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Our Legal Correspondent

Chennai, April 1 The Madras High Court has declined to go into the contentions of Chennai investors in the shares of the city-based Paro Leasing & Finance Ltd, in connection with the alleged “increase in price of shares of the said company from Rs 16 to Rs 94 per share within a span of 22 days”.

The petitioners (G. Ramesh Kumar, K.C. Sethia and Cigatapu Gopi) prayed that the circular dated September 29, 1995, of respondent 1 (Madras Stock Exchange) be quashed. The impugned circular communicated the decision taken in the council meeting: i) to suspend trading in the shares of Paro Leasing until further notice; and ii) to instruct members to square-up all the transactions that were remaining outstanding at the end of September 28, 1995 at Rs 87 a share.

A criminal case was launched in the Additional Chief Metropolitan Magistrate Court. According to the provisions of the Securities Exchange Board of India (SEBI) Regulations, 1996, registration of brokers involved in the contract was suspended.

Appropriate punishments had also been imposed on the errant stockbrokers.

“Since SEBI has undertaken to pursue action in terms of the SEBI Act, this Court is not inclined to go into the contentions raised by the petitioners,” Mr Justice K. Chandru ruled on Monday while dismissing writ petitions filed by several investors, stock brokers and the Madras Stock Exchange.

While the writ petitions were dismissed, that would not preclude SEBI from pursuing its criminal case as well as other actions taken pursuant to the Court’s order, the Judge held.

In its counter affidavit dated February 8, 2000, in the Court, SEBI averred that following investigation into the “irregular trading pattern and abnormal price rise in the scrip” of Paro Leasing, actions were taken against some brokers and some non-intermediaries were debarred from dealing in the capital markets.

It was stated in the counter affidavit dated May 27, 2002, that investigation by SEBI revealed that there was “price rigging” in the stocks of Paro Leasing. The criminal complaints pending in the Additional Chief Metropolitan Magistrate Court-I were against Tatia Finance & Leasing Ltd, Pannalal Tatia, Dhanpat Singh Bokharia, Bokharia Investments, Ms Prabha Bokharia, Unique Investments, Sampath Kumar Parekh, Brilliant Investments and Manohar Jain.

The Madras Stock Exchange, in its counter affidavits filed in two writ petitions , contended it had the power to fix the price, and according to usual practice, the average price that prevailed on the previous working day, viz, Rs 87, was fixed by them. It was also stated that the writ petitioner himself had traded the stock at Rs 87.50 on September 28, 1995.

Though some brokers contended that the steps taken by SEBI were not satisfactory, this Court was not inclined to go into those issues, the Judge added.

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