Rajesh Jayantilal Savadia vs Securities And Exchange Board Of India

M.T. Joshi, J

Aggrieved by the order of the Ld. Adjudicating Officer ('AO' for short) of the Securities and Exchange Board of India ('SEBI' for short) dated October 23, 2020 imposing a penalty of Rs. 1 lakh for violation of the provisions of Regulation 3(a), (b), (c), (d), 4(1), (2) (a) and (e) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 ('PFUTP Regulations' for short) the present appeal is preferred through the wife of appellant Rajesh Jayantilal Savadia. There is a delay of 271 days in the filing of the appeal and accordingly an application for condonation of delay has been filed. In view of the order of Supreme Court dated 23, 2020 and April 27, 2021 in Sue Moto Writ Petition (Civil) No. 3 of 2020, the delay in the filing of the appeal is condoned. The application is allowed.

The main thrust of the argument of appellant is, that the appellant is and was not able to defend himself being of unsound mind, still the Ld. AO proceeded in the matter and imposed the penalty upon him.

The record would show that the appellant along with four other noticees were charged of making fraudulent trading in the shares of Lifeline Drugs and Pharma Limited (now known as Arihant Multi Commercial Ltd.) (hereinafter referred to as 'the company'). All the five noticees were directed to file reply. During the said proceedings, however, the advocate of the appellant provided copy of medical certificate to the Ld. AO purportedly on the instruction of the wife of the appellant. The said certificate showed that the appellant was suffering from schizophrenia. He requested to keep the proceedings in abeyance qua the appellant. The Ld. AO acceded to the request. The case proceeded against other noticees and penalty was imposed upon them. Those noticees had challenged the order before this Tribunal vide Appeal no. 527 of 2020. However, this Tribunal by its order dated December 23, 2020 had confirmed the order of the Ld. AO though the quantum of penalty was reduced.

Ld. AO issued an e-mail on August 28, 2020 asking the advocate of the appellant to furnish a certificate of appellant's illness from the Civil Surgeon of the concerned District. The advocate, however, asked the Ld. AO himself to appoint a Civil Surgeon of the District to examine the appellant. Thereupon the Ld. AO passed the impugned order. Hence, the present appeal.

Heard Shri Vikas Bengani, the learned counsel for the appellant and Ms. Anubha Rastogi, the learned counsel for the respondent.

Shri Vikas Bengani, the learned counsel for the appellant submitted that the Ld. AO proceeded against the appellant who is of unsound mind in his absence. He pointed out to the copy of the medical certificate that was produced before the Ld. AO.

On the other hand, learned counsel for the respondent submitted that there is nothing on record to show that the appellant was unable to defend himself in the proceedings. Therefore, the Ld. AO had asked for production of necessary documents. He emphatically pointed out towards another proceedings initiated by the Whole Time Member ('WTM' for short) of the SEBI during the same period in which the appellant personally was served with notice. He himself had appointed Authorized Representative in the said proceedings and even opposed the said proceedings. The reply was produced under the signature of the appellant dated February 1, 2018 while the appellant in the present proceedings claims that since last 3 to 4 years i.e. during the same period the appellant continued to be suffering from schizophrenia. The copies of all the documents i.e. service of notice, acknowledgment signed by the appellant in person, appointment of authorized representative under the signature of the appellant personally, the copy of the reply filed in the proceedings before the Ld. WTM under the signature of the appellant personally etc. are filed with affidavit in reply.

In affidavit in rejoinder the appellant submits that the appellant's wife had anyhow obtained the signature of the appellant on those documents and the same were filed before the Ld. WTM.

Upon hearing both sides in our view the appeal is liable to be dismissed. The proceeding that was initiated before the Ld. WTM would show that the appellant personally defended the said proceeding. Now belatedly only when those documents were brought on record the appellant in affidavit in rejoinder is taking a different stand. Be that as it may. The impugned order shows that the certificate of one private psychiatrist was placed before the Ld. AO. It nowhere shows that the appellant was suffering from mental illness to the extent making him unable to defend himself in the proceedings. Therefore, the Ld. AO had asked the Authorized Representative to produce the certificate to that effect from a Civil Surgeon of that District. The Ld. AO had relied the Rules and Regulations framed under The Rights of Persons with Disabilities Act, 2016.

The relevant provisions of this Act would show that an application by the proposed guardian is required to be made to the concerned District Judge for appointment as a guardian for a person who is suffering from a mental illness of such a kind making him unable to defend or prosecute any proceedings or deal in his/her property. Thereupon upon satisfaction of the mental illness of the concerned person the concerned District Judge would appoint a guardian, who would prosecute the affairs of the disabled person.

The learned counsel for the appellant however insists that the Criminal Procedure Code provides that the Court itself should get satisfied that the accused is suffering from a mental health of such a kind that the accused is unable to defend himself.

Considering all the facts on record and particularly finding that in another proceeding the appellant was very well defending himself in another proceedings, during the same period, we do not find any merit in the present appeal. The appeal is therefore 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.