N.K. Sodhi, J. (Presiding Officer)

1. Order dated October 18, 2005 passed by the adjudicating officer imposing a penalty of Rs. 10 lacs on the appellant for not responding to the summons sent to him during the course of the investigations conducted by the Securities and Exchange Board of India (for short "the Board") is under challenge in this appeal.

2. It is not in dispute that the Board had ordered investigations into the alleged price manipulation in the scrip of Shalibhadra Infosec Limited. During the course of the said investigations the investigating authority wanted the appellant to appear and produce certain records. It came to the notice of the Board that the appellant had traded in the scrip of the aforesaid company which fact was disputed by the appellant.

3. Be that as it may, the adjudicating officer found that the summons were issued to the appellant and he did not respond. According to the respondent the summons were again issued through the depository participant which were served and despite service the appellant failed to appear before the investigating officer with the relevant records. It is on this basis that the adjudicating officer found that the appellant had caused hindrance in the investigations ordered by the Board by not cooperating. The grievance of the appellant is that he had not been served.

4. We have gone through the records produced by the learned counsel appearing for the Board and are not sure whether the appellant had been served or not. No doubt, there is a letter on the record from the depository participant through whom the appellant had opened his demat account informing the Board that a copy of the summons had been served on the appellant but there is no proof of service. The proof of service does not appear to have been sent by the depository participant to the Board. In regard to the summons directly sent by the Board, there is proof of dispatch but there is no proof of service. Since there was no direct service on the appellant by the Board and having regard to the fact that a heavy amount of penalty has been imposed in the present case we deem it proper in the interest of justice that the adjudicating officer should decide the matter afresh after affording an opportunity of hearing to the appellant. We accordingly set aside the impugned order and direct the appellant to appear before the adjudicating officer on April 3, 2006 on which date the appellant will be furnished with the details of the information which the Board wants from him. He will be allowed 10 days time to furnish the said information. Thereafter the adjudicating officer will pass an appropriate order in accordance with law within 30 days.

5. The appeal is disposed of as above. There is no order as to costs.