Parsvnath Developers Limited & Anr. vs Sebi
- CitationAppeal No. 175 of 2017
Ratio decidendi
The rule this decision rests on
The Tribunal's reasoning rests on a single principle: where SEBI, without conducting any investigation or hearing the company, passes an ex parte direction treating a company as a suspected shell company and moving its securities to Stage VI of the Graded Surveillance Measure, and the company's annual turnover figures for the last three years, which SEBI itself prima facie accepts as correct, cast serious doubt on the basis for that classification, a stay of the impugned directions is warranted pending SEBI's disposal of the company's representation in accordance with law. The interim stay and direction to the stock exchanges to reverse their decision rest on this prima facie assessment.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Date of Decision: 11.08.2017
Appeal No. 175 of 2017
1.
Parsvnath Developers Limited Parsvnath Tower, Near Shahdara Metro Station, Shahdara, Delhi- 110 032
2. Mr. Pradeep Kumar Jain, Son of Late Shri Sheetal Prasad Jain Parsvnath Tower, Near Shahdara Metro Station, Shahdara, Delhi- 110 032 ...Appellants
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. Somasekhar Sundaresan, Advocate with Mr. Prashant Jain, Mr. Akshay Udheshi and Mr. Dhawal Kothari, Advocates i/b M/s. Sanjay Udheshi & Co. for Appellants.
Mr. Gaurav Joshi, Senior Advocate with Mr. Tomu Francis and Mr. Vivek Shah, Advocates for the Respondent.
CORAM: Justice J.P. Devadhar, Presiding Officer Jog Singh, Member Dr. C.K.G. Nair, Member
Per: Justice J.P. Devadhar (Oral)
1. Without conducting any investigation and without hearing the
appellant, whether the Securities and Exchange Board of India ("SEBI" 2
for short), solely based on the letter dated 09.06.2017 received from the
Ministry of Corporate Affairs (MCA), is justified in passing the ex-parte
order on 07.08.2017 and directing the stock exchanges to treat, inter alia,
the appellant company as a 'suspected shell company' and suspend the
daily trading in the securities of the appellant company on the stock
exchanges by moving the securities of the appellant company to Stage VI
of Graded Surveillance Measure ("GSM" for short) is the question raised
in this appeal.
2. Similar question was raised in the case of J. Kumar Infraprojects
Ltd. (Appeal No. 174 of 2017) and by our order dated 10.08.2017 we
have stayed direction 1(a) & (b) contained in the impugned
communication of SEBI dated 07.08.2017 qua the appellant therein.
3. In view of the facts set out in the Memorandum of Appeal and
other documents tendered at the time of hearing relating to annual
turnover of the appellant company for last three years, which even
according to SEBI prima facie appear to be correct, we extend the said
stay to the case of the appellant company herein and direct the stock
exchanges to reverse their decision in respect of the appellant company
as expeditiously as possible.
4. Appellant company has already made a representation to SEBI
against the impugned communication of SEBI dated 07.08.2017. SEBI is
directed to dispose of the said representation in accordance with law. 3
5. It is made clear that this order shall not come in the way of SEBI
as well as the stock exchanges to investigate the case of the appellant
company and initiate proceedings if deemed fit.
6. Appeal is disposed of in the aforesaid terms with no order as to
costs.
Sd/-
Justice J.P. Devadhar Presiding Officer
Sd/-
Jog Singh Member
Sd/-
Dr. C.K.G. Nair Member 11.08.2017 Prepared & Compared By: PK
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