Vipin Sharma vs Sebi

Date of Decision: 06.02.2020

Misc. Application No. 50 of 2020 And Appeal No. 58 of 2020

Vipin Sharma 101, Dariya Mahal (A), 80, Nepean Sea Road, Mumbai- 400 006 ...Appellant

Versus

Securities and Exchange Board of India, SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051 ...Respondent

Dr. Mr. S. K. Jain, Practicing Company Secretary for the Appellant.

Mr. Shyam Mehta, Senior Advocate with Mr. Mihir Mody and Mr. Shehaab Roshan, Advocate i/b K. Ashar & Co. 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 (Oral)

ORDER:

1. The present appeal has been filed against the order dated

September 30, 2019 passed by the Whole Time Member 2

("WTM for convenience) of Securities and Exchange Board of

India ("SEBI" for convenience) under Sections 11, 11B and 19

of the SEBI Act, 1992. Through this order the company

M/s Chromatic India Limited was restrained from accessing the

securities market including issuance of prospectus, offer

document etc. for a period of 5 years and the directors were

restrained from accessing the securities market and prohibited

from buying, selling or otherwise dealing in securities market

for specified period as contained in the order. The appellant

was restrained from accessing the securities market for a period

of 1 year.

2. There is a delay of 7 days in the filing of the appeal and

accordingly an application has been filed for condoning the

delay. The ground urged is, that the impugned order is an ex-

parte order in as much as the appellant was never served with

any show cause notice nor was given any opportunity to file a

reply to the show cause notice. Since the issue involved in the

disposal of the Misc. Application and on the merits was the

same, we had directed the respondent by our order dated

January 29, 2020 to file a reply. The reply filed indicates that

the appellant was never served with the show cause notice 3

accordingly the delay is condoned. The Misc. Application is

allowed.

3. We find that the appellant was a director in the company

and had resigned on September 29, 2010 and the same was

communicated to the Registrar of Companies on October 22,

2010. The residential address of the appellant which is reflected

in Form 32 before the Registrar of Companies indicates as

under:-

"101, Dariya Mahal (A) 80, Nepean Sea Road, Mumbai Maharashtra India- 400 006"

4. On the other hand, the show cause notice was sent to the

appellant was sent to the corporate address of the company at

501, Maker Chamber V, 221, Nariman Point, Mumbai- 400 021.

5. The fact that the appellant had resigned on September 29,

2010 has not been denied by the respondent in their reply.

Consequently, it is a clear case where the appellant was not

served with the show cause notice. In the absence of the service

of the show cause notice the entire proceedings are vitiated. 4

6. For the reasons stated aforesaid, the impugned order

cannot be sustained in so far as the appellant is concerned on

account of non-service of the show cause notice. We

accordingly allow the appeal and direct the appellant to appear

before the Whole Time Member of Securities and Exchange

Board of India on February 20, 2020 on which date the

appellant would be served with the show cause notice and, from

there onwards, the WTM would proceed in accordance with

law.

Sd/-

Justice Tarun Agarwala Presiding Officer

Sd/-

Dr. C.K.G. Nair Member

Sd/-

Justice M. T. Joshi Judicial Member 06.02.2020 Prepared & Compared By: PK