TaxTMI 
TaxTMI 
2020 (2) TMI 869
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.... a legal heir / beneficiary of Late Sewratan Mundra, who is the complainant's paternal grandfather, who had expired on May 15, 1975. It was contended that while clearing and sorting out the old documents, the complainant discovered certain shares of Indo National Limited held by his grandfather and accordingly applied to the appellant seeking information on transferring the said shares in his name. The Company informed that the said shares had already been transferred to one Mr. Sewaratan Mundra contending that Mr. Sewaratan Mundra had applied for duplicate shares and which was duly provided and thereafter Mr. Sewratan Mundra sold it to one Mr. Anil Kumar Shivratan Bhootra of Kolkata. It was alleged that due diligence was not exercised by the appellant in verifying the genuineness of the request sent by the alleged Sewratan Mundra in as much as the complainant's grandfather had passed away in the year 1975 and the question of issuance of duplicate shares after his death does not arise. 3. Even though the complaint was disposed of by the company on the SCORES platform, SEBI undertook the examination of the activities of the appellant with specific reference to the issue of ....
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....ed the ex parte ad interim order by issuing the following directions:- "a. confirm the directions issued against the Noticee in the interim order dated October 18, 2019; b. order SEBI to carry out a special purpose inspection of the Noticee interalia to inspect the books of accounts of the Noticee including but not limited to the due diligence adopted by the Noticee in respect of unclaimed shares, the procedure being followed for issue of duplicate shares, the steps taken by the Noticee with regard to the rectification of the register of members pertaining to wrong transfer of shares etc. The Special purpose inspection is to be conducted by SEBI and a report to be submitted within ninety days from the date of this order. The interim order as mentioned in para 6 a. above shall continue till the expiry of ninety days from the date of this order." 7. In view of the aforesaid, the present appeal has been filed. 8. We have heard Shri Somasekhar Sundaresan, the learned counsel for the appellant and Shri Vikram Nankani, the learned senior counsel for the respondent. 9. The learned counsel for the appellant contended that under Regulation 22 of the Regulations of 1993 if the RTA, th....
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....on; (iii) prohibiting the noticee to take up any new assignment or contract or launch a new scheme for the period specified in the order; (iv) debarring a principal officer of the noticee from being employed or associated with any registered intermediary or other registered person for the period specified in the order; (v) debarring a branch or an office of the noticee from carrying out activities for the specified period; (vi) warning the noticee." 11. In the light of the aforesaid provisions, it was urged that Regulations of 1993 clearly provides that any contravention of the provisions of the Act, Rules, Regulations etc. RTA would be dealt in accordance with the provisions of Chapter V of the Intermediaries Regulations of 2008 which provides a procedure for cancellation or suspension of the registration and other actions. It was contended that Regulation 27 provides for suspension, cancellation and, other action that can be taken but the same can only be taken after submission of a report made by the enquiry officer and after giving an opportunity of hearing. It was contended that in the instant case no opportunity was provided before passing an ex parte ad interim orde....
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....used to an investor. Thus, exercising the powers under Section 11 and 11B restraining the appellant from accepting fresh clients for a period of three months for failing to exercise due diligence appears to be harsh and unwarranted in the facts and circumstances of the given case. 14. In connected appeals, North End Foods Marketing (P.) Ltd. v. SEBI [2019] 105 taxmann.com 69/ 153 SCL 340 (SAT - Mum.) this Tribunal held:- "13. Having heard the learned senior counsel at length, we find that it is no more res integra that SEBI has power to pass ex parte ad interim order, pending investigation, which power flows from Section 11 and 11B of the SEBI Act. A plain reading of Section 11 and 11B shows that SEBI has to protect the interests of the investors in securities and to regulate the securities market by such measures as it thinks fit and such measures may be for any or all of the matters provided in sub-section 2 of Section 11 of the Act. SEBI has power to pass interim orders and such interim orders can also be passed ex parte. Interim orders are passed in order to prevent further possible mischief of tampering with the securities market. If during a preliminary enquiry, it is foun....