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SEBI - Case Laws
Showing 81 to 100 of 624 Records
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2023 (8) TMI 199
Siphoning of the funds of the listed company through related entities - offence under SEBI Act - Need for Urgent provisional action for passing ex parte ad interim order - As contented issue relates to the financial year 2019-20 and therefore there was no emergent circumstances which led the respondent to pass an interim order after more than 3 years - HELD THAT:- In the instant case the WTM has found that the related entities of ZEEL had defaulted in the repayment of the loan taken by them, as a result of which, the fixed deposit given by ZEEL was encashed by the Bank.
The related entities alleged that the money was eventually repaid to ZEEL along with interest. In this regard, the details of the payment was sought by SEBI and the information supplied by ZEEL led to a further enquiry which showed prima facie a round tripping of the funds by ZEEL. It was found that the funds originated from ZEEL and listed companies of Essel Group and ultimately through multiple layers the funds travelled back to ZEEL within 2 to 3 days. This evidence based on bank statements prima facie led to a conclusion that there has been a siphoning of the funds of the listed company through related entities and which is to the detriment of the shareholders and the investors.
These bank statements made the WTM to observe prima facie that there has been a siphoning of the funds and round tripping of the funds from ZEEL to ZEE through related entities.
Contention of the appellants that the transaction related to the financial year 2019-20 and therefore there was no tearing hurry to pass such kind of interim order at this stage is not acceptable. There is nothing on record to indicate that the details of the repayment made by the related entities was made known to the SEBI or to the Stock Exchange in 2019-20. These details only surfaced when ZEEL provided the information on May 8, 2023. Thus, prima facie at this stage there is no delay in the passing of the impugned order.
Contention that no prima facie case existed in passing the impugned order is wholly erroneous. The contention that the conclusion of siphoning of the funds cannot be arrived at on the basis of the bank statements is an attractive argument but such contention cannot be considered in view of the fact that a prima facie opinion was arrived at based on objective facts indicating diversion of funds from a listed company which was not in the interest of its shareholders and the investors coupled with the fact that no evidence of any sort has been placed before us to show that the prima facie finding is perverse.
In the instant case we find that an ex parte ad interim order was issued considering the sense of urgency which was infused by a host of circumstances, namely, diversion of funds from a listed company to related parties which are controlled by the appellants. In the absence of any evidence being filed by the appellants before us, we do not find any perversity, irregularity, illegality or irrationality in passing of the impugned order.
Since the appellants have failed to provide any cogent evidence barring the fact that one of the entities, namely, Pen India Ltd. which according to the appellants is not a related entity, we are of the opinion that the appellants should file an appropriate reply for vacation / modification of the impugned order dated June 12, 2023.
No possible reason to interfere in the impugned order at this stage and we dispose of the appeals directing the appellants to file a reply / objection along with a stay vacating application to the ex parte ad interim order dated June 12, 2023 within two weeks from today.
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2023 (8) TMI 198
Delay in the initiation of the proceedings by SEBI - False impression given to the investors regarding the subscription of the GDR - HELD THAT:- We find that the GDR was issued by the Company on December 12, 2007 and the present show cause notice was issued on June 9, 2019 after an undue delay of 12 years.
we are of the opinion that there has been an inordinate delay in the issuance of the show cause notice. Even though there is no period of limitation prescribed in the Act and the Regulations for issuance of a show cause notice and for completion of the adjudication proceedings, nonetheless, the authorities are required to exercise its powers within a reasonable period. In AO, SEBI vs Bhavesh Pabari [2019 (3) TMI 197 - SUPREME COURT] the Supreme Court held that an authority is required to exercise its powers within a reasonable period.
Thus we are of the opinion that power to adjudicate has not been exercised within a reasonable period. Consequently, no penalty could be imposed.
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2023 (7) TMI 1546
Manipulation or structured trade - Fraudulent and Unfair Trade Practices under SEBI Act - trading pattern of the buyers and the sellers was that they traded in close proximity of time inter-se between them
HELD THAT:- No manifest error requiring review. The applications fail and are dismissed.
