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Database updates
Judgments
In Re : India Capital Markets Private Limited, Pyramid Saimira Theatre Limited vs
[SECURITIES AND EXCHANGE BOARD OF INDIA, 20 Jul 2010]
Securities Exchange Board of India - Securities and Exchange Board of India Act, 1992, ss. 11, 11(4), 11B and 19 - Securities and Exchange Board of India (Stock Brokers and Sub-brokers) Regulations, 1992 - Board vide an ad interim ex-parte order restrained India Capital Markets Private Limited (stock broker) from entering into any fresh agreements with new clients, in its operations as a stock broker, till further directions - Stock broker filed its objections to the order accordingly and was also afforded an opportunity of hearing - Whether based on the available material on record the directions issued vide the Order need to be continued, revoked or modified in any manner, in so far as it relates to the stock broker? - Held, in view of the various acts of commission and omission, as found by the preliminary investigation in the matter, the stock broker was found to have prima facie contravened the Code of Conduct prescribed for stock brokers under Schedule II of the Regulations, 1992 - It was prima facie observed that the stock broker had failed to exercise due diligence and care while enrolling some clients - It would establish that the stock broker was allowing huge exposures to clients when their annual income would not support such exposure - Investigation in the matter prima facie revealed that there were several persons who were involved in the manipulations - In such circumstances, role played by an individual should not be seen in isolation and that the case needs to be seen in its entirety in the light of the large scale market abuse - Directions issued against vide the ex-parte interim order confirmed - Order accordingly.
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Automobile Products India Limited vs Das John Peter and others
[SUPREME COURT OF INDIA, 20 Jul 2010]
Criminal - Corporate - Land & Property - Companies Act, 1956, s. 630 - Constitution of India, 1950, art. 142 - Accused no. 1 was working as a caretaker with the appellant/company to look after the flat owned and possessed by the Company - The servant quarter was allotted to accused No. 1 by virtue of his service in the company - Accused No. 1 had retired from the company w.e.f. 6.3.1992 - After his attaining age of superannuation, instead of delivering its peaceful and vacant possession to the appellant/company, he gave its possession to his daughter, accused No.2 - Written undertaking is said to have been tendered by accused no.1 on 5.1.2000 to the effect that he will vacate the servant quarter within one month thereof - Since despite serving several legal notices to the accused, they refused to hand over its peaceful vacant possession to the company which constrained appellant to file the aforesaid complaint - Accused challenged said complaint submitting the complaint as filed by company through 'X' is not maintainable inasmuch as the Power of Attorney dt. 31-12-2001, said to have been executed in favour of 'X' is a fictitious document - Accused also submitted that as regards his undertaking given to the Chairman of the Company on 5.1.2000, wherein he specifically agreed to vacate the premises on or before 31.1.2000, he contended the same was not tendered voluntarily, meaning thereby the same was given under coercion, threat, undue influence, thus it was not binding - Trial Court critically examined the Power of Attorney and held that the said Power of Attorney is a fictitious document - Company filed an application before HC seeking leave to file appeal, against the order of acquittal of the accused - HC rejected the company's application - Hence, present appeal - Whether Power of Attorney dt. 31-12-2001 executed in favour of 'X' is a fictitious document and order of the HC could be upheld? - Held, no - After having carefully examined the originals of the resolution dt. 31-12-2001 as also Power of Attorney of the even date executed in favour of 'X' and the irresistible conclusion is that the same are genuine and do not come under the cloud of suspicion at all - Moreover, in the light of the admitted position that accused No. 1 retired in the year 1992 and has also given an undertaking to the Company as far as back as 5.1.2000 categorically admitting and agreeing to vacate the premises on or before 31.1.2000, it was incumbent on his part to honour the same - Since he has committed default of his own promise, Court have no other choice or option but to direct the accused persons to vacate the premises by or before 1-10-2010 and to hand over its peaceful vacant possession to the Company - Order passed by Metropolitan Magistrate as also by the HC cannot be sustained in law, hence set aside - Appeal allowed.
