SAT | Additional affidavit filed after disposal of appeal cannot form part of the memo of appeal

Securities Appellate Tribunal (SAT): Justice Tarun Agarwala (Presiding Officer) and Dr C.K.G. Nair (Member) dismissed an appeal by the appellant as it was devoid of any merit

The appellant, a private company, was a minority shareholder in New Delhi Television Ltd. (NDTV). With regard to non-disclosure of a tax demand under Clause 36 of the Equity Listing Agreement prescribed by the Stock Exchange (Listing Agreement) by the Company, the appellant made a complaint to the stock exchange as well as to SEBI based on which adjudication proceedings were initiated by the Adjudicating Officer under Sections 23-A and 23-E of the SEBI Act, 1992 read with 23-I of the Securities Contracts (Regulation) Act, 1956 (SCRA). The Adjudicating Officer imposed a penalty of Rs 2 crores on NDTV. The appellant filed an appeal against the order contending that the penalty should have been imposed on the Key Managerial Personnel of the Company who took a conscious decision of not disclosing the event under Clause 36 of the Listing Agreement, and not the whole company. The Tribunal directed the appellant to make a fresh representation to SEBI.

Based on this, a representation was filed which was rejected by the Whole Time Member (WTM), as they found that out of the nine violations only two violations formed the cause of grievance which was mentioned in the appeal filed before the Tribunal. The remaining seven violations alleged were beyond the scope of the directions of the Tribunal. On the two violations which were part of the appeal, the WTM held that the complaint of the appellant was considered and appropriate orders of the penalty were passed against the Company.

The Tribunal was of the opinion that the contentions by the appellants were misconceived. They held there were parallel proceedings for the same offence culminating into an order passed by the Adjudicating Officer under Section 15-A(b) of the SEBI Act as well as under Sections 23-A(a) and 23-E of the SCRA. Thus, their grievance was set at rest. Another contention of the appellant that the remaining seven alleged violations should also be considered as they were part of the appeal that was filed before the Tribunal was also misconceived.

The earlier order of the Tribunal clearly rejected the contention of the appellant for making the representation on issues other than the issue mentioned. The Tribunal rejected the modification application holding that permitting the appellant to make a representation on issues which are not the subject matter of appeal would amount to enlarging the scope of the representation beyond the grievances set out in the memo of appeal. Also, the additional affidavit on which reliance was placed was filed much after the disposal of the appellant’s appeal. Any additional affidavit filed after the disposal of the appeal cannot form part of the memo of appeal.[Quantum Securities (P) Ltd. v. Securities & Exchange Board of India, Appeal No. 115 of 2018, decided on 07-08-2019]

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