This order will be digitally signed by the Private Secretary on behalf of the bench and all concerned parties are directed to act on the digitally signed copy of this order. Certified copy of this order is also available from the Registry on payment of usual charges.
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2023 (7) TMI 1496
Maintainability of petitioner’s challenge against the impugned Order of Trial Court allowing reference to arbitration u/s 115 of the CPC - Revisional jurisdiction of the High Court.
HELD THAT:- This Court has limited powers which can be exercised under Section 115 of the CPC. Not every order of the Trial Court can be regarded as an order that can be put under the ambit of revisional jurisdiction of the High Court.
In view of the instant matter, Trial Court has referred the dispute of the petitioner for arbitration u/s 8 of the Act, 1996. Considering the facts of the instant case, there is a reference to arbitration as per the AOF executed between the petitioner and respondent no. 2.
This Court is of the view that any agreement that contains an arbitration clause must be referred to arbitration in an application under Section 8 of the Act, 1996. The same must be done because the parties have already consented to arbitration. Since the AOF in the instant case contains the arbitration clause, it has to be referred to arbitration for the necessary adjudication. The Court in this scenario cannot adjudicate upon whether the disputes which are arbitrable under the agreed terms between the parties.
Hon’ble Supreme Court in Magma Leasing & Finance Ltd. v. Potluri Madhavilata, [2009 (9) TMI 592 - SUPREME COURT] has strictly narrated its view with regard to the cases wherein reference to the arbitration has not been allowed by the Court despite existence of an arbitration clause in the agreement.
The application filed before the learned Trial Court has been properly accompanied by the AOF, which outlines the petitioner’s rights and obligations and acknowledgment of the same by the petitioner therein. It evidently specifies that any dispute between the “client and stock broker‟ should be referred to arbitration. In addition, Chapter-11 of the National Stock Exchange of India Byelaws provides for arbitration between trading members and constituents deriving from or relating to dealings, contracts, and transactions made subject to the byelaws, rules, and regulations of the Exchange.
On bare perusal of the reliefs sought by the petitioner before the learned Trial Court, it is ex facie apparent that the petitioner’s primary concern is against respondent no. 2. The reference to arbitration is mandatory for adjudication of the dispute in the present petition. The petitioner's contention that the current dispute is a tripartite dispute and not a bipartite dispute is not sustainable.
Conclusion - This Court is of the view that the learned Trial Court has not committed any error of law that can be the subject matter to be exercised by this Court exercising its revisional powers u/s 115 of the CPC. Section 8 of the Act, 1996 refers to a clause that limits Court's interference in the arbitration procedure. This Court has serious objections to the extent of interference on the grounds of the arbitrability of the subject matter, and the competence of the arbitral tribunal to deal with it. Section 8 of the Act, 1996 continues to serve as a hope for arbitration, forming the basis for mandating the parties to follow the model of arbitration where an arbitration agreement exists.
With regards to the maintainability of the revision petition, the learned Trial Court has rightly determined that its jurisdiction to hear the suit does not exist due to the presence of an arbitration clause. After relying upon the aforementioned judgments, it is concluded that the observations made therein apply to the facts of the case in hand.
Therefore, it is held that the learned Trial Court did not have the jurisdiction to hear a dispute after an application for arbitration under Section 8 of the Act, 1996 was filed. As a result, the learned Trial Court has correctly allowed the said application under Section 8 of the Act, 1996. In such a case, refusing to refer the matter to arbitration would be a failure of justice, causing irreparable harm to the parties and violating the settled principles of law.
This Court is of the view that no case of revision as defined under Section 115 of CPC has been made out by the petitioner as no such cause exists wherein the learned Trial Court has failed to exercise its jurisdiction as per law. The learned Trial Court has neither acted illegally in the exercise of its jurisdiction nor has there been any material irregularity. Accordingly, the issue framed above has been decided.