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In Re : G. G. Automotive Gears Limited, Subhash Chaturvedi, Kenneth A. Pinto, Abhayaraj Shukla, Mangiram Sharma vs
[SECURITIES AND EXCHANGE BOARD OF INDIA, 19 Jul 2010]
Securities Exchange Board of India - Securities Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities Market) Regulations, 2003 - Circular trading - Securities Exchange Board of India (Board) conducted investigation into buying, selling and dealings in scrip of petitioner-company to ascertain any violation of PFUTP Regulations - During the period, a sharp fluctuation in volumes were observed in scrip - Investigation prima facie revealed that circular trading by two groups of brokers and clients contributed to unusual spurt in traded volumes of scrip - Out of these two groups, group consisting of 6 brokers and their clients were found trading intra-day for 25 days in circular manner during relevant period in scrip - Show cause notice was issued to noticees wherein it was alleged that noticees were observed to be part of a group of clients/ brokers involved in circular trading and had actively traded in shares of company during relevant period among themselves, created artificial volumes and thereby contributed to price rise in scrip of company - Hence, present petition for consideration of SCN issued to noticees - Whether noticees indulged in circular trading and were responsible for creating artificial volumes while trading in scrip of company? - Held, trading pattern indulged into by noticees and group was in nature of circular trades since they were main entities who traded amongst themselves by executing synchronised trades with intention that orders of a particular entity get matched with other - Transactions of noticees had resulted in creation of artificial volume in scrip - Pattern of trading indicates instances when time difference between buy and sell orders was nil - Unknown persons cannot trade continuously by putting orders in such a pattern and contribute significantly to total volumes in market - Execution of circular trading repeatedly for several days by noticees and group reveal that they were having nexus with each other - These entities had executed trades with a pre-determined plan to match their trades which were not indicative of genuine transactions since it did not result into transfer of beneficial ownership - Increase in volume in scrip can primarily be attributed to trades done by the noticees - Charge of violation of provisions of regns. 4(a), (b), (c) and (d) of Regulation r/w regns. 4(1), 4(2) (a), (b), (e) and (g) of Regulations established - Noticees restrained from buying, selling or dealing in securities market whatsoever or accessing securities market, directly or indirectly, for a period of 2 years - Order accordingly.
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In Re : Malvica Engineering Limited, P. Y. Jhala vs
[SECURITIES AND EXCHANGE BOARD OF INDIA, 15 Jul 2010]
Securities Exchange Board of India - Securities Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities Market) Regulations, 2003 - Rise is price of scrip - Securities Exchange Board of India (Board) conducted investigation into buying, selling and dealing in shares of petitioner-company for relevant period to ascertain whether there was any violation of provisions of Regulations - Show cause notice was issued to company and its director-noticees alleging that acts of Noticees were in violation of regns. 3(b), 4(1) r/w regns. 4(2)(k) and (r) of Regulations - Hence, present application - Whether noticees made misleading statements in respect of activities of company and whether director of company benefited from such statements as price of shares rose and he sold shares to unwary counterparties? - Held, company and its Managing Director made false and misleading statements regarding performance of company which led to a rise is price of scrip of company and managing director offloaded shares of company during this period - Petitioner-company and its managing director restrained from buying, selling or dealing in securities market whatsoever or accessing securities market, directly or indirectly, for a period of 2 years - Order accordingly.
