INDIA BUSINESS WORLD - FEBRUARY 16th - FEBRUARY 29th - 2008
SC ADMITS PLEA AGAINST SAT’S BAJAJ CASE ORDER
The Supreme Court has admitted an appeal of the Securities & Exchange Board of India (Sebi) against a Securities Appellate Tribunal (SAT) ruling on Harinarayan Bajaj and Rahul H Bajaj. SAT had set aside Sebi’s order debarring them from dealing in the capital and securities markets allegedly for committing irregularities. A bench comprising Justice SH Kapadia and Justice BS Reddy admitted Sebi’s appeal after hearing preliminary pleas.
Appearing on behalf of Sebi, Solicitor General GE Vahanvati and advocate Pratap Venugopal said the tribunal erred in concluding that there is no bar on the practice carried on by the Harinarayan Bajaj and Rahul Bajaj for shifting positions from one exchange to the other.
The findings that there is no provision either in the Sebi Act 1992 or in any of the regulations or circulars of the market regulator is illegal, submitted the solicitor general. The two debarred persons had made huge purchases in the Amara Raja Batteries scrip between August 2000 and February 2001, taking delivery of close to 3,76,260 shares of which 2,93,550 shares were pledged with banks and other individuals to avail loans for utilising it to fuel stock prices.
On June 25, 2003, Sebi had passed an order prohibiting Harinarayan Bajaj and Rahul H Bajaj from trading in the capital and securities market, for 5 and 10 years, respectively.
They traded through various sub-brokers and also made use of different trading cycles in BSE and NSE to shift position from one exchange to another leading to artificial creation of large volume of scrips to lure the investors, it was argued.
However, Bajajs’ counsels Dhruv Mehta and Gaurav Goyal said that dealing in the scrip through 33 sub brokers and different trading cycles were designed to minimise risks.
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