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2017 (8) TMI 456 - AT - Companies LawSuspected to be the shell companies - investigation in respect of 331 companies by SEBI - suspension of trading in securities - Held that:- As rightly contended by counsel for appellants, letter addressed by MCA on 09.06.2017 merely required SEBI to investigate as to whether the 331 companies named therein which were suspected to be shell companies, were in fact shell companies and whether the said companies had any credentials/ fundamentals and if so SEBI was required to take action in accordance with SEBI Act and the regulations framed thereunder. Without conducting any investigation in respect of 331 companies which as per the letter of MCA dated 09.06.2017 were suspected to be shell companies, SEBI on 07.08.2017 (nearly after two months) sought to take action on the letter of MCA, by directing the three stock exchanges to suspend the trading in the securities of those companies on daily basis, by moving the securities of those companies under Stage VI of GSM against all those companies out of the 331 companies which were listed on their exchanges. Thus, it is apparent that SEBI passed the impugned order without any investigation. Even if the letter of MCA dated 09.06.2017 was considered by SEBI to be a direction given for implementation without investigation, very fact that SEBI took nearly two months to comply with the directions given by the MCA clearly shows that there was no urgency in issuing the impugned communication without even investigating the credentials/ fundamentals of those companies. In the facts of these two appeals, we are prima facie of the opinion, that the impugned communication issued by SEBI on the basis that the appellants are ‘suspected shell companies’ deserves to be stayed. Accordingly while staying the communication of SEBI dated 07.08.2017, qua the two appellants, we direct BSE and NSE to forthwith reverse their decisions both dated 07.08.2017 in case of these two appellants.
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