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TMI Blog2018 (12) TMI 1979X X X X Extracts X X X X X X X X Extracts X X X X ..... such intermediaries or persons concerned . Further, various courts while considering the aforesaid sections of the SEBI Act have also held that principles of natural justice will not be violated if an interim order is passed and a post-decisional hearing is provided to the affected entity. Noticees by their own admission, have stated that they became directors of the company to recover the loans (loan details recorded in paras 7 (A) (ii) and 7 (B) (xii) of this order) provided by them to Mr. Pankaj Goel. They have not adduced any evidence to show that they have taken any corrective measures as regards the violations committed by F6 Finserve. It is only in 2018, after SEBI started examining the affairs of F6 Finserve and its other directors namely, Mr. Pankaj Goel and Ms. Meenu Goel i.e. after the inspections of F6 Finserve conducted by NSE and SEBI that the Noticees have taken steps against Noticee nos. 1, 2, 3 and 5 as stated in their reply and additional submissions which are recorded in para 7 and 9 of this order. All the directors of the company including Noticee nos. 4, 6, 7, 8, 9 and 10 who are non- executive directors had provided their personal properties as security ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER 1. The Securities and Exchange Board of India (hereinafter referred to as SEBI ) vide an ad interim ex-parte order dated May 29, 2018 (hereinafter referred to as interim order ) had restrained F6 Finserve Private Limited (hereinafter referred to as F6 Finserve/ company/ broker ), F6 Commodities Private Limited (hereinafter referred to as F6 Commodities ), Mr. Pankaj Goel, Mr. Parveen Sharma, Ms. Meenu Goel, Mr. Sanjay Anand, Ms. Kavita Anand, Ms. Asha Sharma, Mr. Deepak Goel and Ms. Ruchika Goel from accessing the securities market and further prohibited them from buying, selling or dealing in securities, directly or indirectly, in any manner whatsoever, till further directions and were also directed to cease and desist from undertaking any activity in the securities market, directly or indirectly, in any manner whatsoever till further directions. 2. NSE and SEBI had carried out inspection of F6 Finserve and made the following observations based on analysis of samples: a. The broker had not maintained segregation between own and clients securities. The broker met its proprietary ( PRO ) pay-in obligations from the client s securities. b. NSE in i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Pankaj Goel, Director of F6 Finserve. Use of securities of certain clients for meeting the obligation of another client (KK Advisors Private Limited). Securities of clients have been mis-utilized for settlement of Proprietary (PRO)/Own obligation. Received securities from third party (not a client of F6 Finserve) in its client a/c indicating that the client beneficiary a/c has been used for purposes other than the specified purpose. Not maintained inter-se client segregation of securities. c. Non-compliance with SEBI Circular SMD/SED/CIR/93/23321 dated November 18, 1993 and SEBI Circular MRD/DoP/SE/Cir- 11/2008 dated April 17, 2008 on account of misutilizing funds of credit balance clients to fund debit balance clients/for own purposes. d. SEBI Circulars no. MRD/DoP/SE/Cir-11/2008 dated April 17, 2008 and SMD/SED/CIR/93/23321 dated November 18, 1993 for raising funds by pledging securities of clients. e. Not fully complied with SEBI Circular CIR/DNPD/7/2011 dated August 10, 2011 read with SEBI Master Circular No. CIR/DNPD/1/2012 dated January 02, 2012 regarding short collection/non collection of client margins in derivatives segment by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Newspaper, Dainik Jagran (Hindi) and Times of India (English) on August 07, 2018. Till date no reply has been received from Noticee nos. 1, 2, 3 and 5. Replies were received from Noticee nos. 4, 6, 7, 8, 9 and 10 through various letters which were discussed in the following paragraphs. 7. The replies of Noticee nos. 4, 6 to 10 are summarized as under: A. Reply of Mr. Parveen Sharma, Noticee no. 4 submitted vide letter dated June 3, 2018 i. He was a former non-executive Director of F6 Finserve. ii. He knew Mr. Pankaj Goel through his wife Mrs. Meenu Goel who was Mr. Parveen Sharma s wife s friend. Mr. Pankaj Goel had approached him for a loan in November, 2013 for some business venture and promised to return the funds. The Noticee has stated that he had given a total loan of Rs. 45 Lakhs. Mr. Pankaj Goel in Jan, 2016 offered him to join his business when in lieu of repayment of his funds. iii. Mr. Parveen Sharma along with his wife Ms. Asha Sharma joined F6 Finserve as Additional Non-Designated Directors w.e.f. April 11, 2016 and had nothing to do with the working of the company. He was only taking care of the Computer Department and making of an onli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. vii. Noticees were not in control of the day to day affairs of the company and were merely associated in the capacity of the Non-Executive Director. viii. Noticees have not held any shares in F6 Finserve and F6 commodities and has no role to play in respect of trades or