This Court finds no infirmity in the impugned Order in Civil Suit passed by the learned Senior Civil Judge, Patiala House Court, New Delhi.
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2023 (7) TMI 1491
Scope of settlement proceedings - discretion vested in SEBI with an obligation - SEBI (Settlement Proceedings) Regulations, 2018 (“Regulations”) - HELD THAT:- Viewed from any perspective, these Petitions, like the Settlement Application, are entirely without substance. We understand quite clearly now that the only purpose of the Settlement Application and indeed these Writ Petitions was to prolong and delay the adjudication of the show cause notice. If there was any doubt about this, it is surely put to rest by one look at the prayers in the Binny Petition, and in particular prayer clause (b) which is really the prayer that is being sought, for a stay of the adjudication on the show cause notice. Interestingly, although prayer clause (a) ought to be really for a certiorari not a mandamus, there is not even a prayer for a direction to SEBI to reconsider the Settlement Application. An order on this Writ Petition would effectively put an end to all SEBI action as a regulator. That is simply unthinkable.
These Petitions have taken an inordinate amount of time when our dockets are already overcrowded. We believe these Petitions are now fit cases for orders of costs.
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2023 (7) TMI 1440
Defalcation of the proceeds from the preferential issue - allegation of mis-utilization of the proceeds - inordinate delay in the issuance of the show cause notice - show cause notice alleged that there was deviation from the object of the issue and, therefore, the appellants have violated Clause 43 of the Listing Agreement / Regulation 32 of the SEBI-LODR Regulations - As per AO company had deviated from the object of the issue and did not utilize the proceeds from the preferential issue as per the objects and that subsequent ratification by the shareholders of the company will not make any difference to the violation of the Clause 43 of the Listing Agreement. The AO accordingly imposed the penalties.
HELD THAT:- There is an inordinate delay in the issuance of the show cause notice. The preferential issue was made in August 2013 and the show cause notice was issued on January 5, 2023. The issuance of the preferential issue was known to the stock exchange as well as to SEBI and, therefore, there is no justification for issuance of show cause notice at this belated stage.
We are of the opinion that the impugned order in so far as it relates to the appellants cannot be sustained.
Even otherwise we find that admittedly there was a deviation in the object of the issue and the money was utilized for some other purposes by the company. The matter was placed before the shareholders in the extra ordinary general meeting of the company and the object of the issue was ratified by the shareholders on September 29, 2017. Thus, prior to the issuance of the show cause notice, the alleged deviation by the company was ratified and, therefore, in our opinion, there was no violation of any provisions of the LODR Regulations or of the listing agreement on the date when the show cause notice was issued.
Ratification made by the shareholders of the company validates an act already done and even though the company initially utilized the proceeds of the preferential issue for a different purpose in variance of the objects specified, nonetheless, the variance in the utilization of the proceeds should ratified and became authorized pursuant to the special resolution passed by the shareholders on September 29, 2017.
We are of the view that no penalty could be imposed for the alleged deviation. We also find that there is no charge of defalcation of the proceeds from the preferential issue.
Thus, the impugned order in so far as it relates to the appellants cannot be sustained and is quashed. The appeals are allowed.
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2023 (7) TMI 1128
SEBI requisite legal power vested in it to direct the petitioner bank - nature of powers conferred upon SEBI - recovery of debts due to banks and FIs - prevention of auctioning the mortgaged property - do the persons or classes of persons referred to in Section 12 necessarily have to be registered with SEBI in order to be subject to its powers under Section 11B? - petitioner is aggrieved by the impugned emails/communications dated 29.01.2021 and 18.03.2021 by which SEBI directed the petitioner bank to comply with the orders dated 29.05.2018 and 14.12.2018 and not to proceed against the mortgaged property under Section 13 of the SARFAESI Act, 2002 without prior permission of the SEBI - HELD THAT:- One plain meaning that can be given to Section 11B(1)(iii)(a), it being, that persons or class of persons referred to in Section 12, are referred irrespective of the registration under Section 12. In other words, in order for Section 11B(1)(iii)(a) to be attracted, one may only need to fall in the person or class of persons referred to in Section 12 irrespective of their registration with SEBI.
