TMI Blog2013 (5) TMI 435X X X X Extracts X X X X X X X X Extracts X X X X ..... s on account of such alleged fraudulent and misleading representations by the VCL through various advertisements needs to be looked into by a civil court of competent jurisdiction in a trial and not by SEBI under the SEBI Act, 1992 for the simple reason that SEBI has neither the expertise nor infrastructure for this purpose. There is no mandate in law requiring SEBI to do so in case any investor suffers loss on account of trading in shares etc. Direction to SEBI to launch an investigation into the alleged misleading and/or fraudulent advertisement by VCL no doubt is acceptable as SEBI is duly authorized by the SEBI Act, 1992 to do so in any given and fit case in this connection. SEBI itself has stated in its affidavit in reply dated 6th March, 2013 filed by Ms. Doel Saha, Assistant Legal Advisor that SEBI has already taken action against VCL and its directors under Section 11B and by an order dated 20th February, 2008, VCL was barred from accessing the securities market and from buying, selling or dealing in securities for a period of two years - Thus SEBI directed to look into the part of the complaint of the Appellants which relates to the alleged misleading and fraudulent ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verage Rs.2,37 per share jointly and severally. (b) Pendentelite and future interest @ Rs.12% p.a. on the above amount w.e.f. the month of June, 2002 till the date of payment or recovery from the BSE and VCL as both are jointly and severally liable for the payment due to fraudulent and unfair trade practice adopted by them, for the wrongful gain. (c) That the Respondent No.1 may kindly be ordered to act in accordance with the Act 59 of 2002 u/s 15HA which are mandatory as per law laid by our Hon'ble Supreme Court which is still not decided by the Respondent till date as per confirmation of CPIO/SEBI letter dated 8/8/2010. (d) Cost of the appeal or any suitable order may kindly be passed in the interest of justice for which the Appellant shall be ever grateful. The Appellant crave leave to add to alter/amend the above grounds at the time of hearing of the present appeal. VII. Interim order prayed for- The Appellant most respectfully prayed that the Respondent No.2 3 may kindly ordered to deposit the amount of compensation as prayed by the Appellant as well as amount of penalty as prescribed u/s 15HA of Act, 59 of 2002 till pending of this appeal with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was filed in respect of complaints regarding announcements relating to buy-back of shares, preferential allotment and bonus issue etc. 5. SEBI declined the request of the Appellants for grant of compensation stating, inter alia, that they do not have such jurisdiction to consider and grant compensation to the investors who incidentally suffer losses in the process of purchasing/selling shares in the open market. SEBI further submits that it has, in fact, otherwise taken action against VCL and its directors under section 11B. By an order dated 20th February, 2008, VCL was barred from accessing the securities market and from buying, selling or dealing in securities for a period of two years. However, this Tribunal by an order dated 28th August, 2008, remanded the matter to SEBI with the following directions:- "The appeals are accordingly allowed and the impugned order qua the appellants set aside and the cases remanded to the Board with a direction to issue fresh show cause notice(s) to the appellants herein who will file their replies, if necessary. The Board will then afford an opportunity of hearing to them and pass a fresh order in accordance with law. In case the Board ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erly, systematic and a more organized capital market. Thus, greater emphasis is given by the SEBI Act, 1992 to empower SEBI to streamline the functioning of the securities market as this task had remained scattered, uncertain and in many hands prior to 1992. Section 11(1) also deals with powers and functions of the Board in a manner similar to the preamble of the Act. Section 11(2), however, enumerates around 15 directives to SEBI to be undertaken by it in the discharge of its duties to attain the objectives for which it has been established. There is no directive or mandate in any of the 15 or 16 measures empowering SEBI to undertake the task of considering and granting compensation to an investor for the alleged losses he might have suffered due to certain misleading or fraudulent advertisements by a company. In view of this legal position, the prayer of the Appellants seeking a direction to the SEBI to grant them compensation to the tune of Rs.51,53,190/- for the alleged loss suffered on account of the purchase/sale of 1,71,773 shares of VCL is totally misconceived and is hereby rejected. In fact, the Appellants' prayer for compensating him for the alleged loss is in the nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed role of uploading the information furnished by the company and if any alleged fraudulent or misleading statement of the company is there in the newspapers, the Exchange has no role, whatsoever, in this regard. In this connection, it is pertinently noted that the documents on record do not reveal any type of alliance between the BSE and VCL. The BSE appears to have acted in a transparent manner, within the four corners of law and the agreement between the two. Therefore, the act of the Appellants of involving the Exchange in the wrongs, if any, committed by VCL is totally improper and unjustified. 12. In the fitness of things, we, therefore, direct SEBI to look into the part of the complaint of the Appellants which relates to the alleged misleading and fraudulent advertisements issued by VCL, along with the investigation, understandably, being carried on in respect of VCL or separately, as it may be advised and considered fit and proper in the circumstances of this case as per law. The outcome of such investigation should also be conveyed to the Appellants on completion of the investigation proceedings which are stated to be at an advanced stage by the Respondents. Needless to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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