BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI

 Appeal No. 140 of 2012 

 Date of decision: 11.09.2012   

Fairwealth Securities Ltd.
(Previously known as Fairwealth
Securities Pvt. Ltd.)
651-652, Udyog Vihar,
Phase-V, Gurgaon,
Haryana – 122 001. …Appellant
Versus
Securities and Exchange Board of India
SEBI Bhavan, Plot No. C4-A, G-Block,
Bandra Kurla Complex,
Mumbai – 400 051.

… Respondent
Mr. Prakash Shah, Advocate for the Appellant.
Mr. Prateek Seksaria, Advocate with Mr. Mobin Shaikh, Advocate for the Respondent.
CORAM : P. K. Malhotra, Member & Presiding Officer ( Offg .)
S. S. N. Moorthy, Member
Per : P. K. Malhotra (Oral)
The appellant before us is a company registered under the Companies Act, 1956
and is also registered as a stock broker with the Securities and Exchange Board of India
(for short the Board).

2. The Board carried out investigations into the alleged manipulation in the scrip of
   M/s. Alka Securities Limited (the company) an d for that purpose, it issued summons to
   a large number of entities including the appellant. One such summons was issued to the
   appellant on December 9, 2009. It is the case of the appellant that it responded to the
   summons by its letter dated December 18, 2009. However, the case of the Board is that 2
   no such reply was received. Accordingly, th e Board issued a show cause notice dated
   June 16, 2010 to the appellant asking it to show cause as to why action should not be
   initiated against it for the alleged violation of provisions of sections 11C(2) and (3) of
   the Securities and Exchange Board of I ndia Act, 1992 (for short the Act) for not
   complying with the summons which, according to the Board, has hampered the
   investigations into the dealing in the scrip of the comp any. The appellant responded to
   the show cause notice after which a person al hearing was also granted. After
   considering the matter, the adjudicating officer, vide its order dated May 10, 2012, held
   the appellant guilty of violating sections 11C(2) & (3) of the Act and imposed a penalty
   of Rs.1 lac under section 15(A)(a) of the Act. Hence this appeal.
3. Learned counsel for the appellant submitted before us that the summons dated
   December 9, 2009 were replied vide letter dated December 18, 2009. In support, he has
   annexed a copy of the cour ier receipt no. 580547305 issued by Overnite Express Ltd.,
   Delhi. It is further submitted by the appell ant that it received another summons dated
   January 21, 2010 relating to th e same investigation seekin g further information which
   was again replied vide letter dated January 29, 2010. The said letter is in continuation
   of its earlier letter in respons e to the first summons issued. The receipt of reply to the
   second summons is not disputed by the re spondent Board. It was further submitted on
   behalf of the appellant th at in spite of its response to the second summons, the
   respondent Board has given an advertisement in the newspapers on March 12, 2010
   showing the appellant as defaulter to the su mmons issued. According to the appellant,
   since second summons was responded to in continuation of its reply and there was no
   query from the Board with regard to the non compliance of the first summons, there was
   no reason for the Board to conduct an enquiry for non-compliance of the first summons
   or to put the appellant’s name in the press advertisement given on March 12, 2010.
4. Learned counsel for the respondent Boar d vehemently argued that the initiation
   of proceedings is for non-compliance of first summons issued to the appellant on
   December 9, 2009. He has also disputed the genuineness of the courier receipt
   produced by the appellant and st ated that in spite of specific direction to furnish the 3
   information at the Mumbai address, the a ppellant has, as per the courier receipt,
   furnished the information to Delhi office of the Board. Therefore, there was no
   compliance with the summons issued on December 9, 2009 and the appellant has come
   before this Tribunal with a false case. The case of the learned counsel for the
   respondent Board is that the courier receip t is a fabricated document. It does not
   contain necessary particulars and the appell ant has not approached this Tribunal with
   clean hands and, therefore, it does not deserv e any relief. In s upport of his contention,
   learned counsel for the Board has relied on the judgment of the Hon’ble Supreme Court
   in the case of S.P. Chengalvaraya Naidu v. Jagannath (1994) 1 SCC 1. The observations
   of the Hon’ble Apex Court re lied upon by the learned coun sel for the Board reads as
   under:
   “The courts of law are meant for imparting justice between the
   parties. One who comes to the court, must come with clean
   hands. We are constrained to say that more often than not,
   process of the court is being abused. Property-grabbers, tax-
   evaders, bank-loan-dodgers a nd other unscrupulous persons
   from all walks of life find the court-process a convenient lever
   to retain the illegal-gains indefi nitely. We have no hesitation to
   say that a person, who’s case is based on falsehood, has no right
   to approach the court. He can be summarily thrown out at any
   stage of the litigation.”
5. After hearing learned counsel for the pa rties and perusing the record, we are of
   the view that the appeal must succeed for th e reasons given below. It is not a case
   where decision is to be taken solely on the basis of alleged non-compliance of the
   summons issued by the Board on Decembe r 9, 2009. Assuming that the respondent
   Board is correct in contending that the c ourier receipt produced by the appellant is
   fabricated, the fact remains that in res ponse to the second summons, the appellant has
   submitted a reply on January 29, 2010 wherein he has made a reference to his earlier
   reply dated December 18, 2009. There is not a word by the Board in the documents
   placed before us that it had disputed either receipt of reply to the second summons or
   the statement made in the second reply that this is in continuation of the appellant’s
   earlier submission dated December 18, 2009 in response to the first summons. Further,
   we fail to understand when reply to the summons dated January 21, 2010 was received
   by the Board, where was the need to publis h the appellant’s name in the press 4
   advertisement dated March 12, 2010 showing th e appellant as defaulter. The judgment
   referred to by the learned counsel for the respondent Board would have been relevant if
   the case was confined only to non-complian ce to the summons issued on December 9,
6. That is not the case here. The appe llant has responded to the second summons
   and has given reply which has not been disputed and no further questions were asked in
   continuation to the reply given to the second summons.
7. In view of the fact that the appe llant had responded to the second summons
   relating to the same investigation for whic h first summons was issued and no further
   questions were asked by the Board, we are of the view that the Board was not justified
   in initiating adjudication proceedings against the appellant for not responding to the first
   summons.
   In view of the foregoing discussions, we set aside the impugned order and allow
   the appeal with no order as to costs.
   Sd/-
   P. K. Malhotra
   Member &
   Presiding Officer ( Offg.) Sd/- S.S.N. Moorthy Member 11/9/2012
   Prepared & compared by-ddg