sebi:WTM/RKA/ISD/14/2014
This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.
Facts / Headnote
Prima facie findings of fraud and disclosure violations upheld; interim directions continued with order to remain in force till further directions.
Provisions invoked
- s. 11B
- s. 11
- s. 11(4)
- s. 19
- s. 11(1)
- s. 12A
- s. 21
- s. 11(2)
- s. 55A
- s. 12
- s. 173(2)
- s. 11A
- s. 12(3)
Regulations
- Reg. 3
- Reg. 2(1)(c)
- Reg. 2(1)
- Reg. 2(c)
- Reg. 3(c)
- Reg. 12
Parties
- Zenith Infotech Ltd.
- Rajkumar Saraf
- Akash Rajkumar Saraf
- Devita Rajkumar Saraf
- Vijay Ramchandra Mukhi
Holding
SEBI held it has jurisdiction over fraudulent diversion of MSD business sale proceeds and false/misleading disclosures by a listed company and its promoters/directors as fraudulent and unfair trade practices relating to securities market, and confirmed and continued the ad-interim ex-parte order dated March 25, 2013 till further directions.
Full text
Order in the matter of Zenith Infotech Ltd. Page 2 of 35 1. Vide an ad interim ex-parte order dated March 25, 2013 (hereinafter referred to as the 'interim
Order in the matter of Zenith Infotech Ltd. Page 3 of 35 application and extended the time period for furnishing the bank guarantee, as directed in the
Order in the matter of Zenith Infotech Ltd. Page 4 of 35 (d). As per section 55A of the Companies Act, 1956, SEBI’s jurisdiction is limited to issue and transfer of securities and non-payment of dividend. FCCBs are not “securities” as defined under section 2(h) of the SCRA and hence not within the regulatory purview of SEBI. The issues alleged in the interim order are exclusively under the jurisdiction of the Ministry of Corporate Affairs (MCA). If there is a failure to comply with the shareholders resolution, the aggrieved shareholders have remedies available to them under the Companies Act, 1956 and SEBI has no jurisdiction to enforce shareholders resolution. (e). As stated under frequently asked question (FAQ’s) entitled “Investors Grievance Redressal Mechanism at SEBI” (dated November 26, 2011) it is SEBI’s policy of not passing orders on matters which are sub judice before Civil Courts. In the said FAQ it is also stated that grievances pertaining to mismanagement of company, minority shareholders interest, etc. fall within the ambit of the MCA. (f). The interim order is beyond jurisdiction, powers and functions of SEBI as available under the SEBI Act. Sections 11, 11(4), 11B and 12A of the SEBI Act and section 12A of the SCRA, which are used as source of power to pass the interim order do not include the matters specified in section 55A of the Companies Act. (g). The power under section 11(4) of the SEBI Act is exhaustive and it does not include the power to direct the b
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Source: SecMarx — sebi:WTM/RKA/ISD/14/2014. 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.