Quantum Securities Private Limited vs Sebi

Order Reserved on : 1.8.2019 Date of Decision : 7.8.2019

Misc. Application No.98 of 2018 And Appeal No.115 of 2018

Quantum Securities Private Limited 103, AVG Bhavan, M-3 Connaught Circus, New Delhi-110001. ..... Appellant

Versus

1.

Securities & Exchange Board of India Plot No.C-4/A, G Block, BKC, Bandra (East), Mumbai - 400051.

2. New Delhi Television Limited 207, Okhla Industries Estate, Phase III, New Delhi - 110020. ...... Respondents

Mr. Sandeep Parekh, Advocate with Ms. Deepika Goyal, Advocate i/b. Finsec Law Advisors for the Appellant.

Mr. Sumit Rai, Advocate with Mr. Abhiraj Arora and Mr. Vivek Shah, Advocate i/b. ELP for the Respondent No.1. Mr. Lukesh Aidasani, Advocate i/b. DMD Advocates for the Respondent no.2.

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

Per : Justice Tarun Agarwala 2

Misc. Application No.98 of 2018

For the reasons stated in the application, the delay in

filing the appeal is condoned.

The Misc. Application is allowed.

Appeal No.115 of 2018

1. The appellant is a private Company and is a minority

shareholder in New Delhi Television Ltd. (hereinafter

referred to as 'NDTV'). With regard to non-disclosure of a

tax demand under Clause 36 of the Equity Listing Agreement

prescribed by the Stock Exchange (hereinafter referred to as

'Listing Agreement') by the Company, the appellant made a

complaint to the stock exchange as well as to the Securities

and Exchange Board of India (hereinafter referred to as

'SEBI'), based on which adjudication proceedings were

initiated by the Adjudicating Officer under Sections 23A and

23E of the Securities and Exchange Board of India Act, 1992

(hereinafter referred to as 'SEBI Act') read with 23-I of the

Securities Contracts (Regulation) Act, 1956 (hereinafter

referred to as 'SCRA'). These proceedings culminated in an

order being passed by the Adjudicating Officer dated 3

4th June, 2015 wherein the Company NDTV was imposed a

penalty of Rs.2 crore.

2. The appellant being aggrieved by the said order filed

Appeal no.343 of 2015 contending that the penalty of Rs.2

crores should not have been imposed upon the Company but

should have been imposed on the Key Managerial Personnel

of the Company who took a conscious decision of not

disclosing the event under Clause 36 of the Listing

Agreement.

3. The appellant prayed that the order of the Adjudicating

Officer dated 4th June, 2015 should be quashed and the

matter should be remanded to the Adjudicating Officer to

pass a fresh order on penalty on Key Managerial Personnel.

The Tribunals while considering the matter disposed of the

appeal permitting the appellant to make a fresh representation

to SEBI with regard to the grievances made in the appeal.

For facility the order of the Tribunal dated 10th October, 2017

is extracted hereunder:

"1. After the matter was argued for some time, counsel for the appellant states that in relation to the grievances made in the appeal, the appellant would make a fresh representation within a period of two weeks from today before the Securities and Exchange Board of India ("SEBI" for short).

4 2. If the appellant makes a representation within two weeks from today then the appropriate authority of SEBI shall consider the said representation and pass appropriate order thereon in accordance with law within a period of eight weeks from the date of receiving the representation.

3. Appeal is disposed of in the aforesaid terms with no order as to costs."

4. It transpires that a modification application was filed

for modification of the order dated 10th October, 2017. The

said application was rejected by an order dated 12th October,

2017. The relevant extract of the order dated 12th October,

2017 passed by the Tribunal is extracted hereunder:

"1. Not on board. Taken up by consent of parties.

2. By this misc. application, the applicant seeks modification of our order passed in aforesaid appeal on October 10, 2017.

3. First Grievance of the applicant is that in para 1 of our order it is recorded that counsel for the appellant has agreed to make a fresh representation to SEBI when in fact the suggestion was made by counsel for SEBI and not by the counsel for the appellant. Since counsel for appellant has accepted the suggestion, we see no reason to modify our order.

