11C(2) and 11 C(3) of the SEBI Act mandates any person for submission of documents/information sought by IA through summons

11C(2) and 11 C(3) of the SEBI Act mandates any person for submission of documents/information sought by IA through summons

SEBI disposes of Adjudication proceedings against Siva Balan without any monetary penalty

In the matter of Supreme Tex Mart Limited, SEBI has disposed of the Adjudication proceedings initiated against the Noticee viz. Siva Balan without the imposition of any monetary penalty.

Herein, SEBI had conducted an investigation into the affairs of Supreme Tex Mart Limited (STML/Company) for the period 1 June 2016 to 31 October 2016 (IP). During the investigation, the Investigating Authority of SEBI (IA) issued summons under Sections 11C(2) read with 11C(3) of the SEBI Act to various entities including Mr Siva Balan Jaipal (Noticee/by Name) for production of documents.

However, the Noticee failed to comply with the summons. In view of the same, SEBI initiated Adjudication proceedings under Section 15A(a)of the SEBI Act, 1992 (SEBI Act) against the Noticee,

SEBI conducted an investigation into the affairs of STML and during the course of the investigation, IA is sued summons to the Noticee seeking certain information under section 11 C (2) and11 C(3) of the SEBI Act. It was alleged that the Noticee did not furnish the complete information to IA.

The Adjudicating Officer of SEBI has opined that seven queries were raised visa vispertaining to his relations and reasons for fund transactions with certain entities. From the facts, it was noted that Noticee did not reply to the aforesaid summon within the specified time. Therefore, an email dated 28 August 2018 was sent to the Noticee giving them time till 4 September2018 to provide the required information. Thereafter, the Noticee, vide letter dated 7 September 2018 submitted their reply to the summons.

The AO examined the reply of the Noticee along with the documents available on record in terms of the section 11C(2) and 11 C(3) of the SEBI Act. The said provisions mandate any person for submission of documents/information sought by IA through summons. The SCN alleged that Noticee sdid not comply with the summons.

Upon perusal of the reply dated 7 September 2018, the AO noted that the Noticee had replied to all seven queries raised by the IA. Upon plain reading of the reply of the Noticee, there was nothing to suggest that Noticee had failed to reply to the queries raised of IA.

Further, there was also nothing on record to suggest that information submitted was incomplete and, therefore, hampered the investigations. Had the information been incomplete or inadequate there would have been correspondence or other follow up summons by IA clearly specifying such deficiencies to the Noticee. In the absence of same, based on the documents available on records and reply of Noticee, it was concluded that the Noticee had complied with the Summons dated 14 August 2018 issued by IA and, therefore, charge alleged in SCN did not stand established.