9911796707
TMI Blog2012 (6) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 15C of the SEBI Act, the petitioner is permitted to file its objections to the impugned show-cause notice. writ petitions are disposed of - WRIT PETITION NOS. 27354 OF 2008 & 8471 OF 2009 W.P.M.P. NOS. 35840 OF 2008 & 11093 OF 2009 W.V.M.P. NOS. 1638 & 2706 OF 2009 - - - Dated:- 18-7-2011 - C.V. NAGARJUNA REDDY, J. B. Adinarayana Rao for the Petitioner. S.R. Ashok, P.V.S.S.S. Rama Rao and B. Mayur Reddy for the Respondent. JUDGMENT 1. W. P. No. 27354 of 2008 is filed by M/s. SVPCL Ltd., and W. P. No. 8471 of 2009 by its directors for a mandamus to set aside notice in proceedings No. CFD/DIL/NB/NB/SCN/146318/2008, dated December 2, 2008, of respondent No. 1. They sought for a consequential direction to the respondents to desist from taking any coercive steps in pursuance of the impugned notice. 2. Since the issues raised in both these writ petitions are identical, they are heard and are being disposed of by this common order. For convenience, the parties are referred to as they are arrayed in W. P. No. 27354 of 2008. 3. The petitioner is a company incorporated under the provisions of the Companies Act, 1956 (for short "the Companies Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ween it and the petitioner in relation to the latter's liability for payment and interest, and observed that under section 73(2) of the Companies Act, the petitioner is liable to refund all the money received from the applicants in its public issue along with interest at the rate of 15 per cent. Respondent No. 1 has concluded that the petitioner has committed default in compliance with section 73(2) of the Companies Act, which constitutes an offence under section 73(3) of the Act and also not complying with its advice to refund the application moneys along with the stipulated interest. It is also observed that the default on the part of the petitioner also constitutes violation of the declarations and undertaking given in prospectus and the petitioner's application form, besides violation of clause 6.13.2 of the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000, which requires payment of interest at 15 per cent if the refund orders are not dispatched within the specified time. While opining that non-compliance with these provisions is detrimental to the investors' interests in particular and securities market in general, which may invite s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia , include the responsibility to protect the interests of the investors in securities and to promote the development of, and to regulate the securities market by such measures as it thinks fit. Learned senior counsel further submitted that under section 11A(1)( a ) of the SEBI Act, respondent No. 1 is empowered to specify by regulations the matters relating to issue of capital, transfer of securities and other matters incidental thereto and the manner in which such matters shall be disclosed by the companies. Sub-clause ( b ) thereof empowers respondent No. 1 by general or special orders from prohibiting any company from issuing of prospectus, any offer document, or advertisement soliciting money from the public for the issue of securities and specify the conditions subject to which, such offer document or advertisement, if not prohibited, may be issued. Learned senior counsel also placed reliance on section 11B of the SEBI Act in support of his submission that under sub-clause ( iii ) of the said provision, respondent No. 1 is empowered to give directions to any company in respect of the matters specified in section 11A of the Act. 9. I have carefully considered the submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to make regulations with respect to the matters relating to issue of capital, transfer of securities and other matters incidental thereto. Respondent No. 1 has made guidelines called the SEBI (Disclosure and Investor Protection) Guidelines, 2000, which according to learned senior counsel appearing for respondent No. 1 are almost in pari materia with the statutory regulations made in the year 2009. Learned senior counsel relied on clause 7.3.1. of the said Guidelines which postulates that lead merchant banker shall actively associate himself with post-issue activities, namely, allotment, refund, despatch and giving instructions to Self Certified Syndicate Banks and shall regularly monitor redressal of investor grievances arising therefrom in support of his submission that the merchant banker has only supportive role. He made a strong emphasis on section 73(2) of the Companies Act, under which, it is the responsibility of the company to pay interest to the applicants in the event the applications are not returned within eight days of rejection of the public issue. 14. Learned senior counsel submitted that it is the company which is principally liable for refund of the applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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