Besides, poor supervision and inspections by the licensing authorities like the Department of Company Affairs (DCA) and Registrars of Company (ROCs) has also helped these fake companies abscond with public money during the period, experts say.

Sebi sources alleged that about 79 companies, which raised more than Rs 700 crore from the capital market during 1992-95, have now vanished. There is no clue to their addresses and their promoters. As many as seven companies, which mobilised Rs 23.25 crore from the market during 1997-98, are not traceable now.

Besides, there are several non-banking finance companies (NBFCs) and plantation firms, which raised huge amounts from investors through various deposit schemes, are either missing orunable to pay their debts. A study made by a private research firm says out of 3,872 public issues offered in the market during 1992 to 1996, only 562 issues were traded above the issue price, while 205 were not traded at all on the exchanges. At present, promoters of 118 public offerings have reportedly fled without leaving any clue.

The modus operandi of these companies is to offer lucrative collective investment schemes (CIS), attractive high-return fixed deposits and initial public offers, sometimes at premiums, to mobilise huge funds from the public, which were disproportionate to the promoters' own equity or finances and then divert these funds from the productive segment of the economy to various speculative activities like real estate purchases, stock market dealings and trading. Expressing helplessness in this regard, Sebi officials said the market regulatar just cannot do anything to the erring promoters of fake companies as it does not have adequate statutory powers.

Sebi gained statutoryrecognition in January 1992. The main objective of the Sebi Act was to protect the interest of the investors in securities and promote and regulate the securities market.

Except partial powers under Section 11 of the Companies Act, 1956 to regulate brokers and stock markets throgh listing norms, Sebi was not given any statutory powers to carry out search and seizure of assets of erring companies or its promoters. It has neither power of attachment of property nor specific powers of disgorgement of ill-gotten profits.

Sebi is, however, permitted to impose a small amount of penalty on companies violating listing agreement in limited circumstances. In recent past, several actions of Sebi to protect the interests of investors were challenged by companies, intermediaries, stock exchanges and brokers, including big bull Harshad Mehta.

Sebi executive director Pratip Kar told UNI that the board should be empowered with several provisions under the Companies Act, 1956 as suggested by the Dhanuka Committee inorder to bring back confidence in the market, which not only consists of investors but also issuers, intermediaries and other operators. At present Sebi Act has given limited powers like prosecution, suspension or cancellation of registration and monetary penalty of only Rs 5 lakh, he said.

In fact, the capital market in India is guided by regulations of several multiple agencies such as Central Bureau of Investigations, Monopolies and Restrictive Tract Practices Commission, DCA, Reserve Bank of India, Unit Trust Act and various consumer forums.

On recent failure of plantation companies to meet their commitments to the investors, Sebi sources said these companies were registred with the ROC and other local authorities, which should be held accountable of the missing companies particularly when they duped several crores of public money.

Sensing public cry on the issue, the government last year brought various schemes of the plantation companies under the regulations of Sebi though these companies areregistered under different authorities.

The promoters of collective investment schemes mainly from plantation sector challenged the Sebi's jurisdiction, stating that instruments are not notified as securities in the Securities Regulation Act. Cases were filed against Sebi in high courts of Allahabad, Jabalpur, Hyderabad, Mumbai, Delhi and civil court in Srinagar. Experts said the Company Law Board should dilute its powers related to the securities in favour of market regulatory authorities like Sebi to bring discipline among the market players. Special courts are to be set up to deal with matters relaing to securities law.

There should be one authority to investigate and regulate the capital market. In fact, they suggested that the Company Law Board should act promptly to find the vanishing promoters with the help of police and by filing cases under sections 63 and 209 A of the Companies Act, 1956. Unless such actions are taken, investors' confidence would not improve inspite of several incentives givenby the government, they opine.