It may be true that this construction, casts the web of powers that SEBI enjoys, to a larger degree than the other narrower construction would have. But merely on the basis of the consequences, this court cannot limit the plain meaning of a text.This court is therefore of the opinion that Section 11B(1)(iii)(a) of the SEBI Act, 1992 allows for directions to be given to persons or class of persons referred to in Section 12 of the SEBI Act, 1992 irrespective of the persons or class of persons being registered with SEBI.
In the facts of the instant case, SEBI does have the power to direct the petitioner bank, however, that power must be exercised with due caution. It must not be exercised so as to curtail the effect of other laws.
From the above analysis, it can be concluded that SEBI is possessed with powers under the SEBI Act, 1992 to direct the petitioner bank in specific, and banks in general, regardless of them being registered with SEBI.
The orders passed by Whole Time Member of SEBI are applicable to the petitioner bank, they however do not prevent the petitioner bank from auctioning the mortgaged property being Villa in Gurgaon under the provisions of the SARFAESI Act, 2002.
The impugned emails dated 29.01.2021 and 18.03.2021 are found to be erroneous and wholly without jurisdiction.
The proceedings under the SARFAESI Act, 2002 are to be treated as a carve out to, and remain unaffected by, the orders and directions passed under the SEBI Act, 1992.
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2023 (7) TMI 586
Offences under SEBI - collective investment schemes without applying for registration - petitioner (directors) was summoned for the offences under Sections 24(1) and 27 of the SEBI Act - company never initiated any steps for winding up of the schemes and for repayment to the investors despite notices - HELD THAT:- The complaint filed by respondent, SEBI makes a specific averment that the present petitioner was the director and was in-charge of and responsible to the company for the conduct of its business for the relevant period of time in terms of Section 27 SEBI Act, 1992. No documents have been produced on record to rebut the aforesaid averment made by the respondent to demonstrate that making the petitioner stand trial would be an abuse of process of the Court.
It is pertinent to state that the question as to whether the present petitioner shall be liable as the director of the accused company with regard to the violations committed by the said entity in question is a matter of trial and shall be adjudicated before the Trial Court of competent jurisdiction. This Court need not examine disputed factual issues involved in the present case while exercising the jurisdiction u/s 482 of Code of Criminal Procedure.
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2023 (7) TMI 3
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2023 (7) TMI 2
Offence under SEBI Act - fraudulent scheme of issuing GDR with an ulterior motive - whether the appellants had played part in the fraudulent scheme of issuing GDR with an ulterior motive? - HELD THAT:- No ground to interfere with the impugned order passed by the Securities Appellate Tribunal [2022 (3) TMI 1539 - THE SECURITIES APPELLATE TRIBUNAL MUMBAI]
The civil appeal is, accordingly, dismissed.
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2023 (6) TMI 1464
WTM issued an ex-parte ad-interim order cum show cause notice - HELD THAT:- We dispose of the appeal with the direction that it would be open to the appellant to file an appropriate reply within three weeks from today questioning the interim direction. If such an appropriate reply is filed and an application is made for vacation of the interim order, the authority will consider and pass appropriate orders after giving an opportunity of hearing.
The direction contained in paragraph nos. 32(b) shall remain in abeyance. The appeal is disposed of with the aforesaid directions.
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2023 (6) TMI 1337
Professional misconduct of statutory Auditors - Forensic Audit Report shows irregularities in financial statements apparently showing profits through inflated sales and non-existent purchases and sales noticed by SEBI - allegation of books of accounts of ARL were manipulated - Allegation of price and trade movement in the scrip of ARL - violations of various provisions of SEBI Act, 1992 and PFUTP Regulations 2003 - as per SEBI Noticees being statutory auditors had been conspiring with the management and/or were knowingly negligent in their job so as to facilitate the Company in defrauding the shareholders and investors - HELD THAT:- There is no dispute to the finding that the Noticees were instrumental in preparing accounts of ARL.We find that there are strong evidences in this matter available on records to point out that there has been gross negligence and dereliction of duty on the part of Noticees.
