2013 (9) TMI 1243 - AT - SEBI

Summary

Issues Involved:
1. Maintainability of appeal against SEBI's rejection of the complaint.
2. Alleged failure to disclose material information in the letter of offer.
3. Consideration of the complaint by SEBI.

Summary:

1. Maintainability of Appeal:
The primary issue is whether an appeal against SEBI's rejection of a complaint alleging fraud and misrepresentation in the letter of offer by the Acquirer is maintainable u/s 15T of the SEBI Act, 1992. The Tribunal held that an investor whose complaint is rejected without considering the allegations is a "person aggrieved" and entitled to file an appeal u/s 15T of the SEBI Act. The Tribunal dismissed the preliminary objections raised by the respondents regarding the maintainability of the appeal, stating that SEBI's rejection of the complaint constitutes an order prejudicially affecting the investor's interests.

2. Alleged Failure to Disclose Material Information:
The appellant's complaint alleged that the Acquirer and the Manager failed to disclose material information in the letter of offer dated 12th March 2008, violating Regulation 16(v) of the SAST Regulations, 1997, and Clauses 4.1.5 and 4.1.8 of the standard letter of offer as per SEBI's circular dated 8th March 2004. The specific allegations included:
- Non-disclosure of Sycamore Ventures' control over IndiaStar Fund L.P.
- Suppression of the association of Ravi Pratap Singh with Sera Nova Inc, Dahava Resources Ltd., and Silverline Technologies Ltd.

The Tribunal found that SEBI's impugned communication dated 8th June 2012 did not adequately address these grievances. The reasoning provided by SEBI did not consider whether the failure to disclose Sycamore Ventures' control over IndiaStar Fund L.P. and the association of Ravi Pratap Singh with the mentioned companies caused prejudice to the appellant.

3. Consideration of the Complaint by SEBI:
The Tribunal held that SEBI is obligated to consider the allegations in the complaint and pass appropriate orders. The rejection of the complaint without considering the alleged violations resulted in a miscarriage of justice. The Tribunal emphasized that it is SEBI's duty to enforce compliance with the regulations and protect investors' interests.

Conclusion:
The Tribunal set aside the impugned order dated 8th June 2012 and directed SEBI to reconsider the appellant's complaint dated 16th January 2012 afresh and pass appropriate orders. The Tribunal clarified that it had not expressed any opinion on the merits of the case and disposed of the appeal with no order as to costs.