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Order In The Matter Of Application For Grant Of Certificate Of Registration By Single Point Security Solutions Private Limited, As A Share Transfer Agent

Jul 02, 2004
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Orders : Orders of Chairman/Members

SECURITIES AND EXCHANGE BOARD OF INDIA

ORDER

IN THE MATTER OF APPLICATION FOR GRANT OF CERTIFICATE OF REGISTRATION BY SINGLE POINT SECURITY SOLUTIONS PRIVATE LIMITED, AS A SHARE TRANSFER AGENT.

 

                                                                                                        WTMN/48/MIRSD/7/04

1. Single Point Security Solutions Pvt. Ltd., a company having its registered office at Silvassa (hereinafter referred to as ‘the applicant company’) submitted an application dated April 03, 2003 for registration under Securities and Exchange Board of India (Registrar to an Issue and Share Transfer Agents) Regulations, 1993 (hereinafter referred to as ‘the said regulations’) to Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) for grant of certificate of registration for the purpose of carrying on the activities as a Share Transfer Agent. As per the said application for registration, the applicant company is owned by two shareholders namely Shri Jayesh Merchant and Shri Subhash Jambhale (Directors) each holding 50% of the share capital and the principal officer is Shri Jayesh Merchant (Director). Its corporate office is situated at Krishna House, Raghuvanshi Mills Compound, Lower Parel (W), Mumbai.

2. In the course of processing the application, the following were noticed:

  •  The shareholders and directors of the applicant company viz. Shri Jayesh Merchant and Shri Subhash Jambhale were the employees of Eskay K’n’IT (India) Ltd.
  •  The address of the corporate office of the applicant company was 11/12 Senapati Bapat Marg, Lower Parel, Mumbai 400013, the same as that of Eskay K’n’IT (India) Ltd.
  •  The telephone number of the applicant company as furnished also happened to be the telephone number of Eskay K’n’IT (India) Ltd.
  •  The bank account of the applicant company had also been introduced by Eskay K’n’IT (India) Ltd.
  •  The authorised signatories of the applicant company to operate the bank account viz State Bank of Indore, Dadar (W) Branch were S/Shri Sanjay Kumar Tayal and Saurabh Tayal.
  •  Shri Sanjay Kumar Tayal was a Director on the Board of Eskay K’n’IT (India) Ltd. formerly known as Shree Krishna Petro Yarns Ltd. and was also the company’s authorised signatory for the operation of the bank account.
  •  An amount of Rs.40,000/- had been transferred from the account of Eskay K’n’IT (India) Ltd. on May 26, 2003 to the account of the applicant company.
  •  Also an amount of Rs.4,00,000/- had been transferred from the bank account number 745584 maintained, (as it was learnt later, by Eskay K’n”IT (India) Ltd) in Andhra Bank, Nariman Point Branch to the bank account of Shri Jayesh Merchant and Shri Paresh Soni on September 3, 2003 and that on the same day a similar amount had been transferred by Shri Jayesh Merchant and Shri Paresh Soni to the bank account of the applicant company maintained in State Bank of Indore, Dadar Branch.
  •  The Whole Time Directors of Eskay K’n’IT (India) Ltd. were S/Shri Sanjay K. Tayal, Pravin K. Tayal and Navin K. Tayal. The aforesaid persons were also promoter directors of KSL and Industries Ltd.
  •  The said KSL and Industries Ltd and its directors viz. S/Shri Sanjay K. Tayal, Pravin K. Tayal and Navin K. Tayal stand debarred from accessing the capital market for a period of 2 years by SEBI vide its directions dated June 18, 2003 passed under section 11 and 11B of the SEBI Act, 1992 for violation of the provisions of Securities and Exchange Board of India (Prohibition of Fraudulent and unfair Trade Practices relating to Securities Market) Regulations, 1995 in the matter of Pashupati Cable Ltd.

3. In view of the above, SEBI formed a prima facie opinion that the applicant company was connected with the aforesaid entities/ persons who stood debarred from accessing capital market for a period of 2 years till June 17, 2005. The applicant company was not therefore considered prima facie a fit entity to be granted certificate of registration as Share Transfer Agent. An opportunity of personal hearing was, however, granted to the applicant company to make its submissions, if any, before taking a final decision in the matter.

4. Shri Jayesh Merchant, Shri Anil Rao and Shri Madhu Prasad appeared on behalf of the applicant company at the personal hearing on March 29, 2004 and made submissions before me.

5. I have perused the application for the certificate of registration, submitted by the applicant and its oral and written submissions. The following submissions have been made by or on behalf of the applicant company in support of its application:

  •  The applicant company does not have any connection with the directors of Eskay K’n’IT (India) Ltd. The money received by the applicant company from Eskay K’n’IT (India) Ltd. was for the purpose of setting up certain infrastructural facilities.
  •  The applicant company is not presently associated or connected in any way with any of the companies of Krishna group or S/Shri Sanjay Kumar Tayal, Pravin Kumar Tayal and Navin Kumar Tayal.
  •  Shri Sanjay Kumar Tayal has since ceased to be authorised signatory for the bank account of the applicant company.
  •  SEBI’s order dated June 18, 2003 against KSL and Industries Ltd. and its directors has been appealed against and the appeal is pending.


6. The available facts and stated circumstances of the case do indicate that the applicant company had been promoted by, or connected with or is under the control and management, howsoever indirectly, by the entities / persons who stand debarred by SEBI Order of June 18, 2003 from accessing capital markets for a period of 2 years till June 17, 2005, for serious regulatory violations. Mere pendency of an appeal would not invalidate the subsisting regulatory order. The explanations offered and the subsequent changes effected by the applicant company seem to be intended to have a cosmetic effect of disguising its ownership and control.

7. In my view, therefore, it would not be in the interest of investors to grant the applicant company certificate of registration to commence activities as Share Transfer Agent.

8. In view of the foregoing, and pursuant to the powers conferred upon me under Regulation 10 of Securities and Exchange Board of India (Registrar to an Issue and Share Transfer Agents) Regulations, 1993, read with section 19 of Securities and Exchange Board of India Act, 1992, I hereby reject the application of Single Point Security Solutions Pvt. Ltd., for certificate of Registration as a Share Transfer Agent.

                                                                            T.M.NAGARAJAN
                                                 WHOLE TIME MEMBER
          SECURITIES AND EXCHANGE BOARD OF INDIA