4. Second grievance of the applicant is that the applicant must be permitted to make representation on all issues relating to the violation of securities laws by the respondent No.2 and not restricted to the violation set out in the appeal.

5. In our opinion, permitting the appellant to make representation on issues which are not subject matter of 5

appeal would amount to enlarging the scope of the representation beyond the grievances set out in the memo of appeal. Therefore, we see no reason to modify our order on this issue as well.

6. Accordingly, we see no merit in the misc. application and the same is hereby dismissed with no order as to costs."

5. It was categorically asserted that the representation

would only contain the issue which was the subject matter of

the appeal and other issues would not be entertained as it

would amount to enlarging the scope of the representation

beyond the grievances set out in the memo of appeal.

6. Based on the orders of the Tribunal dated 10th October,

2017 and 12th October, 2017, a representation was filed

which was rejected by the Whole Time Member (hereinafter

referred to as 'WTM') by an order dated 20th December,

2017. The appellant being aggrieved by the said order has

filed the present appeal.

7. In the representation, the appellants had enumerated

that the violations which is alleged to have been made by the

Company NDTV was required to be investigated and

appropriate orders were required to be passed. The WTM

found that out of the nine violations only two violations

formed the cause of grievance which was mentioned in the 6

appeal filed before this Tribunal. The remaining seven

violations so alleged were beyond the scope of the directions

of this Tribunal. On the two violations which were part of

the appeal, the WTM held that the complaint of the appellant

in this regard was considered and appropriate orders of

penalty was passed against the Company.

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

9. Before this Tribunal it was asserted that the imposition

of Rs.2 crores was only made against the Company whereas

the penalty should have been imposed against the Key

Managerial Personnel of the Company which has not been

done. In our opinion, this contention is wholly

misconceived. We find that parallel proceedings for the

same offence, namely, violation of Clause 36 of the Listing

Agreement was also initiated against Key Managerial

Personnel which also culminated into an order dated

16th March, 2018 being passed by the Adjudicating Officer

under Section 15A(b) of the SEBI Act as well as under

Section 23A(a) and Section 23E of the SCRA for violation of

Regulation 13(6) of SEBI (Prohibition of Insider Trading)

Regulations ("PIT Regulations" for convenience) read with

Clauses 2.1 and 7.0(ii) of Schedule II for Code of Corporate 7

Disclosure Practices for Prevention of Insider Trading

specified in Schedule II read with Regulation 12(2) of PIT

Regulations as well as violation of Clause 36 of the Listing

Agreement imposing penalties against the Key Managerial

Personnel. Thus, the grievance of the appellant to the extent

that the Key Managerial Personnel should be penalized has

now been set at rest.

10. The contention of the appellant that the remaining

seven alleged violations should also be considered as they

were part of the appeal that was filed before this Tribunal is

patently misconceived. In this regard, the learned counsel

tried to impress upon the Tribunal by placing reliance on the

additional affidavit dated 17th November, 2015 contending

that the said affidavit was part of the record of the Tribunal

which contained the allegations and, therefore, the said

allegations were required to be considered by the WTM.

11. The contention of the learned counsel for the appellant

is patently misconceived and cannot be accepted. The order

of the Tribunal dated 12th October, 2017 clearly rejected the

contention of the appellant for making the representation on

issues other than the issue which related to the order dated 4th

June, 2015. The Tribunal rejected the modification 8

application holding that permitting the appellant to make a

representation on issues which are not the subject matter of

appeal would amount to enlarging the scope of the

representation beyond the grievances set out in the memo of

appeal. Thus, the allegations made in the additional affidavit

could not be considered. In any case, we find that the

additional affidavit on which reliance has been made was

filed on 17th November, 2015 much after the disposal of the

appellant's appeal on 10th October, 2017 and disposal of his

modification application dated 12th October, 2017. Any

additional affidavit filed after the disposal of the appeal

cannot form part of the memo of appeal.

12. In the light of the aforesaid, the appeal is devoid of any

merit and is dismissed.

Sd/-

Justice Tarun Agarwala Presiding Officer

Sd/-

Dr. C. K. G. Nair Member

7.8.2019 Prepared and compared by RHN