Capital Grow Financial Services vs Securities And Exchange Board Of India

Tarun Agarwala, Presiding Officer

We have heard the learned counsel for the parties. The appellant has challenged the order dated January 03, 2023 passed by the Adjudicating Officer (“AO” for convenience) of the Securities and Exchange Board of India (“SEBI” for convenience) imposing a penalty of Rs. 6 lakhs. The appellant is a registered investment advisor and based on a complaint for misleading the investors and making false commitments and not resolving the complaint in a time bound manner the proceedings were initiated and, thereafter, the impugned order was passed.

It is alleged that the impugned order was passed ex-parte without serving a show cause notice and without giving an opportunity of hearing. In this regard, it was also stated that the appellant closed its business operations when Corona Pandemic kicked in March 2020 and has not resumed its operations thereafter.

In this regard, a compilation of documents has been filed by the respondent indicating that service has been made by affixation at his business premises in October 2022.

Having perused the documents and the submissions made by the parties, we are of the opinion, that adequate opportunity was not given to the appellant to defend itself. Consequently, the impugned order is violative of the principles of natural justice and cannot be sustained. The impugned order is set aside and the matter is remitted to the AO to pass a fresh order after serving of a show cause notice and after giving an opportunity of hearing. In this regard, the appellant shall appear before the AO on July 24, 2023.

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. Certified copy of this order is also available from the Registry on payment of usual charges.