BEFORE THE SECURITIES APPELLATE TRIBUNAL MUMBAI
Appeal No. 75 of 2007
Date of decision: 30.6.2008
Karvy Stock Broking Limited …… Appellant
Versus
Securities and Exchange Board of India …… Respondent
Mr. Navroz Seervai Senior Advocate with Mr. Shyam Mehta and Mr. Vinay Chauhan Advocates for the Appellant.
Mr. J. J. Bhatt Senior Advocate with Mr. Shiraz Rustomjee and Mr. Anant Upadhyay Advocates for the Respondent.
Coram: Justice N.K. Sodhi, Presiding Officer
Arun Bhargava, Member
Utpal Bhattacharya, Member
Per: Justice N.K. Sodhi, Presiding Officer (Oral)
This order will dispose of three Appeals no.75, 111 and 153 of 2007 in which common questions of law and fact arise and they are all directed against the order dated June 22, 2007.
We have heard the learned senior counsel on both sides who have taken us through the record and the impugned orde r running into more than 190 pages. Appeals no.75 and 111 of 2007 have been filed by Karvy Stock Broking Limited whereas Appeal no.153 of 2007 is filed by Ka rvy Computershare Pvt. Ltd., which is a group company. A common show cause notice was issued to the appellants herein specifying therein the alleged irregular ities committed by Karvy Stock Broking Limited as a stock broker and also as a Depository Participant (DP). Karvy Computershare Pvt. Ltd. is a Registrar and Transfer Agent and the irregularities allegedly committed by it had also been men tioned in the same show cause notice. The appellants filed three separate replies and the respondent Board conducted three separate enquiries. One enquiry was held against Karvy Stock Broking Limited as a stock broker and another in regard to the alleged irregularities as a DP. On receipt of three separate enquiry repor ts holding the appellants guilty, the learned wholetime member of the Board issued separate show cause notices to the appellants furnishing to them a copy of the enquiry report in each case. It is thereafter that the wholetime member by a composite order which is im pugned in these appeals found that the allegations and charges levelled against the appellants stood established. Having carefully gone through the impugned order we find that the wholetime member has recorded common findings against Karvy Stock Broking Limited both as a stock broker and also as a DP and we feel that it would have been more appropriate to record separate findings against this appellan t in regard to its role as a stock broker and also as a DP. During the course of the hearing, we put it to the learned senior counsel on both sides that we remand the matter to the respondent Board with a direction to pass separate orders in regard to the violations emanating from the initial show cause notice issued by the enquiry offi cer. On seeking instructions from their respective clients, they are agreed that the impugned order be set aside and the cases be remanded back to the Board for passing fresh orders.
In this view of the matter we allow the appeals, set aside the impugned order dated June 22, 2007 and remand the cases to the respondent Board with a direction to pass three separate orders on the three show cause notices issued by the learned wholetime member. It is, however, made clear that while passing the fresh orders the wholetime member shall take into account on ly the material that is already on the record and will not permit either party to produce any fresh material or file fresh replies or written submissions. He will, however, grant a fresh oral hearing to the parties and take into consideration the repl ies and written submissions already filed. The parties will however be at liberty to cite case law in support of their respective submissions. The wholetime member while passing the fresh orders shall not be influenced by any observation or finding r ecorded in the impugned order. We also make it clear that we have not decided a ny issue on merits and, therefore, all the issues raised by the parties remain open to be decided afresh by the learned wholetime member in accordance with law. In case the final order(s) were to go against the appellant(s), the same shall not be given effect to for a period of four weeks from the date of receipt thereof by the appellant(s). This order shall not preclude the appellant(s) to apply for a consent order to the respondent Board and in case such an application is filed, the sa me shall be heard and disposed of in accordance with law. There is no order as to costs.
Sd/-
Justice N. K. Sodhi
Presiding Officer
Sd/-
Arun Bhargava
Member
Sd/-
Utpal Bhattacharya
Member
30.6.2008
pw
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