SAT Raps SEBI for Failing to Protect, Compensate Investors; Asks to Pay Rs18.25 lakh
The Securities Appellate Tribunal (SAT) has pulled up market regulator Securities and Exchange Board of India (SEBI) for not having a proper mechanism to compensate investors who are victims of stock market manipulations. 
 
While directing SEBI to pay Rs18.25 lakh to two investors of Vital Communications Ltd (VCL), the Tribunal says, "Violation by VCL has been now conclusively proved by the impugned order and, as such, the impugned order should have contained provision for compensating the appellants.
 
Accordingly, in the light of this Tribunal’s earlier orders, and purely given facts and circumstances of this matter, we direct SEBI to compensate the appellants by Rs18,25,041, the amount they invested in the shares of VCL in 2002." 
 
Interestingly, SEBI has asked VCL and its directors to disgorge unlawful gains of Rs4.56 crore with an interest of 10% since August 2002 for manipulation. While this huge money would go to SEBI’s kitty, SEBI pleaded helplessness to compensate the affected investors. 
 
SAT has ordered SEBI to pay more than Rs18 lakhs to the Guptas from the amount being disgorged from VCL and connected entities, or from SEBI’s Investor Protection and Education Fund within a period of three months. SAT, however, refused any interest on the money invested by investors, Ram Kishori Gupta and Harish Chandra Gupta. It says, "No interest thereon shall be paid, since the appellants (the Guptas) should also bear part of the risk of investing in the securities market following the principle of caveat emptor.
 
Last year, when SEBI asked Vital Communications and its directors to pay unlawful gains of Rs4.56 crore with an interest of 10%, the Guptas appealed before SAT contending that the SEBI order in VCL matter violates the directions given by the Tribunal in its order dated 30 April 2013 as well as the mandate given to the market regulator by the SEBI Act for protecting investors. 
 
In its 2013 order, the SAT has directed the market regulator to "consider directing the concerned entity or VCL to refund the actual amount spent by the appellants on purchasing  the  shares  in  question  and  with appropriate interest and as per law" if SEBI finds VCL guilty of playing fraud on investors. 
 
However, the order passed by SEBI last year against VCL failed to redress grievances of the Guptas, which prompted them to appeal before the SAT.
 
The SAT bench of Justice Tarun Agarwala, DR CKG Nair and Justice MT Joshi, observed, "... it is contended that SEBI is in breach of not following the directions of this Tribunal, apart from not fulfilling its mandate of protecting the investors. This is particularly relevant in the context that the appellants have been pursuing this matter since 2002 by running from pillar to post. Apart from informing SEBI about the violations committed by the Company VCL in 2003, by means of misleading announcements they approached the National   Consumer Disputes   Redressal   Commission (NCDRC),  SEBI  and  SAT  multiple  times  at  very  high personal cost.
 
On account of these complaints SEBI has now confirmed that the Company VCL has committed several violations and passed the disgorgement order, (impugned order). However, still the appellants are left in the lurch without any compensation despite the fact that they are genuine investors in the shares of VCL and despite the explicit direction for compensation by this Tribunal. "
 
Mustafa Doctor, senior counsel for SEBI contended that the direction contained in the Tribunal’s 30 April 2013 was further modified by the Tribunal’s order on 19 December 2013. He said, "While the first order stated that SEBI may consider compensating the appellants, the second order of this Tribunal modified it by stating that such consideration, if any, has to be as per the provisions of the law and if the circumstances so require. 
 
Citing  paragraph  32  of  that order, Adv Doctor submitted that "it was virtually impossible for SEBI to provide for restitution to a  large  number  of  investors  who  have  invested  in  the secondary   market   and   incurred   losses   and   giving compensation on a selective basis would be discriminatory as there  may  be  a  large  number  of  affected  investors  and restitution to investors as a class is a complex task beyond the capacity of SEBI."
 
