SECURITIES AND EXCHANGE BOARD OF INDIA, MUMBAI

Whereas, a complaint dated 06.01.96 was received by Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) stating that due process was not followed in the public issue of Trident Steels Ltd. (hereinafter referred to as ‘the company’) for despatch of share certificates/allotment advices to the subscribers and that in some cases the share certificates/allotment advices were handed over to representatives of the company, and,

whereas, the aforesaid complaint was forwarded to M/s. Apple Finance Ltd. (hereinafter referred to as ‘Apple’) by SEBI vide letter dated 18.01.96 for its comments, since Apple, a merchant banker registered with SEBI acted as the post-issue lead manager to the issue and was responsible for ensuring due despatch of the share certificates/allotment advices, and,

whereas, Apple replied vide its letter dated 23.01.96 mentioning, inter-alia, that it was not aware of the handing over of shares to the company by M/s. Online Share Management Services Ltd., Registrar to the issue, and,

whereas an investigation ordered by SEBI in the matter was completed and the report submitted on 17.11.99 where after an enquiry was initiated to look into any violations committed by Apple, and,

whereas, the enquiry officer vide his report dated 18.02.00 noted that the certificate of registration as a merchant banker of Apple had expired by the time the report was being submitted and thereby no recommendation could be made against Apple in the enquiry report. However, SEBI decided to proceed under Section 11B of the SEBI Act, 1992, and,

whereas, a notice dated 30.09.04 was issued to Apple, charging it with failure to ensure timely despatch of allotment advice/ refund orders for all the respondents to the public offer of the company in violation of Regulation 13 read with Schedule III of SEBI (Merchant Bankers) Regulations, 1992, and asking it to show cause as to why suitable directions under Section 11B read with Section 11 of SEBI Act, 1992 restraining it from accessing the capital market for a suitable period, should not be passed, and,

whereas, Apple vide its reply letter dated 20.01.05, inter alia, raised its contentions against the charges mentioned in the show cause notice and requested for an opportunity to explain its case, and, accordingly, a hearing was afforded to Apple on 22.02.05, when Apple through its counsels made its submissions relating to the allegations made against it in the show cause notice and also filed further written submissions on 23.02.05, and,

whereas, the material issue for consideration has been whether Apple is guilty of failure to ensure the dispatch of allotment letters/refund orders to the applicants before issuing due diligence certificate, resulting in a violation of duties to be performed by a merchant banker in its capacity as a post issue lead-manager under Regulation 13 read with schedule III of SEBI (Merchant Bankers) Regulations, 1992.

I have gone through the submissions made by the Apple and it is seen from the records made available to me that the correspondence between the company and the registrar in this regard has not been brought to the knowledge of Apple, as has been submitted by it, and Apple has come to know of the same only based on the complaints and other documents, received through SEBI. Further, I believe that Apple had no reason to suspect, from the facts and circumstances of the case, the non-dispatch of shares to respective allottees, since the Registrar and the Company had submitted the Due-Diligence Certificate in the matter to the Lead-Manager.

I, having considered the nature and gravity of the charge made out against Apple under the show cause notice, the reply given by Apple to the said charge vide its written submissions and at the time of personal hearing before me, am satisfied that Apple has taken reasonable steps and fulfilled its obligations which were expected of it under Regulation 13 read with schedule III of SEBI (Merchant Bankers) Regulations, 1992.

In view of the facts and circumstances of the case and the reasons elucidated above, I conclude that there is no need for any action against M/s. Apple Finance Limited.

Now, therefore, in exercise of powers conferred upon me under Section 19 read with Section 11B and Section 11 of the SEBI Act, 1992, I hereby direct that no action be taken against M/s. Apple Finance Ltd.