2015 (3) TMI 412 - HC - Companies Law

Off-market transfer of shares - Private transaction between parties - Outside the purview of SEBI - SEBI provisions do not bar the common law remedies - Held that - The complaint made by the petitioner before the SEBI was for imposition of penalty upon respondent no.2. However, the SEBI found that petitioner had failed to provide any material to conclude that respondent no.2 had approached the petitioner as a broker. Consequently, the SEBI held that the disputes related to entities, which were not regulated by SEBI. I do not find any infirmity with the SEBI s decision. The impugned order passed by SEBI is neither patently erroneous nor ill-informed by reason. Accordingly, the present petition is dismissed as bereft of any merits. - Decided against the appellant.

Summary

Issues:
1. Jurisdiction of SEBI in complaints regarding off-market transactions.
2. Applicability of SEBI Act provisions on transactions between private entities.
3. Jurisdiction of Civil Courts in matters under SEBI Act.

Analysis:
1. The petitioner challenged SEBI's order rejecting a complaint against a stock dealer for off-market share transfers. SEBI found the transfers were private transactions, not on a stock exchange, and the dealer was not a registered broker. SEBI's role is limited in such cases as they are unrelated to the securities market.

2. SEBI's functions include regulating stock exchange business and market intermediaries. The transactions in question were private, not market-related. SEBI's jurisdiction is limited in such non-market transactions.

3. The petitioner contended that Civil Courts lack jurisdiction in disputes under SEBI Act. However, SEBI Act provisions do not bar common law remedies for breach of contract. The petitioner failed to substantiate the dealer's role as a broker, leading SEBI to conclude the matter was beyond its regulation. The petitioner's complaint for penalty imposition was dismissed by SEBI due to lack of evidence. The court upheld SEBI's decision, stating it was not erroneous or ill-informed, and dismissed the petition for lacking merit.