Mukesh Shah vs Sebi

Date of Decision: 21.01.2020

Misc. Application No. 484 of 2019 And Misc. Application No. 485 of 2019 And Appeal No. 401 of 2019

Mukesh Shah 14, Lily Kunj, Near Damodar Wadi, Kandivali (East), Mumbai- 400 101 ...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. Rushin Kapadia, Advocate with Ms. Rinku Valanju, Advocate i/b R. V. Legal for the Appellant.

Mr. Vishal Kanade, Advocate with Mr. Mihir Mody and Mr. Shehaab Roshan, Advocates i/b K. Ashar & Co. for the Respondent.

WITH Misc. Application No. 486 of 2019 And Misc. Application No. 487 of 2019 And Appeal No. 402 of 2019

Mukesh Shah 14, Lily Kunj, Near Damodar Wadi, Kandivali (East), Mumbai- 400 101 ...Appellant 2

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. Rushin Kapadia, Advocate with Ms. Rinku Valanju, Advocate i/b R. V. Legal for the Appellant.

Mr. Vishal Kanade, Advocate with Mr. Mihir Mody and Mr. Shehaab Roshan, Advocates i/b K. Ashar & Co. for the Respondent.

CORAM: Justice Tarun Agarwala, Presiding Officer Dr. C.K.G. Nair, Member

Per: Justice Tarun Agarwala (Oral)

1.

Appeal No. 401 of 2019 have been filed against the order

of the Adjudicating Officer ("AO" for convenience) of the

Securities and Exchange Board of India ("SEBI" for

convenience) dated May 06, 2010 imposing a penalty of

` 5,00,000/- (Rupees Five Lakhs Only) for failure to provide

information/ documents to the investigating authority inspite of

due notice. Appeal No. 402 of 2019 have been filed against the

impugned order dated December 02, 2010 passed by the AO of

SEBI imposing a penalty of ` 2,00,000/- (Rupees Two Lakhs

Only) for fraudulently creating artificial volume and liquidity in

the scrip of a company. Since the issues involved in both the 3

appeals are common the same are been decided together by a

common order.

2. In Appeal No. 401 of 2019 there is a delay of 3349 days in

filing the appeal. In Appeal No. 402 of 2019 there is a delay of

3154 days in filing the appeal. Accordingly, the applications

have been filed by the appellants in both the appeals for

condoning the delay. The ground urged is that the appellant

was totally unaware of the proceedings and was never served

with the show cause notice or with the impugned order. The

respondents in the reply have not filed any proof of service of

the impugned order. Thus, we are of the opinion that the

impugned order was not served and the appellant only came to

know of the impugned order when they received a letter dated

April 03, 2019 requiring the appellant to deposit the amount

along with the interest. In the light of the aforesaid, since the

appellants were never served with the impugned order the delay

in filing the appeals are condoned. Misc. Application No. 484 of

2019 in Appeal No. 401 of 2019 and Misc. Application No. 486

of 2019 in Appeal No. 402 of 2019 are allowed.

3. On merits the learned counsel for the appellant urged that

he was never served with any show cause notice and

consequently the impugned order was passed ex-parte without 4

giving an opportunity of hearing. It was thus urged that the

impugned order should be set aside and the matter should be

remitted to the AO to pass fresh order after giving an

opportunity of hearing.

4. We find that the submission of the learned counsel for the

appellant is misconceived and cannot be accepted. The reply

filed by the respondent in Appeal No. 401 of 2019 indicates that

the show cause notice was served through registered post.

Thereafter, summons dated March 07, March 20, April 05 were

served by hand delivery. The notice for the date of hearing was

again served by hand delivery on December 24. Thus, we are of

the opinion that the appellant had ample notices of the

proceedings. It was alleged by the appellant that the signatures

in the acknowledgment of the receipt of the show cause notice

was not his signatures. We are of the opinion that this

contention appears to be an afterthought and cannot be taken

into consideration in the light of the facts, that subsequently

summons was also served upon the appellant and thus the

appellant had knowledge of the proceedings.

5. In appeal No. 402 of 2019 the record indicates that the

show cause notice was refused. Subsequently the show cause

notice along with a letter was served by affixation at his address 5

on October 06. The notice issued for the date of hearing was

also served by affixation. These facts have not been refuted nor

the fact that the appellant has been residing at the same address.

The only contention raised that the report on affixation by the

process server cannot be relied upon as only one witness had

countersigned the affixation notice. In our opinion, when the

service of show cause notice was refused the question of any

alleged irregularity in the subsequent service becomes

irrelevant.

6. In the light of the aforesaid, we are of the opinion that the

appellant had ample notices of the two proceedings initiated by

the AO. Inspite of the service of the show cause notice the

appellant failed to appear or file a reply. Consequently, we do

not find any error in the impugned orders passed by the AO.

Both the appeals fail and are dismissed. In view of the

dismissal of the appeals, Misc. Application Nos. 485 and 487 of

2019 seeking stay of notice of demand are also rejected.

Sd/-

Justice Tarun Agarwala Presiding Officer

Sd/-

Dr. C.K.G. Nair Member 21.01.2020 Prepared & Compared By: PK