Munjal Investments v. SEBI

BEFORE THE SECURITIES APPELLATE TRIBUNAL MUMBAI

APPEAL NO.16/2000

In the matter of

Munjal Investments Appellant Vs. Securities & Exchange Board of India Respondent Appearance: Mr. Sanjay Munjal for Appellant Ms Poonam A Bamba Division Chief, SEBI Ms Sonia Soni Officer, SEBI for Respondent

ORDER

This appeal under section 15T of the Securities & Exchange Board of India Act, 1992 (the SEBI Act) is directed against the Respondent’s order made on 2.2.2000 under regulation 29(3) of the Securities and Exchange Board of India (Stock Brokers and Sub Brokers) Regulations, 1992 (the Regulations) whereby the Appellant's certificate of registration (INB 050459626) granted by the Respondent, was cancelled.

The Appellant is a member of Delhi Stock Exchange (DSE) holding a registration certificate issued by the Respondent permitting to carry on the activities of a broker in the capital market. It has been stated in the impugned order that against the Appellant, the Respondent had received a complaint alleging non-payment of sale proceeds of shares worth Rs.2.2 lakhs, and also default in repayment of the interest/deposit amounting to Rs.94 lakhs collected from the public through one Fauzia Financial Services (FFS). On receipt of the said complaint, the Respondent advised its Northern Regional Office (NRO) to look into the complaint and report the facts. DSE, of which the Appellant is a member, was also advised to examine the complaint and furnish comments with particular reference to the violation of Rules, Regulations and Byelaws of the exchange. On the basis of the feed back received from the NRO and DSE, the Respondent decided to make an enquiry under the Regulations, to ascertain the factual position, to their satisfaction. The enquiry officer appointed for the purpose concluded that the Appellant had collected deposits from the public violating the provisions of rule 8(I)(f) of the Securities Contracts (Regulation) Rules, 1957 read with article 25(I)(g) and 25(3)(f) of the Articles of Association of DSE, according to which a member was not to be engaged in the business of collection of deposits. He also concluded that the Appellant had closed down its office, denying access to the public from whom it had accepted deposit and defrauded them, attracting the provisions of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995. On the basis of the findings, the enquiry officer recommended cancellation of the certificate of Registration granted to the Appellant. Thereafter, the Respondent in terms of regulation 29(1) issued a show cause notice to the Appellant enclosing