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2020 (9) TMI 1304 - AT - SEBIEx-parte interim order passed by WTM - illegal gains made using unpublished price sensitive information - directing the Appellant to deposit a sum in an escrow account in a Nationalised Bank towards - WTM further directed the Banks to freeze all debits to the extent of the above amount till such time the escrow account is opened and the amount is transferred and directed the depositories to suspend all debits and, therefore, restrained the Appellants from disposing or alienating any assets or properties till such time the amount is credited in the escrow account - Appellant contented that there was no urgency in passing an ex-parte order with regard to the trades done by the Appellants HELD THAT: In the instant case, we do not find that the matter is one of extreme urgency which requires passing of an ex-parte interim order. We find that the trades were done in the year 2017. Nothing has come on record as to when the Respondent became aware of these transactions. However, we find that the proceedings were initiated in February, 2019 which continued till 11th March, 2020 and, thereafter, it took the Respondents another 4 months to pass the impugned order. This by itself indicates that there was no extreme urgency in passing the impugned order. We, therefore, are of the opinion that merely by arriving at a prima facie case that the Appellants were an insider as defined under the PIT Regulations, 2015 cannot be made the sole basis for passing the impugned order without considering the balance of convenience or irreparable injury. Only reason given for passing the interim order has been provided in para 34 of the impugned order namely that the illegal gains should be impounded otherwise it would result in irreparable injury to the interest of the securities market and investors. In our view, illegal gains are yet to be adjudicated and, therefore, in the absence of adjudication it will not be proper to impound the so called illegal gains especially when there is no assertion that the Appellants are disposing of the property in question or they are obstructing or delaying the proceedings. The impugned order in so far as it relates to the Appellants cannot be sustained and is quashed at the admission stage itself without calling for a reply except the show cause notice. The Appeal is allowed and the Misc. Application are accordingly disposed of. We further direct the Appellants to file a reply to the show cause notice on or before 7th October, 2020. The Respondent will thereafter decide the matter finally after giving an opportunity of hearing to the Appellants either through physical hearing or through video conference within 6 months thereafter. During the interim period, in order to safe guard the interest of the investors in the securities market and also to protect the integrity of the securities market, we direct the Appellants to provide a fixed deposit of Rs 2,60,93,085.85 in the name of SEBI for a period of one year, within two weeks from today. This fixed deposit receipt will be kept in the safe custody with the respondent and will not be encashed till three months after the passing of the final order by the respondent.
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