sebi:1300692046556

SEBI · SEBI · 2000-10-30 · G. N. Bajpai, Chairman, Securities and Exchange Board of India

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Facts / Headnote

Noticees debarred from accessing the capital market for five years; public companies in which they hold controlling or substantial interest also debarred for five years

Provisions invoked

• s. 11B
• s. 11(1)
• s. 21

Parties

• Saket Extrusion Limited
• Shri Lakshmi Kumar Baheti
• Shri Rajendra Kumar Mohta
• Shri Mahendra Kumar Mohta
• Shri Gopikishan Mohta
• Shri Ramesh Kumar Luharuka
• Dr R Srinivasan

Holding

SEBI directed Saket Extrusion Limited and its directors to disassociate themselves from capital market related activities and not to access the capital market for a period of five years, and further directed that public companies in which the said directors hold controlling or substantial interest shall not raise funds from the capital market for five years.

Full text

godown, plant shed, underground water tank, machine platforms are completed a n d t h e construction work for the remaining i t e m s i s i n progress and is likely to be completed by Dec., 93. (iii) Installation o f P l a n t & Machinery : T h e m a j o r equipments worth Rs.113.13 l a c s h a v e already been ordered and for remaining equipments orders need not be placed as they are readily available in local market. (iv) Trial production : Likely to comment from February, 94. (v) Commercial Production : Likely to commence from March, 94."

was communicated to SEBI by the Calcutta Stock Exchange by its letter dated 30.10.2000. 2. Show cause notice 4.1 In view of the above, a show cause notice dated 2.5.2000 was issued by SEBI to the SEL calling upon it to explain why action, including prohibiting SEL from accessing the capital market for a period of five years should not be taken under the SEBI Act and the Securities Contracts (Regulation) Act, 1956, specifically directions under section 11B of the SEBI Act. Similar show-cause notices were also issued by SEBI on 16.11.2000 to all the Directors of SEL. They had been given a personal hearing before the Chairman, SEBI on 26.08.2002. However the directors or their representatives have not turned up on that date. Since the company is not traceable at the address of its registered office, since none of the company’s assets are found there and no business is being carried on there and since, the company had not been complying with the listing agreement nor replying to correspondence from the exchange, the presumption is irresistible that the funds raised by the public issue have been put to uses other than those for which they were promised to be in the offer document. It is also clear that SEL is a vanishing company as per the criteria laid down by the CMC for identification of vanishing companies

The promoters of such companies are not even known to many investors in shares of such companies. It is a matter of common experience that in some cases later it transpires to the investors that the promoters had the sole object to form a bogus company and foist it off on the public to the latter’s detriment and for their own wrongful gain. In this process the public becomes the victim of the evil design of the promoters who enrich themselves by dishonest means without there being any real intention to do any business...." The SAT in Status Management Services Ltd. v. SEBI, has observed that there can be no two views on question of taking deterrent action in accordance with the procedure established by law, against those companies which had duped the public and vanished. 5.4 It is relevant to note that in Integrated Amusements Ltd. v. SEBI, the Securities Appellate Tribunal has held that SEBI has power under sections 11 and 11B of the Securities and Exchanges Board of India Act, 1992 (hereinafter referred to as "the SEBI Act") to debar vanishing companies and their directors from accessing capital markets for fixed periods of time. Further, clause 17.1(b) of the SEBI (Disclosure and Investor Protection) Guidelines, 2000 also empower SEBI to issue such directions.

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