Roopalben Nareshbhai Panchal vs Sebi

BEFORE THE SECURITIES APPELLATE TRIBUNAL MUMBAI Date of Decision: 03.03.2016

Appeal No. 400 of 2015

1.

Roopalben Nareshbhai Panchal

2. Arjav Nareshbhai Panchal

15/1, Surdhara Residency Near Silver Alkananda Society, Dental College Road, Opp. Pleasure Club, Manipur-Ghuma Road Manipur, Ahmedabad- 382 115 ...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

WITH Appeal No. 401 of 2015

1. Roopalben Nareshbhai Panchal

2. Arjav Nareshbhai Panchal

15/1, Surdhara Residency Near Silver Alkananda Society, Dental College Road, Opp. Pleasure Club, Manipur-Ghuma Road Manipur, Ahmedabad- 382 115 ...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

Mrs. Roopal Nareshbhai Panchal Appellant in Person in Appeal Nos. 400 of 2015 & 401 of 2015.

Mr. J.P. Sen, Senior Advocate with Mr. Mihir Mody, Mr. Saurabh Bachhawat and Mr. Harekrishna Ashar, Advocates i/b K. Ashar & Co. for the Respondent in Appeal Nos. 400 of 2015 & 401 of 2015. 2

CORAM: Justice J.P. Devadhar, Presiding Officer Jog Singh, Member

Per: Justice J.P. Devadhar (Oral)

1. In these two appeals, the appellants (mother and son) have

challenged two orders viz. order passed by the Whole Time Member

("WTM" for short) of Securities and Exchange Board of India ("SEBI"

for short) on February 25, 2011 as also the order passed by the

Adjudicating Officer ("AO" for short) on January 31, 2012.

2. By order dated February 25, 2011 the appellants and four others

are directed to disgorge unlawful gains made by them along with interest.

By order dated January 31, 2012 the appellants are directed to pay

penalty of ` 15 lac and 1 lac respectively under Section 15HA of the

Securities and Exchange Board of India Act, 1992 ("SEBI Act" for short)

for violating the provisions contained in the Securities and Exchange

Board of India (Prohibition of Fraudulent and Unfair Trade Practices

relating to Securities Market) Regulations, 2003 ("PFUTP" Regulations"

for short).

3. The aforesaid disgorgement order and the penalty order have been

passed against the appellants mainly on the ground that the appellants in

concert with a Depository Participant and the Financiers have opened

thousands of afferent accounts and by making applications under the

retail category of 18 IPO's have cornered shares meant for RIIs and on

allotment of shares, transferred the shares received in afferent accounts to

their own demat accounts and then transferred the shares to the financiers

as per the prior understanding and also refunded the balance money. 3

4. Entire case of the appellants is that they are in no way concerned

with the fraudulent acts committed by Mr. Dipak Panchal who was the

master mind behind the fraudulent acts and since the afferent accounts

were opened by Mr. Dipak Panchal by forging the signatures of the

appellants, no action ought to have been taken against the appellants. In

support of the above contention reliance is placed on the charge sheet

filed by Central Bureau of Investigation (CBI) against Mr. Dipak Panchal

in the Court of Special Judge at Greater Mumbai on September 24, 2007

and the charge sheet filed by the Department of Enforcement against

Mr. Dipak Panchal under the Prevention of Money Laundering Act,

before the Court of Special Judge at Greater Mumbai on August 29,

2013. In the aforesaid charge sheets it is recorded that the said Mr. Dipak

Panchal had forged signatures of the appellants while opening the

afferent accounts. Apparently, the aforesaid charge sheets support the

contention of the appellants.

5. It is an admitted position that the charge sheet filed by CBI on

September 29, 2007 was not placed by the appellants before the WTM of

SEBI. Similarly, the charge sheet filed by the Enforcement Department

against Mr. Deepak Panchal under the Money Laundering Act on August

29, 2013 could not be placed before the WTM and also the AO of SEBI

as the said charge sheet was filed subsequent to the orders passed by the

WTM and AO of SEBI.

6. Although the charge sheets filed by CBI and the Enforcement

Department against Mr. Dipak Panchal do not conclusively establish that

the appellants were not involved in the offence, the said charge sheets

prima facie establish that Mr. Dipak Panchal had forged the signatures of 4

the appellants and consequently, support the argument of the appellants

that they were not involved in the offence committed by Mr. Dipak

Panchal.

7. Since the prima facie findings recorded in the charge sheet filed by

CBI and Enforcement Department, support the case of the appellants and

the WTM of SEBI as also the AO of SEBI had no occasion to consider

the aforesaid charge sheets, we deem it proper to quash and set aside the

impugned orders and remand the matters for fresh decision on merits and

in accordance with law.

8. Accordingly, we set aside the orders passed by the WTM and also

the AO of SEBI on February 25, 2011 and January 31, 2012 respectively

and restore both the matters to the file of the WTM of SEBI and AO of

SEBI respectively, for fresh decision on merits and in accordance with

law after giving personal hearing to the appellants. Appellants are at

liberty to tender additional documents, if any, before the WTM of SEBI

and AO of SEBI, within a period of two weeks from today. Thereupon,

the WTM and AO of SEBI shall issue fresh notice of hearing to the

appellants and thereafter, pass fresh orders in accordance with law. All

contentions on both sides are kept open.

9. Both appeals are disposed of in the above term with no order as to

costs.

Sd/-

Justice J.P. Devadhar Presiding Officer

Sd/-

Jog Singh Member 03.03.2016 Prepared & Compared By: PK