Sucheta Dalal :Achuthan's order (10 August 2003)
Sucheta Dalal

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Achuthan's order (10 August 2003)  

Reports about Securities Appellate Tribunal (SAT) order in the Kishore Chhabria-Vijay Mallya dispute suggest that SAT has overturned the Securities and Exchange Board of India’s (Sebi) ruling against Chhabria. But the order has an interesting twist. In fact, C. Achuthan, presiding officer at SAT has ‘upheld’ Sebi’s order against Chhabria, holding him guilty of violating the takeover code. The difference is a ‘modification’ in the manner of making restitution. Achuthan decided that asking Chhabria to divest shares acquired in violation of the takeover code would hurt the interest of all investors by depressing the market price. So, he has asked him to buy the shares at their October 1994 price and pay a 15 per cent interest on them. That puts Sebi in the piquant situation of having snatched defeat out of victory—the order upholds its judgement, but also reverses it. Sebi’s messy handling of the case and the fact that it has won, seems to rule out an appeal against the judgement. There is also another catch. The October 2002 amendment to the Sebi Act has made the SAT more powerful than it was before.

An appeal against a SAT order is only to the Supreme Court, and no longer the High Court. Also, the appeal is only on matter of law and not questions of fact. Of course, the 2002 amendment was also supposed to expand SAT from one member to three, but the government obviously hasn’t found the time to make those important appointments in almost a year.

Goa in the rains

The relentless bull run in the stock market has been a big bonanza for discredited scamsters. They are freely trading in the stock market and making oodles of money, because the regulators simply do not have the market intelligence to trace their activities. A bull run is also the time to bury the hatchet on various financial disputes, because there is more money to be made by ramping stocks.

After having booked profits running into several crores of rupees recently, the scamsters decided to make whoopee at Goa last week. Their group of 35 or more checked in at a leading five star hotel and partied lavishly over the weekend, even booking the entire casino for their gambling pleasure. The only blip in this wonderful scenario is the on-going 1992 scam trail at the Special Court in Mumbai, which has gained new momentum due to Justice D.K. Deshmukh’s no-nonsense style.

Shortages or surpluses?

All of us know that both Maharashtra and Gujarat have been reeling from power shortages for several years. Just a year ago, consumer groups were accusing Gujarat of creating shortages by shutting down multiple plants for maintenance at the height of summer. But the unprecedented monsoon seems to have changed all that. Shailesh Gandhi, who has factories near Vapi that get power from the Gujarat Electricity Board (GEB) tells a different story.

He says that factories in the region have received a notice saying that if they consume more power in the current year, as compared to last year, they will be given an incentive by GEB. Does this mean that Gujarat is now power surplus? NGOs in the power sector seem to think that GEB is only pushing sales to industrial consumers to encourage usage by high-tariff payers, while starving rural consumers.

Data sale

The evil of spam marketing has now hit investor related data. While shareholder lists of investors have always been available for sale, technology has now made much more information accessible to these list-collectors. Anjana Mehta of Delhi, sent us an offer to sell a database of investors in India’s top 100 companies, living at the four metros—Mumbai, Delhi, Chennai and Kolkata. Apart from the usual name, address and telephone number, the list offers depository account numbers and the number of shares held in the DP accounts. This database of 50,000 records is available for Rs 9000. Regulators keen on investigating the racket of DPs and other intermediaries selling their client list can be provided the marketing agencies email address.

-- Sucheta Dalal