SAT, however, pulled SEBI for expressing helplessness. "While we sympathise with the submission of the learned senior counsel for the respondent SEBI, we do not agree with the helplessness of SEBI in the context like in this appeal. It is on the relentless efforts of the appellants before us that the violations made by VCL and other entities have been brought to the fore. Such efforts have been going on since the year 2002. The direction contained in our order dated 30 April 2013 though amended in December 2013 was that if violation by VCL was proved the appellants’ claim may be considered as per law. This direction has to be placed in the context of the disgorgement order issued by SEBI (impugned order) whereby Rs4.5 crore (approximately) along with interest has been ordered to be paid by VCL and other entities jointly and severally. The basic idea behind disgorgement is restitution. In the given context, we are of the view that as an investor protection measure the appellants needs to be compensated, since disgorgement without restitution does not serve any purpose."
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    COMMENTS

    Mitesh Shah

    4 months ago

    When will SEBI take action against V.B.Desai group co. Neptune Steel strips Ltd ( unlisted cos ) & Dowells Elektro Werke Ltd _ delisted Co but the company is still operating business with major clients like L&T , ABB but then why the company is not accountable now ? Why the company is operated in private domain & investors always have to see their wealth erode.

    Reliance Capital Companies of Anil Ambani Group Headed for Default?
    Multiple companies of Reliance Anil Dhirubhai Ambani group (ADAG) are suffering a huge ratings downgrade to default imminent status by multiple rating agencies. CARE Ratings has downgraded Rs12,700 crore worth of Reliance Commercial Finance’s debt to “CARE D”. “CARE D” rating indicates that the instruments are in default or expected to be in default soon. Of this, Rs12,500 crore is towards long-term bank facilities and remaining Rs200 crore is towards non-convertible debentures.
     
    At the same time, the ratings agency has downgraded Rs4,980 crore worth of long-term debt of Reliance Home Finance to “CARE D”. In case of both Reliance Commercial Finance and Reliance Home Finance, CARE has cited the delays in servicing of instruments and stressed liquidity profile of the group as the rationale for these downgrades.
     
    Just few days ago, ratings agencies like CARE Ratings and Brickwork Ratings had downgraded Reliance Commercial Finance, Reliance Capital and Reliance Home Finance. 
     
    CARE further states that, they have factored in linkages between the companies and their parent Reliance Communications Ltd (RCom), which are in the form of RCom’s demonstrated track record of support to subsidiaries and strategic importance of the subsidiaries to its parent along with sharing of the brand name. The moderation in RCom’s profile has weakened these linkages as the parent is not in a position to extend adequate support to its subsidiaries, the ratings agency says.
     
    Separately, ratings agency ICRA has also downgraded commercial papers worth Rs1,200 crore of Reliance Home Finance to “ICRA A4”. 
     
    “ICRA A4” indicates that the instruments are considered to have minimal degree of safety regarding timely payment of financial obligations and that, such instruments carry very high credit risk and are susceptible to default. ICRA also cites the rational for such downgrade to incapability of Reliance Communications to support its subsidiaries given the slow pace of monetisation of the company’s non-core investments.
     
    In a statement, a spokesperson for Reliance Commercial Finance stated, "RCFL has been affected by a timing mismatch in regard to the ongoing further securitisation or monetisation proposals with banks and the same has resulted in minor delay on principal repayments aggregating to only Rs477 crore to five-six banks, and limited only to its bank borrowings. RCFL expects to regularise all such repayments very shortly."

    "RCFL has already completed securitisation of over Rs2,200 crore from 1 October 2018 till date, and is engaged in active discussions for further securitisation or monetisation of its asset base. RCFL is also completely current and regular on principal repayments on all its capital market borrowings aggregating Rs3,071 crore," the company added.

    Similarly, in a statement, a spokesperson for Reliance Commercial Finance stated, "RHFL has been affected by a timing mismatch in regard to the ongoing further securitisation or monetisation proposals with banks and the same has resulted in minor delay on principal repayments aggregating to only Rs542 crore to around five-six banks, and limited only to its bank borrowings. RHFL expects to regularise all such repayments very shortly."

    Reliance Commercial Finance says it has "already completed securitisation of over Rs5,500 crore from 1 October 2018 till date, and is also completely current and regular on principal repayments on all its capital market borrowings aggregating Rs7,708 crore."
     
    According to a report from the Mint, several asset management companies (AMCs) like Reliance Nippon AMC, Aditya Birla Sun Life AMC, and DHFL Pramerica AMC have exposure in Reliance Commercial Finance; eight out of 13 schemes are fixed maturity plans (FMPs).
     
    It is unclear how much debt held by mutual fund schemes has been individually affected by the downgrade, the report says. 
     
    A spokesperson from DHFL Pramerica AMC told the Mint, “Our exposure to Reliance Commercial Finance is a structured transaction based on the credit enhancement offered by the Parent—Reliance Capital which is rated Care A. As such our structure also carries the rating of Care A (So). There is no change in the ratings of our instrument despite the change in rating of Reliance Commercial Finance on a stand-alone basis."
     