However, at the same time we can turned a blind eye to the fact that the Noticees had issued a Qualified Report highlighting certain irregularities in the financials of the Company that were taken up for limited review for the quarter ended 31-12-2014.
The instances of being unprofessional or being negligence would be difficult to equate with committing fraud in connivance with the management, where evidences are not sufficient to demonstrate that the Noticees had actually manipulated the books of accounts with knowledge and fraudulent intention.
In the absence of any tangible evidence, the question of fraud committed by the them would be difficult to survive and therefore in the absence of any material to establish knowledge/collusion/connivance of the Noticees with such fraudulent scheme, the Noticee cannot be brought under disciplinary/penal jurisdiction of SEBI.
With respect to any possible connivance or collusion by the Noticees with the Company or its management, it is acknowledged that, in such matter it is very difficult to find out either a written agreement or such agreement of minds and the same has to be culled out from the acts of the parties.
However, there has to be some evidence to support such meeting of minds before attributing to the Noticees of actively colluding with the Company. In the present matter, we don’t find sufficient evidence from the record to make an assertive statement that there was an agreement or understanding suggesting that the Noticees were acting in connivance and collusion with the Company or its management in executing their fraudulent scheme.
However, at the same time, while dealing with the submission of the Noticees for being granted exoneration based on the observations in the peer review conducted by the ICAI, it may be stated that primary objective of peer review is not to find out deficiencies but to improve the quality of services rendered by members of the profession.
Under the circumstances, while granting benefit of doubt to the Noticees with respect to alleged commission of fraud by the Noticees, it would sufficient that to meet the end of justice so as to address the gross negligence and sheer professional misconduct as displayed by the Noticees as the Statutory Auditor of the Company which has been deliberated and established beyond doubt in the preceding paragraphs, the instant proceedings are disposed of with the following directions.
Directions - We find that the materials brought forth in the Investigation while propounding the allegation against the Noticees herein, lack the tenacity to withstand legal scrutiny required in the matter pertaining to violation of the PFUTP Regulations, 2003 or suchlike. Accordingly, we are constrained to dispose of the present proceedings qua the Noticees with a cautionary advice to be careful while dealing in the securities market.
However, looking at the glaring misconduct and dereliction of duties and abhorrence of due diligence while conducting statutory audit as glaringly displayed by the Noticees, it is directed that a certified copy of this order be forwarded to ICAI and NFRA for appropriate action, if any, as deemed fit at their end.
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2023 (6) TMI 1252
Penalty for violation of Section 15HB of SEBI Act, 1992 - justification for the Tribunal to reduce the penalty below Rs. 1,00,000/- which is the minimum as permissible - HELD THAT:- Tribunal has not taken into consideration the effect and mandate of Section 15HB of the SEBI Act, 1992.
Taking into consideration the facts and circumstances of this case, there appears no justification in calling upon the respondent and we modify the order impugned and the penalty of Rs.75,000/- as inflicted upon noticee no.5 (Mr. Sandip Ray) and noticee no.6 (Mr. Rajkumar Sharma), as referred to in para no. 13 of the order impugned, is modified and substituted to Rs.1,00,000/- in terms of Section 15HB of SEBI Act, 1992 and with this modification the present appeals stand disposed of.
We make it clear that if the respondents have any objection in reference to the modification made by this Court, they are always at liberty to make an application, if so advised.
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2023 (6) TMI 331
Fraudulent activities under SEBI - issue of 80,800 false share certificates, forging signatures of genuine investors on the transfer documents and verifying fake share certificate and forging signatures and approving fraudulent transfer etc. - as per SAT[Mumbai] WTM passed ex-parte ad-interim order correctly in terms of Section 11 in the interest of the investors - HELD THAT:- No good ground and reason to interfere with the impugned judgment and hence, the present appeals are dismissed.
