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Indo Biotech Foods Ltd. versus Securities & Exchange Board of india

    Appeal No. 169/2003
    Decided On, 22 July 2004
    At, SEBI Securities Exchange Board of India Securities Appellate Tribunal
    By, DR. B. SAMAL
    By, MEMBER
    By, MEMBER
    Appellant – Represented by S/Shri B.P. Colabawala & M.B. Madekar, Advocates. Respondent – Represented by Shri Kumar Desai, Advocate

Judgment Text
Per: N.L. Lakhanpal, Member

1. This is an appeal against orders dated 10.10.2003 passed by Shri G.N. Bajpai, Chairman of Securities & Exchange Board of India (SEBI) directing S/Shri Dilip Dahanukar, Java H. Haresh, Save P. Ganesh and G.C. Bapna to disassociate themselves from the securities market for a period of five years and not to deal in securities in any manner whatsoever for a period of five years.

2. SEBI had received complaints against the appellant company from investors and as on 31.3.2002 a total of 108 unresolved investor grievances were pending with the company. The company was therefore invited for discussions with SEBI officials in connection with the redressal of these grievances. According to SEBI, when the company failed to respond, a formal order was passed by the respondent after issuing a formal show cause notice directing the company to redress all these grievances within a period of one month. Since the grievances still remained unredressed, a personal hearing was fixed for 31.5.2003. When the company sought an adjournment, the date for personal hearing was shifted to July 9, 2003 and the company again failed to appear before the respondent. The impugned order thereupon came to be passed against the appellant because it was noticed that as on 27.8.2002 a total of two investor grievances had remained unredressed. Being aggrieved, the appellants have filed the present appeal.

3. At the time of hearing, the learned counsel for the appellants submitted that the lists of outstanding investor grievances were indeed received by them from the respondent from time to time but that all these grievances were attended to by the appellant with due promptitude. These complaints were in the nature of routine servicing of investors such as non-receipt of transferred share certificates, enquiries about declaration of dividends etc. Even in respect of the two outstanding grievances mentioned in the impugned order, the learned counsel made a categorical statement before us that there were absolutely no investor grievances pending with them either on the date of the order or even till today and that if there be any such complaints pending with any authority the company would attend to the same to the full satisfaction of the investors within the shortest possible time. Regarding the non-appearance before the respondent on 31.5.2003 and 9.7.2003, the appellants have contended that they had indeed sought an adjournment vide their letter dated 23.5.2003 as mentioned in the impugned order but that their request had been rejected by the respondent vide SEBI letter dated 27.5.2003. In support of this contention, they have annexed the two letters to the memorandum of appeal. It is in the appellant’s submission that the hearing took place as scheduled on 31.5.2003, that they participated in the proceedings and that they explained to the respondent that all the investor grievances received by them through SEBI had been redressed by them. In the circumstances, they have expressed at the statement in the impugned order to the effect that they remained absent on the fresh date of hearing on 9.7.2003 about which they were informed vide letter dated 23.6.2003. The appellants have denied any knowledge of any such letter. Lastly, the appellant argued that lack of application of mind was also evident from the fact that G.C. Bapna against whom the order was directed had never been a director of the company and had nothing to do with it. There was no specific rebuttal of these contentions by the respondent beyond stating that unresolved investor grievances need to be taken very seriously.

4. There can be no two opinions about the fact that every investor grievance must be dea

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lt with promptly and effectively. However, in view of the facts of the case, we are in agreement with the learned counsel for the appellant that the action taken by the respondent is totally disproportionate to the alleged misdemeanor by the company or by any of its directors. We have therefore no alternative before us except to set aside the impugned order. The impugned order is accordingly set aside. No order as to costs.