Order in the matter of Mr. Shashikant Tulsian
- Order No.WTM/RKA/CFD/160/2016
Ratio decidendi
The rule this decision rests on
A director who is included in a vanishing-company direction solely because he held office at the relevant time, without any allegation of personal default, cannot be held responsible for the company's violations, and the direction against him cannot stand on that basis alone. Where the record shows that the director resigned before the violations occurred and had informed the regulator of that resignation well before the show cause notice was issued, his inclusion in the order is a clear mistake apparent from the record. Where the regulator has dropped proceedings against other directors placed in similar circumstances, a director similarly placed may be granted the same relief, and the directions and observations against him may be revoked.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
1. Vide order no. WTM/RKA/CFD/151/2016 dated October 21, 2016, SEBI had issued directions more particularly described in para. 26 thereof inter alia to Mr. Shashikant Tulsian considering him as a promoter/director of Manav Pharma Ltd. (the company) which has been determined as a vanishing company as per specified criteria. 2. The aforesaid order was passed ex-parte qua Mr. Shashikant Tulsian as he had not filed any reply to the show cause notice issued in the matter and has not availed the opportunity of personal hearing.
3. After the aforesaid order was passed Mr. Shashikant Tulsian has filed a representation dated October 24, 2016 wherein he has made following submissions- a) He was a non-promoter independent director of the company and had resigned from its directorship on July 27, 1995. In support of the same he has provided following documents:
(i) A copy of the resignation letter dated July 27, 1995 (ii) Copy of resolution passed by company on July 27, 1995 accepting his resignation from the directorship of the company. (iii) Letter of the company confirming acceptance of resignation by company (iv) Copy of the annual return filed by the company with RoC showing his status as resigned director.
b) In response to a letter dated January 10, 2000 from SEBI, based on relevant documents, he had informed SEBI, vide his letter dated January 20, 2000, that he had resigned from the Board of directors of the company on July 27, 1995.
c) He had shifted his residence in February 1998 and hence he did not receive the show cause notice and other notices from SEBI in the matter. 4. In view of the above, Mr. Shashikant Tulsian has requested to drop his name from the aforesaid order dated October 21,2016.
Order in the matter of Vanishing Companies
5. I have considered the representation of Mr. Shashikant Tulsian and note that aforesaid order has been passed against the directors on the sole basis that they were directors of the concerned vanishing company at the relevant time. There is no charge of any default of personal nature against Mr. Shashikant Tulsian. Mr. Shashikant Tulsian had resigned from the company on July 27, 1995 and this fact was informed by him to SEBI on January 20, 2000 i.e. much before the show cause notice dated April 23, 2014 in this case was issued to him. It is thus, very clear from the record that Mr. Shashikant Tulsian was not responsible for the violations of the company as mentioned in the order dated October 21, 2016. I further note that in similar facts and circumstances, proceedings have been dropped in the said order against few other directors namely, Mr. Rajkumar Bafna (with respect to Genuine Commodities Development Company Limited) and Mr. Surendra Malhotra (with respect to South Asian Mushrooms Limited). I, therefore, find that inclusion of Mr. Shashikant Tulsian in the order dated October 21, 2016 is a clear mistake apparent from record.
6. Considering the peculiar facts and circumstances as brought out hereinabove, I hereby revoke the directions and observations qua Mr. Shashikant Tulsian in the aforesaid order dated October 21, 2016.
7. A copy of this order will also be sent to MCA and stock exchanges for information.
Sd/- DATE: OCTOBER 27TH, 2016 RAJEEV KUMAR AGARWAL PLACE: MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA
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