Case BriefsHigh Courts

Tripura High Court: Arindam Lodh, J. dismissed a writ petition by the petitioner challenging the show cause notice issued against him whereby the dealership of his fair price shop was threatened to be cancelled. 

The counsel appearing for the petitioner is K. Nath and learned Additional GA appearing for the State-respondent is D. Sharma.

Petitioner was appointed as a dealer of a fair price shop in 1968. A show-cause notice was issued upon him in 2018 stating that he had violated the guidelines provided under Tripura Foodgrains Dealers Licensing Order, 1964 for his personal gain. The petitioner replied to the show cause stating that he was aged 86 years and suffering from Parkinson’s disease due to which he could not move independently. As a result, he had to appoint one person or employee for the smooth functioning of the fair price shop licensed to him. Thus, he urged that the person in whose favour he had executed a power of attorney (one Ratan) for running the dealership of shop, not be treated as a proxy dealer. 

The Court noted that it was evident from the Power of Attorney that the petitioner had bestowed the responsibilities and the liabilities upon Ratan and that he has no involvement with the running of the shop. Thus, it was true that the petitioner has not been running the business for which the dealership was provided to him. Further, it was also admitted by the petitioner that he has nominated a person (apart from his family members) to run his fair price shop. 

The Court also took note of a memorandum dated 18-03-2011 issued by the Director, Food, Civil Supplies & Consumer Affairs, Government of Tripura wherein it was clearly mentioned that “no F.P. Shop shall be allowed to run by any person other than the original licensee (i.e. in favour of whom the license has been issued by the Licensing Authority) for an unlimited or unreasonable period”. 

In view of the above, it was held that the petitioner was running his business of contradictory to the directives of the government, and the court had no jurisdiction to invade or replace the decision of the government. Thus, due to lack of merit, the petition was dismissed.[Sachindra Chandra Das v. State of Tripura, 2019 SCC OnLine Tri 500, decided on 20-11-2019]

Case BriefsTribunals/Commissions/Regulatory Bodies

Securities Exchange Board of India (SEBI): Anant Barua, Whole Time Member, denied KSBL’s request to permit the continuation of Karvy Stock Broking Limited (KSBL) using the Power of Attorney (PoA) for the purpose of transfer of securities.

SEBI had passed an ad-interim order against the Power of Attorney. Following directions were issued by SEBI:

“(i) KSBL is prohibited from taking new clients in respect of its stockbroking activities;

(ii)  The Depositories i.e. NSDL and CDSL, in order to prevent further misuse of clients’ securities by KSBL, are hereby directed not to act upon any instructions given by KSBL in pursuance of power of attorney given to KSBL by its clients, with immediate effect;

(iii)  The Depositories shall monitor the movement of securities into and from the DP account of clients of KSBL as DP to ensure that clients’ operations are not affected;

(iv)The Depositories shall not allow the transfer of securities from DP account no. 11458979, named KARVY STOCK BROKING LTD (BSE) with immediate effect. The transfer of securities from DP account no. 11458979, named KARVY STOCK BROKING LTD (BSE) shall be permitted only to the respective beneficial owner who has paid in full against these securities, under supervision of NSE; and

(v) The Depositories and Stock Exchanges shall initiate appropriate disciplinary regulatory proceedings against the Noticee for misuse of clients’ funds and securities as per their respective bye-laws, rules and regulations;………….”

Letters were sent by KSBL to SEBI with respect to placing the request in order to permit the continuation of KSBL using the power of attorney (PoA) only for the limited purpose of the transfer of securities for settling the client’s pay-in obligations to the Stock Exchanges.

KSBL had filed an appeal before SAT, Mumbai and for the same SAT had passed the following order:

“…7. We accordingly dispose of this appeal at this stage with a direction to the WTM to consider the request of the appellant which has been made vide letters dated November 24, 25 and 26, 2019 and pass an appropriate order after giving an opportunity of hearing by December 02, 2019…..”

Analysis & Decision

SEBI on considering the facts and submissions stated that the interim order that was passed by SEBI was at the time when it was found that KSBL had misused the clients’ securities by misusing the PoA given to it by its clients.

Further, the Commission noted that the clients of stockbrokers are free to avail various modes for giving instructions to the brokers including through PoA.

“..As per the Business Rules of depositories, the mode of affecting transfer by book entry based on electronic instruction received from the client such as through Speed e facility eliminating the need to deliver the DIS in physical form. If any client seeks to give instruction in physical form, he may also do so by sending the DIS through fax to depository participant and the original DIS may be sent within three days of the fax. The client who seeks to send physical DIS, in addition to sending it by fax has the option to deliver the same at the offices of the broker of depository participant (DP)..”

Thus, the Commission noted that the enormity of the prima facie violations observed against the KSBL in the interim order, it would not be prudent to allow the use of PoA by KSBL given to it by its clients, as prayed by KSBL. The clients of KSBL who seek to sell securities through KSBL may do so by using electronic or physical DIS only. [Karvy Stock Broking Ltd., In Re, 2019 SCC OnLine SEBI 303, decided on 29-11-2019]

Case BriefsHigh Courts

Punjab and Haryana High Court: Petitioner had prayed for anticipatory bail in FIR registered under Sections 420, 465, 467, 471 and 120-B of the Penal Code before a Single Judge Bench of Arvind Singh Sangwan, J.

Facts of the case are that petitioner had executed a sale deed and sold a house of the complainant on the basis of alleged forged Special Power of Attorney of the complainant. Later, petitioner was granted interim anticipatory bail. Whereas complainant submitted that huge amount was transferred in the account of the petitioner. Petitioner had not accounted for the same and had mis-utilized. On request of the petitioner, matter was referred to Mediation and Conciliation Centre of the High Court which was contested by the complainant by stating that petitioner was not inclined to any amicable settlement pertaining to the FIR. The state opposed grant of bail to petitioner alleging him of committing of a serious offence.

The High Court was of the view that petitioner had forged and fabricated power of attorney related to the property of the complainant. The Court considered the allegations on the petitioner to be of serious offence. Therefore, this petition for grant of anticipatory bail was dismissed. [Gurdeep Singh v. State of Punjab,2018 SCC OnLine P&H 1843, decided on 21-11-2018]