SC dismisses Sebis plea on H&M

Written by Indu Bhan | Indu Bhan | New Delhi | Updated: Apr 24 2012, 14:52pm hrs
The Supreme Cout on Monday dismissed a petition filed by Sebi alleging that Chennai-based Helios and Matheson Information Technology (H&M) had withheld price-sensitive information while seeking to seal the deal of taking over three vMoksha entities in May 2005 for $19 million.

However, the apex court kept a question of law open on the issue whether sectoral tribunal had erred in applying the provisions of Sale of Goods Act, 1930 and the law relating to transfer of ownership of shares instead of securities laws, more specifically the Depositories Act and the DP Regulations, in thecase.

H&M, which has long been under the scanner of regulators, including the Enforcement directorate (ED) in March 2008, for alleged financial irregularities, was investigated for making false announcements to influence the stock price and hiding information about acquisition of vMoksha.

A bench headed by chief justice S H Kapadia dismissed the Sebi's plea on the ground that H&M's appeal against the SAT's order of November last year had been dismissed in January. H&M had challenged the tribunal's order that upheld stock-market regulator's view that the company had resorted to non-disclosure practice by keeping the second leg of the transaction under wraps.

However, Sebi in its appeal before the Bench had challenged a part of the SAT order that reduced the fine on the irregularities count from R25 lakh to R15 lakh. It also questioned SAT's order that quashed other charges that the company had misled the investors on it being a cash deal and that it had announced the completion of the deal before it was actually finalised.

Sebi in January last year had imposed a R50 lakh penalty on H&M after holding that H&M "failed to make announcements/disclosures with regard to price-sensitive information" and "had not informed the stock exchange about the interim developments such as its attempt to acquire three vMoksha companies had not materialised in the stipulated time period, i.e. within 120 days as specified in share purchase agreement.