sebi:WTM/TCN//ID-3/149/Jan/2009
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Facts / Headnote
Show cause notices disposed of without passing any directions against the noticees; preliminary objections rejected as not sustainable.
Provisions invoked
- s. 11B
- s. 11
- s. 19
- s. 11(1)
- s. 11C
Regulations
- Reg. 3
Parties
- Saatal Katha (the company)
- Hukumchand Rathi
- Purshottamdas Rathi
- Vijay Rathi
- Suraj Ratan Rathi
- R. M. Saatal
Holding
All preliminary objections raised by the noticees (non-furnishing of documents, delegation of powers, limitation, lack of cogent reasons, premature issue of show cause notice, retrospective application of Sections 11(3)/11B, and absence of 'investigation' in the SEBI Act) were rejected as unsustainable. However, since the alleged fraudulent alteration of allotment terms occurred before the PFUTP Regulations, 1995 came into force, and there were no investor complaints or retail investors cheated, no directions were issued and the show cause notices were disposed of.
Full text
Page 2 of 16 a. The company came out with a public issue of 21,50,000 equity shares of face value of Rs.20/- each aggregating to Rs.4,30,00,000/-. The public subscription had opened on 30-01-1995 and closed on 02-02-
Page 3 of 16 2. In view of the above allegations, a detailed show cause notice dated 23-12-2002 was issued to the company requiring it to show cause as to why suitable directions including directions to write to all applicants / existing shareholders giving them an option to claim refund for the subscription made in the said public issue or sell their shares at face value to the promoters. Show cause notices dated 27-05-2003 were also issued to the company’s directors, S/Shri Hukumchand Rathi, Purshottamdas Rathi, Vijay Rathi, Suraj Ratan Rathi and R. M. Saatal. For sake of brevity, the company and its directors are hereinafter collectively referred to as ‘noticees’.
Page 4 of 16 09-05-2006 replied that the Hon’ble High Court of Madhya Pradesh, Indore Bench had disposed W. P. No. 1212/1998 with the direction that if preliminary objections are filed by the petitioner relating to the competency of authority, then after giving an opportunity of hearing to the petitioners (noticees) and before proceeding further, the objections shall be decided by the respondents (SEBI) in accordance with law by passing a reasoned order. The reply further mentioned that the noticees would be attending the hearing fixed on 17-05-2006. The hearing was rescheduled to 13-06-2007 in order to obtain a certified copy of the said order of the Hon’ble High Court. On the said date of the hearing, the noticees after becoming aware of the ‘consent scheme’ being introduced by the SEBI vide Circular ref no. EFD/ED/Cir-1/2007 dated April 20, 2007, had through their representative, Shri Dilip K Neema, expressed their desire to file necessary applications for a ‘consent order’. In view of their desire to come for ‘consent’ the matter was kept in abeyance. As no applications for consent order were filed despite the passing of more than two months from the date of the personal hearing, SEBI vide letter dated 03-09-2007 required the noticees to present themselves for a hearing scheduled before me on 25-09-2007. Due to administrative exigencies, the hearing was rescheduled to 28-03-2008, when the parties neither attended the hearing nor requested for adjournment of the hearing. I
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Source: SecMarx — sebi:WTM/TCN//ID-3/149/Jan/2009. 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.