Mumbai: A SEBI judge cleared an Andheri trader for failing to receive a penalty order in a timely manner

An Andheri-based trader who was accused of failing to pay a penalty levied by the SEBI Board in 2009 for engaging in manipulative trading has been cleared by a special SEBI court. The accused was not told about the order, according to the court’s findings. The SEBI official acknowledged that the order was not followed for a decade, ending in 2019.

The trader Santosh Narvekar was found to have engaged in share manipulation of the company Mega Corporation Limited, according to the prosecution’s evidence. In the July 16, 2009 ruling, the adjudication officer designated by SEBI penalized him with an amount of Rs 10 lakh. However, SEBI didn’t send him the order until 2019.

Narvekar is accused of not complying with the ruling and failing to pay the fine even after receiving it. As a result, charges were brought against him. The regulation states that the penalty must be paid within 45 days of the order being received.

The order was not served to the accused at his residence from 2009 until 2019, according to special SEBI judge A. A. Kulkarni’s observations. It is observed that on March 13, 2019, the accused received the order by speed post, and on September 20, 2019, a reminder letter was also delivered to them via speed post.

According to the prosecution, the accused received the order by speed post on March 13, 2019, and on September 20, 2019, a reminder letter was also issued by the same method. To prove that the order and letter were sent, the prosecution produced an acknowledgment card that it had received from the postal service. The prosecution claimed that the court should assume that the postal service would have finished sending both the order and the reminder letter, citing the acknowledgment card as proof of having dispatched the order.

Nonetheless, the defense maintained that Narvekar never got a copy of the reminder letter or the order. The defense contended that the prosecution had not shown any evidence demonstrating that Narvekar had received the order, been made aware of it, or known that it had been issued against him in order for him to comply with it.

The prosecution has not shown that the accused knew about the adjudicating order and purposefully chose not to pay the fine, the court said. The judge said that “only on the basis of acknowledgment cards produced by the complainant (SEBI), it cannot be presumed that, the adjudication order and reminder letters as claimed by the complainant were duly posted and were received by the accused.”