Pending application(s), if any, shall stand disposed of.
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2023 (6) TMI 195
Offence under SEBI - person responsible for the commission of the offence - person responsible for the carrying out the business - liability of director - allegation of Fraudulent and Unfair Trade Practices - Additional Session Judge set aside the summoning order qua the Respondent No. 1 while observing that the Complaint filed did not contain any material to suggest that the Respondent No. 1 herein was responsible for the carrying out the business of IHIL - HELD THAT:- It is now trite law that a Director cannot ipso facto, simply by virtue of being the director of a Company, be arraigned as an Accused by the SEBI [Refer to: SEBI v. Gaurav Varshney [2016 (7) TMI 642 - SUPREME COURT]. By virtue of being a juristic person the acts attributed to a Company are attributed to the officers at the helm of affairs.
Every person responsible for the commission of the offence or with the knowledge of whom the offence was committed, is liable for the offence. There is now burgeoning jurisprudence both under the SEBI Act, and under the Negotiable Instruments Act, 1881 which suggests that the liability is fastened upon an individual by virtue of being in charge, and being responsible when the offence was committed, and not merely on the basis of holding a designation or office in the company.
Even an individual not holding a particular designation in the Company, but who was at the helm of affairs at the relevant time can be held liable. Hence, such vicarious criminality is not attributed to individuals simply by virtue of the position held by them in the company.
The Director or officer of the company needs to have played a role in the functioning of the Company or in the commission of the offence, as recorded in the Complaint, to be arraigned as an Accused. There must be specific averments against the Accused Director detailing the manner in which the Director was responsible for the conduct of the business.
A company may have numerous Directors, however, it is apposite to state that to make each of these Directors accused persons simply by virtue of their position in the Company is not the true import of Section 27 of the SEBI Act.
As stated, there is not even a bald cursory averment which ties Respondent No. 1 to the allegations of price manipulation of IHILs stock. It appears that the Respondent No. 1 has been arraigned as an Accused solely by virtue of him being a Director in IHIL.
On the contrary, the statements of Accused Nos. 16 and 10, categorically stated that the day to day affairs of IHIL were being handled by Mr. Prakash Gupta, Accused No. 16, Shri L.R. Maurya, Accused No. 10 and Shri. Shririam Maurya, Accused No. 11. It must also be noted that the Summoning Order dated 29.03.2000 was quashed qua similarly placed Accused Persons i.e., Mr. Vinod Kumar, also a Director of IHIL, Accused No. 12 and Mr. Pankaj Goel, Accused No. 20. In light of this, this Court does not find any reason to interfere with the order dated 24.03.2009 passed by the Learned Additional Session Judge in Revision Petition.
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2023 (5) TMI 1419
Fraudulent and Unfair Trade Practices under SEBI Act -manipulation or structured trade - imposition of penalties for creating misleading appearance of trading through miniscule trades - HELD THAT:- No arguments / submissions was made against the findings given by the AO with regard to the shares being received off- market by noticees no. 1, 2 and 3. No arguments was raised that the receipt of the shares was with consideration or that the finding of the AO that it was received without consideration is incorrect. The violation of spot delivery u/s 2(i) (a) of the SCRA was also not contested. Consequently, the finding of the AO that the shares of the Company Wisec Global Limited were received by noticees no. 1, 2 and 3 without any consideration from a director of the Company Kolluru Surya Prakash Venkata is affirmed. The violation of Section 2(i) read with Regulations 13, 16 and 18 of the SCRA is also affirmed.
The fact that false information was furnished by noticee no. 1, namely, that the off-market transaction was a loan transaction is also affirmed, since this point was not argued before us.
Thus, it is clear that noticees no. 1, 2 and 3 received the shares of the Company Wisec Global Ltd. from its Director Kolluru Surya Prakash Venkata without consideration and with the sole intention of increasing the price of the scrip which was the motive.
