BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA
CORAM: V. K. COPRA, WHOLE TIME MEMBER
UNDER SECTIONS 11B AND 11(4) OF SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 IN THE MATTER OF MILLENNIUM CYBERTECH LTD. AGAINST JUPITER SECURITIES AND PROPERTIES PVT. LTD.
DATE OF HEARING 29.11.2006
APPEARANCES
FOR COMPANIES:
- Shri. Bharat Bindal, Promoter, Jupiter Securities and Properties Pvt. Ltd.
- Shri. Ashok Mehta, Consultant, Jupiter Securities and Properties Pvt. Ltd.
FOR SEBI
- Mrs Barnali Mukherjee, DGM, SEBI
- Shri. Vir Sahab Singh , Manager, SEBI
- Shri. Mohamed Rahaz. P.M, Legal Officer, SEBI
ORDER
1.0 BACKGROUND
1.1 The Securities and Exchange Board of India (hereinafter referred to in short as SEBI) had initiated investigation in the scrip of Millennium Cybertech Ltd (herein after referred to in short as “the company MCL”) on observing steep rise in the price and volume of the said scrip during the period from June 01, 2005 to September 30, 2005. Based on the preliminary findings in the said investigation, an ad-interim ex-parte order dated January 24, 2006 was passed under Section 11B and 11(4) of the Securities and Exchange Board of India Act, 1992 against the company MCL, its promoters, Private Corporate Bodies (PCBs), Stock Brokers and Clients, pending investigation. By way of the said ad-interim order, the company MCL was directed not to issue any equity shares or any other instrument convertible into equity shares or shall not alter its capital structure in any manner till further direction. The said interim order was confirmed against the company on September 26, 2006.
1.2 There was a direction against the promoters of MCL, PCBs, Stock Brokers and Clients restraining them from buying, selling or dealing in the securities of MCL directly or indirectly till further direction. Now, the issue before us is to consider as to whether the said interim order against one of the PCB namely Jupiter Securities and Properties Pvt. Ltd. (hereinafter referred to in short as JSPPL) can be vacated or not, pending investigation.
1.3 The name of JSPPL appeared among the PCBs category in the aforesaid interim order dated January 24, 2006 wherein it is mentioned that JSPPL was holding 168900 shares (3.38% – face value Rs 10/-) of MCL as on September 30, 2004. It is also mentioned that its holding declined to 101600 shares (2.03% - face value Rs 10/-) as on September 30, 2005. During the course of investigation, JSPPL was asked to clarify the above change in shareholding which ultimately culminated into the filing of objection to the aforesaid interim order.
2.0 OBJECTION OF JSPPL AGAINST THE AFORESAID INTERIM ORDER DATED JANUARY 24, 2006 AND PERSONAL HEARING
2.1 In the aforesaid ad-interim order dated January 24, 2006, 15 days time from the date of the order was given to the entities against whom the said interim order has been passed. JSPPL whose name appeared among the PCBs in the said interim order was directed not to buy, sell or deal in the securities of MCL directly or indirectly till further order. However, JSPPL filed their objection only on October 13, 2006. In the said written objection, the company JSPPL requested for a personal hearing. Accordingly, hearing was fixed on November 29, 2006 at SEBI’s head office at Mumbai. Shri. Bharat Bindal, Promoter, Jupiter Securities and Properties Pvt. Ltd and Shri. Ashok Mehta, Consultant, Jupiter Securities and Properties Pvt. Ltd attended the hearing.
2.2 During the course of hearing, the representative of JSPPL explained the reason for delay in filing the objection to get the said interim order vacated. They stated that they have not received the copy of the aforesaid order and they only came to know of the said interim order in the month of March 2006 when the Corporation Finance Department of SEBI inquired from Brahma Interactive Ltd about the investigation in MCL where the name of JSPPL had also appeared. JSPPL stated that it was not holding the shares of MCL after January 06, 2004 and as such genuinely believed that the said interim order is not applicable to them. However, the investigating authority had sought details of their shareholdings in MCL which culminated into the filing of the objection against the aforesaid interim order. In view of what is expressed hereinabove, delay in filing the objection to the aforesaid interim order is accepted.
2.3 In the said objection, JSPPL inter-alia submitted that it was holding 609900 shares before December 16, 2002 and in between December 16, 2002 and January 06, 2004, it sold its entire share holding through off market to 3 entities viz. Avinash Finlease Private Limited (2,92,300 shares), Mutual Impex Pvt. Ltd. (3,08,600 shares) and Fast Track Securities Pvt. Ltd. (9,000 shares).
