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2019 (11) TMI 1016 - AT - SEBIDisposal of the complaint on the SCORES platform - appellants are aggrieved by the disposal of their complaints on the SCORES platform by the Securities and Exchange Board of India - contended that the manner in which the complaints of the appellants have been disposed of in a mechanical and summary manner - HELD THAT - If the complainants are aggrieved by the disposal of the complaint on the SCORES platform the said complainants have a right to file an appeal under Section 15T of the SEBI Act. We are further of the opinion that the computer generated communication by the respondent on the SCORES platform, even though it may be an administrative communication is nonetheless an order since it disposes of the lis between the parties and disposes of the complaint and the issues raised by the complainants. The said communication / order as the case may be, in our opinion, is appealable. In the instant case, we find that written complaints made to SEBI from 2013 onwards has not been disposed of as yet but complaints filed on the SCORES platform has been disposed of without deciding / settling the issue that was raised in the complaints. Thus, disposal of the complaints by the respondents on the SCORES platform is no disposal in the eyes of law. It is merely an eye wash without disposing of the complaints and without settling the controversy involved in the complaints. SCORES is an online platform designed to help investors to lodge their complaints pertaining to the securities market. These complaints are filed online with SEBI against listed companies and SEBI registered intermediaries. All complaints received by SEBI against listed companies are dealt through SCORES The complaint made by the appellants was a serious issue with regard to incorrect disclosures being made by three companies regarding their promoter shareholding and consequently failure of these three companies from complying with the minimum public shareholding requirement as per Rule 19A of the SCRR read with 38 of the LODR Regulations. The disposal of the complaint does not refer to the issues raised by the complainants / appellants with regard to the non-disclosure of the promoters shareholding or violation of the minimum public shareholding requirement under the Rules and Regulations. On the other hand, the communication intimated to the appellants has closed the complaint in a roundabout manner intimating the appellant that the information provided by the complainants would be treated as market intelligence and would also be treated as confidential. Why would the complaint of the appellants be treated as market intelligence or be treated as confidential is not known nor in our view the complaint is such which requires SEBI to treat it as market intelligence or confidential. It is not a price sensitive matter which requires SEBI to keep such matters under wraps or confidential in nature. We also find it strange to note that SEBI in the said order / communication states that the information submitted by the appellants would be analyzed and investigation would be made in a holistic manner but, on the other hand, in the same breath states that SEBI would neither confirm nor deny the existence of any investigation conducted by them. We find that before the Delhi High Court SEBI informed that the matter is under investigation by them. We find it strange that while disposing of the complaint SEBI would neither confirm nor deny as to whether investigation in the complaint is going on or not. Approach adopted by the respondents to be a strange one. Such computer generated disposal of a serious complaint speaks volume on the conduct of the respondents in treating the minority shareholders in this shabby manner. It seems that the respondents have lost sight of the mandate provided to them under Section 11 of the SEBI Act which mandates SEBI to safeguard the interest of the investors. No hesitation in stating that the SEBI as a regulator in the instant case has not performed its duties and has kept the complaint pending for more than six years which speaks volumes by itself. The Tribunal fails to fathom as to why the complaint could not have been decided unless SEBI officials had a vested interest in not deciding the matter. We set aside the communication / order passed by the SEBI on the SCORES platform. The appeal is allowed. We direct the appellants to file a consolidated representation / complaint before SEBI annexing the earlier complaints within four weeks from today.
Issues Involved:
1. Non-disclosure of promoter shareholding by BNL, PNBF, and Camac. 2. Violation of Minimum Public Shareholding (MPS) norms by BNL, PNBF, and Camac. 3. SEBI's inaction and improper disposal of complaints on the SCORES platform. 4. Maintainability of the appeal under Section 15T of the SEBI Act. Issue-wise Detailed Analysis: 1. Non-disclosure of Promoter Shareholding: The appellants contended that BNL, PNBF, and Camac failed to disclose their true promoters, thereby providing incorrect disclosures regarding their promoter shareholding. The appellants alleged that Respondent Nos. 5 and 6, who are the Managing Directors of BCCL, effectively controlled these companies but were wrongly classified as public shareholders. This concealment led to non-compliance with the Minimum Public Shareholding norms. 2. Violation of Minimum Public Shareholding Norms: The appellants argued that BNL, PNBF, and Camac failed to comply with the Minimum Public Shareholding requirement of 25% as per Rule 19A of the Securities Contracts (Regulations) Rules 1957 and Regulation 38 of the SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015. Despite multiple complaints filed since 2013, SEBI failed to take any decisive action to address these violations, leading to significant prejudice against the minority shareholders. 3. SEBI's Inaction and Improper Disposal of Complaints: The appellants highlighted SEBI's inconsistent responses to their complaints, ranging from non-response to treating the complaints as market intelligence without concluding investigations. The computer-generated communication disposing of the complaints on the SCORES platform was criticized for being mechanical and lacking application of mind. The Tribunal found SEBI's approach to be inadequate and non-compliant with its mandate under Section 11 of the SEBI Act to safeguard investors' interests. The Tribunal noted that SEBI's disposal of the complaints was merely an eye wash and did not settle the issues raised. 4. Maintainability of the Appeal under Section 15T of the SEBI Act: The respondents raised preliminary objections regarding the maintainability of the appeal, arguing that no formal order was passed by SEBI and that the appeal was premature. However, the Tribunal held that the computer-generated communication disposing of the complaints on the SCORES platform constituted an appealable order under Section 15T of the SEBI Act. The Tribunal distinguished the cited cases and concluded that the appellants, being aggrieved by the disposal of their complaints, had the right to file an appeal. Judgment: The Tribunal set aside SEBI's communication/order on the SCORES platform and allowed the appeal. It directed the appellants to file a consolidated representation/complaint before SEBI within four weeks, annexing the earlier complaints. SEBI was instructed to consider and decide the matter by a reasoned and speaking order within six weeks from the date of the presentation of the complaint. The Tribunal emphasized that SEBI should perform its duties diligently and safeguard the interests of investors. The parties were ordered to bear their own costs.
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