Pagita Leasing & Finance Company Ltd. vs Sebi

Order reserved on: 25-04-2019 Date of Decision : 15-05-2019

Misc. Application No.354 of 2017 And Appeal No.388 of 2017

Pagita Leasing & Finance Company Ltd. through Authorized Representative Sh. Shashikant Sharma 205/206, 2nd Floor, Amar Chand Sharma .... Appellant Complex, S.P. Road, Secunderabad - 500 003. (Telangana)

Versus

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

Ms. R.K. Sanghi a/w Mr. Satyendra Kumar, Advocates for the Appellant.

Mr. Sumit Rai a/w Mr. Kaushal Parsekar, Advocates i/b Legasis Partners for the Respondent.

CORAM : Justice Tarun Agarwala, Presiding Officer Dr. C.K.G. Nair, Member Justice M.T. Joshi, Judicial Member

Per : Justice Tarun Agarwala, Presiding Officer

Misc. Application No.354 of 2017:

1.

By this Misc. Application, appellant seeks exemption in

filing certified copies of the impugned order dated 30/11/2017. -2- For the reasons stated in the Misc. Application, Misc.

Application is allowed.

Appeal No.388 of 2017:

2. The appellant is aggrieved by the order of the

Adjudicating Officer of Securities and Exchange Board of India

(hereinafter "SEBI" for short) dated 30th November, 2017 by

which a penalty of Rs.6 lakh under Section 15HB of the SEBI

Act, 1992 has been imposed for not obtaining authentication on

SCORES (SEBI Complaints Redress System) and violating the

circulars/directions issued by SEBI in this regard.

3. SEBI initially issued a circular dated June 03, 2011 for

obtaining authentication on SCORES for processing investor

complaint received by SEBI. Consequently, another circular

dated 18th December, 2014 was issued consolidating the earlier

circulars in which all companies whose securities were listed on

the stock exchange were directed to obtain SCORES

authentication and also redress the pending investor grievances

within the stipulated period. Since the company failed to

comply with the circulars of SEBI, a show-cause notice dated

19th June, 2017 was issued to show cause as to why an enquiry

should not be held and penalty be not imposed under Section

15HB of the SEBI Act. Since the appellant did not appear, an -3- order of penalty was passed. The appellant being aggrieved has

filed the present appeal.

4. We have heard the learned counsel for the parties.

5. It was contended that the show-cause notice that was

issued was never served as it was returned undelivered and that

there is no proper service on the appellant of the said show-

cause notice. It was also alleged that the notice should have

been sent at the corporate address or at the address of the

promoters or the email address submitted with the Registrar of

Companies. Since the show-cause notice was not sent at the

aforesaid addresses, the impugned order is in violation of the

principles of natural justice as no opportunity of hearing was

provided.

6. The impugned order as well as the reply by the

respondent to the memo of appeal clearly indicates that initially

a show-cause notice dated 19th June, 2017 was sent through the

Speed Post but the same returned undelivered. However, the

show-cause notice was served by way of affixation as per Rule

7(c) of the Adjudication Rules which was affixed at the

registered address of the appellant on 6th July, 2017. It was thus

contended that service by affixation was made which was

sufficient and since the appellant failed to appear, the ex-parte

order was passed which does not suffer from any error of law. -4-

7. In rejoinder the appellant has reiterated that, service of the

show-cause notice was insufficient as it was not sent to the

corporate address or by email. The appellant has made wild

allegation that proper address has not been indicated nor the

date of signing of the witness has been mentioned. The report of

the affixation has not been signed and only the name of Manoj

Pawar has been indicated.

8. In our view, such contentions with regard to affixation

cannot be raised for the first time in rejoinder. Such allegation

should have been raised in the memo of appeal, which has not

been done. In fact, the memo of appeal is silent on the question

of service by affixation.

9. Having perused the impugned order and the memo of

appeal, and the affidavits in reply as well as rejoinder, we are of

the opinion that the requirement of law is to send the summons

at the registered office of the company which in the instant case

has been done when the show-cause notice was returned

undelivered. The said show-cause notice was served by

affixation at the registered address of the appellant. Once this

has been done, it was not required to serve the appellant at the

other addresses. Affixation of the show-cause notice has not

been denied. What has been denied by the appellant is the -5- manner in which the affixation was done. In our opinion, there

is no illegality in the affixation of the show-cause notice at the

registered address of the appellant done by the respondent.

10. We are, therefore, of the opinion that the appellant was

duly served with the show-cause notice by affixation. Since the

appellant failed to appear, we do not find any infirmity in the

impugned order.

11. The appeal fails and is dismissed. In the circumstances,

there shall be no order as to costs.

Sd/-

Justice Tarun Agarwala Presiding Officer

Sd/-

Dr. C.K.G. Nair Member

Sd/-

Justice M.T. Joshi Judicial Member

15-05-2019 prepared & compared by-dg