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In Re : Prraneta Industries Limited, Rajesh Waghwala vs
[SECURITIES AND EXCHANGE BOARD OF INDIA, 15 Jul 2010]
Securities Exchange Board of India - Securities Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities Market) Regulations, 2003 - Non-genuine trades - Securities Exchange Board of India (Board) conducted investigation into buying, selling and dealings in scrip of company to ascertain any violation of Regulations - Investigation revealed that during first phase notice was found executing self trades, entering orders with higher last traded price in scrip of company and thereby had influenced price of scrip - Show cause notice was issued - Hence, present petition - Whether noticee indulged in entering non-genuine trades, leading to increase in prices of scrip of company? - Held, increase in volume in scrip can primarily be attributed to trades done by notice and such pattern of trading leads to reasonable conclusion that transactions were carried out with intention of creating artificial volume and to impact prices of scrip on basis of transactions which were not genuine - Such transactions give impression to others that scrip is being traded actively at prevailing prices as genuine prices but actually this was not the case - Noticee had entered impugned trades with a view to create misleading appearance of trading which tampers with price discovery mechanism of stock exchange and is against concept of transparency - Noticee restrained from buying, selling or dealing in securities market whatsoever or accessing securities market, directly or indirectly, for a period of 2 years - Order accordingly.
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Central Bank of India vs Mishra Oil Udyog and others
[PATNA HIGH COURT, 13 Jul 2010]
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Finite Infratech Limited vs IFCI and others
[DELHI HIGH COURT, 09 Jul 2010]
Corporate - Banking & Finance - Companies Act, 1956, s. 4A - Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, s. 2(1)(m) - Petitioner seeks quashing of notification which has been issued u/s 4A(2) of Companies Act notifying IFCI Limited as a public financial institution - Plea taken by petitioner that it is not a financial institution within meaning of s. 2(1)(m) of said Act is accepted, then proceedings initiated by IFCI Limited under said Act against property of petitioner in respect of which a mortgage has been created, would be set at naught and this would be so because, then, IFCI Limited would not fall within meaning of expression 'financial institution' as defined in s. 2(1)(m) of said Act and, therefore, it would not be entitled to avail benefits available to a financial institution under said Act - Respondents claim that IFCI Limited is such a financial institution then IFCI would be entitled to take and continue proceedings under said Act - Whether IFCI Limited is a 'financial institution' within meaning of s. 2(1)(m) of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002? - Held, validity of notification from standpoint of shareholding would have to be examined as on date on which notification u/s 4A(2) of Companies Act is issued - Condition with regard to government owning or controlling not less than 51% of paid up share capital of an institution is merely a condition precedent for purposes of examining status of institution as a public financial institution and for purposes of determining validity of notification u/s. 4A(2) of Companies Act, 1956 - It is open to Central Government, at any subsequent point of time to 'de-notify' an institution as a 'public financial institution' if it deems fit - In Repeal Act of 1993 while there is reference to company to be formed, IFCI Limited was to be formed and registered under Companies Act, 1956 - In that sense, IFCI Limited was not formed or registered by or under Repeal Act of 1993 and expression 'established or constituted by or under', in our view, would have to be construed as 'established by' or 'established under' or 'constituted by' or 'constituted under' - Institution which has been established or constituted by or under any Central Act need not also satisfy other condition with regard to its paid-up share capital (and vice versa) for it to qualify as an institution which Central Government may specify to be a public financial institution - Indication is very clear that institution could have been constituted by Central Act or under a Central Act, latter expression being of a wider amplitude - IFCI Limited would have to be regarded as a public financial institution u/s. 4A of Companies Act - Petition dismissed.
