2014 (4) TMI 1212 - AT - Companies Law

Creation of artificial volumes - Allegations against the appellant were mainly that he made misleading corporate announcement in March 2005 regarding preferential / rights issue with a view to lure investors - Guilty of violating PFUTP Regulations, SAST Regulations and PIT Regulations - Held that - As during the proceedings before this Tribunal, the appellant was granted leave to obtain and submit a signature comparison report from a Forensic expert. Accordingly, the appellant furnished a signature comparison report dated June 18, 2013. The respondent also filed reply / comments in response to the said report. During the course of hearing, it was felt that in the facts and circumstances of the case, a comparison of the appellant s signature would be required to ascertain authenticity of his alleged signature on the transfer deed. This factual analysis may also require additional evidence. It would be, therefore, appropriate to remand this matter to the learned adjudicating officer for fresh hearing and adjudication.

Summary

Issues:
Violation of various SEBI regulations leading to penalties and allegations of misleading corporate announcements and off-market transfers without requisite disclosures.

Analysis:
The appeal was against an order holding the appellant guilty of violating multiple SEBI regulations and imposing penalties totaling Rs. 1 crore. The violations included Regulations 3(b), 3(c), 3(d), 4(1), 4(2)(d), 4(2)(e), 4(2)(k), and 4(2)(r) of PFUTP Regulations, Regulation 7(1A) read with 7(2), Regulations 10 and 11 of SAST Regulations, and Regulation 13(4) read with 13(5) of PIT Regulations. The appellant was penalized under various sections of the SEBI Act for these violations. The allegations included making misleading corporate announcements in 2005 to attract investors and engaging in off-market transfers without necessary disclosures.

During the proceedings, the appellant contended that the signatures on transfer deeds presented by the respondent were forged as he did not sign them. To verify this claim, the appellant was allowed to obtain a signature comparison report from a forensic expert, which was submitted to the Tribunal. Considering the need for a comparison of the appellant's signature to establish authenticity, the matter was remanded to the adjudicating officer for fresh hearing and adjudication. Both parties were given the opportunity to present additional evidence, and SEBI was permitted to issue a fresh show cause notice if deemed necessary.

Consequently, the impugned order was quashed, and the matter was remanded for fresh adjudication, ensuring the appellant's right to represent his case adequately. The adjudicating officer was directed to expedite the process and conclude the matter within six months. The appeal was disposed of with no costs awarded to either party.