We find that these noticees were selling the shares in miniscule quantities creating NHP and by such trades increased the price of scrip which was manipulative and violative of Regulations 3 and 4 of the PFUTP Regulations.
The contention that there was no manipulation or structured trade is patently erroneous in as much as we find that the trading pattern of the buyers and the sellers was that they traded in close proximity of time inter-se between them.
The buy and sell orders were placed within a short time interval varying from 1 minute to 2,3 or 4 minutes.
Such trading pattern as found by the AO cannot occur by accident or by coincidence. The trading pattern leads to an inference that there was a meeting of minds with a pre-determined plan and, therefore, there was a collusion between the parties. Such trades executed, in our opinion, are not genuine and were done with a fraudulent intent to create artificial volume in the scrip.
Consequently, the findings that noticees no. 1, 2 and 3 have manipulated the price of the scrip through small trades does not suffer from any error of law. The trading pattern of noticees no. 1, 2 and 3 with noticees no. 9, 11 and 12, clearly indicates that these structured trades were done with the intent of creating artificial volumes and misleading appearance of trading with the intent of misleading the investors. Such structured trades were violative of Section 12A of the SEBI Act read with Regulations 3 and 4 of the PFUTP Regulations. The decisions cited by the learned counsel for the appellants are not applicable to the facts of the present case.
For the reasons stated aforesaid, we do not find any error in the impugned order. All the appeals fail and are dismissed with no order as to costs. Misc. Application are disposed off accordingly.
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2023 (5) TMI 1395
Application moved seeking clarification of order - also passing of an appropriate direction thereby directing the learned Additional Session’s Judge-05, Patiala House Court, Delhi to take on record the documents, more specifically stated in para 3 of the application.
HELD THAT:- Admittedly, the petitioner has obtained the certified copies of such documents and has filed before the learned Trial Court but the same were not taken on record by the learned Trial Court, hence this petition.
The arguments raised by the learned counsel for the petitioner is vehemently opposed by the learned counsel for the respondent. He submits the matter is already a disposed of matter and no further directions can be issued.
We agree to the submissions made by the learned counsel for the respondent. If the learned Trial Court had failed to take on record such documents, such an order may be challenged by the petitioner herein before the appropriate forum. The application stands dismissed.
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2023 (5) TMI 1162
Condonation of delay - inordinate delay in approaching the Tribunal - As decided by SAT there is an inordinate delay in approaching the Tribunal with no adequate reason to condone the delay at this belated stage - HELD THAT:- We find no error in the order of the Securities Appellant Tribunal, Mumbai.
Appeal is accordingly dismissed. Pending application, if any, stands disposed of.
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2023 (5) TMI 985
PIL - Suspension of Admission to Dealings on the Exchange - millions of investors who are being duped by the unscrupulous promoters of the companies - Petitioner holding a Bachelor’s Degree in Law stating that he is espousing the cause millions of investors who are being duped by the unscrupulous promoters of the companies as the promoters of the companies vanish after siphoning off the hard-earned money of the investors - Scope of Appeal to Securities Appellate Tribunal.
HELD THAT:- It is the duty of the SEBI to protect the interest of the investor in securities and to promote the development of, and to regulate the securities market by such measures as it thinks fit. Meaning thereby, the SEBI is empowered to take all such measures in the interest of investors and such measures may include regulating the business in stock exchange, registering and regulating the working of stock brokers, performing such functions and exercising such powers under the Provisions SCRA, as may be delegated by the Central Government. The aggrieved investor can certainly prefer an Appeal before the Securities Appellate Tribunal (SAT) in case he is aggrieved in the matter of delisting of the security.
Delisting regulations provide Provisions with respect to the rights of the share-holders and all kind of checks and balances are in place under the Regulations. It is pertinent to note that Section 23(2) of the SCRA gives a special power to SEBI to penalize any person who contravenes the Provisions inter alia Section 21 or Section 21A or Section 22, and a punishment upto 10 years or a fine which may extend up to Rs. 25 crores can be inflicted.
