Sanco Industries Ltd. vs Sebi
- CitationAppeal No.193 of 2017
Ratio decidendi
The rule this decision rests on
The Securities and Appellate Tribunal's reasoning rests on the proposition that a regulator's directions suspending trading in a company's securities and moving those securities to a restrictive surveillance stage, made without any investigation and without hearing the affected company, must be stayed where the company's annual turnover over the preceding three years, as shown in documents placed before the Tribunal, prima facie contradicts the basis on which the company was treated as a suspected shell company. A regulator's interim measure adverse to a listed company, founded solely on a communication from another government department and passed without hearing the company or conducting any investigation, is open to interim stay where the material before the forum prima facie displaces the factual premise of that measure. An interim stay of such a measure does not preclude the regulator or the exchanges from investigating the company and initiating proceedings, and the regulator remains bound to dispose of any representation made against the measure in accordance with law.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
BEFORE THE SECURITIES APPELLATE TRIBUNAL MUMBAI Date of Decision: 17-08-2017
Appeal No.193 of 2017 Sanco Industries Ltd. Regd. Office: 9/51, Bazar Gali, Vishwas Nagar, New Delhi - 110 032 ... Appellant
Versus
1.
Securities and Exchange Board of India SEBI Bhavan, Plot No.C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051.
2. National Stock Exchange of India Ltd.
Exchange Plaza, Plot No. C/1, G-Block, Bandra-Kurla Complex, Bandra (E), Mumbai - 400 051. ... Respondents
Mr. Prakash Shah, Advocate for the Appellant. Mr. Tomu Francis a/w Mr. Vivek Shah, Advocates for the Respondent No.1. None for Respondent No. 2.
CORAM : Justice J.P. Devadhar, Presiding Officer 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" 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 2
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.
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/-
Dr. C.K.G. Nair Member
17/08/2017 Prepared & compared by - dg
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