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wp 5024 · PDF file 2020. 9. 2. · # karvy stock broking limited, reprsented by its vice- president (legal) mr. ch.viswanath. .. petitioner and $ the union of india, represented by

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Text of wp 5024 · PDF file 2020. 9. 2. · # karvy stock broking limited, reprsented by its...

  • * THE HON’BLE SRI JUSTICE A.RAJASHEKER REDDY + W.P.NOS.5024 AND 8997 OF 2020

    % 26.08.2020 W.P.NO.5024 OF 2020 # KARVY STOCK BROKING LIMITED, REPRSENTED BY ITS VICE- PRESIDENT (LEGAL) MR. CH.VISWANATH. .. Petitioner

    And

    $ THE UNION OF INDIA, REPRESENTED BY ITS SECRETARY, MINISTRY OF CORPORATE AFFAIRS, NEW DELHI AND FIVE OTHERS.

    .. Respondents

    W.P.NO.8997 OF 2020 # KARVY STOCK BROKING LIMITED, REPRESENTED BY ITS VICE-PRESIDENT (LEGAL) MR. CH.VISWNATH.

    .. Petitioner

    AND

    $ THE UNION OF INDIA, REPRESENTED BY ITS SECRETARY, MINISTRY OF CORPORATE AFFAIRS, NEW DELHI AND FIVE OTHERS.

    .. Respondents.

    ! Counsel for the petitioner : Sri S. Niranjan Reddy, learned Senior Counsel appeared for the learned counsel Sri Avinash Desai.

    Counsel for respondents : Sri N.Rajeshwar Rao, Learned Assistant Solicitor General.

    < Gist :

    > Head Note :

    ? Citations:

    1. 2018(1) ALD 734 2. 2016 SCC OnLine Bom 9276 3. 2000(1) ALD 388 4. (1966)1 SCR 466 = AIR 1966 SC 671 5. 1989 Supp. (2) SCC 462 6. (1996)4 SCC 69 7. (1966) Supp SCR 311

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    8. (1969)1 SCC 325 9. 2019 SCC Online Del. 6465

    DATE OF JUDGMENT PRONOUNCED : 26.08.2020 SUBMITTED FOR APPROVAL:

    THE HON’BLE SRI JUSTICE A.RAJASHEKER REDDY

    1. Whether Reporters of Local Newspapers : Yes / No may be allowed to see the Judgments ? 2. Whether the copies of judgment may be : Yes / No marked to Law Reporters/Journals 3. Whether Their Lordship wish to : Yes / No see the fair copy of the Judgment ? -------------------------------------------------------- A.RAJASHEKER REDDY,J

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    THE HON’BLE SRI JUSTICE A.RAJASHEKER REDDY

    W.P.NOS.5024 AND 8997 OF 2020

    COMMON ORDER Since the issue involved in both the writ petitions is connected and the

    parties are same, they are heard together and are being disposed of by this

    common order.

    2. The petitioner in both the writ petitions is M/s Karvey Stock

    Broking Limited and it is represented by its Vice President (Legal)

    Mr. Ch.Viswanath.

    3. The 2nd respondent – Office of Director General, Ministry of

    Corporate Affairs, represented by its Joint Director, in exercise of jurisdiction

    under Section 212 (1) (a) and (c) of the Companies Act, 2013 (for short ‘the

    Act’), ordered investigation into the affairs of the petitioner – company in the

    public interest, vide order No.07/341/2015-CL II (SER) dated 27-02-2020.

    In pursuance of the order dated 27.02.2020, the Investigating Officer issued

    notice dated 16.06.2020 under Section 217 of the Act calling for

    information, and vide communication dated 19.06.2020, intimated the

    petitioner to strictly comply with Section 217 of the Act, with a default

    clause.

    4. Challenging the order passed by the 2nd respondent under

    Section 212 (1) (a) and (c) of the Act dated 27.02.2020, petitioner -

    company filed W.P.No.5024 of 2020, and challenging the consequential

    notices issued under Section 217 of the Act dated 16.06.2020 and

    19.06.2020, W.P.No.8997 of 2020 has been filed.

