TMI Blog2018 (3) TMI 1293X X X X Extracts X X X X X X X X Extracts X X X X ..... haracterized as the defaulter, the logical corollary would be that the Board would have to return the moneys held in trust by it. Needless to say if the Recovery Officer reaches a contrary conclusion, then, the Board would continue to hold the moneys and use the same as mandanted by law. With the aforesaid observations, the writ petition is disposed of. - W.P. (C) 4517/2017, CM APPL.19724/2017 - - - Dated:- 5-2-2018 - MR. RAJIV SHAKDHER J. Petitioner Through: Mr. Sunil Kumar, Sr. Advocate with Mr. Hiren Dasan, Mr. Uday Gupta, Mr. Chand Qureshi, Ms. Shanti Pandey and Mr. M.K. Tripathi, Advocates. Respondents Through: Mr. Neeraj Malhotra, Sr. Advocate with Mr. Ashish Aggarwal, Advocate and Mr. J. Srinivas, Officer from SEBI. Ms. Surabhi Anand, Advocate for R-3. RAJIV SHAKDHER, J. (ORAL) 1. This petition is directed against the order dated 24.03.2017 passed by the Recovery Officer, Securities and Exchange Board of India (hereafter referred to as Recovery Officer ). By virtue of this order, the Recovery Officer has in effect, attached all accounts, lockers whether held singly or jointly by the petitioner. 2. It is not in dispute that pursuant to this order, am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1992 against Alchemist Infra Reality and its Directors; (ii) SEBI would make a reference to the State Government/Local Police to register a civil/criminal case against Alchemist Infra Realty Limited and its Directors and its Managers/persons in-charge of the business and its schemes for offences of fraud, cheating, criminal breach of trust and misappropriation of public funds; and (iii) SEBI would make a reference to the Ministry of Corporate Affairs, to initiate the process of winding up of the company, Alchemist Infra Reality Limited. (c) Alchemist Infra Reality Limited and its Directors Mr. Brij Mohan Mahajan, Mr. Narayan Madhav Kumar, Mr. Balvir Singh, Mr. Chandra Shekhar Chauhan and Mr. Sunil Kanti Kar are restrained from accessing the securities market and are prohibited from buying, selling or otherwise dealing in securities market till all the collective investment schemes are wound up by the Company and all the monies mobilized through such schemes are refunded to its investors with returns which are due to them. 5. As is evident from the aforesaid directions, the Board injuncted Alchemist from collecting any money from investors or from launching or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability and so called responsibility to wind up the collective investment scheme and refund the money to the investors does not fall upon the petitioner. 8.1 The reason advanced in support of this argument is that the petitioner remained a Director of Alchemist between 2.4.2008 and 9.2.2009. In other words, the emphasis is on the fact that since the petitioner ceased to be the Director in Alchemist w.e.f. 9.2.2009, this aspect was taken into account by the Board while framing its order. To buttress this argument, my attention is drawn to Alchemist s letter dated 13.06.2013 addressed to the Board whereby information was given that the petitioner had ceased to remain its Director. 9. It would be relevant to note that the factum of petitioner s tenure has been adverted to by the Board in paragraph 49 of its order. 9.1 Therefore, taking a cue from the same, the petitioner argues that the Board consciously drew a distinction between those Directors who were concerned with the affairs of the company at the relevant point of time and those who had already left the company and ceased to be on its Board of Directors. 9.2 Argument is that the liability or responsibility to win ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d perused the records. According to me so far as the first submission made by Mr. Neeraj Malhotra is concerned, which is, that the appeal would lie under Section 15 of the SEBI Act is not required to be dealt with, as according to the petitioner, he is not aggrieved by the order of the Board. Therefore, quite naturally, the appeal provided under Section 15T of the SEBI Act is a remedy which the petitioner does not wish to take recourse to. Surely, this Court cannot force the petitioner to do something which he does not desire to do, especially, in the circumstances where it is the petitioner s contention that the order if read in its entirety is in his favour. Since, there is no grievance the petitioner does not wish to take recourse to an appeal qua the order of the Board. 13. I may also place on record a fact qua which counsel for both the sides agree which is that the order of the Board was taken in appeal to the Securities Appellate Tribunal by alchemist and its directors other than the petitioner whereupon some modifications were made in the order of the Board. The matter thereafter was carried in appeal to the Supreme Court where the appeal filed by the alchemist and Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attachment or sale of, any property in execution of a certificate, on the ground that such property is not liable to such attachment or sale, the Tax Recovery Officer shall proceed to investigate the claim or objection : Provided that no such investigation shall be made where the Tax Recovery Officer considers that the claim or objection was designedly or unnecessarily delayed. (2) Where the property to which the claim or objection applies has been advertised for sale, the Tax Recovery Officer ordering the sale may postpone it pending the investigation of the claim or objection, upon such terms as to security or otherwise as the Tax Recovery Officer shall deem fit. (3) The claimant or objector must adduce evidence to show that- (a) (in the case of immovable property) at the date of the service of the notice issued under this Schedule to pay the arrears, or (b) (in the case of movable property) at the date of the attachment, he had some interest in, or was possessed of, the property in question. (4) Where, upon the said investigation, the Tax Recovery Officer is satisfied that, for the reason stated in the claim or objection, such property was not, at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e execution of the decree of the Civil Court, and as a result thereof the realization of the amount reflected in the certificate would get delayed or obstructed. 16. If this position is taken by the Recovery Officer, he has to state his reasons in writing to support the order of attachment which is issued without prior notice to the defaulter. 17. A close perusal of the impugned order would show that in paragraph 2, all that the Recovery Officer has stated is that he has reasons to believe that the defaulter, i.e., the petitioner would dispose of the amounts/proceeds credited to his bank account. According to me, the averments therein do not meet the requirement of the proviso to Clause 3 of the Second Schedule. The powers conferred with the Recovery Officer are akin to the powers available to a Civil Court to pass an order of attachment before judgment. The rigour contained therein and the principles analogous thereto would apply in equal measure when power of attachment of a defaulter is exercised under second schedule of the Income Tax Act, 1961. The assertions in paragraph 2 of the impugned order are vague and do not reflect the need or the reason for doing away with the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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