The Hindu Business Line : Dinesh Dalmia, DSQ move SAT against SEBI order

DSQ Software Ltd and its Managing Director, Mr Dinesh Dalmia, have not responded to the order by the Securities and Exchange Board of India (SEBI) asking the company and Mr Dalmia to buy back 1.3 crore "irregular" DSQ Software shares, introduced into the secondary market system in 2000-01 without listing.

On the contrary, they have challenged the order before the Securities Appellate Tribunal (SAT).

The company has already filed an application before the SAT. It is understood to be under a routine scrutiny. After the scrutiny, the application is to be admitted and the tribunal will fix a date for hearing accordingly.

A senior SEBI official, while declining to comment on the subject, merely said: "We are collecting information on the case".

According to legal experts, the case right now was virtually in no-man's land as the SEBI mentioned deadline for complying with its order expired on October 23 and SAT has not admitted the application as yet.

SEBI can take penal action against the company and also retains the option to move court for the purpose, a top legal mind told Business Line.

DSQ has also contested the market regulator's order to deposit Rs 630 crore, calculated as the total value of such dud shares, taking into account the average price of the scrip in the relevant settlement, within 45 days from September 9, 2004, when the order for buyback was issued. The money was to be deposited in a separate escrow account to be maintained with a nationalised bank. The shares, according to the order, were to be retained in a separate demat account, "till completion of investigations by various police agencies".

SEBI had also barred withdrawal of these specific 1.30 crore shares "without prior permission in writing from SEBI". The shares were to be retained in the demat account till permission for reduction in capital (of DSQ Software Ltd) was obtained by the company from the "competent authority".

The SEBI order under Section 11 and 11b of the SEBI Act, also debarred Mr Dalmia from stock trading activities for 10 years and five other directors of company during the 2000-01 period, when a total of 1.70 crore "fake" DSQ Software shares were allotted. SEBI claimed that its investigation "revealed that there were irregularities in the allotment of 1.70 crore shares of DSQ Software Ltd in the year 2000-01 and out of the said shares, 1.30 crore shares were introduced into the secondary market without listing".

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