business of these companies. They have no relation with the director, promoters, preferential allottees or any other shareholders of the company. ix. The Noticees did not derive any benefit from the any of the alleged transactions. x. There are no provisions under the SEBI Act which mandatorily requires the undersigned to disclose his personal information pertaining to assets he owns and therefore to this extent the impugned order exceeds jurisdiction. xi. The Noticees have also provided two Affidavits signed and notarized on April 12, 2018 and undertaking dated April 12, 2018 given by Noticee no. 3 i.e. Mr. Pankaj Goel stating that all responsibilities and liabilities inter alia incidental, consequential, supplemental and any other liabilities which are de- hors, whether past or present, are assumed by Mr. Pankaj Goel for all transactions and business carried on by the said compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oticees is not explained. The interim order is generic and vague since it does not elucidate in clear terms as to exact nature of violation committed by them. The Noticees have relied on the observations of the Hon ble Securities Appellate Tribunal (hereinafter, SAT ) in Vikas G. Bengani v. Adjudicating Officer (Appeal no. 283 of 2009) wherein the Hon ble SAT has observed that when fraud is being alleged the particulars thereof have to be indicated in the show cause notice. viii. The Noticees submitted that they had no role to play and that they been wrongly clubbed with other entities without examining the peculiar facts. In this regard, they have relied on the following orders to support their claim. o Pepsico India Holdings Pvt. Ltd. vs. Food Inspector and Another [(2011) 1 SCC 176], o Ashoke Mal Bafna vs. M/s Upper India Steel Mfg. Engg. Co. Ltd. [2017 SCC Online SC 705], o Pooja Ravinder Devidasani vs. State of Maharashra and Another [(2014) 16 SCC 1], o K. K. Ahuja vs. V. K. Arora and Another [(2009) 10 SCCC 48] ix. The Noticees submitted that impugned transactions were carried out without their knowledge and consent, and therefore, they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of F6 Finserve, under section 138 of the Negotiable Instruments Act has been withdrawn against all the Directors except Mr. Pankaj Goel and Ms. Meenu Goel when he met the said noticees and realized that they have also been duped by Mr. Pankaj Goel. In the additional submissions by Noticee nos. 6 7 Mr. Sanjay Anand and Ms. Kavita Anand it was inter alia stated that they have taken the following steps against F6 Finserve and Mr. Pankaj Goel and furnished the following documents: (i) Criminal complaint dated April 25, 2018, (ii) Representation dated April 25, 2018 submitted to Kotak Mahindra Bank by Noticees, (iii) Notice dated May 04, 2018 received from Kotak Mahindra Bank and its reply dated May 12, 2018, (iv) Copy of complaint under section 138 of Negotiable Instruments Act against Mr. Pankaj Goel, (v) Copy of complaint under section 156 (3) of Criminal Procedure Code against Mr. Pankaj Goel, (vi) Copy of order sheet dated July 10, 2018 in the complaint, and (vii) Kotak s notice of demand under section 13(2) of the SARFAESI Act and its reply. Consideration of Replies and Submissions in Personal Hearing 10. I have perused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g part of any transaction which is under investigation : Power to issue directions. 11B. Save as otherwise provided in section 11, if after making or causing to be made an enquiry, the Board is satisfied that it is necessary, (i) in the interest of investors, or orderly development of securities market; or (ii) to prevent the affairs of any intermediary or other persons referred to in section 12 being conducted in a manner detrimental to the interest of investors or securities market; or (iii) to secure the proper management of any such intermediary or person, it may issue such directions, (a) to any person or class of persons referred to in section 12, or associated with the securities market; or (b) to any company in respect of matters specified in section 11A, as may be appropriate in the interests of investors in securities and the securities market. 11. While passing such directions, it is not always necessary for SEBI to provide the entity with an opportunity of pre-decisional hearing. The law with regard to doing away with the requirement of pre-decisional hearing in certain situations is also well settled. The following findin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional opportunity, the principles of natural justice which are never excluded will be satisfied if a post decisional opportunity is given, if demanded. I, therefore, do not find that the interim order is vitiated for want of a personal hearing prior to passing of the order. 13. Before proceeding with the submissions of the Noticees in their replies and personal hearing, it pertinent to look into the details of directorship of the Noticee nos. 3 to 10 in F6 Finserve which is as under: Sr. no. Name of the director Designation Change in designation, if any Tenure 1 Mr. Pankaj Goel Director 26/12/2012 till date 2 Mr. Parveen Sharma Additional Director Non Executive Director on 03/04/2017 11/04/2016 02/01/2018 3 Ms. Meenu Goel Director 26/12/2012 till date 4 Mr. Sanjay Anand Additional Directo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmission by a company which had occurred with his knowledge, attributable through Board processes, and with his consent or connivance or where he had not acted diligently. 