Sebi lets off Sterling Holiday Resorts with a warning

The Securities and Exchange Board of India (Sebi) has disposed a case against Sterling Holiday Resorts for delay in dematerialising certain shares pledged with Gujarat Industrial Investment Corporation Ltd (GIIC), as the matter was settled amicably.

“...Though (Sterling Holiday) delayed the dematerialisation of shares, however, considering the amicable settlement between GIIC and the notice and specific request by GIIC to Sebi...I am inclined to dispose of the matter without imposing penalty on the notice,” adjudicating officer Sandeep Deore said in the order issued yesterday.

“The notice is, however, warned that it should refrain from repeating any such instances in future,” he added.

GIIC had granted loan to Sterling Holiday Resorts in 1996 against 25.92 lakh shares pledged by the promoters of the leisure hospitality firm as security.

However, as the company was unable to repay the debt, GIIC invoked the pledge in accordance with the terms of the agreement and sought to transfer the pledged shares in its name.

It was found that even though Sterling Holiday Resorts transferred a few shares in the name of GIIC, it had not dematerialised those shares.

Following a complaint by GIIC, the regulator in November 2009, passed an order directing Sterling Holiday Resorts to dematerialise the shares. Subsequently, Sterling Holiday Resorts dematerialised nearly three lakh shares.

But since the company had delayed in dematerialising the shares, it was liable for a monetary penalty, Sebi said.

The regulator observed that there was a delay on the part of Sterling in dematerialising the shares even after its legal dispute with GIIC was over.