    “Kotak Mutual Fund recently held back some of its FMP units against payments due from the Essel Group and HDFC Mutual Fund rolled over (extended) the maturity of one of its FMPs with Essel exposure. A surge of redemptions from some AMCs like DHFL Pramerica Mutual Fund has also caused their exposures to the troubled groups to breach SEBI limits. The Regulator has not initiated any penal action in this regard at this point of time,” the report added.
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    COMMENTS

    Sanjeev jain

    7 months ago

    He will make money in satta ,

    jignesh shah

    8 months ago

    always go thru intelligent and experience people never get lose and l discredit in the market

    Hudaf Shaikh

    8 months ago

    In wake of IL&FS default, most small HFCs and and NBFCs are facing challenges in raising funds - this has severely impacted availability of home loans for the needy and has squeezed many SMEs who don't have access to bank credit. Sadly, many larger well funded HFCs, instead of stepping up to fill the gap, are using this as an opportunity to scalp needy homebuyers -

    RBI needs to owe up responsibility and needs to immediately take corrective action by providing funding to smaller HFCs so as to increase the competition and prevent home buyers from being scalped by greedy HFCs.

    Pralhad Shewale

    8 months ago

    " ये तो होणाही था "

    Reshma Khanum Niyazi

    8 months ago

    Anil Ambani has his big b to rescue him from the debt...but wht about the general public who have trusted ur company & invested their hard earned money in Rcom ???

    PACL Refund Claims Can be Filed till 31 July 2019: SEBI
    The Justice RM Lodha (retd) Committee appointed in the PACL Ltd matter has decided to extend the last date for receiving claim applications till 31 July 2019.
     
    In a release, market regulator Securities and Exchange Board of India (SEBI) said, "...in view of representations received, the Committee has decided to extend the last date of receipt of applications to 31 July 2019 from 30 April 2019."
     
    In February this year, the Justice Lodha Committee had allowed investors to file refund claims online before 30 April 2019. 
     
    SEBI has created a separate website for accepting the claim forms from all investors of PACL who are seeking refund of their investment. To file the claim, the investor need to visit http://sebipaclrefund.co.in/ and submit her application. For submitting the claim, the investor needs to upload copy of her PAN card, latest passport size photo, copy of cancelled cheque, copy of PACL certificate and receipts, if any.
     
  • User

    COMMENTS

    ganesh salve

    2 days ago

    pcal pase nahi milale ajun kab milege

    Mahi Lakki

    3 days ago

    9164073143

    K karthick

    1 week ago

    i have only the acknowledgement copy of pacl refund all document submitted in bangalore branch what i can do sir

    K karthick

    1 week ago

    how they get amt

    K karthick

    1 week ago

    acknowledge holders status what

    Zishan Ansari

    2 weeks ago

    Zishan ansari

    REPLY

    Mahi Lakki

    In Reply to Zishan Ansari 3 days ago

    sir my name is ajjaiah my amount not resive pacl

    MDT

    2 weeks ago

    Kindly read an update on PACL...

    PACL Investors to Get an Opportunity to Rectify Deficiencies in Applications

    https://www.moneylife.in/article/pacl-investors-to-get-an-opportunity-to-rectify-deficiencies-in-applications/58815.html

    Dev Upadhyay

    2 weeks ago

    plz confirm date for complete policy holder

    Manoj Kumar

    2 weeks ago

    Pl tell me for the next date

    samaun sarkar

    3 weeks ago

    Sar I not submit my Certificate last date.next date?

    Ramakhat Gaonkar

    3 weeks ago

    Sir iam not aware of last date is there any possibility of extension of last date.so I can fill my refund form?

    REPLY

    Santosh Kumar Vashishtha

    In Reply to Ramakhat Gaonkar 3 weeks ago

    Me also waiting for next date so that refund claim can be filed

    Hasmukh Parmar

    3 weeks ago

    Pacl ka paisa kab aye ga and kese pata kare paisa aya hai ya nahi...

    Prakash Parwani

    4 weeks ago

    U 198164743

    Raju k v

    4 weeks ago

    Sir,
    refund how many days is taking

    Pankaj Sharma

    4 weeks ago

    sir i Am not aware of last date is there is any possibility of extension of last date so we can fill the refund form??

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