16. From the aforesaid provisions of the Companies Act, it is clear that a non executive director shall be liable in respect of such acts of omissions or commissions by a company where inter alia he had not acted diligently. I note that the Noticees by their own admission, have stated that they became directors of the company to recover the loans (loan details recorded in paras 7 (A) (ii) and 7 (B) (xii) of this order) provided by them to Mr. Pankaj Goel. They have not adduced any evidence to show that they have taken any corrective measures as regards the violations committed by F6 Finserve. It is only in 2018, after SEBI started examining the affairs of F6 Finserve and its other directors namely, Mr. Pankaj Goel and Ms. Meenu Goel i.e. after the inspections of F6 Finserve conducted by NSE and SEBI that the Noticees have taken steps against Noticee nos. 1, 2, 3 and 5 as stated in their reply and additional submissions which are recorded in para 7 and 9 of this order. The Hon ble Supreme Court in Official Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the owner Description of the Property 1 Mr. Pankaj Goel and Ms. Meenu Goel 206 (S.F.), Sewa Corporate Park, M. G. Road, Gurgaon, Haryana 2 Mr. Pankaj Goel and Ms. Meenu Goel 407 (F.F.), Sewa Corporate Park, M. G. Road, Gurgaon, Haryana 3 Mr. Sanjay Anand and Ms. Kavita Anand B-11/2, DLF Phase 1, Qutab Enclave, Gurgaon 4 Mr. Parveen Sharma and Ms. Asha Sharma Plot no. 122 L, Model Town, Rewari, Haryana 5 Mr. Parveen Sharma and Ms. Asha Sharma Flat no. 902, 9th floor, Tower no. 12, Valley View Estate, GWAL Pahadi, Gurgaon 6 Mr. Deepak Goel and Ms. Ruchika Goel CF 015, Ground Floor, The Palm Spring Plaza, Golf Course Road, DLF City Phase V, Gurgaon From the two tables above, it is observed that F6 Finserve has availed loans to the extent of Rs. 29 Crore from Kotak Mahindra Bank, Delhi Aerocity Branch. All the directors of the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titled to exercise all such powers and do all such acts and things as the company is authorized to exercise and do. Therefore, the said order further notes that the Board of Directors being responsible for the conduct of the business of a company are liable for any non-compliance of law and such liability shall be upon the individual directors also. I also note that the order relies on the observation of the Hon ble Supreme court while describing what is the duty of a Director of a company held in Official Liquidator v. P.A. Tendolkar (1973) 1 SCC 602 which has also been quoted above at para 16. 20. Noticee no. 9 and 10 have also relied on Pooja Ravinder Devidasani v. State of Maharashra and Another and K. K. Ahuja v. V. K. Arora and Another to further their case. I note that the case relied by them have been decided under the provisions of the Negotiable Instruments Act. In this regard, I note the observations of the Hon ble SAT in Akhil Chandra Saha v. SEBI (Appeal no. 316 of 2017, decided on November 27, 2017) wherein the decision in K. K. Ahuja was sought to be relied on. The Hon ble SAT observed that the said decision is not relevant as it is in the context of the role of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ository Clearing member, and Depositories, the total available funds and securities as on December 04 05, 2018 in the accounts of F6 Finserve F6 Commodities are as under- Deposit Claims with Exchanges Entity name Deposit available with Exchange (s) Deposit available with Clearing Corporation Total No. of claims received Claim Value (In Rs.) BSE 24,30,307.00 Nil 95 9.00 crs NSE Nil Nil 324 15.58 Cr Total 24,30,307.00 Nil 419 24.58 Cr NCDEX 3,66,769.29 Nil 02 Nil MCX Nil Nil 47 0.49 Cr NMCE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticees mentioned above, shall continue until further orders. 27. In the matter of Amrapali Aadya Trading Investment Pvt. Ltd. decided on October 31, 2018 wherein similar circumstances existed, to protect the interest of clients/ investors it was directed that a separate demat account and separate interest bearing bank account shall be opened wherein the securities and funds belonging to the Noticee therein would be transferred. In the extant matter, the interim order dated May 29, 2018 directed the depositories, Registrar and Transfer Agents and banks that no debits/ transfer is made from the accounts of the Noticees. I, therefore, direct as under: a. Since the claim value is higher at NSE, NSE Defaulters Committee shall, as expeditiously as possible, open and operate a dedicated demat account where all the securities lying in the demat accounts of F6 Finserve shall be transferred. b. The NSE Defaulters Committee shall open and operate a dedicated interest bearing bank account with a Nationalized Bank where all the funds lying in various bank accounts held in the name of F6 Finserve, Mr. Pankaj Goel and Ms. Meenu Goel, shall be transferred. c. Since the claim v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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