2017 (8) TMI 1714 - Board - SEBI

Company mobilized resources by issuing RPS to the public - default of RPS Redeemable Preference Shares issue - accountability of a Director to the actions of the Company - as per DR Directors including the appellant are jointly and severally directed to forthwith refund the money collected by the company through the issuance by Redeemable Preference Shares with interest at the rate of 15% from the date when the repayment became due till the date of actual payment - As argued Director of the company had confirmed that the resignation letter of the appellant as been accepted in the Board Meeting, neither involved in the business activities/operations nor the appellant took part in any Board Meetings, General Meetings, thus nor the appellant was paid with any remunerations or fees or had not taken any monitory benefits whatsoever in cash or kind. HELD THAT - In the Memorandum of Appeal the appellant has annexed a letter which is written by appellant to the Managing Director of the company wherein the appellant has clearly stated that he intends to discontinue as a Director of the company with effect from 15.05.2010. This letter addressed by the appellant to the company completely falsifies the case sought to be made out in the Appeal that he had resigned on 10.03.2009 and the same was accepted by the company on 12.03.2009. Even the letter addressed by the Whole Time Director and Authorised Signatory to the effect that the appellant during the period from 24.11.2008 to 12.05.2010 was not at all involved in the business activities/operation of the company is falsified by the letter addressed by the appellant on 12.05.2010 wherein the appellant intended to discontinue as a Director of the company with effect from 15.05.2010. Argument advanced byappellant was compelled to write the aforesaid letter on 12.03.2009 is clearly an afterthought and totally unbelievable. In these circumstances, we are clearly of the view that there is no merit in the appeal and the case sought to be made out in the appeal is totally false. At this stage, counsel for SEBI fairly stated that liability of the appellant to refund the amount along with the company and other Directors would be in relation to the amount collected by the company up to 02.05.2010 as the appellant had ceased to be a Director of the Company with effect from 15.05.2010. Statement made by counsel for SEBI is accepted.

Summary

Issues:
Delay in filing the appeal, challenge to SEBI order directing refund of money collected through issuance of Redeemable Preference Shares, appellant's resignation and involvement in company activities, validity of appellant's contentions, liability of appellant for refund amount.

Analysis:
1. Delay Condonation Application:
- The applicant sought condonation of a 439-day delay in filing the appeal, which was granted by the authorities for reasons stated in the application.

2. Challenge to SEBI Order:
- The appeal was filed to challenge an order by SEBI directing the company and its directors to refund money collected through Redeemable Preference Shares with interest.
- The appellant argued resignation and lack of involvement in company affairs, but SEBI dismissed these contentions.
- The appellant's letter intending to discontinue as a director contradicted claims of earlier resignation, leading to dismissal of the appeal.

3. Liability for Refund Amount:
- SEBI acknowledged the appellant's liability only for the amount collected by the company up to the date of ceasing to be a director.
- The appeal was ultimately dismissed with no costs awarded, based on the findings and lack of merit in the appellant's case.

This judgment addressed issues of delay condonation, challenge to SEBI order for refund, appellant's resignation claims, involvement in company activities, liability for refund amount, and ultimately dismissed the appeal based on lack of merit in appellant's contentions.