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SAT sets aside SEBI ban on Videocon, BPL

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MUMBAI, June 20

THE Securities Appellate Tribunal (SAT) has set aside SEBI's orders of 2001 banning Videocon International Ltd and BPL Ltd from accessing the capital markets for alleged price manipulation of their scrips in 1998.

The SEBI orders, under Section 11 and 11B of the SEBI Act against the two companies — banning Videcon for three years and BPL for four years — were not in the interests of investors and have no legal backing and hence, cannot sustain, SAT said in its ruling here on Thursday.

In the absence of sufficient material evidence to establish that the two companies had directly or indirectly indulged in market manipulation, the market regulator's orders holding them guilty could not sustain and therefore, deserved to be set aside, SAT ruled. Sections 11 and 11B of the SEBI Act are mainly focused on investor protection and the latter did not even remotely empower the market regulator to impose penalties, SAT observed.

SAT had, in October last year, set aside SEBI's order in a similar case against Sterlite Industries Ltd (SIL), which was banned from accessing the capital markets for two years for alleged market manipulation.

On an appeal by Videocon and BPL against prosecution proceedings launched by SEBI against them, SAT said it did not have the jurisdiction to set aside the prosecution pending before the court.

In its order dated April 19, 2001, SEBI had directed Videocon not to raise money from the capital markets for three years. It had also directed initiation of prosecution proceedings against the company through its directors/officers — Mr V.N. Dhoot, Mr S.K. Shelgikar and Mr S.N. Hegde — for indulging in unfair trade practices and violating the SEBI Act, 1992. Following the SEBI order, Videocon was also constrained from participating in the Government's disinvestment programme in VSNL.

BPL was also prohibited from accessing the capital market for four years on similar charges, with SEBI initiating prosecution proceedings against the Bangalore-based company through its directors/officers — Mr Rajiv Chandrashekhar, Mr Ajit Nambiar, Mr R. Murali, Mr T.P.G. Nambiar and Mr T.C. Chauhan.

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