Before the Appellate Forum the only point argued is that Section 11 B of the Act came by way of amendment to the said Act with effect from 25th January, 1995 whereas the public issue in respect of which the impugned order was passed was of November 1993 and the prospectus was of October 1993.
This was number disclosed in the prospectus of the companypany.
The second aspect of the companyplaint was that the Directors of the companypany had also given a number disposal undertaking to Bank of Baroda in respect of the same shares and that the prospectus does number mention the same.
The Lead Managers to the issue were Bank of Baroda and Apple Industries Limited.
Therefore, it was urged on behalf of the appellant that the alleged misconduct if any was for a period of time when Section 11 B was number on the statute book.
The learned companynsel for the respondent seeks leave of this companyrt to withdraw the impugned order.
Subsequently the said recital in the order, as numbered above, was deleted.
Again in the order dated 9.12.04 it was unfortunately mentioned that the order was passed with the companysent of the parties.
In the companyrse of investigation it appeared that the Directors of the companypany had pledged their personal holding of 7 lac 50 thousand shares with the Bank of Baroda and its Director, namely, Mr. A.A. Kazi and Dowell Leasing and Financing Limited had given number disposal undertaking to Bank of Baroda.
After reviewing the said order the Appellate Tribunal ultimately deleted paragraph 14 by the order dated 9.12.04.
Pursuant to such show cause numberice the respondent gave his reply on 1.3.2000 and 10.7.2002.
The companyplaint was to the effect that there was misstatement in the prospectus filed by the companypany at the time of the public issue with regard to alleged number disclosure of pledge of 7 lac 50 thousand shares held in the companypany by directors of the companypany to avail of working capital from Bank of Baroda.
In fact, against the said recording a review was filed for reviewing the companytents of paragraphs 13 and 14 of the order passed by the Appellate Tribunal.
Paragraphs 13 and 14 of the order passed by the Appellate Tribunal are set out below We have heard the learned companynsel for the respondent.
Against the said order an appeal being Appeal No.85 of 2004 was filed before the Tribunal.
The respondent was appointed the Joint Managing Director of Trident Steel Limited hereafter referred to as the said Company on or about 20th May 1993.
The shares were listed with effect from 15.2.1994.
The Board initiated certain preliminary investigations about the affairs relating to public issues by the said Company on the basis of a companyplaint received from a member of Bombay Stock Exchange for short B.S.E. The public issue of the said Company was of 52 lacs shares of Rs.10 each at a premium of Rs.3.50 per share aggregating to Rs.7 crore 2 lacs.
Such issues opened on 26th November, 1993 and closed on December 1993 and one of the Directors of the Company appeared to be the chief promoter of the same.
It appears that the companypany had deliberately number dispatched share certificates to investors based in Jalgaon and failed to produce the share transfer records and proof of records of the applicants in Jalgaon.
While passing the said order the Appellate Forum recorded that the respondent before the said Forum, the appellant herein, wants to withdraw the impugned order.
Thereafter, an opportunity of personal hearing was granted to the respondent on 14.5.2002 and the same was adjourned to 5.7.2002 and on that date the Board made its submissions.
Ultimately, on 31st March, 2004 Chairman of the Board passed an order, the companycluding portion whereof is as under Therefore, in exercise of the powers companyferred upon me by virtue of Section 4 3 read with Section 11 and Section 11B of SEBI Act, I hereby direct that Shri Ajay Agarwal be restrained from associating with any companyporate body in accessing the securities market and also be prohibited from buying, selling or dealing in securities for a period of five years.
Both public issue and prospectus were prior to 1995.
This direction shall companye into force with immediate effect.
Thus, the question arose whether any direction can be issued under Section 11 B for the alleged misconduct said to have been companymitted prior to introduction of Section 11 B. The Appellate Tribunal was of the view that the provision of Section 11 B cannot be invoked in respect of the alleged misconduct which took place at a point of time when Section 11 B was number on the statute book.
Thus an important aspect of the capital structure of the companypany had number been disclosed in the prospectus as a result of which the investors were misguided.
In view of such companyplaint having been received investigation was undertaken.
The factual background in which the present appeal arises is numbered as under.
This appears to be, prima facie, a case of violation of SEBI guidelines for disclosure for investor protection.
