A bench headed by Justice JS Khehar also summoned him on August 25 after his lawyer told the court that he had no instructions from Dalmia on the matter.
Sebi barred DSQ Software and its MD from the market for 10 years and its four directors for five years. The regulator has also ordered Dalmia and the company to deposit R630 crore till investigations were completed.
The DSQ case is one of the biggest frauds since dematerialised shares were introduced, where the depository system was misused to make illegal gains.
Sebi had found irregularities in the allotment of 1.70 crore shares of DSQ Software in 2000-01. It also found that 1.30 crore of these shares were introduced into the secondary market without listing. It was found that the company and its MD filed wrong information with the stock exchanges and the regulator.
Dalmia was barred from buying, selling or otherwise dealing in securities in any manner, directly or indirectly, for 10 years.
He was also prohibited from holding any office of responsibility in a company/entity or other institution associated with the securities market for 10 years.
Sebi had, in 2004, asked the company to deposit a sum of R630 crore, the value of 1.3 crore shares, taking into account the average price of the scrips during the relevant time in an escrow account. It had then directed the company to buy back the 1.3 crore unlisted shares. However, the Securities Appellate Tribunal, in its order passed on March 7, 2006, had asked the authority to identify people who had invested in the unlisted shares and not the shares itself.
Sebi challenged the tribunal's order in the apex court, saying the directions were unworkable and cannot be executed.