HC dismisses PILagainst Sebi

HC dismisses PILagainst Sebi
ENS ECONOMIC BUREAU

MUMBAI, MAR 13: The Securities and Exchange Board of India (SEBI) today told the Bombay High Court that it has taken all necessary measures in view of the recent market crisis following the manipulation of scrips by a bear cartel.

The division bench of Justice A P Shah and Justice S J Vazifdar disposed of a public interest litigation (PIL) after they were told Advocate General Goolam Vahanvati, appearing in private capacity as SEBI's counsel, that SEBI is very much alive to the situation which is being monitored and it has acted with utmost urgency in the matter. He assured that all necessary steps will be taken as required.

Vahanvati was replying to a PIL filed by a chartered accountant and investor Ronojay Mazumdar seeking the court's intervention to prevent the collapse of the capital market. Mazumdar urged the court to issue directions to stop stock lending and borrowing activity with immediate effect pointing to the failure and neglect of SEBI, the principal securities market regulator, to prevent the market crisis.

The PIL also urged the the court to direct or order SEBI to direct under Section 11 (b) of SEBI Act 1992 to direct all stock exchanges to retain in escrow account, the differential amounts that may accrue to market manipulators. Mazumdar said SEBI should be directed to fix a base price of scrips whose prices had been manipulated and the money in excess be kept in escrow account lest the manipulators reap fruits of manipulation. This would strengthen the hands of the regulator and protect the interests of small investors, he added.

However the bench declined to do issue directions saying it was of the view that its interference was not called for in the functioning of SEBI and accordingly disposed of the petition. In the afternoon Justice Vazifdar asked Mazumdar's counsel Shyam Diwan,``How can you expect us to interfere?'' He further added,``The markets will collapse''.

Vahanvati said the petitioner's prayer seeking blanket directions will lead to more chaos as it is very difficult and cumbersome to identify such manipulated transactions. Vahanvati said the regulator has ``acted very fast'' and certain urgent steps between March 7 and 11, 2001 including stopped of short sales in securities, prevented lending of securities and other measures to help investors in getting their money on time.