P.V.R. Murthy vs Sebi
- CitationAppeal No.413 of 2023
Ratio decidendi
The rule this decision rests on
The complexity of a manipulative GDR issue spanning multiple jurisdictions, requiring information from overseas regulators, together with a period of abeyance pending a determination of whether SEBI could investigate a GDR issued abroad, justifies the interval between the issuance and the show cause notice, so that no undue delay in issuing the show cause notice is established. A person who, as a Director involved in the day-to-day management of a company and authorised by its Board to sign documents relating to a GDR issue, signs a pledge agreement that is not disclosed to the stock exchanges is involved in the violation of the LODR Regulations, and the lack of direct evidence of fraud or of day-to-day involvement is no answer to the charge. Where the controversy is squarely covered by earlier decisions of the Tribunal which affirmed penalties against co-Directors and an Adjudicating Officer's order on the same GDR issue, the appeal on the same grounds is dismissed as lacking merit.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Date of Decision: 2.5.2023
Misc. Application No.451 of 2023 And Appeal No.413 of 2023
P.V.R. Murthy C/402, Fortune Tower, Madhpur, Hyderabad - 82. ...Appellant
Versus
Securities and Exchange Board of India SEBI Bhavan, Plot No.C-4A, G Block, Bandra Kurla Complex, Bandra (E), Mumbai - 400 051. ...Respondent
Mr. Abhiraj Arora, Advocate with Mr. Deepanshu Agarwal, Ms. Misbah Dada and Mr. Shourya Tanay, Advocates i/b. ELP for the Respondent.
CORAM: Justice Tarun Agarwala, Presiding Officer Ms. Meera Swarup, Technical Member
Per: Justice Tarun Agarwala, Presiding Officer (Oral)
1.
For the reasons stated aforesaid, the delay in the filing
of the appeal is condoned. The application is allowed.
2. The present appeal has been filed by the appellant
challenging the order dated 31 st January, 2023 passed by 2
the Adjudicating Officer (hereinafter referred to as 'AO')
in the matter of Global Depository Receipt ('GDR' for
short) issue relating to Birla Cotsyn (India) Ltd. wherein a
penalty of Rs.10 lakhs has been imposed.
3. We have heard the learned counsel for the parties.
The only contention raised was there was an undue delay
in the issuance of the show cause notice. The GDR
related to the year 2010 whereas the show cause notice
was issued on 18th April, 2019 and, thus, there was an
undue delay. It was also urged that there is no evidence
against the appellant to show that he had committed a
fraud or violated the Regulations in the matter of issuance
of GDR. It was contended that he was not involved in the
day to day affairs and the management of the Company.
4. Having heard the learned counsel for the parties, we
find that the complexity involved in the manipulative
GDR issue is vast and that SEBI was required to obtain
information from multiple jurisdictions and from overseas
regulators. Further, at some stage a question arose
whether SEBI could investigate the GDR matter which 3
was issued abroad and since the matter was pending
consideration on this issue the proceedings remained in
abeyance till the matter was decided by the Supreme
Court in Pan Asia Advisors Ltd. vs. SEBI. Considering
the aforesaid, we are of the opinion that there is no undue
delay in the issuance of the show cause notice.
5. The contention that there is no evidence against the
appellant is patently misconceived in as much as the
appellant was a Director and was involved in the day to
day running and managing the affairs of the Company.
Further, the Board of Directors had authorised the
appellant to sign various documents on behalf of the
Company in relation to the GDR issue, pursuant to which
the appellant had signed the pledge agreement which was
not disclosed to the stock exchanges and, consequently,
violated the LODR Regulations. Thus, the appellant's
involvement in the GDR issue was writ large.
6. We also find that the controversy involved in the
present appeal is squarely covered by a decision of this
Tribunal Mr. Mohandas Shenoy Adige v. SEBI Appeal 4
no.511 of 2020 dated 28th July, 2021 whereby the order
of the WTM dated 29th September, 2020 was affirmed in
the two appeals filed by the two Directors as well as the
order dated 3rd November, 2022 Yashovardhan Birla v.
SEBI, Appeal no.454 of 2022 against the Adjudicating
Officer's order was affirmed.
7. In view of the aforesaid, the appeal lacks merit and is
dismissed.
8. This order will be digitally signed by the Private
Secretary on behalf of the bench and all concerned parties
are directed to act on the digitally signed copy of this
order. Certified copy of this order is also available from
the Registry on payment of usual charges.
Justice Tarun Agarwala Presiding Officer
Ms. Meera Swarup Technical Member RAJALA Digitally signed by KSHMI RAJALAKSHMI 2.5.2023 HARISH NAIR HARISH Date:
2023.05.10 RHN NAIR 14:47:41 +05'30'
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