Arvind Parasramka vs Securities And Exchange Board Of India And Others

M.T. Joshi, J

Aggrieved by the decision of the respondent Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) of disposing the

complaints of the present appellant on 11th November, 2020 received on the online complaint redressal system of respondent SEBI namely SCORES

the present appeal is preferred by the original complainant.

The complaint pertains to the appointment of the Respondent no.4 - Mr. Pradip Kumar Khaitan as Non-Independent Director for three years and,

thereafter, appointing him as Independent Director later on of Respondent no.3 Dhunseri Venture Ltd. ( hereinafter referred as the Company). The

next of the grievance was that the Respondent no. 4 had pecuniary interest in one of the transaction of the Company while he served as Independent

Director. Therefore, alleging that the provisions of the Companies Act and Regulatory provisions have been violated the compliant was made.

Upon seeking responses from the relevant respondents, SEBI disposed of the complaint vide the impugned order. Hence the appeal.

Heard Mr. Keshav Parasramka, appellant in person and Mr. Vishal Kanade, Advocate assisted by Mr. Anubhav Ghosh and Mr. Ravishekhar

Pandey, Advocates for the respondent no.1, Mr. Abhiraj Arora, Advocate assisted by Mr. Karthik Narayan and Ms. Rashi Dalmia, Advocates for

respondent no.2 and Mr. Mainak Bose, Advocate with Mr. Nikhil Jhunjhunwala, Advocate for respondent no.3.

The admitted material on record would show that for the financial years 2010-11, 2011-12 and 2012-13 the Respondent no. 4- Mr. Pradip Kumar

Khaitan served as non-independent and non-executive director on the board of the Company. Thereafter, he was appointed as an independent director

on 14th August, 2014. Admittedly, his son is married to one Ms. Tarulika, the daughter of Mr. Chandra Kumar Dhanuka-the promoter director of the

Company.

During the relevant period, there was no provision of prohibiting such a relationship for appointment as independent director. Section 2(41) read with

Section 6 and Schedule 1A of the Companies Act, 1956 does not enumerate such relationship between the parties as relative. Therefore, the

respondent SEBI has rightly held that Mr. Pradip Kumar Khaitan, respondent no.4 cannot be considered as a relative of the promoter thereby

prohibiting his appointment as an independent director. Therefore we do not find any fault in the impugned order in this regard.

As regards the next of the complaint that respondent no.4 Mr. Pradip Kumar Khaitan was made independent director after holding the post of non-

independent director, it is found that respondent no.4 Mr. Pradip Kumar Khaitan was non-independent and non-executive director for three years and,

thereafter, he was appointed as an independent director. Again, there is no prohibition for appointment as an independent director as respondent no.4

Mr. Pradip Kumar Khaitan has not served as executive director for three years prior to being appointed as an independent director. Clause 49 of

Listing Agreement as argued, therefore has no role to play in the present situation.

As regard the material pecuniary interest of respondent no.4 Mr. Pradip Kumar Khaitan in one of the transaction of the company, the material on

record would show that one entity, namely, Bonanza Trading Co. Pvt. Ltd. in which the Respondent no 4 had stakes, stood as a guarantor to the

Company in availing loan for development of certain projects. The respondent SEBI found that not only this transaction was less than 10% of the

recipient’s consolidated gross revenue but even Bonanza Trading Co. Pvt. Ltd. has not received any pecuniary advantage but merely provided the

guarantee. Therefore the same cannot be termed as having “pecuniary interest†in the transactions. Therfore the reasoning of the Respondent

SEBI on this count also needs no interference..

In the result the following order.

The appeal is hereby dismissed without any order as to costs.

The present matter was heard through video conference due to Covid-19 pandemic. At this stage it is not possible to sign a copy of this order nor a

certified copy of this order could be issued by the registry. In these circumstances, this order will be digitally signed by the Private Secretary on behalf

of the bench and all concerned parties are directed to act on the digitally signed copy of this order. Parties will act on production of a digitally signed

copy sent by fax and/or email.