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S. R. Buildcon Private Limited vs Haryana Concast Limited
[PUNJAB AND HARYANA HIGH COURT, 09 Jul 2010]
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Daiichi Sankyo Company Limited vs (1) Jayaram Chigurupati and others; (2) N. Narayanan and another
[SUPREME COURT OF INDIA, 08 Jul 2010]
(A) Securities Exchange Board of India - Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, regns. 2(e)(1) and 20(4)(b) - Applicability of regn. 20(4)(b) to determine the offer price for shares in the public announcement - Determination of offer price in the case of an indirect takeover of a company - Respondent no. 3 entered into a Share Purchase and Share Subscription Agreement (SPSSA) jointly with respondent no. 4 and its promoter - Respondent no. 3 made a public announcement and sought to acquire from the public shareholders, equity shares of respondent no. 4 - Share purchase transaction between respondent no. 3 and the promoters of respondent no. 4 was completed - Thereafter, appellant entered into a SPSSA jointly with respondent no. 3 and its promoters - Appellant made a public announcement to the shareholders of respondent no. 3 - Appellant acquired more than fifty percent of the share capital of respondent no. 3 and on and from that date respondent no. 3 became a subsidiary of appellant - As a result, appellant became the "acquirer" both in relation to respondent no. 3 and respondent no. 4, directly in case of the former and indirectly in case of the latter - Appellant duly made the public announcement in regard to respondent no. 4 and offered Rs.113.62 for each share of respondent no. 4 - Offer price was based on the price of the respondent no. 4 shares quoted on the stock exchange - A complaint was made to Securities and Exchange Board of India (Board) and it was claimed that the offer price for respondent no. 4 shares could not be less than Rs.160.00 per share and requested the SEBI to direct appellant to revise the offer price accordingly - Board rejected the claim - On appeal, Security Appellate Tribunal upheld the claim of the respondents and directed appellant to offer Rs.160.00 per share to the shareholders of respondent no. 4 - Hence, present appeal - Whether regn. 20(4)(a) can be applied in determining the offer price of respondent no. 4? - Held, regn. 20(4)(b) speaks of the price paid by the acquirer or persons acting in concert with him for acquisition of shares, if any, during the twenty six weeks period prior to date of public announcement - For application of regn. 20(4)(b) it is material that the other person was acting in concert with the acquirer at the time of purchase of shares of the target company - Further, in order to hold that a person is acting in concert with the acquirer or with another person it must be established that the two share the common intention of acquisition of shares of some target company - In the present case, on signing the SPSSA appellant and respondent no. 3 did not come within the relationship of persons acting in concert within the meaning of regn. 2(e)(1) - Also so far as respondent no. 4 is concerned respondent no. 3 was not acting in concert with appellant either from the date of the SPSSA or even after becoming a subsidiary of appellant and the acquisition of respondent no. 4 shares by respondent no. 3 did not come within the ambit of regn. 20(4)(b) - Appellate Tribunal was in error in proceeding on the basis that the material date for respondent no. 3 and appellant to be acting in concert was the date of the public announcement for the respondent no. 4 shares - Appeals allowed.(B) Securities Exchange Board of India - Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, regns. 2(e)(1) and 20(4)(b) - Securities Exchange Board of India Act, 1992 - Meaning of "persons acting in concert" as defined in regn. 2(e) - Held, concept of "person acting in concert" u/regn. 2(e)(1) is based on a target company on the one side, and on the other side two or more persons coming together with the shared common objective or purpose of substantial acquisition of shares etc. of the target company - Other limb of the concept requires two or more persons joining together with the shared common objective and purpose of substantial acquisition of shares etc. of a certain target company - There can be no "persons acting in concert" unless there is a shared common objective or purpose between two or more persons of substantial acquisition of shares etc. of the target company - Element of the shared common objective or purpose is the sin qua non for the relationship of "persons acting in concert" to come into being - Relationship of "persons acting in concert" is not a fortuitous relationship - It can come into being only by design - Appeals allowed.
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In Re : Proposed Increase in Shareholding And Voting Rights in Consolidated Securities Limited vs
[SECURITIES AND EXCHANGE BOARD OF INDIA, 08 Jul 2010]
Securities Exchange Board of India - Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 - Exemption from complying certain provisions of Regulations - Acquirer submitted application under Regulations to Securities Exchange Board of India wherein it was stated that acquirer is the sole promoter of target company and currently holds 53.28% of its paid up capital - It was further stated that target company proposes to buy-back a maximum of 6,25,000 equity shares from open market through stock exchanges at a price not exceeding Rs. 133/- per share - Said buy-back would result in increase of acquirer's shareholding from 53.28% to 63.14% i.e. increase by 9.86% - As said increase would trigger regn. 11(1) and (2) of Regulations, present application seeking exemption from applicability of regn. 11(1) and (2) filed - Held, no direct acquisition of any equity shares/voting rights of target company by acquirer - Even after proposed acquisition, public shareholding in target company would be at a level more than what is required for meeting conditions for continuous listing - Thus, minimum public shareholding requirement specified in Cl. 40A of Listing Agreement would not be breached by proposed increase in shareholding of acquirer - As the acquirer is eligible to acquire additional shares or voting rights which entitled it to exercise upto 5% of the voting rights of the target company without making a public announcement, in terms of the second proviso to regn. 11(2), exemption beyond 55% needs to be granted only in respect of the remaining 3.14% assuming that the buy-back would get 100% response - Acquirer granted exemption on certain conditions - Petition disposed of.