2.4 JSPPL also stated that they have furnished detailed information to SEBI on September 28, 2006 giving substantial evidence like copies of bank statements, personal accounts, books of account of both the companies and promoters to prove that they did not hold any share of MCL after January 06, 2004 and have not done any transaction (market / off market) during the period June 01, 2005 to September 30, 2005.
3.0. CONSIDERATION OF ISSUE
3.1 I have carefully considered the materials on record. I find from the shareholding pattern filed by the company MCL with Stock Exchange Mumbai (BSE) that JSPPL was holding 1,68,900 shares for the quarter September 30, 2004 and 1,01,600 shares for the quarter September 30, 2005. On the basis of the said information, SEBI passed the aforesaid interim order against JSPPL. Further, the present investigation is for the period from June 01, 2005 to September 30, 2005. JSPPL submitted that it had last dealt in the shares of MCL on January 06, 2004. and is no way involved in the matter under investigation.
3.2 During the course of hearing, the representative of JSPPL categorically submitted that their company JSPPL and its promoters and directors have not indulged in buying, selling, trading or dealing in any manner whatsoever in the shares of MCL after January 06, 2004. Before January 06, 2004, the entire shareholding of MCL held by JSPPL was sold through off market to the aforesaid three entities namely M/s Avinash Finlease Private Limited, M/s Mutual Impex Pvt. Ltd. and M/s Fast Track Securities Pvt. Ltd. and the consideration thereof was received through regular banking channel. However, no agreement was entered between buyers and sellers.
3.3 In order to prove the said submission, they have also provided copies of the balance sheet of the company JSPPL as on March 31, 2004 along with its written submission filed on the date of hearing. They also stated that the said balance sheet had already been filed to the Registrar of Companies in Madhya Pradesh and Income Tax Office at Indore on due date in the year 2004 itself. I have examined the copy of the said balance sheet and find that the same shows nil balance in respect of the shares of MCL.
3.4 The representative of JSPPL also submitted that they have submitted a letter dated October 09, 2006 enclosing the documents to prove that they had disposed of the entire shares of MCL during the financial year 2003-2004. I have pursued the said letter and find that it had provided the following documents along with the said letter.
· Letter dated October 04, 2006 of Oriental Bank of Commerce showing the receipt of payment of Rs 19,31,000/- from December 15, 2002 to December 15, 2003.
· Debit note dated December 15, 2002 by JSPPL on Avinash Finlease Private Ltd with respect to 1,68,900 shares of MCL for Rs 5,00,000/-.
· Letter dated October 03, 2006 to M/s Sharex Dynamic India Pvt. Ltd., Mumbai being RTA of MCL, requesting them to furnish the details of the shares held in the name of JSPPL.
· Two separate Letters both dated September 29, 2006 to NSDL and CDSL requesting them to provide details of any other fictitious account opened in the name of JSPPL other than their valid demat account bearing no. 14712623 at Stock Holding Corporation at Indore.
3.5 From the above documents, it is clear that JSPPL had already taken steps to prove that they are not involved in the matter under investigation and they have not transacted in the scrip of MCL after January 06, 2004. Further, it is clear from the balance sheet of JSPPL as on March 31, 2004 that it was not holding any shares of MCL. I have also examined the statements of Shri Ashok Mehta, Authorized Representative of JSPPL recorded on September 28, 2006 and October 13, 2006 and find that his statements corroborates with the aforesaid documentary evidence and also proved their claim of disposing of the entire shareholdings prior to January 06, 2004.
3.6 Therefore, I am of the view that the ad-interim directions contained in the aforesaid interim order dated January 24, 2006 against JSPPL restraining it from buying, selling or dealing in securities of MCL directly or indirectly till further direction is not tenable and hence the same is vacated.
4.0 Order
4.1 In the light of the above, in exercise of the powers conferred upon me in terms of Section 19 read with Section 11(4)(b) and Section 11B of the SEBI Act, I have no hesitation in vacating the ad interim ex-parte order dated January 24, 2006, against the company M/s Jupiter Securities and Properties Pvt. Ltd.
4.2 This order shall come into force with immediate effect.
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Mumbai
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V. K. CHOPRA
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December 05, 2006
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WHOLE TIME MEMBER
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SECURITIES AND EXCHANGE BOARD OF INDIA
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