Case Law Details
DKG Buildcon Private Ltd. Vs Adjudicating & Enquiry Officer, SEBI (Supreme court of India)
Investigation by SEBI which had concluded that the appellants and other entities were involved in aiding and abetting Ketan Parekh and his companies in rigging the securities market in the years 2000 and 2001 had not been challenged, at any point, by the appellants. Thus, the relevant order of SEBI had attained finality. The said investigation had found that the appellants were involved in certain unauthorized transfer of shares starting from the allotment of shares of STIL to various people including Ketan Parekh’s entities through a web of transfers which could virtually wreck the integrity of the securities market, undermine the system and provide for a fertile ground to wangle unfair gains. The investigation had also concluded that the appellants had played a role in facilitating such activities by manipulating the market, and this finding of guilt remains unchallenged by the appellants and is thus admitted.
As has been rightly observed by the SAT in its Order dated 07.01.2009, non-furnishing of information by the appellants in compliance of summons cannot be viewed lightly, particularly, when the appellants were involved in offences of such a grave nature being detrimental to the interest of genuine investors and to the smooth and secure functioning of the securities market. While the appellants have submitted that they had responded to the summons dated 02.07.2001 and 26.07.2001 respectively and had furnished the information and documents as required therein, it has already been held that the summons dated 01.04.2003 and 09.04.2003 respectively were issued as separate fresh directions to the appellants. By not responding to the said fresh summons and by not appearing before the Investigating Authority when directed to appear, the appellants’ statements could not be recorded and this has hampered with the investigation. The appellants had failed to produce the documents and information as required vide summons dated 01.04.2003 and 09.04.2003 respectively and had, thus, affected the conduct of the investigation. The appellants’ compliance, if any, to one summons dated 02.07.200 1 and 26.07.2001 respectively, in no way, absolves the appellants of their responsibility to comply with the summons issued thereafter on multiple dates. The appellants were bound to fully co-operate with the Investigating Authority and promptly produce all documents, records, and information as were required for the investigation from time-totime. In failing to do so, the appellants clearly obstructed and hindered the investigation.
- Taking into consideration the severity of offences found to have been committed by the appellants and other entities, and the noncooperative attitude of the appellants during the course of the investigation in attempting to obstruct the same, the quantum of penalty imposed under Section 15A(a) of the 1992 Act is justified and with effective consideration of the factors listed in Section 1 5J of the 1992 Act.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
