Rakhi Trading Pvt. Ltd. vs Sebi

Date of Decision : 13.1.2020

Misc. Application No.1 of 2020 And Appeal No.1 of 2020

Rakhi Trading Pvt. Ltd. 61/162, 4th Floor, 109 Gaya Building, Y M Road, Masjid Bunder West, Mumbai - 400009. ..... Appellant

Versus

Securities and Exchange Board of India SEBI Bhavan, C-4A, G- Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 51. ...... Respondent

Mr. Vikram Nankani, Senior Advocate with Mr. P.R. Ramesh, Mr. KRCV Seshachalam, Ms. Sabeena Mahadik, Mr. Pankaj Uttaradhi and Mr. Aayush Kothari, Advocates i/b. Visesha Law Services for the Appellant.

Mr. Kumar Desai, Advocate with Mr. Mihir Mody and Mr. Shehaab Roshan, Advocates i/b. K. Ashar & Co. for the Respondent.

CORAM: Justice Tarun Agarwala, Presiding Officer Justice M.T. Joshi, Judicial Member

Per : Justice Tarun Agarwala (Oral)

1.

The facts leading to the filing of the present appeal is

that the Adjudicating Officer passed an order dated 2

26th March, 2009 under Section 15I of the Securities and

Exchange Board of India Act, 1992 (hereinafter referred to as

'SEBI Act') imposing a penalty of Rs.1,08,00,000/- for

violating Regulations 3(a), (b), (c) and 4(1), 4(2)(a) and (b) of

the Securities and Exchange of India (Prohibition of

Fraudulent and Unfair Trade Practices Relating to Securities

Market) Regulations, 2003 (hereinafter referred to as 'PFUTP

Regulations'). The order further directed the appellant to pay

the amount within 45 days from the date of receipt of the

order. The said order was challenged by the appellant before

this Tribunal which was allowed by an order dated 11th

October, 2010 and the order of the Adjudicating Officer was

set aside. Consequently, the demand of Rs.1,08,00,000/-

came to an end.

2. Securities and Exchange of India (hereinafter referred

to as 'SEBI') being aggrieved by the order of this Tribunal

filed an appeal before the Supreme Court of India. The Civil

Appeal of SEBI was allowed by judgment dated 8th February,

2018 and the order of SAT was set aside in so far as the

appellant was concerned.

3

3. As a result of the setting aside of the order of the

Tribunal the order of the Adjudicating Officer revived and the

demand of Rs.1,08,00,000/- became payable by the appellant.

Since the same was not paid, the Recovery Officer issued a

Recovery Certificate No.1773 of 2018 dated 14 th December,

2018 directing the appellant to pay a sum of Rs.2,34,05,932/-

which included the component of interest and recovery cost

in addition to the penalty imposed by the Adjudicating

Officer. The appellant being aggrieved by the Recovery

Certificate dated 14th December, 2018 issued by the Recovery

Officer has filed the present appeal. Since there is a delay of

335 days in filing the present appeal, a Misc. Application

No.1 of 2020 has also been filed for condoning the delay.

4. We have heard Shri Mr. Vikram Nankani, Senior

Advocate assisted by Mr. P.R. Ramesh, Mr. KRCV

Seshachalam, Ms. Sabeena Mahadik, Mr. Pankaj Uttaradhi

and Mr. Aayush Kothari, Advocates for the Appellant and

Mr. Kumar Desai, Advocate assisted by Mr. Mihir Mody and

Mr. Shehaab Roshan, Advocate for the Respondent. Since

there is no factual dispute the appeal is being decided at the

admission stage without calling for a reply. 4

5. Under Section 15T of the SEBI Act, an appeal is

required to be filed within 45 days from the date of receipt of

the order. In the instant case, the impugned order is dated

14th December, 2018. The present appeal was filed on 31st

December, 2019. There is a delay of 335 days in filing the

appeal. The ground urged is, that the impugned order is void

and, therefore, no cognizance was taken on the said order and

only when the appellant's bank account was attached and

money was withdrawn that an application was filed before the

Recovery Officer in October, 2019. Since the Recovery

Officer took no action on the representation of the appellant

the present appeal was filed. It was thus urged that there is no

undue delay on the part of the appellant and, in the

circumstances of the case, the delay, if any, was liable to be

condoned.

6. It was further contended by the learned Senior counsel

that no amount is payable as on the date in as much as the

order of the Adjudicating Officer merged with the order of

SAT and consequently the quantum of penalty was set aside.

It was further contended that once the appeal of SEBI was

allowed by the Supreme Court the order of the Adjudicating 5

Officer with regard to the quantum of penalty does not revive

and that the Adjudicating Officer was required to quantify the

penalty, if any, afresh.

7. On the other hand, learned counsel for SEBI submitted

that the principle of merger is not applicable in the present

case and since there is undue delay in filing the appeal the

same should be dismissed on the ground of laches.

8. Having heard the learned counsel for the parties, we

find that the appellant was aware of the order of the Recovery

Officer dated 14th December, 2018. Even after the receipt of

the said order the appellant took no action and sat over the

matter. The request for reconsideration of the quantum of

penalty was only made by the appellant in October, 2019

after a considerable delay. Such representation so made will

not allow the appellant to extend the period of limitation for

the purpose of filing an appeal under Section 15T of the SEBI

Act.

9. We are of the opinion, that there is an inordinate delay

in filing the appeal. No sufficient cause has been shown for

condoning the inordinate delay. The Supreme Court in Ram

Nath Sao Alias Ram Nath Sahu and Ors. (2002) 3 SCC 195 6

held that the expression "sufficient cause" should be given a

liberal construction so as to advance substantial justice

especially when no negligence or inaction or want of

bonafides is imputable to a party. However, in Balwant

Singh (Dead) vs. Jagdish Singh & Ors. (2010) 8 SCC 685

the Hon'ble Supreme Court held that the expression

"sufficient cause" means the presence of legal and adequate

reasons.

10. In the instant case, we are of the opinion that sufficient

cause has not been show nor any adequate or legal reasons

have been given for condoning the delay. Further, the reason

for filing representation is not bonafide. Thus, for the

inordinate delay in filing the appeal, the application for

condonation of delay cannot be allowed and is rejected as a

result, the appeal is also dismissed with no order as to costs.

Sd/-

Justice Tarun Agarwala Presiding Officer

Sd/-

Justice M.T. Joshi Judicial Member

13.1.2020 Prepared and compared by RHN