Jyoti Munver vs Securities And Exchange Board Of India

Tarun Agarwala, Presiding Officer

We have heard the learned counsel for the parties. The present appeal has been filed against the order dated July 31, 2023 wherein the Adjudicating Officer (“AO” for convenience) of the Securities and Exchange Board of India has imposed a penalty of Rs. 5 lakhs for non-compliance of the summons issued under section 11C(3) of the SEBI Act.

Admittedly, the appellant was an Independent Non-Executive Director. The impugner order shows that summons were sent on September 03, 2018, June 07, 2019, February 28, 2020, March 06, 2020, March 13, 2020 and January 13, 2021. The AO came to the conclusion that the summons were duly served and the last summon sent on January 07, 2021 was refused and, therefore, there was a deliberate non-compliance of the information sought under the summons. The AO found that there was failure on the part of the appellant in furnishing the information and accordingly imposed a penalty of Rs. 5 lakhs for violation of Section 11(2)(i) and 11C(3) read with Section 11C(2) of the SEBI Act.

Having perused the impugned order, we find that the summons were sent on September 03, 2018, June 07, 2019, February 28, 2020 and March 06, 2020 was never served in as much as these summons apparently was sent at the company’s address and were not sent at the residential address of the appellant. The summons sent on March 13, 2020 was sent at the appellant’s residential address which was duly received. The summon sent on January 13, 2021 which is alleged to have been refused was also sent at the company’s address and, therefore, the refusal was not made by the appellant.

In view of the aforesaid, we find that the summons dated March 13, 2023 was duly served but we also take judicial notice that soon thereafter the lockdown occurred on account of COVID pandemic and consequently there was no occasion for the appellant to reply to the summons. Subsequent reminder sent by the respondent was on January 13, 2021 which was sent at the Company’s address and not at the residential address of the appellant.

In view of the aforesaid, we are of the opinion that there was no deliberate non-compliance of the summons and consequently the appellant cannot be imposed with the monetary penalty of Rs. 5 lakhs.

In view of the aforesaid, the impugned order cannot be sustained and is quashed. The appeal is allowed.