Sumangal Industries Limited & Ors. vs Sebi
- CitationAppeal No. 75 of 2016
Ratio decidendi
The rule this decision rests on
A recovery certificate issued by the Recovery Officer of SEBI, pursuant to a Tribunal order that had recalled an earlier extension of time for compliance and authorised SEBI to enforce the underlying directions, cannot be impugned on the ground that the quantified sum lacks basis or was fixed without a hearing, where the appellant has not established before the Recovery Officer that the amounts claimed to have been refunded were in fact paid to the investors concerned. The burden lies on the person resisting enforcement to establish, before the Recovery Officer, payment or refund of the sums in question; where that is not done, the Recovery Officer is entitled to issue the recovery certificate for the full amount collected from investors together with returns and costs, and an appellant who has not first pursued that route is not justified in approaching the Tribunal.
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: 21.04.2016 Misc. Application No. 51 of 2016 And Appeal No. 75 of 2016 1.
Sumangal Industries Limited
2. Subrata Adhikary
3. Madhumita Adhikary
4. Somnath Adhikary
5. Gopal Chandra Adhikary
6. Sarbani Adhikary
7. Astick Umar Roy
8. Debika Adhikary
Room No. 8, 10th Floor, Room No. A11 & 12, 20th Floor, Chatterjee International Centre, 33A, J. L. Nehru Road, Kolkata - 700 071 ... Appellants Versus
1. Securities & Exchange Board of India L&T Chambers, 3rd Floor, 16, Camac Street, Kolkata-700 017
2. Reserve Bank of India RBI, Kolkata-700 001
3. National Securities Depository Limited Trade World, A-Wing, 4th & 5th Floor, Kamala Mills Compound, Lower Parel, Mumbai- 400 013
4. Central Depository Services (India) Limited 17th Floor, P.J. Towers, Dalal Street, Fort, Mumbai- 400 001
5. DG, West Bengal Police Bhabani Bhaban, Kolkata -700 027
6. Commissioner of Police, Kolkata Lal Bazar, Police Head Quarter, Kolkata-700 001
7. Somnath Dhar 58/1, Patua Tala Lane, Kolkata- 700 007 2
8. Anup Dutta C/o. 58/1, Patua Tala Lane, Kolkata-700 007
9. Jagjit Sing Rana House No.89, Sector-15, Sonepat, Haryana-131 001
10. Haryana Agriculture Marketing Board Mandi Bhavan, C-6, Sector 6, Panchkula, Chandigarh-160 172
11. D.S. Trading Prop. Dalbir Sing Siddharta Enclave, Opp. Power House, Delhi Road, Sonepat-131 001
12. Samrat Hotel, Unit of ITDC 50-B, Kautilya Marg, Chanakyapuri, New Delhi-110 021
13. Atul Rana House No.89, Sector -15, Sonepat, Haryana-131 001
14. Anand Suman Sing House No.89, Sector -15, Sonepat, Haryana-131 001
15. Siddharta Karnany 20th Floor, CIC, Kolkata-700 071
16. Arun Kumar Karnani 20th Floor, CIC, Kolkata-700 071
17. Sunil Kedia 9th Floor, CIC, Kolkata-700 071
18. Harsa Bardhan Ground Floor, CIC, Kolkata-700 071 3
19. Biswanath Bhattacharya 19th Floor, CIC, Kolkata-700 071
20. South City Projects Kolkata Ltd.
375, Prince Anwar Saha Road, Kolkata-68
21. Mukund Hospitality Pvt. Ltd.
1st Floor, 59D, Chowringhee Road, Kolkata-20
22. Amar Traders & Finance Co. Ltd.
10, Raja Subodh Mallick Square, Kolkata -13
23. Anukul Cold Storage Pvt. Ltd.
Bhabanandapur, Block-II, Kalna, PO Goda Ananda, Dist. Burdwan-713 409
24. Domkal Cold Storage Pvt. Ltd.
Juginda Biswas Para, Jiginda Domkal, Murshidabad-742 303
25. United Bank of India UBI, Chowringhee Branch, 50, J.L. Nehru Road, Kolkata-71
26. State Bank of India SBI, Burdwan Main Branch, Court Compound, Burdwan-713 101 ... Respondents
Mr. Subrata Adhikary, Authorized Representative for Appellants.
Mr. Anubhav Ghosh, Advocate i/b The Law Point for Respondent No. 1.
