Hc Admits Pse Brokers Stay Plea On Sebi Order

The Bombay High Court on Tuesday admitted the plea of seven brokers of Pune Stock Exchange (PSE) wherein the petitioners had sought a stay in the operation, implementation and effect of the Securities and Exchange Board of India's order of suspension for varying periods from trading on the Pune bourse.

Earlier on September 22, the Bombay High Court had stayed the orders of the appellate authority of the Union Ministry of Finance, following urgent applications filed by the PSE brokers, against the upholding of the order to suspend them from trading by Sebi from varying periods of suspension: three months to one year.

 

The seven brokers how received the interim relief following the admission of the stay by the Bombay High Court are: Clever Investments, Kunal Securities, Rajesh Kasat (former PSE president), Jahanavi Securities, Prabodh Artha Wardhini, Pratik Investments and RBM Investments.

The PSE brokers in their petition to the Bombay High Court had stated that the enquiry report of Sebi dated June 24 1997, the order dated August 12, 1997, and the order dated September 11 were all vitiated and bad in law since the petitioners were deprived of the right to be represented by a lawyer before the enquiry officer, by virtue of the statutory bar thereto under the first proviso to Regulation 28 of the 1992 Regulations.

The brokers' plea was to retrain the respondents (appellate authority), by themselves, their servants, agents, officers and subordinates from taking any action whatsoever against the petitioner pursuant to implementation of the suspension order. The petitioners stated that the starting point of the enquiry was the fall in the BSE Sensex during the period October 1995 to January 1996 and that nowhere does the record establish how, and in what manner transactions on the PSE led to the fall in the BSE Sensex.

The regulator had charged the PSE brokers of pulling down the BSE Sensex through hammering of the pivotals, particularly the scrip of Reliance Industries. However, the brokers in their petition stated that the regulator had totally ignored and neglected several factors especially since the BSE is highly sensitive to political and economic considerations both at the national and international level.

During the 106-day period in question, the BSE Sensex fell from 3,583 to 2,872 a decline of 19.84 per cent. The petitioners also charged the regulator for selectively acting against the PSE brokers and was based on the whims and fancies of the Sebi officers. ``The conduct of the respondent is a classic case of pick and choose,'' the petitioners stated.

Though notices were initially issued to 26 brokers, the petitioners said that only 21 brokers have been punished with varying periods of suspension, whereas five others have not been punished and have been allowed to go scot-free. The five brokers who have been left free from any punishment by the regulator include, Devi Investments, Mayur Investments, Rajendra Dagha, Bhojwani Securities and JP Surana.

In the case of another broker CR Paranjpe to whom notice was issued by the regulator, was thereafter permitted by Sebi to transfer his card to Devichand Oswal against whom no action has been initiated, the petitioners further pointed out at the Sebi discrimination against them.