Sanjay Jethalal Soni vs Sebi

Date of Decision: 22.3.2021

Appeal No.263 of 2019

Sanjay Jethalal Soni 36, Malay Bungalows, Science City Road, Sola, Ahmedabad-380001- Gujarat ...Appellant

Versus

Securities and Exchange Board of India SEBI Bhavan, Plot No.C-4, "G" Block, Bandra Kurla Complex, Bandra (E), Mumbai 400051. ...Respondent

Mr. Nishant Upadhyay, Advocate i/b. Ms. Jyoti Pandey, Advocate for the Appellant.

Mr. Kumar Desai, Advocate with Mr. Nishit Dhruva, Mr. Chirag Bhavsar and Ms. Vidhi Shah, Advocates i/b. MDP & Partners for the Respondent.

CORAM: Justice Tarun Agarwala, Presiding Officer Dr. C.K.G. Nair, Member Justice M.T. Joshi, Judicial Member

Per : Justice Tarun Agarwala, Presiding Officer (Oral)

1.

We have heard Mr. Nishant Upadhyay, Advocate for

the Appellant and Mr. Kumar Desai, Advocate assisted

by Mr. Nishit Dhruva, Mr. Chirag Bhavsar and Ms.

Vidhi Shah, Advocates for Respondent. 2

2. The present appeal has been filed against the order

dated 22nd January, 2019 passed by the Adjudicating

Officer imposing a penalty of Rs.15 lakhs upon the

appellant under section 15A of the Securities and

Exchange Board of India Act, 1992 (hereinafter

referred to as the „SEBI Act‟) for failure to furnish

information/documents under section 11C(2) and

11C(3) of the SEBI Act.

3. The facts leading to the filing of the appeal is, that

the investigating authority issued an email dated 6th

April, 2016 asking for following information.

1. Nature of your occupation/business and details of your annual returns for last 2 financial years.

2. What was the basis or reasoning behind circulation of such SMS?

3. Kindly mention the name of person/source through which such news was received by you and details of consideration received by you.

4. Your relationships/connections whether personal, financial or otherwise, with the promoters or directors of the company viz. Timbor Home Limited.

5. Details of your trading in the captioned scrip as well as other scrips.

3

6. Your relationship with the following:

a. Anant Sureshchandra Maloo b. Maloo Building Materials P. Ltd.

c. Manan Vidhyapati Patel d. Abhijeet Dwarkadas Daga

4. It transpires that the appellant vide email dated 12th

April, 2016 furnished the following information.

"This is in respect to your letter received wrt trading in the matter of TIMBOR HOME LIMITED I would like to state that we are not connected or known to any of the persons or directors or promoters of the company. We had received some information that the company was expanding and opening new showrooms and some research analysts had also suggested in the business new channels. We and our clients had bought the stocks and all our targets had been achieved and all our clients exited from the stock.

And would provide you the financial details and the trading details of the 2 years shortly."

5. Thereafter, the investigating authority issued

summons dated 28th April, 2016, 12th May, 2016, 10th

August, 2016 and 22nd August, 2016 requiring the

appellant to furnish the aforesaid information and in

addition to the above asked for certain more 4

information and documents which are extracted

hereunder.

1. Nature of your occupation/business and details of your annual returns for last 2 financial years.

2. What was the basis or reasoning behind circulation of such SMS?

3. Kindly mention the name of person/source through which such news was received by you and details of consideration received by you for circulation of such SMS (Supported by appropriate evidences/proof).

4. Number of persons to whom such SMS was being sent by you.

5. Are you registered with SEBI as Research Analyst or in any other capacity?

6. Your relationships/connections whether personal, financial or otherwise, with the promoters or directors of the company viz. Timbor Home Limited.

7. Details of your trading in the captioned scrip as well as other scrips.

8. Your relationship with the following:

a. Anant Sureshchandra Maloo b. Maloo Building Materials P. Ltd.

c. Manan Vidhyapati Patel d. Abhijeet Dwarkadas Daga

6. The aforesaid summonses were not replied by the

appellant and, consequently, adjudication proceedings 5

were initiated against the appellant for the purpose of

imposing penalty under section 15A of the SEBI Act.

7. The appellant appeared and filed his reply and,

thereafter, the impugned order was passed imposing a

penalty of Rs.15 lakhs.

8. The contention of the learned counsel for the

appellant is that whatever information was sought for

by the respondent vide email dated 6th April, 2016 was

duly provided by the appellant vide emailed dated 12th

April, 2016 and since the same information was sought

by the investigating authority vide their subsequent

summons the appellant did not think it fit to reply since

the relevant information had already been provided.

9. It was also alleged that the appellant cannot be

compelled to provide documents and in support of his

submissions has relied upon Article 20(3) of the

Constitution of India.

10. Having heard the learned counsel for the appellant at

some length, we find that there has been a complete

failure on the part of the appellant to provide the 6

information under section 11C(2) and 11C(3) of the

SEBI Act. Consequently, penalty was rightly imposed

under section 15A of the SEBI Act. In this regard

provision of section 15 A is extracted hereunder.

"Penalty for failure to furnish information, return, etc.--

15A. If any person, who is required under this Act or any rules or regulations made thereunder,--

(a) to furnish any document, return or report to the Board, fails to furnish the same, he shall be liable to a penalty which shall not be less than one lakh rupees but which may extend to one lakh rupees for each day during which such failure continues subject to a maximum of one crore rupees."

11. A perusal of the aforesaid provisions makes it clear

that in the event there is a failure to furnish relevant

information and documents then the authority could

impose. The appellant in the instant case argued that a

reply was given vide email dated 12th April, 2016. We

find from a reading of the said email that the reply was

totally evasive and did not answer or provide the

documents as sought by the respondent. Further, we

find from the subsequent summons that additional 7

information and documents sought for was never

given. Consequently, we are of the opinion that

"failure to furnish information" would include within

its ambit partial information or incomplete information

or incorrect information supplied by the appellant.

12. The contention that the appellant cannot be

compelled to furnish information and documents in

view of the mandate given in Article 20(3) of the

Constitution of India is patently misconceived. The

said provision has no application in the instant case.

An analysis of Article 20(3) would show three things,

namely, that the protection is available only to a person

accused of an offence. Secondly, the protection is

against compulsion to a witness and lastly, this

protection avails against himself. In our opinion, none

of these ingredients exists. The appellant has only been

asked to provide certain information and documents.

The contention raise is rejected. 8

13. In the light of the aforesaid, we do not find any

error in the impugned order. The appeal fails and is

dismissed with no order as to costs.

14. The present matter was heard through video

conference due to Covid-19 pandemic. At this stage it

is not possible to sign a copy of this order nor a

certified copy of this order could be issued by the

registry. In these circumstances, this order will be

digitally signed by the Private Secretary on behalf of

the bench and all concerned parties are directed to act

on the digitally signed copy of this order. Parties will

act on production of a digitally signed copy sent by fax

and/or email.

Justice Tarun Agarwala Presiding Officer

Dr. C.K.G. Nair Member

Justice M.T. Joshi Judicial Member RAJALA Digitally by signed

22.3.2021 KSHMI NAIR RAJALAKSHMI H

Date: 2021.03.24 RHN H NAIR 10:50:44 +05'30'