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Civil litigation

The details of cases that were filed in the Courts during 1999-2000 where the SEBI was a party are given in Table 2.52.

Table 2.52 : Status of Litigation where SEBI was a Party
Sr.No. Subject Matter
      Cases Filed Cases Dismissed Cases Allowed
1 Primary Market Department 36 37 0
2 Secondary Market Department (batch matters not included) 53 18 0
3 Investigations, Enforcement and Surveillance Department 13 07 0
4 Mutual Funds Department 10 05 0
5 Takeovers  05 02 0
6 Collective Investment Scheme 06 16 0
7 Consumer Forum Cases* 38 16 0
8 GSD 03 0 0
   Total 164 91 0
* Only those cases where SEBI has received notice has been included. There may be other cases where notices from the forum have not been received. Some cases might have been disposed off without SEBI's knowledge.

Source: SEBI


Graph 2.32: Status of Litigation where SEBI was a Party


Persons aggrieved by an order of the SEBI passed under the SEBI Act, 1992 can prefer an appeal to the Central Government under Section 20 of the SEBI Act, 1992. Table 2.53 gives status of appeals that were filed before the Appellate Authority in the financial year 1999-2000.

Table 2.53: Appeals Filed under Section 20 to the Central

Government for the year 1999-2000
Status of Appeals
No. of Appeals
Appeals filed
Appeals dismissed
Appeals allowed
1 (Remanded back

for reconsideration)

Source : SEBI

Appeals before the Securities Appellate Tribunal (SAT)

Persons aggrieved by an order of the Adjudicating Officer passed under Chapter VIA of the SEBI Act, 1992 can prefer an appeal to the Securities Appellate Tribunal under section 15T of the SEBI Act, 1992. Table 2.54 gives the status of the appeal pending before the Tribunal.

Table2.54: Appeals filed under section 15T Before

the Securities Appellate Tribunal (SAT) for the year 1999-2000
Appeals filed
Appeals dismissed
Appeals allowed
Source : SEBI

Important court pronouncements relating to securities laws

High Court of Gujarat - SEBI & Rich paints Ltd. vs. Kamlesh Jain & others

The Gujarat High Court held that the subscription money does not belong to the company and hence neither the Directors of the company can handle it the way they want nor can the Income Tax department attach the same.

High Court of Mumbai - The Stock Exchange, Mumbai vs. Vinay Bubna

The Supreme Court held that once a defaulting member ceases to be member, no interest remains in the card and hence can not be considered as an asset. With regard to Rule 16 of BSE, the Supreme Court held that Rule 16 makes a provision for clearing the debts etc., of erstwhile members which gives a hope to the credits. Hence Rule 16 of BSE is not illegal or arbitrary.

High Court of Mumbai - Krishna H. Bajaj Vs, Sesa Industries & others

The petitioner was not allotted shares in a public issue. The Court in this case held that the SEBI does not have any such statutory duty to direct any company to issue shares.

The Securities Appellate Tribunal, Mumbai - Sailesh Thakkar & others Vs. SEBI

The Appellants and others in this case rigged, large quantities of shares were shown to have been sold and purchased which resulted in the Appellants have bulk of floating stock with them. This resulted in the increase of the price. The Securities and Exchange Board of India (SEBI) had suspended the Appellants from the market for a year. The Ministry of Finance upheld the order of the SEBI and rejected the appeal.

The Securities Appellate Tribunal, Mumbai - Dhanalakshmi Bank Lt. Vs. SEBI, Karnataka Bank Ltd Vs. SEBI & Punjab & Sind Bank Vs. SEBI

The SAT held that the letters exchanged between the banker to an issue and the bodies corporates on behalf of whom the banker is going to act as banker, which contained offer and acceptance, amounted to an agreement.

The Securities Appellate Tribunal, Mumbai - State Bank of Indore Vs. SEBI

The SAT in this case did not find enough evidence to constitute an agreement between the Appellant and the bodies corporates, dismissed the appeal.

The Securities Appellate Tribunal, Mumbai - R.R. Mohta Vs. SEBI

Impugned order issued by SEBI suspending the broker for 3 years, held not in violation of Section 13 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Markets) 1995- Factors like increase in price, cornering of stocks, movement of index are all relevant factors in establishing price rigging - suspension of appellant for a period of 3 years not unduly harsh - Order by SEBI upheld by Central Government.

The Securities Appellate Tribunal, Mumbai - M/s. Indian Bank Mutual Fund & Indian Bank Vs. SEBI

Wordings indicated in the offer document involved assured return-trustee bank liable to make good the losses made by the Fund proceedings before MRTP Commission no bar to proceedings with SEBI as the provisions of law as well as nature of obligations are different - Directions of SEBI under Section 11B of SEBI Act, 1992 are in order.

High Court of Mumbai - M/s. Universal Incast Ltd. Vs. SEBI

The High Court of Punjab and Haryana in this case held that a company cannot be permitted to list its shares on a stock exchange unless the minimum subscription clause is complied with and the subscription amount shall be deposited with the banker to an issue only and no one else.