SAT observed that complaints were filed six years ago against 16 listed entities, including the registered intermediaries, but were disposed of by the regulator without settling the case.
The Securities and Appellate Tribunal (SAT) has hauled up the Securities and Exchange Board of India (Sebi) for giving computer-generated response to investor complaints filed on its online platform Scores and for disposing of the matter without settling the case.
“We find the approach adopted by Sebi to be a strange one.
"Such computer-generated disposal of a serious complaint speaks volumes on the conduct in treating the minority shareholders in this shabby manner,” the tribunal said while delivering a judgment on a matter related to an investor complaint.
It said that disposal of the complaints by the markets regulator was merely an eyewash.
Scores is an online platform designed to help investors lodge their complaints pertaining to the securities market.
All complaints received by Sebi against listed companies and market intermediaries are dealt with through this mechanism.
The tribunal observed that complaints were filed six years ago against 16 listed entities, including the registered intermediaries, but were disposed of by the regulator without settling the case.
“It seems that the respondents have lost sight of the mandate provided to them under Section 11 of the Sebi Act which mandates it to safeguard the interest of the investors.
"Disposal of the complaint in this manner in the instant case indicates non-application of mind and non-consideration of the interest of the investors,” SAT said in an order.
“We have no hesitation in stating that the Sebi as a regulator in the instant case has not performed its duties and has kept the complaint pending for more than six years which speaks volumes by itself.”
It added the “tribunal fails to fathom as to why the complaint could not have been decided unless Sebi officials had a vested interest in not deciding the matter”.
The matter pertains to a complaint filed in 2013 by minority public shareholders of three companies - Bharat Nidhi (BNL), PNB Finance and Camac Commercial - for non-disclosure of promoter shareholding of BNL and also the violation of minimum public shareholding requirement by BNL.
BNL, PNBF and Camac hold 24.41 per cent, 9.29 per cent and 13.3 per cent shares, respectively, in Bennett, Coleman & Co (BCCL).
The contention of the complainant was that the three companies are owned and controlled by Vineet Jain, Samir Jain and their family members, who are the managing directors of BCCL.
Replying to this, Sebi said the information submitted by the appellants would be analysed and investigation would be made in a holistic manner but, on the other hand, it would neither confirm nor deny the existence of any investigation conducted by them.
Later, the regulator disposed of the case and said the information provided by the complainants would be taken as market intelligence and would also be treated as confidential.
SAT questioned the response and asked why would the complaint be treated as market intelligence or confidential.
The tribunal on Thursday set aside the Sebi order and allowed the appeal by the complainants.
It also directed the regulator to “consider and decide the matter by a reasoned and speaking order within six weeks from the date of presentation along with the appellate order”.
Photograph: Shailesh Andrade/Reuters