Sebi Asked To Clarify Interpretation Of Permission Clause

We want you to give us your interpretation in black and white. Take this as a direction, the bench observed. Having regard to the fact that Sebi is the watchdog in regard to public issues by companies, we direct that an affidavit be filed in one week's time, the bench observed in its order.

The high court's observation came at Monday's hearing on the Rajdoot Paints case where the petitioner has alleged listing violations by the company for its Rs 22.5 crore public issue which had entered the market last year. The company has however denied the allegations.

According to the petitioner, section 73 (1A) of the Companies Act states: ...any allotment made on an application in pursuance of the prospectus be void if the permission has not been granted by the stock exchange before the expiry of ten weeks from the date of closure of the subscription list.

 

The point of debate is on the interpretation of the word permission. According to the petitioner, Rajdoot Paints, received merely a letter of recommendation for listing from one of the stock exchanges, which according to him does not constitute permission.

The company has however denied that it has flouted any of the listing norms.

Against this backdrop, the high court had asked Sebi, to clarify what in its opinion, constituted permission. At Monday's hearing however, Sebi failed to come up with its interpretation. The court has now made it mandatory for the market regulator to file its affidavit within a week.