2015 (4) TMI 517 - AT - Companies Law

Recovery certificate issued by SEBI on the basis of provisional liability - Notice to NSE to adjust from the deposit of the appellant - Held that - Basic grievance of the appellant is that the recovery certificate has been issued on the basis of provisional liability statement dated August 25, 2004 and without considering the auditors certificate furnished on April 5, 2002 and again on April 30, 2004. Since SEBI has issued fee liability statement on March 14, 2005 and April 20, 2005 subsequent to the appellant furnishing auditors certificate, it is evident that the said fee liability statements dated March 14, 2005 and April 20, 2005 constitute final fee liability statement. Moreover, it is relevant to note that challenging the provisional fee liability statement dated August 25, 2004 (served on September 2, 2004) as also the final fee liability statement drawn up by SEBI on March 14, 2005 and April 20, 2005, appellant had filed Appeal No. 158 of 2012 with Misc. Application seeking condonation of delay before this Tribunal inter alia alleging that the fee liability statement has been issued without considering the arguments raised on behalf of the appellant. On August 22, 2012 this Tribunal declined to condone the delay and accordingly the appeal filed by the appellant was dismissed. Thereupon, appellant filed Civil Appeal Nos. 8472-8474 of 2012 before the Apex Court which was dismissed as withdrawn on January 14, 2013. Thus, the fee liability of appellant as per fee liability statement attained finality. The appellant has filed the present appeal in gross abuse of the process of law. The recovery certificate was issued based on the fee liability statement dated August 25, 2004, March 14, 2005 and April 20, 2005 which were all served on the appellant. Moreover, appellant had repeatedly challenged those fee liability statements of SEBI by initiating proceedings one after the other and all those proceedings have been either dismissed or allowed to be withdrawn by this Tribunal / Apex Court. - Decided against the appellant.

Summary

Issues:
1. Validity of recovery certificate issued by SEBI
2. Allegations of illegal issuance of recovery certificate and notice to NSE
3. Consideration of auditors' certificates by SEBI
4. Finality of fee liability statements issued by SEBI
5. Abuse of legal process by the appellant

Analysis:

Issue 1: Validity of recovery certificate issued by SEBI
The appellant contested the recovery certificate issued by SEBI on the grounds that it was based on a provisional liability statement without any formal order supporting it. However, SEBI argued that the recovery certificate was issued based on final fee liability statements issued after considering documents provided by the appellant. The Tribunal noted that subsequent fee liability statements issued by SEBI after the appellant furnished auditors' certificates constituted final fee liability statements, thereby upholding the validity of the recovery certificate.

Issue 2: Allegations of illegal issuance of recovery certificate and notice to NSE
The appellant alleged that SEBI had not considered the auditors' certificates while issuing the recovery certificate and notice to NSE, making them illegal. SEBI countered by stating that the recovery certificate was based on final fee liability statements and that NSE had already remitted the amount to SEBI as per the notice. The Tribunal found that the recovery certificate and notice were in conformity with the fee liability statements, rendering the appeal infructuous.

Issue 3: Consideration of auditors' certificates by SEBI
The appellant argued that SEBI did not consider the auditors' certificates provided, which certified the correctness of the turnover details. However, the Tribunal observed that the appellant had challenged the fee liability statements multiple times through various legal proceedings, all of which were either dismissed or withdrawn, indicating that the fee liability had attained finality.

Issue 4: Finality of fee liability statements issued by SEBI
The Tribunal highlighted that despite multiple challenges by the appellant, the fee liability statements issued by SEBI had been upheld, leading to the recovery of the outstanding fees from the appellant by NSE as per SEBI's notice. The Tribunal concluded that the recovery certificate was in line with the fee liability statements and the appeal lacked merit, resulting in its dismissal.

Issue 5: Abuse of legal process by the appellant
The Tribunal noted that the appellant had engaged in a series of legal proceedings to stall payment of the fee liability determined by SEBI. Despite the finality of the fee liability statements and the remittance of the amount by NSE to SEBI, the appellant filed the present appeal, which was deemed a gross abuse of the legal process. The Tribunal dismissed the appeal and imposed costs on the appellant to be paid to SEBI within a specified period.