Mehmood Vaid vs Sebi

Date of Decision: 11.08.2017

Appeal No. 172 of 2017

Mehmood Vaid A 2/7: 2 Sneh CHS Ltd., Plot No. 16, Sector 19A, Nerul, Navi Mumbai- 400 076 ...Appellant

Versus

Securities and Exchange Board of India, SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai -400 051 ...Respondent

Mr. Navroz Seervai, Senior Advocate with Mr. Ayush Agarwal, Advocate i/b Crawford Bayley & Co. for the Appellant.

Mr. Mihir Mody, Advocate with Mr. Nishant Upadhyay, Advocate i/b K. Ashar & Co. for the Respondent.

CORAM: Justice J.P. Devadhar, Presiding Officer Jog Singh, Member

Per: Justice J.P. Devadhar (Oral)

1.

The appellant is aggrieved by the ad-interim ex-parte order passed

by the Whole Time Member ("WTM" for short) of the Securities and

Exchange Board of India ("SEBI" for short) on August 2, 2017. By the

said order it is, inter alia, held that the appellant was an insider under the

SEBI (Prohibition of Insider Trading) Regulations, 1992 ("PIT

Regulations" for short) and while in possession of unpublished price

sensitive information ("UPSI" for short), the appellant had sold the 2

shares of Multi-Commodity Exchange of India Ltd. ("MCX" for short)

and averted loss to the tune of `15.10 lac and with a view to impound the

loss averted, the WTM of SEBI has directed the appellant not to dispose

of or alienate any of his assets/properties/securities till the amount of loss

averted is credited to an escrow account. By the said order, the WTM of

SEBI has directed the banks not to debit any amount from bank accounts

of the appellant except for the purpose of transfer of funds to the escrow

account.

2. Although the prima facie view of the WTM of SEBI that the

appellant was an insider and had traded in the securities while in

possession of UPSI is seriously disputed by the appellant, without

prejudice to his rights and contentions, the appellant has furnished to the

counsel for SEBI, Fixed Deposit for an amount exceeding `15.10 lac and

seeks to contest the matter before SEBI.

3. In view of the fact that the appellant has secured the loss allegedly

averted by the appellant, the directions issued against the appellant in the

ex-parte order do not survive. Consequently, the appeal does not survive.

4. Accordingly, we dispose of the appeal by directing the appellant to

make a representation, if any, within a period of two weeks from today

and further direct SEBI to dispose of the said representation as

expeditiously as possible in any event within a period of three months

from the date of receiving the representation from the appellant. 3

5. All contentions of both parties are kept open.

6. Appeal is disposed of in the aforesaid terms with no order as to

costs.

Sd/-

Justice J.P. Devadhar Presiding Officer

Sd/-

Jog Singh Member 11.08.2017 Prepared & Compared By: PK