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In Re : Dynamic Stock Broking (India) Private Limited, Pyramid Saimira Theatre Limited vs
[SECURITIES AND EXCHANGE BOARD OF INDIA, 06 Jul 2010]
Securities Exchange Board of India - Securities and Exchange Board of India (Stock Brokers and Sub-brokers) Regulations, 1992 - Ex-parte order - Contravention of Code of Conduct - Prohibition from entering into any fresh agreements - SEBI vide ad interim ex-parte order prohibited stock broker from entering into any fresh agreements with new clients in its operations as stock broker, till further orders - Whether based on available material on record, directions issued by SEBI against it need to be continued, revoked or modified in any manner? - Held, it was prima facie that the stock broker have contravened Code of Conduct prescribed for stock brokers under Schedule II of 1992 Regulations - Further, stock broker has not made out a case for reviewing interim directions issued against it vide order - Ex parte interim order confirmed - Application disposed of.
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In Re : In Respect of Consortium Securities Private Limited vs
[SECURITIES AND EXCHANGE BOARD OF INDIA, 05 Jul 2010]
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In Re : Genomics Biotech Limited, In respect of Vijay Jhindal, Prabhat Fincap Private Limited, Neat Developers Limited and Troop Trac Exports Private Limited vs
[SECURITIES AND EXCHANGE BOARD OF INDIA, 01 Jul 2010]
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In Re : Venture Business Advisors Private Limited, Alleged Manipulative Trading In The Shares of Cals Refineries Limited, Confidence Petroleum India Limited, Bang Overseas Limited, Shree Precoated Steels Limited (As Ajmera Realty and Infra India Limited), Temptation Foods Limited vs
[SECURITIES AND EXCHANGE BOARD OF INDIA, 30 Jun 2010]
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In Re : Vikas Holdings Private Limited, Member, Delhi Stock Exchange Limited, Ankur Commercial Limited vs
[SECURITIES AND EXCHANGE BOARD OF INDIA, 25 Jun 2010]
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In Re : Proposed Increase In Shareholding And Voting Rights of Panacea Biotec Limited vs
[SECURITIES AND EXCHANGE BOARD OF INDIA, 23 Jun 2010]
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In Re : Cairn India Limited, Mumbai vs
[BOMBAY HIGH COURT, 22 Jun 2010]
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In Re : P. S. Saminathan, Pyramid Saimira Theatre Limited vs
[SECURITIES AND EXCHANGE BOARD OF INDIA, 21 Jun 2010]
Securities Exchange Board of India - Securities and Exchange Board of India Act, 1992, ss. 11, 11(4) and 11B - Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003, regn. 3, 4 and 11 - Constitution of India, 1950, art. 19 - Securities and Exchange Board of India (Board), vide an ad interim ex-parte order in the matter of the company (PSTL), directed various entities and persons including 'M', not to buy, sell or deal in the securities market including in Initial Public Offerings (IPOs) directly or indirectly, till further directions - 'M' alleged made misleading public announcements to create public interest in the shares of the company for facilitating 'N' in offloading his shares in the company at artificially inflated prices in the market and that by his acts 'M' violated regn. 3 and 4 of Regulations - Challenged - (A) Whether action of Board was violative of art. 19 of the Constitution? - Held, in the present case, interim directions issued in the order have been issued invoking the powers conferred u/s. 11, 11(4) (b) and 11B of the Act and regn. 11 of the Regulations - Said directions in the matter have been issued pending investigations and passing of a final order - Further, in accordance with the second proviso to s. 11(4) of the Act, an opportunity of hearing has been afforded to 'M' after passing of the Order accordingly - Order is interim in nature and was issued in the interest of the investors and the securities market - Therefore, the Order directing him not to deal in securities is an interim measure and does not violate his right of profession or business - Plea that the action of SEBI was violative of art. 19 of the Constitution does not have any merit - (B) Whether ex parte directions issued by Board against 'M', in terms of the Order needs to be continued, revoked or modified in any manner? - Held, the present case involves a complex web of persons and entities who are intertwined and had individual roles to play - In the facts and circumstances of the case, 'M' has not made out a case for revoking or modifying the directions issued against him vide the Order accordingly - This is not a fit case to revoke the ad interim directions issued against him - Order accordingly.