Not only this, as stated in the written reply filed by the SEBI, for vanishing companies, the exercise was undertaken by the Registrars of companies and action has been initiated in the matter against them. Thus in short, the statutory provisions do provide a robust mechanism to safeguard the interest of investors and by no stretch of imagination, it can be said that the interest of investors is not at all protected.
Appeal against any order/ decision for recognized stock exchange before the SAT and any person aggrieved in the matter by the order or decision of the recognized stock exchange or the adjudicating officer or any order made by the SEBI under Section 4B can prefer an Appeal, therefore, an efficacious remedy is also available under the statutory provisions.
The statutory provisions governing the field make it very clear that a transparent mechanism of delisting the securities, adequate participation and/ or representation of public shareholders in the process of delisting is in place, and a remedy is also available to aggrieved investor in the matter of delisting. Not only this, even in case of compulsory delisting, which is a disciplinary mechanism, an aggrieved investor may file an Appeal before the SAT against the decision of the recognized stock exchange delisting the securities under Section 21A(2) of the SCRA.
In the considered opinion of this Court, in view of the reply filed by the SEBI, Government of India and Bombay Stock Exchange, no further orders are required to be passed in the present PIL, and the interest of the investors is certainly protected under the Statutory Provisions governing the field.
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2023 (5) TMI 771
Public issue of shares - payout to the shareholders - Persons acquiring shares to make public announcement in certain cases - accused offered the public to acquire 20% of the capital of M/s. Damania Airways Limited in terms of Clause 40 B of the listing agreement of the Stock Exchange, Mumbai - non-despatch of consideration amounts to a violation of Regulation 20 - acquirers replied to the show cause notice stating inter alia that the liquidity crunch in the market caused the delay and that they had already despatched more than 70% of the consideration.
HELD THAT:- All procedures to the offer, including payment of consideration to the shareholders who have accepted the offer, would be completed within four weeks from the date of closure of the offer. The offer closed on 29 February 1996; Khemkas should have made the payments to the shareholders on or before 28 March 1996. the complainant has produced on record letters from the Manager of the Offer and Khemka Brothers dated 9 April 1996, 25 April 1996, 10 July 1996 and 17 August 1996 wherein it is unambiguously admitting that the acquirers, i.e. Khemka Brothers have not been able to pay the shareholders who have accepted the offer and cited liquidity crunch in the market as the reason for their failure. As has been explained above, the Regulation requires that the payout to the shareholders who have accepted the offer is to be made within four weeks from the closure of the offer. Prima facie failure on the part of the acquirer to meet the obligation amounts to a breach of Regulations 20 and 22. Section 24(1) of the SEBI Act makes it clear that any SEBI Act, Rules and Regulations breach would invite prosecution.
As there was sufficient material available with the complainant, which prima facie indicates a violation of Regulations 20 and 22. Regulation 33 confers discretion on the Board having regard to the facts and circumstances of the case to investigate into the books of account or other records. Based on the report of such investigation under Regulation 36, the Board has the power to issue directions as contemplated under Regulation 39. Regulation 39 expressly saves the power of the Board to initiate criminal prosecution under Section 24 of the Act.
Conjoint reading of Regulation 33, along with Regulation 39, confers discretion on the Board to initiate an investigation if such investigation appears to be necessary to the Board.
In the facts of the case, there was sufficient material to demonstrate that there was sufficient material based on correspondence between the Managers of the accused and the complainant wherein the accused admitted that they have not been able to pay the shareholders who had accepted the offer. Furthermore, the accused cited the liquidity crunch in the market as the reason for their failure. Therefore, in the facts of the case, it is not necessary for the Board to lodge an investigation as per Chapter V into the violation of Regulations 20 and 22.
In the absence of incontrovertible documents such as Form 32 under the Companies Act, 1932 or other material to show the applicant's resignation, the SEBI Special Judge has rightly held that the applicant has failed to make out a case for discharge. Hence, there is no merit in the criminal applications. No case is made out for quashing the complaint or charges.Both criminal applications are dismissed.
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