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Parul Jitendra Shah v/s Securities & Exchange Board of India SEBI Bhavan & Others

    Appeal No. 451 of 2019
    Decided On, 02 May 2022
    At, SEBI Securities amp Exchange Board of India Securities Appellate Tribunal
    For the Appellant: Harshit Patel, Advocate. For the Respondents: R1, Shyam Mehta, Senior Advocate, Abhiraj Arora, Anshu Mehta, Shourya Tanay, Harshvardhan Nankani, Advocates i/b ELP, R2, None, R3, Saurabh Bachhawat, Aditya Bhansali, Akshaya Bhansali, Utkarsh Mehrotra, Advocates, Nirali Mehta, Practicing Company Secretary.

Judgment Text
Tarun Agarwala, Presiding Officer

1. The appellant has filed the present appeal challenging the correctness of the order dated May 15, 2019 by which the representation of the appellant was rejected.

2. The facts leading to the filing of the present appeal is, that the respondent nos. 3 Lux Industries Ltd. came out with an Initial Public Offer (IPO) in the year 2003. The appellant applied and was allotted 1000 shares vide allotment letter dated October 13, 2003. The allotment letter indicated that the appellant had paid Rs. 15,000/- while applying for the allotment of the shares and that the balance amount of Rs. 35,000/- was required to be paid on or before November 15, 2003. It was also stated that the failure to pay the amount or before the due date would entail interest of 18% p. a. and that the allotment would also be liable for cancellation and forfeiture of the amount already paid.

3. The record indicates that the company made a first call on April 7, 2004 and the second call on June 1, 2004, in spite of which the appellant did not pay the balance amount. The record also indicates that the board of directors in its meeting of June 24, 2006 approved the forfeiture of shares with respect to those who has failed to pay the allotment / call money due on the shares. Pursuant to the said decision, the company had written letters dated Aril 7, 2004, June 11, 2004 and April 10, 2006 giving last opportunity to the defaulting investors to pay the arrears of the allotment money failing which the shares would be forfeited. Not only this, company also published a public notice in various newspapers in 2007 and thereafter a forfeiture notice was also issued.

4. After 13 years, the appellant makes a representation dated May 16, 2016 expressing interest to pay the call money. The company vide letter dated May 30, 2016 informed that the alleged shares were forfeited in the year 2007 on account of non-payment of the balance amount.

5. It transpires that the appellant thereafter wrote various complaints to the Ministry of Corporate Affairs, to SEBI, etc. and thereafter filed Writ Petition No. 13911 of 2019 before the Hon’ble High Court of Gujarat at Ahmedabad. The Hon’ble High Court by an order dated March 14, 2019 disposed of the Writ Petition directing the appellant to make a detailed representation before SEBI who shall take a decision and communicate the same to the appellant. Based on the said direction, the representation dated April 9, 2019 was made which was disposed of by the impugned order.

6. The contention of the appellant that she had not received any call money notice and accordingly payments were not made. It was contended that the company is saddled with the duty to issue notice by the registered post with regard to call notice and with regard to notice for forfeiture which has not been done. No proof has been filed to show that call notice was served upon the appellant. It was further contended that the delay in making a representation was on account of unavoidable circumstances. It was urged that on account of family problem, the allotment letter came to the notice of the appellant only in the year 2016, based on which the letter dated May 16, 2016 was issued.

7. Having heard the learned counsel for the appellant, we find that there has been an inordinate delay on the part of the appellant in raising her claim for allotment of the shares. No cogent explanation whatsoever has been given as to why she could not take steps to pay the balance amount towards the allotment money. We find that no steps were taken from 2003 to 2016 and, after 13 long years, a representation was made praying that the appellant is willing to pay the call money alongwith the due interest.

8. We are of the opinion that in the absence of any cogent reason, no relief can be granted on account of the inordinate delay made on the part of the appellant in asserting her rights. We are further satisfied that the company who took all necessary steps issuing the reminders to the appellant to pay the balance amount which was followed by publication and notice of forfeiture. We also find that the shares were forfeited in 2007. Consequently, we do not find any illegality committed by the company in f

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orfeiting the shares. The representation was rightly disposed of by SEBI and we do not find any reason to interfere in the impugned order. The appeal fails and is dismissed with no order as to costs. 9. This order will be digitally signed by the Private Secretary on behalf of the bench and all concerned parties are directed to act on the digitally signed copy of this order. Certified copy of this order is also available from the Registry on payment of usual charges.