Shyama Infosys share sale: SEBI sends strong signal to defaulters

When SEBI sold 55,000 shares of Shyama Infosys held by Ahilya Commercial Pvt Ltd for 55 paise apiece in a bulk deal last Wednesday, it was probably the first such bulk deal initiated by the market regulator to recover money from a defaulter.

But this may not be the last. The regulator will increasingly resort to selling shares lying in the demat account of defaulters to recover money in the future, say SEBI sources.

BSE sources confirmed that the bulk deal was done through a broker on account of a defaulter and that SEBI carries out such transactions on account of regulatory orders against some accounts.

In 2014, Parliament bestowed on SEBI the power to attach and sell movable and immovable property and attach bank accounts of defaulters in pursuance of any order or direction passed by SEBI or to recover fees due to it or recover penalties which are outstanding.

Tejesh Chitlangi, Partner IC Legal, said, “SEBI vide recent amendments in the SEBI Act has power to attach the demat account of a defaulter who does not pay penalties and then realise the dues by selling the securities lying in such account. The monies obtained from such sale will get credited to the Consolidated Fund of India.”

However, recovery is a tedious task and selling of securities lying in the demat account is only one of the options. A Mumbai-based tax lawyer said: “The recovery process here is akin to what Income Tax authorities do. It is a step by step process. First, the notice is served and if the entity in question does not pay then, the attachment of property (movable and immovable) besides bank account is ordered and recovery is done through auction of such attached properties and attachment of bank accounts.”

SEBI drew recovery certificates and issued notices of demand against 64 entities as on March 31, 2014, amounting to ₹1,574.4 crore. The regulator also issued attachment notices against 251 bank accounts, including lockers, 48 demat accounts and others in 11 cases as on the same date. However, recovery was completed in eight cases and amount recovered was ₹7.8 crore, according to SEBI data.

SEBI has put in place a centralised exhaustive recovery software facilitating real-time status of recovery proceedings. The regulator has also rolled out its Data Warehousing and Business Intelligence System to its recovery cell besides initiating the process for comprehensive upgrade of the system to handle data up to 2018.

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