Securities Appellate Tribunal
Sebi vs Baroda Rayon Corporation Ltd. on 27 January, 2005
ORDER
G.N. Bajpai, Chairman
1. The National Securities Depository Ltd. (NSDL)/ Central Depository Services Ltd. (CDSL) informed SEBI that 1778 requests of dematerialization were pending for more than 30 days against Baroda Rayon Corporation Ltd. (hereinafter referred to as "BRCL") as on December 12, 2003.
2. Pursuant to the information provided by the depository, SEBI issued a show cause notice dated 09.02.04 to BRCL advising it to show cause as to why appropriate directions under section 19 of the Depositories Act, 1996 be not issued against it for violating the provisions of Regulation 53 read with Regulation 54(5) of SEBI (Depositories and Participants) Regulation, 1996 and the Depositories Act, 1996.
3. Further it was stated in the show cause notice that the alleged conduct of BRCL in keeping dematerialization requests pending for more than 30 days was detrimental to the interest of the shareholders in as much as they could not sell their shares as their original share certificates were deposited with BRCL for the purpose of dematerialization. This had also deprived the share holders the liquidity of their investments and loss of opportunity to sell.
4. An opportunity to appear before the Chairman, SEBI was given to BRCL on 16.10.04 vide letter dated 24.09.04. I note that the representatives of BRCL attended the personal hearing and attributed the delay in dematerialising of shares to financial disputes with their R&T Agent. They further submitted that they were in the process of bringing down the demat pendency and did in fact bring down the pendency to reasonable level subsequently. Certificates of secretarial audit in support of the same were also furnished. They further assured to reduce the remaining dematerialisation requests within one week's time. CDSL has confirmed that BRCL has brought down the pendency to Zero as on 27.10.04.
5. As per the information furnished by NSDL, Baroda Rayon Corporation Ltd. has taken necessary steps to reduce the pendency of dematerialisation requests and in fact brought it down to Nil. In view of the same, I am of the considered view that no adverse directions under Section 19 of Depositories Act, 1996 need be issued against Baroda Rayon Corporation Ltd.