TMI Blog1997 (3) TMI 450X X X X Extracts X X X X X X X X Extracts X X X X ..... ations in the capacity of patron. He is a former member of the Agra Development Authority. The petitioner No. 1 claims to be deeply interested in matters of public importance to the nation and the society at large. Petitioner No. 2 is a society engaged in welfare activities and legal literacy and family coun-selling, etc. Petitioner Nos. 3 to 5 are social workers. 3. The petitioners were impelled to file the present writ petition, when they found that the respondent No. 5, Bank of India, had taken out the public issue of 15 crores equity shares of Rs. 10 each at a premium of Rs. 35 per share, when the bank was suffering and incurring losses for the last several years. The petitioners claim that the losses for the year 1995- 96 was Rs. 1,420 crores. The petitioners find, the advertisement issued offering shares, deceptive and misleading. The petitioners claim that SEBI, respondent No. 2 herein, has failed to discharge its statutory obligation under section 11 of the Securities and Exchange Board of India Act, to protect the interest of the investors in the security market inasmuch as it failed to prohibit fraudulent and unfair trade practice, act of respondent No. 5 in offering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice. Ms. Barkha Babbar entered appearance on behalf of respondent No. 1. 6. The learned counsel for the petitioners, Ms. Sunita Bhardwaj made a very spirited and fervent plea for interference by this court to stop what she terms as a 'deception on the investors' who had been led to believe that the bank was making profits, while in fact it had been incurring losses. She submitted that the net profit/(loss) position of the respondent No. 5, Bank of India, since 1992 was as under: 1992 1993 1994 1995 1996 +56.63 534.90 953.50 +50.35 276.48 (Profit) (Loss) (Loss) (Profit) (Loss) 7. There were discrepancies inasmuch as this did not tally with the balance sheet data appearing at page 38 which is as under : 1992 1993 1994 1995 1996 +56.63 331.12 +1089.15 +50.35 276.48 (Profit) (Loss) (Loss) (Profit) (Loss) In any case, she submitted that the factum of losses duly stood estab- lished. 8. It would, at this stage, be pertinent to look at the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India to return capital of Rs. 93.47 crores to the Government vide letter F. No. 12/19/96-BOA dated 28-10-1996. Pursuant to the same, the capital of the Bank stands modified to Rs. 489.00 crores from the level of Rs. 582.47 crores as on March 31,1996. In the opinion of the Bank save as above and as otherwise disclosed in the offer document, there are no material developments after the date of the latest Balance Sheet which is likely to adversely affect the profitability of the Bank and the value of its assets or its ability to pay its liabilities within the next 12 months." 13. We further find that in the memorandum containing salient feature of the offer document, the following statement appears: "The paid-up capital of the Bank as on 31st March, 1992 was Rs. 469 crores. The Bank has received contributions towards its capital from the Government of India an aggregate of Rs. 1483.38 crores as per details below: Up to the year ended 31-3-1994 Rs. 635.00 crores. Year ended 31st March, 1995 Rs. 848.38 crores. Rs. 1483.38 crores. The Government of India permitted the set off of the carried forward de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated, if approached, must consider that very often the Court is approached in the last minute seeking injunction either on the allotment of shares or meeting of the Board of Directors or meeting of the General Body. It would, at times, be difficult to undo the damage by such interim orders. The Court, therefore, must ensure that the plaintiff comes to the Court well-in-time so that notice may be served on the defendant and he may have his say before any interim order is passed. Basing his argument on this, Mr. Arun Jaitley argued that the present petition, which has been filed while the issue was underway, even issuance of notice could have caused immense damage to the answering respondent. We find consider-able merit in the submission of the answering respondent. The petitioner, if at all, should have approached the Court much earlier, at least immediately after it claims to have sent the brief representation, said to be undated, which was reportedly ignored by respondents. This court had not granted any interim order. The issue, we are informed, has since been over-subscribed. 17. Mr. Arun Jaitley has also produced before us the documents granting various approvals in order t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and meet the capital adequacy norms. Rs. 635.50 crores was advanced in the year 1993-94 and Rs. 848.38 crores in the year 1994-95, after adjusting the accumulated loss of Rs. 1,369.91 crores. To adhere to the revised accounting norms Government of India allowed the bank to adjust the accumulated loss from the capital. The adjustment of capital was only to wipe out the accounting entry that had been necessitated by the revised accounting norms. The capital contributed by the Government of India was required to be invested in the approved Government securities and did not result in any cash inflow to the bank. A statement showing the comparative performance of nationalized banks for the year ending 31-3-1994 shows that out of 18 banks listed therein 12 major banks had incurred losses due to the revision of accounting norms referred to above. 19. We find the Bank's explanation that the loss that had been shown were due to the revised accounting norms and not a result of any operating loss suffered is acceptable. The bank, as stated earlier, had made operating profit and it was only the compliance with the banking norms which resulted in the above loss being shown. Besides, and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Stock Exchange. The respondent bank has also filed on record a copy of the letter dated 21-1-1997 from the SEBI containing their comments on the Draft Offer Document. The learned counsel referred to the Disclaimer clause in the issue documents to urge that the SEBI had not given the requisite approvals. We find that the Disclaimer clause inserted is a usual one and, in any case, it cannot negate the factum of approvals, as placed on record by respondent No. 5. Thus, the argument of the learned counsel for the petitioner that the public issue was devoid of the requisite approvals from the SEBI and the RBI does not hold good and is rejected. 21. Before parting with the case we must observe that the SEBI, the RBI and the Delhi Stock Exchange are expert bodies in financial, accounting and economic matters. The questions as to the accounting method adopted or the fixation of the premium at which the share can be issued or determining the rates at which premium should be allowed in public issues are matters which fall within their domain. The Court does not have the expertise to embark upon the determination of these issues. In this connection the observations of the Apex Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