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Coal India Limited vs Nicco Corporation Limited
[CALCUTTA HIGH COURT, 18 Jun 2010]
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Sanchay Fincom Limited vs Securities and Exchange Board of India
[SECURITIES APPELLATE TRIBUNAL, 17 Jun 2010]
Securities Exchange Board of India - Manipulating scrip - Circular and synchronized trades - Imposition of monetary penalty - Investigations into the dealings in the shares of Company - Circular and premeditated synchronized trades in Company's scrip by group of brokers and clients found - Show cause notices were issued to delinquents - Adjudicating officer concluded that the charge of executing circular/manipulative trades by the appellants and others as a group among themselves stood established - Different amounts of monetary penalty imposed on the appellants - Order challenged in present appeals - (A) Whether appellants executed circular trades while trading in the scrip of the Company? - Held, appellants executed circular trades and entered the buy and sell orders thereby synchronizing the trades to the second - Records show that 5,000 shares of the company were sold by one of the members of the group to one of the appellants, and the shares were then transferred from one entity to the other and finally the same quantity of the shares go back to member of the group who started the chain, all these trades having been executed within 5 minutes - Traded quantity, time and price repeatedly matched indicating circular and synchronized trades by delinquents - Several other trades similarly executed by the appellants depicting an identical pattern of trading between the appellants and others who formed the group, therefore, the adjudicating officer rightly held that the charge of circular and synchronized trades in a premeditated manner stood established - (B) Whether appellant liable for the violations that were committed even for the period prior to the transfer of the broking business in his name? - Held, appellant liable for the violations that were committed even for the period prior to the transfer of the broking business in his name - Old membership and registration was transferred on a clear undertaking being given by appellant to the effect that he would be liable for all liabilities/obligations including monetary penalties for the period prior to the transfer - Having taken the advantage of the continuity of the old business, the appellant cannot be allowed to approbate and reprobate and resile from the undertaking - Appeals disposed of.
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In Re : Nilesh Kapadia, Rajiv Ramniklal Sanghvi, Rajiv Ramniklal Sanghvi (HUF), Chandrakant P. Mehta and Dipti Paras Mehta vs
[SECURITIES AND EXCHANGE BOARD OF INDIA, 17 Jun 2010]
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Devbhoomi Awas Limited vs Antelec Limited
[CALCUTTA HIGH COURT, 16 Jun 2010]
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In Re : Basant Periwal and Company, Shares of Bakra Pratisthan Limited vs
[SECURITIES AND EXCHANGE BOARD OF INDIA, 15 Jun 2010]
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In Re : Proposed Acquisition of Equity Shares of Jainex Aamool Limited vs
[SECURITIES AND EXCHANGE BOARD OF INDIA, 15 Jun 2010]
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ARC Holdings Limited vs Rishra Steels Limited and others
[CALCUTTA HIGH COURT, 14 Jun 2010]
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