Mr. Girishchandra Mukundram Baluni vs Sebi
- CitationAppeal No.340 of 2017
Ratio decidendi
The rule this decision rests on
The question on which the appeal turns is whether a person who had been an additional director of a company and whose resignation or cessation is supported by official records can be held liable, as a current director, for refund of amounts collected by the company; the court's reasoning rests on the following point. Where the Registrar of Companies' records, which are not disputed by the regulator, establish that a person ceased to be a director of a company before the date on which the impugned liability is fixed, that person cannot be treated as a current director of the company, and a direction imposing joint and several liability on him as a current director cannot be sustained.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Date : 20.4.2018
Appeal No.340 of 2017
Mr. Girishchandra Mukundram Baluni L-112, Swatantra Senaninagar, Near Akhbarnagar, New Wadaj, Ahmedabad - 380013. .... Appellant
Versus
Securities and Exchange Board of India SEBI Bhavan, Bandra Kurla Complex, Mumbai - 400 051. ... Respondent
Mr. Rakesh Puri, Advocate for the Appellant.
Mr. Mustafa Doctor, Senior Advocate with Mr. Nikhil R. Kaoor, Mr. Pulkit Sukhramani and Ms. Vidhi Jhawar, Advocates i/b. The Law Point for the Respondent.
CORAM : Justice J. P. Devadhar, Presiding Officer Dr. C.K.G. Nair, Member
Per : Justice J. P. Devadhar (Oral)
1.
This appeal is filed to challenge the order passed by the Whole Time
Member (WTM) of Securities and Exchange Board of India ('SEBI' for
short) on 20th September, 2017. By the said order appellant is held liable to
refund the amounts collected by Neesa Technologies Limited jointly and
severally with Neesa Technologies Ltd. and its other current directors.
2. In the impugned order it is held that although appellant was not a
director when the amounts were collected by the company, being a current
director appellant is liable to discharge the liability of the company jointly
and severally with the company and other current directors. 2
3. Before the WTM, appellant contended that he had resigned as
director on 4.3.2015, however, in the absence of any documentary
evidence, the plea of the appellant was rejected.
4. In the affidavit in rejoinder, filed on 17.4.2018, the appellant has
annexed a letter dated 13.4.2018 received from the Registrar of
Companies, Gujarat, Dadra and Nagar Haveli wherein it is stated that the
appellant was the additional director of Neesa Technologies Ltd up to
27.5.2015 and that the appellant has also filed form no. DIR II with the
MCA portal on 3.6.2015.
5. In view of the above document which is not disputed by SEBI, it
becomes evident that the appellant cannot be said to be a current director of
Neesa Technologies Ltd.
6. In these circumstances decision of the WTM that the appellant
continues to be a director of Neesa Technologies Ltd cannot be sustained.
Consequently, directions issued against the appellant to refund the monies
collected by Neesa Technologies Ltd along with other directors jointly and
severally cannot be sustained.
7. In the result impugned order is quashed and set aside qua the
appellant and the appeal is allowed in the aforesaid terms with no order as
to costs.
Sd/-
Justice J.P. Devadhar Presiding Officer
Sd/-
Dr. C.K.G. Nair Member
20.4.2018 Prepared and compared by RHN
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