9911796707
TMI Blog1998 (7) TMI 514X X X X Extracts X X X X X X X X Extracts X X X X ..... bscription on 21-12-1995 and was oversubscribed by nearly 12 times. However, large number of applications totalling to 21126300 ( sic ) shares were withdrawn before the allotment was made. Respondent No. 2, Securities Exchange Board of India (SEBI) received a complaint in regard to this public issue. It issued a notice to the petitioner-company and an inquiry was held. After the inquiry, (wherein amongst other Mr. Atul Shah, Managing Director of the petitioner was heard), a report was submitted, which established the involvement of Mr. Atul Shah with one Mr. Shantilal Gandhi, which led to this oversubscription and subsequent withdrawal of the applications. An agreement entered into between Atul Shah and Shantilal Gandhi, which guaranteed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r violating principle of natural justice inasmuch as petitioner's advocate was not available and the matter ought not to have been proceeded in that manner. The second submission of Mr. Jhaveri is that the complaint was proceeded against the petitioner, in view of the alleged agreement with above referred Mr. Shantilal Gandhi, Mr. Jhaveri submits that the signa- ture of Mr. Atul Shah of the petitioner-company on that agreement is a forged signature and since the action is based on a forged document, it is naturally uncalled for. He also states that a complaint has been filed with the Ahmedabad Metropolitan Magistrate's Court against Mr. Gandhi. (The directors of Jaltarang Club are same as directors of the petitioner- company as stated by Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner had every right to file the appeal, but at the same time the least that was expected of the petitioner was to keep the fund intact and not to divert it. After the matter came up before this Court, initially an ad interim relief in terms of prayer clause 6( b ) was granted which prevented the execution of the impugned orders. After the matter came before me, the petitioner was asked as to what he had done with the amounts which had been realized from the subscription. A statement was filed for that purpose in this Court accepting that properties have been purchased at village Vekaria Kishol, Taluka Viramgam at village Vasna near Ahmedabad and in Jamalpur, Ward-II in Ahmedabad. An amount of Rs. 67,60,000 was diverted to the Jaltaran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to refund the amounts. The documents of the purchase of land effected thereafter have been made available and they show that all these lands are purchased subsequent to the original order passed by the SEBI. A party which wants to be heard is not expected to utilise the time for such diversion of funds. 8. In the circumstances stated above, the proper course will be that the petitioner can be given an opportunity to be heard once again in both the appeals, but that will be on stringent terms. In fact, the petitioner ought to refund the entire amount, and restore the status quo ante. Mr. Shelat states that they should at least deposit Rs. 50 lakhs since admittedly they have diverted Rs. 67,60,000 to their sister concern and Mr. Atul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the diverted fund of Rs. 67,60,000, that will enable him to raise the deposit of Rs. 50 lakhs as well. Mr. Jhaveri states that it is a separate entity but no further particulars about it are being given. He accepted that the directors are the same persons. No prejudice will be caused if the activities of the club are not run for a period of four weeks. 10. The respondent SEBI is at liberty to take appropriate action with respect to the recovery of amounts either from these properties or from the club or from the bankers to the issue in the meanwhile short of execution of the impugned orders. In the event, the petitioner complies with the above terms, within a period of four weeks these appeals will stand revived. In the event he does ..... X X X X Extracts X X X X X X X X Extracts X X X X
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