sebi:MO/20/IVD/06/04
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Facts / Headnote
M/s. Zoom Industrial Services Limited prohibited from accessing the securities market and dealing in securities, directly or indirectly, for a period of eighteen months with immediate effect
Provisions invoked
- s. 11B
- s. 19
- s. 77
Parties
- M/s. Zoom Industrial Services Limited
Holding
Zoom Industrial Services Limited, acting in connivance with SPML, bailed out SPML's rights issue by subscribing after closure to create an illusion of 90% minimum subscription, and was therefore prohibited from accessing and dealing in the securities market for eighteen months.
Full text
Page 2 of 12 4. The Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) received a reference from the Income Tax Office, Calcutta, in May 1996, as also a number of complaints regarding the said issue, alluding to inter alia, irregular subscription, price manipulation before the rights issue, non-disclosure and misstatements in the letter of offer, violations of Debenture Trustee regulations, non-listing of shares etc.
Page 3 of 12 II. Zoom, acting in connivance with SPML, had subscribed to a major portion of the rights issue of SPML, after the date of closure of the issue, in order to create an illusion that the rights issue of SPML had received a minimum subscription of 90%.
Page 4 of 12 1995, showed the same to have been issued by them, as per their records on November, 08, 1995. Zoom stated that the purported bank documents on the basis of which such allegations were made, had not been properly proved and the photocopies annexed to the show cause notice were not certified under the Bankers Books Evidence Act and the concerned persons who maintained the bank books had not prepared any affidavit and the person who had allegedly collected these cheque books had not been identified. Zoom submitted that no attempt was made to ascertain as to whether the bank’s books were maintained and entries made contemporaneously. It further stated that a perusal of the cheque issue register of the Vysya Bank Limited clearly indicated that the alleged issuance of the cheque books were not done chronologically and stated that they could not be held responsible or be bound by the manner in which the bank records were maintained. Zoom further denied the contention that although they were entitled to certain rights shares, they had renounced the same, in favour of others and that soon thereafter, they had applied for shares and debentures in excess of their entitlements, using the funds provided by SPML.
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Source: SecMarx — sebi:MO/20/IVD/06/04. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.