Ms. Faiza Dhanani, Advocate i/b Dhruve Liladhar & Co. for Respondent No. 20.
None for Respondent Nos. 2 to 19 & 21 to 26.
CORAM: Justice J.P. Devadhar, Presiding Officer Jog Singh, Member Dr. C.K.G. Nair, Member 4
Per: Justice J.P. Devadhar (Oral)
Misc. Application No. 51 of 2016 In Appeal No. 75 of 2016
In view of the fact that the appellant had paid the Court Fees in
Appeal No. 09 of 2016 and the said Appeal was allowed to be withdrawn
with liberty to file fresh appeal we waive the Court Fees payable in the
present appeal.
Miscellaneous Application is disposed of accordingly.
Appeal No. 75 of 2016
1. Appellants have filed this appeal to challenge the Recovery
Certificate issued by the Recovery Officer of Securities and Exchange
Board of India ("SEBI" for short) on 02.06.2015. By the said certificate
the appellants are inter alia directed to pay ` 85 crore along with returns
due to investors, along with further interest, all costs, charges and
expenses incurred in respect of all the proceedings taken for recovery of
the said sum.
2. The above Recovery Certificate arises from the order passed by the
Whole Time Member ("WTM" for short) of SEBI on 09.07.2013. By the
said order the appellants were inter alia called upon to wind up the
existing Collective Investment Schemes ("CIS" for short) and refund the
money collected by the company under the schemes with returns which
are due to its investors as per the terms of offer within the period set out
therein.
5
3. Challenging the order of WTM dated 09.07.2013, appellants had
filed an appeal before this Tribunal Bearing Appeal No. 210 of 2013.
When the said appeal was taken up for hearing, counsel for the appellants
submitted that the appellants have already started implementing the order
dated 09.07.2013 and sought extension of time to pay the balance amount
to the investors. Accordingly, by an order dated 03.02.3014 the appeal
was disposed of by extending the time to implement the order dated
09.07.2013 till 31.01.2015 subject to the conditions set out therein.
4. Since the appellants failed to comply with the conditions set out in
the impugned order, SEBI moved a Miscellaneous Application for
modification of the order passed by this Tribunal on 03.02.2014 in
Appeal No. 210 of 2013.
5. Advocate of the appellants opposed the Miscellaneous Application
by inter alia contending that out of the total collected amount of ` 85
crore, more than ` 35 crore has already been refunded to the investors
and that due to circumstances beyond control the appellants are not in a
position to comply with the directions given in the order dated
03.02.2014.
6. Rejecting the aforesaid contentions, this Tribunal by order dated
12.09.2014 recalled the order dated 03.02.2014 and permitted SEBI to
take such steps as it deems fit and proper so as to enforce the order
passed by the WTM of SEBI on 09.07.2013. Accordingly, the Recovery 6
Officer of SEBI has issued the impugned Recovery Certificate dated
02.06.2015.
7. Challenging the impugned Recovery Certificate, the appellants had
filed Appeal No. 9 of 2016, which appeal at the request made by the
representative of appellants was allowed to be withdrawn with liberty to
file fresh appeal. Accordingly, the present appeal is filed.
8. Representative of the appellants submitted that the amount
quantified in the Recovery Certificate is without any basis and that the
said amount has been determined without giving an opportunity of
hearing to the appellants and any hearing offered after issuance of the
Recovery Certificate is meaningless.
9. We see no merit in the above contentions. Fact that the appellants
had collected ` 85 crore from the investors is not in dispute. In fact, in
our order dated 12.09.2014 we have recorded the statement made by the
advocate for the appellants that out of the total collected amount of ` 85
crore, more than ` 35 crore have already been refunded to the investors.
However, as the appellants failed to establish that ` 35 crore has been
paid to the investors, we had recalled our order dated 03.02.2014.
10. In these circumstances, no fault can be found with the Recovery
Officer of SEBI in issuing the impugned Recovery Certificate. If the
appellants have paid any amount to the investors, then it is open to the
appellants to satisfy the Recovery Officer that the refunds have been
made to those investors from whom the amounts were received. Without 7
establishing before the Recovery Officer that refunds to the extent of
` 35 crore have already been made, the appellants are not justified in
approaching this Tribunal.
11. In the result, the appeal is dismissed with no order as to costs.
Sd/-
Justice J.P. Devadhar Presiding Officer
Sd/-
Jog Singh Member
Sd/-
Dr. C.K.G. Nair Member 21.04.2016 Prepared & Compared By: PK
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