Judgment:
2. The appellant challenges the order passed by SEBI under Regulation 11 of the SEBI (Prohibition of Fraudulent & Unfair Trade Practises relating to securities market) Regulation, 2003 read with Section 11 and 11B of the SEBI Act.
3. The matter related to investigation in the dealing of the shares of the Cyber Space Ltd. Ultimately, the respondent passed an order under Section 11 of the Act read with the Regulation injuncting the appellant from accessing the securities market and prohibited him from buying, selling or dealing in the securities market for a period of one year.
The order was passed on 17.8.2004.
4. The order has spent itself out. However, while the appeal was pending, we passed certain interim directions with regard to some moneys being in the hands of BSE with respect to certain bonafide trades. One such interim direction is dated 9.3.2005 which reads as follows: "It is submitted by the learned counsel for the appellant that some trades which were entered into by the appellant and the consideration amount is still being kept with BSE on account of the impugned order. All that the appellant requires is that these monies to be released to him to enable him to withdraw the appeal without the impugned order being a stigma on the appellant since he is a senior citizen of 75 years old and he has undertaken not to access the capital market in his lifetime as he has lost heavily.
5. It was also pointed out to BSE that in similar circumstances certain money which were held up by the BSE, was paid by BSE with respect to transaction of Prabodh Artha Sanchay Pvt. Ltd. 6. The learned counsel for the appellant fairly submitted that if these moneys which were locked up with the BSE are disbursed to the appellant, he would not pursue this appeal although he submitted that in similar circumstances, Prabodh Artha Sanchay Pvt. Ltd. has been absolved by SEBI.7. Be that as it may, the appellant is a senior citizen and 75 years old and the order has spent itself out. Since all his savings have been locked up in the hands of BSE, we directed BSE to be made a respondent in this appeal and passed certain direction to BSE to look into the matter.
8. Mr. Modi, the learned senior counsel for BSE after getting instruction submitted fairly that taking into account the facts and circumstances of the case that a sum of Rs. 1,17,80,000/- would be released to the appellant with respect to his trades and further submitted that out of the said amount, the exchange will be paying an amount of Rs. 65,80,000/- to broker ACK Capital Management Pvt. Ltd., who will in turn make payment to the appellant.
9. The learned counsel for the appellant submitted that the appellant being at an advanced age cannot pursue this matter with the broker to get back his money unless the Court gives suitable directions.
10. There should be no difficulty in the broker making payment. A letter has been shown to us addressed by the broker ACK Capital Management Pvt. Ltd. to BSE dated 22.7.2005 which reads as follows: "This has reference to your letter bearing Ref. No. IS/RP/4012/2005 dated 19th July, 2005 regarding payment due and payable to one of our client Mr. Jugal Kishor Barasia regarding sale of shares of Cyberspace Infosys Ltd. pertaining to the Settlement Nos. 242 to 246/2000-2001.
A] as a broker/member of the BSE, we had effected transactions for sale of share of Cyberspace Infosys Ltd. for and on behalf of our client Mr. Jugal Kishore Barasia in Settlement No. 242/2000-2001; and B] an amount of Rs. 65,80,000/- being the sale proceeds has been withheld by the Exchange and accordingly, the payment was not made either by the Exchange or by us to our said client.
3. We have now been given to understand that the Governing Board of the Stock Exchange, Mumbai has agreed to make the payment of the said amount of Rs. 65,80,000/- 4. In this regard, we say and submit that we have no objection to the Exchange making the payment directly to our client Mr. Jugal Kishor Barasia.
5. We further submit that in any event, neither we are liable nor responsible for making any payment to any of our clients if the settlements have been withheld or the amount due and payable to the clients are not effected by the Exchange.
6. Please note that we are unable to give any undertaking or indemnity as suggested in your letter under reference.
11. Copy of the letter written by the BSE to the appellant dated 19.7.2005 is as follows: "We have to inform you that the Governing Board of the Exchange in its meeting held on May 18, 2005 has considered the matter regarding the withheld payout for the transactions in the scrip Cyberspace Infosys ltd. entered by you pertaining to the Settl. Nos. 242 to 246/2000-2001.
The Board in its aforesaid meeting has decided not to annul the above referred transactions entered by you in respect of the above referred settlements. It has been observed that you had sale transactions through two members of the Exchange i.e. ACK capital management Pvt. Ltd. and NIkko Stock brokers P. Ltd. in the scrip Cyberspace Infosys Ltd. Accordingly, it has been decided to affect the payout in respect of the aforesaid settlements in so far as your transactions are concerned.
You are now advised that an amount of Rs. 1,17,80,000/- (Rs. One crore seventeen lacs eight thousand only) will be released to you.
Out of the said amount the Exchange will credit an amount of Rs. 65,80,000/- to the account of the member ACK Capital Management Ltd., who in turn make payment to you. The balance amount of Rs. 52,00,000/- will be directly paid to you, since the seller member for the said transactions have been declared defaulter by the Exchange, on your furnishing a duly executed 12. From these correspondence we understand that the broker ACK Capital Management Pvt. Ltd. undertakes to pay the amount to the appellant only if the money is paid by BSE, and now BSE before us has agreed to pay the money to the Broker.
13. Mr. Modi, learned counsel appearing for BSE expresses some difficulty that the amount cannot be paid directly to the appellant and the amount has to be paid to the broker and broker in turn will pay the appellant.
14. In view of the letter addressed to the broker dated 22.7.2005, we have no difficulty in understanding that if the amount is paid by BSE to ACK Capital Management, ACK Capital Management would pay the amount to the appellant in accordance with law.
15. Taking all these factors into account, it will not be necessary for us to go into the merits of the matter since BSE has come to the rescue of the appellant. The appellant being of advanced age, an equitable arrangement has been made by BSE.16. The learned counsel for SEBI also concedes that taking into account the advanced age of the appellant and for putting an end to the litigation, they have no objection in principle for BSE to release the amount to the appellant. The learned counsel's statement for SEBI is placed on record.
17. BSE is directed to make the payment of Rs. 52,00,000/- (Rupees fifty two lakh only) in accordance with their letter dated 19.7.2005 to the appellant within a period of four weeks.
18. In view of the fact that the broker ACK Capital Management has no objection in making the payment to the appellant, which is paid by BSE on behalf of the appellant, it would be appropriate for ACK Capital Management to complete the necessary formalities within four weeks from the receipt of the order and make payment to the appellant as promptly as possible.
19. In these circumstances, appeal is disposed of accordingly. No order as to costs.
20. We place on record the valuable assistance rendered by Mr. P.N.Modi in these proceedings.