Mumbai: Special SEBI Court Acquits Suman Motels & Directors Of Non-Compliance Charges In Share Dematerialisation Case

Mumbai News: Special SEBI Court Acquits Suman Motels & Directors Of Non-Compliance Charges In Share Dematerialisation Case
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Mumbai: The special SEBI court has acquitted Suman Motels and its directors from the charges of non compliance of Direct given by SEBI, observing that they are not responsible for processing the request of dematerialisation of shares and it was the result of non cooperation on the part of Registrar and Transfer Agent.

SEBI had initiated prosecution against Suman Motels and its directors Mukhtar Hussain, Surendra Khandhar and Praful Khandhar in December 2014 as the company failed to follow the directions of the SEBI to clear the request of dematerialisation and rematerialisation requests. The SEBI alleged that, company entered into a tripartite agreement with the National Securities Depositories Ltd (NSDL) for facilitating holding and transfer in dematerialized form with NSDL.

However it is alleged that, as per the tripartite agreement it shall be duty of the issuer for dematerialisation and rematerialisation requests are processed within 15 to 30 days respectively. The NSDL had informed SEBI that 184 requests for dematerialisation were pending for more than 60 days with the company as on July 19, 2002.

It is alleged that SEBI issued directions to the company to process all the pending dematerialisation requests as per the procedure prescribed in the applicable bye-laws and business rules of NSDL within 15 days on August 08, 2002. It is alleged that inspite of such directions the company failed to process pending requests and thereby committed violations of tripartite agreement and directions issued by SEBI. 

The defense of accused is of total denial and false implication and the fact that Register and Shares Transfer agent SRTA as per the tripartite agreement was assigned with duty of transfer of shares, demating and maintain record. The SRTA has not done its work properly therefore, the director of the company namely Surendra Khandar made complaint to SEBI as well as NSDL.

It is claimed that they did not do work on the pretext of outstanding due failed to process the dematerialized request.The court after hearing both the side noted that As such SEBI is well aware about the factual position about the non processing of the dematerialisation request but without conducting any inquiry and giving directions to the concerned SRTA for processing the request only appears to have given directions to the issuer who is not responsible alone for the processing of the request of the dematerialisation shares.

Hence while acquitting the company and its directors the court said, “they are not responsible for processing the request of dematerialisation of shares and it was the result of non cooperation on the part of Registrar and Transfer Agent. Consequently, the accused deserves to be acquitted from the charge leveled against them.

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