Case: 1. SEBI, 2. In Re: Axel Polymers Limited Vs J.R. Desai. Securities and Exchange Board of India
| Judges | K.M. Abraham, Member |
| Issue | Company Law |
| Judgement Date | December 15, 2009 |
| Court | Securities and Exchange Board of India |
Order:
K.M. Abraham, Member
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On the basis of a report received from the Bombay Stock Exchange Limited (hereinafter referred to as BSE), the Securities and Exchange Board of India had conducted an investigation into the buying, selling or otherwise dealing in the shares of Axel Polymers Limited (hereinafter referred to as the company) for the period between August 2, 2000 to August 31, 2000 (hereinafter referred to as the investigation period). Though, the shares of the company were listed at Ahmedabad Stock Exchange Limited, Vadodara Stock Exchange Limited, Madras Stock Exchange Limited and BSE, the same were traded only in BSE. The trading in the shares of the company was suspended in BSE with effect from February 24, 1997 for non-compliance with Clause 16 of the Listing Agreement. The suspension was later revoked with effect from April 3, 2000. Though, the said suspension was revoked on April 3, 2000, the shares of the company were not traded till August 1, 2000. It was observed that a trade for 10,000 shares of the company at the rate of Rs. 1.85/- was executed on August 2, 2000. Thereafter, the trading in the shares was observed from August 16, 2000 onwards. The share price of the company touched its period (investigation) high of Rs. 6.10/- on August 29, 2000. The share price was Rs. 5.50/- on August 31, 2000. The traded volumes increased from 10,000 shares (on August 2, 2000) to 1,96,000 shares (on August 21, 2000) and the average daily volume was 87,638 shares. The investigation inter alia found that Mr. J. R. Desai (hereinafter referred to as the noticee) was the promoterPage director of the company and had dealt in the shares of the company during the investigation period through Thakkar Securities Private Limited, who was an unregistered sub-broker of Pramod Kumar Jain Securities Private Limited (Member, BSE). It was also found that multiple client codes were used for placing orders for the noticee. The noticee was found to be involved in the reversal of trades with others.
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The findings of the investigation prima facie suggested that the noticee had contravened Regulations 4(a), (b), (c) and (d) of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995 (hereinafter referred to as PFUTP Regulations) while dealing in the shares of the company. Accordingly, a notice dated May 30, 2008 was issued to the noticee requiring him to show cause as to why suitable directions including directions restraining him from buying, selling or dealing in securities for a specified period should not be issued. The said notice required the noticee to reply to the same within twenty one days from the date of receipt of the notice. The said notice returned undelivered with the remark "left". Thereafter, another show cause notice dated September 23, 2008 was issued at the address of the noticee obtained from the Central Depository Services (India) Limited The said notice was also returned undelivered with the remark "incomplete address". Subsequently, a notice dated June 26, 2009 enclosing a copy of the show cause notice was sent to the last known address which also returned undelivered. Thereafter, the notice for hearing and the show cause notice dated September 23, 2008 were uploaded on the SEBI website. Besides, a newspaper advertisement was published in the regional newspaper ('Sandesh') of Vadodara region on August 9, 2009 and in 'Hindustan Times' on August 13, 2009 intimating that the show cause notice/personal hearing notices could not be delivered to the noticee at the last known address. It was also informed that the said notices have been made available in the SEBI website (www.sebi.gov.in). It was further informed that, if the noticee wished to avail personal hearing or to make any submissions in the matter, he may write to SEBI within fifteen days from the date of the publication, failing which the matter would be decided ex-parte.
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Thereafter, the noticee through his advocate, Mr. Sunil L. Mehta, vide letter dated August 26, 2009, inter alia requested for a further period of three months to reply to the show cause notice. It was further stated that the noticee had resigned from the company and that a reply would be filed after collecting the details. He further requested SEBI to inform him of the next date of hearing. The learned Counsel also sent a telegram (received by SEBI on August 28, 2009) wherein he had requested time to file detailed reply in the matter. In response to the same...
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