    5. Since the result in W.P.No.5024 of 2020 will have bearing on

    W.P.No.8997 of 2020, the former is taken up for adjudication.

    6. The case of the petitioner - company, as per the averments made

    in the affidavit filed in support of the writ petition is that, it is involved in the

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    business of stock broking, commodities trading, depository, wealth

    management services and distribution of other financial produces.

    7. As there were media reports stating that the petitioner – company

    is violating the regulations of Securities Exchange Board of India (SEBI), the

    5th respondent – Ministry of Corporate Affairs, O/o the Registrar of

    Companies, through its Assistant Director – 6th respondent, vide letter in

    Ref:ROCH/KSBL/2019/2410 dated 03.12.2019, called for certain information

    from the petitioner – company with regard to current status of investigation

    by SEBI, and the action taken against the petitioner and its group of

    companies, and to submit a copy of the latest financial statement of the

    company. The petitioner - company, vide letter dated 13.12.2019,

    submitted a detailed reply with regard to information sought for by the

    6th respondent.

    8. Thereafter, the 6th respondent issued notice dated 14.01.2020

    under Section 206(1) of the Act, calling upon the petitioner, to furnish some

    more information and documents within seven days of receipt of notice. As

    the information sought for by the 6th respondent is voluminous, petitioner

    vide letter dated 22.01.2020, sought four weeks time. But, without

    considering the request made by the petitioner vide letter dated 22.01.2020,

    the 6th respondent issued notice dated 24.01.2020 under Section 206(3) of

    the Act, to produce original documents/ registers maintained by the company

    on 27.01.2020, in pursuance thereof, the officials of the company were

    physically present on 27.01.2020, and submitted a preliminary reply, and

    sought further time for producing some more documents and for personal

    hearing.

    09. As the respondents are proceeding with undue haste, petitioner

    filed W.P.No.3143 of 2020, alleging that the respondents, without giving

    adequate time to respond to the notice dated 14.01.2020 issued under

    Section 206(1) of the Act, have issued further notice dated 24.01.2020 under

    Section 206(3) of the Act, as such the same is illegal and arbitrary.

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    10. In the said writ petition, the learned Assistant Solicitor General

    represented before the court that the respondents would take into

    consideration the explanation submitted by the petitioner on 03.02.2020,

    and proceed with the inquiry in accordance with law, after giving opportunity

    to the petitioner and considering the above representation of the learned

    Assistant Solicitor General, this court, vide order dated 14.02.2020, disposed

    of W.P.No.3143 of 2020, directing the respondents to proceed with the

    inquiry initiated against the petitioner under Section 206(1) of the Act, by

    duly taking into consideration the explanation submitted by the petitioner –

    company, and conclude the same as expeditiously as possible, preferably

    within a period of six months from the date of receipt of that order.

    11. It is stated that as per the above directions of this court, the

    petitioner approached the respondents vide letter dated 25.02.2020, to give

    opportunity of hearing before the 6th respondent, but there was no response.

    12. Petitioner also filed W.P.No.4742 of 2020 aggrieved by the action

    of the respondents is not responding to its letter dated 25.02.2020. During

    the hearing of the said writ petition, the Standing Counsel informed the court

    that based on the inquiry report dated 24.02.2020 submitted by the

    5th respondent – Registrar of Companies (ROC), under Section 208 of the

    Act, the Joint Director of the 2nd respondent – Office of Director General,

    Ministry of Corporate Affairs, New Delhi, passed the impugned order dated

    27.02.2020, directing investigation into the affairs of the company under

    Section 212(1)(a) and (c) of the Act. 14. The Chairman and the Managing

    Director of the petitioner – company, vide email dated 20.02.2020, to the

    Secretary of Ministry of Corporate Affairs, also gave the gist of the issues

    with SEBI, and requested for a personal hearing. In response to the same,

    vide email dated 27.02.2020, it was intimated that the petitioner could meet

    the Secretary, Ministry of Corporate Affairs on 05.03.2020 at noon. In view

    of the same, the said writ petition has become infructuous. Therefore,

    challenging the order dated 27.02.2020, the present writ petition is filed.

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    13. Counte

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