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TMI Blog2020 (9) TMI 1304X X X X Extracts X X X X X X X X Extracts X X X X ..... ime Member 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. The Whole Time Member also 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. The Whole Time Member also directed the appellants to provide details of all the bank accounts, demat account, holdings in shares and securities and details of companies in which the Appellants have a substantial or controlling interest. 2. By the impugned order, the Appellants were further directed to show cause as to why the illegal gains should not be disgorged and an order under Section 11B(2), 11A and 15G of the Securities and Exchange Board of India Act, 1992 read with Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (hereinafter referred to as 'PIT Regulations') should not be passed. 3. The aforesaid ex-parte directions have been passed for violation of the PIT Regulations, 2015 on the ground that the Appellants had executed trades in viola ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Senior Counsel for the Respondent contended that the impugned order is just and proper in the circumstances of the case in order to protect the securities market and the investors. It was urged that on account of a prima facie finding it was essential to impound the illegal gains in order to protect the securities market and to ensure that the investors are not put to any loss. It was contended that if a reply is filed the matter would be decided within a short period. The learned senior counsel contended that there is no laches in issuing the impugned order and the same was passed at the earliest opportune moment. It was urged that pursuant to a report of NSE dated 22.5.18, the Adjudicating Officer was appointed on 31.01.19 and the order was passed in August 2020.It was also urged that the decision of this Tribunal in the matter of Dr. Malhoutra is not applicable and that the principles of O38 R5 to 13 of CPC are not applicable and that the respondent has the powers to pass an impounding order under Sec. 11(4)(d) of the SEBI Act. 8. Having heard the learned counsel for the parties at some length, we are of the opinion that the controversy involved in the present case is squarel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary it may be, restraining an entity/person from pursuing his profession/trade may have substantial and serious consequences which cannot be compensated in terms of money. 15. Thus, ex-parte interim order may be made when there is an urgency. As held in Liberty Oil Mills & Ors. vs. Union of India & 18 Ors. [AIR (1984) SC 1271] decided on May 1, 1984, the urgency must be infused by a host of circumstances, viz. large scale misuse and attempts to monopolise or corner the market. In the said decision, the Supreme Court further held that the regulatory agency must move quickly in order to curb further mischief and to take action immediately in order to instill and restore confidence in the capital market." 10. In Dr. Udayant Malhoutra (supra) this Tribunal held: "9.............In our opinion, the reasoning given by the WTM justifying its action to pass an exparte interim order is patently erroneous and cannot be sustained. On one hand, we find that only a show cause notice has been issued and the matter has not been adjudicated on merits but the appellant, on the other hand, has been directed to deposit the possible disgorgement amount in advance. We are of the opinion that no a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e PIT Regulations without considering the balance of convenience or irreparable injury." 11. 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. We further find that the 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 ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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