BEFORE THE SECURITIES APPELLATE TRIBUNAL MUMBAI

Date of Decision: 22.7.2019
Appeal No.202 of 2019

1. Life Care Real Developers Limited
306, 3rd Floor, Vardhman City-2,
Plaza Asaf Ali Road Delhi-110002.

2. Arshad Hussain
Vill. DurgaMandir Road, Bhatpar Rani,
Near Gramin Bank Ke Pas, Bhatpar Rani,
Deoria – 274702, Uttar Pradesh.

3. Mohammed AftabAlam
DhanouziKhurd, Fajil Nagar,
Deoria-274001, Uttar Pradesh.

4. Mohd. Gani
66 Mehrauna, Salempur,
Dist. Deoria, 274702, Uttar Pradesh.

5. Shiba Pravin
DurgaMandir Road, Bhatpar Rani,
Deoria-274702, Uttar Pradesh.

6. Mohd. Seraj Lari
56 KHA, BasiyanVadar No-09 Khanda 1,
Khanda 1, Bans, Devariya-274001,
Uttar Pradesh.

7. Rajneesh Chandra Shukla
629/6, Govindpuri, Kalkaji,
New Delhi – 110019. … Appellants

Versus


Ld. Adjudicating Officer
Securities and Exchange Board of India
SEBI Bhavan, Plot No.C-4A, G Block,
Bandra Kurla Complex, Bandra (East)
Mumbai-400051. … Respondent

Mr. Saurabh Bachhawat, Advocate with Mr. Jitendra Sharda, Advocate i/b. Mindspright Legal for the Appellants.

Mr. Shyam Mehta, Senior Advocate with Mr. Mihir Mody and Mr. Sushant Yadav, Advocates 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)

1.The facts leading to the filing of the appeal is that the appellants had raised capital for its business requirements through issuance of Redeemable Preference Shares (RPS). Since the provisions of the Companies Act, 1956 were violated Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) in exercise of the powers granted under Section 11 and 11B of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as ‘SEBI Act’) passed an order dated December 9, 2015 directing the appellants to jointly and severally refund the monies collected from the investors.

2.The appellants filed an appeal before this Tribunal which was disposed of on the basis that the appellants would repay the balance amount in installments by making an application to SEBI. For facility, the order of the Tribunal dated 25th October, 2016 is extracted hereunder:

“1. This appeal is basically filed to challenge the order passed by the Whole Time Member (“WTM” for short) of
Securities and Exchange Board of India (“SEBI” for short) on 9th December, 2015. By the said order, appellants are jointly and severally directed to refund the moneys collected by the appellant No.1-company through issuance of the redeemable preference shares to the investors. Counsel for the appellants fairly states that in
compliance of the aforesaid order, appellants have already refunded approximately Rs.75 lakh to the investors and the appellants would like to repay the balance amount in installments by making an application to SEBI.

2. Accordingly, appellants are permitted to make an application to SEBI by 3rd November, 2016 setting out in
detail the modalities for refunding the balance amount to the investors. If such an application is made, SEBI shall consider the same and pass appropriate orders thereon.

3. It is made clear that if the appellants fail to submit an application within the stipulated time, then SEBI is at
liberty to enforce the impugned order as they deem fit.

4.Appeal is disposed of in the above terms with no order as to costs.

5. In view of the disposal of appeal, Misc. Application filed by the appellants becomes infructuous and is
accordingly disposed of as infructuous.”

3.It transpires that a proposal was made which was rejected by SEBI by an order of 16th March, 2017. It further transpires that a fresh proposal was again submitted.

4.In the meanwhile, because the balance amount was not been deposited recovery proceedings were initiated and a show cause notice was again issued to the show cause why an enquiry should not be held and penalty be not imposed under Section 15HB of the SEBI Act. The Adjudicating Officer passed an order dated 28th January, 2019 imposing a penalty of Rs.65 lakhs for not complying with the directions of SEBI order dated 9th December, 2015. The appellant being aggrieved by this order of penalty has filed the present appeal.

5.Having heard the learned counsel for the appellant we find that admittedly the order dated 9th December, 2015 as affirmed by the Tribunal by its order of 25th October, 2016 has not as yet been complied with till date. The balance amount has not been refunded to the investors. We also find that dilatory tactics are being adopted to scuttle the recovery proceedings in one way of the other. In this regard, in order to test the bonafides of the
appellant, this Tribunal by an order dated 27th June, 2019 had directed the appellants to deposit a sum of Rs.1.5 crores by 15th July, 2019 which was also not been done.

6.Considering the aforesaid and looking into the conduct of the appellants we find that there is willfull default and failure on the part of the appellants in not refunding the amount as per the order of the Tribunal dated 25th October, 2016.

7.Consequently, we do not find any manifest error in the impugned order. The appeal fails and is dismissed.

Sd/Justice Tarun Agarwala
Presiding Officer

Sd/Dr. C. K. G. Nair
Member

Sd/Justice M.T. Joshi
Judicial Member
22.7.2019
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