Appeal Nos. 68 and 70 of 2014. Case: Vilas Valunji Vs Securities and Exchange Board of India. Securities and Exchange Board of India

Case NumberAppeal Nos. 68 and 70 of 2014
CounselFor Appellant: None and For Respondents: Kumar Desai and Pratham V. Masurekar, Advocates
JudgesJog Singh, Member
IssueAdministrative Law
Judgement DateSeptember 05, 2014
CourtSecurities and Exchange Board of India


Jog Singh, Member

  1. These two appeals were heard by a Division Bench of this Tribunal consisting of Hon'ble Presiding Officer (PO) Shri Justice J.P. Devadhar and Hon'ble Member Shri A.S. Lamba and were disposed of on the same date i.e. on June 20, 2014 by a common order. Whereas, Hon'ble PO in his order held that the two impugned orders dated January 20, 2014 were liable to be quashed and set aside on the ground that there was no effective service on the Appellants, and as such, a valuable right of Appellants of being heard before the impugned orders were passed against the Appellants had been violated. The matter was, therefore, remanded to SEBI to hold an enquiry after issuing Show Cause Notices (SCNs) to the Appellants afresh at the address given by them in accordance with the rules and pass orders on merit as per law after giving an opportunity of hearing to the Appellants. It is pertinent to note that the impugned order in both the appeals were quashed and set aside by the Hon'ble PO with the consent of the learned counsel for the Respondent. On the other hand, Hon'ble Member held that proper service was effected by SEBI on the Appellants as per SEBI (Manner of Service of Summons and Notices issued by Board) Amendment Regulations, 2007 ('Regulations 2007') and hence the impugned order of SEBI could not be interfered with on the ground of non-service of SCNs to the Appellants even though the same were passed ex parte against the Appellants and as such the appeals were dismissed.

  2. The original Respondent i.e. SEBI, however, found that the Regulations referred to and relied upon by Hon'ble Member i.e. Regulations of 2007 were not applicable in the facts of the case as the enquiry was conducted by an Adjudicating Officer (AO) who is an independent and quasi-judicial authority and is governed by SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 ('Rules of 1995'). The Regulations of 2007 will apply only when the Board decides to take cognizance of a case. As such, the AO is obliged to conduct inquiry proceedings against persons as per Rules of 1995.

  3. SEBI, therefore, has moved two Review Applications in the matter which were disposed of by order dated August 18, 2014 by referring the matter to the undersigned for fresh hearing of the appeals. Accordingly, notices were issued to the parties and the two appeals have been heard today.

  4. There is no appearance on behalf of the...

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