Securities Appellate Tribunal
Sebi vs Continental Construction 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 2223 requests of dematerialization were pending for more than 30 days against Continental Construction Ltd. (hereinafter referred to as "CCL") 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 CCL advising it to show cause as to why appropriate directions under section 19 of the Depositories Act, 1996be 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 CCL 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 CCL 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 CCL on 16.10.04 vide letter dated 24.09.04. CCL vide its letter dated 06.10.04, stated that they were facing difficulties because of inter-se dispute between the management. Due to this, the work in the share section was at standstill as lot of persons in the section had resigned and practically for a major period there was nobody to look to the matters of handling the shares. However, they had engaged a person to handle the pendency of demat work.
CCL further stated that the shares of the company were not being actively traded since last three years and the value of the shares was also negligible. Further the trading of the shares had been suspended by the Bombay Stock Exchange due to non payment of annual fees for the last 4 months and as such there was not much adverse effect of delay in dematerializing of shares, if any, to the investors.
It was further submitted by CCL that the Bank Accounts of the company could not be operated by the management due to orders from the Apex Court issued on 24.03.03, restraining them from operating any bank account of the company. Under the circumstances as no expenses could be incurred, they could not send any staff to represent the matter for the personal hearing.
It was further assured by CCL that the work of dematerialization of the shares was being taken up in right earnest and all the pendencies would be cleared within a very short period of time.
5. As per the information furnished by NSDL & CDSL, it is noted that Continental Construction Ltd. has taken necessary steps to reduce the pendency of dematerialisation requests to reasonable levels. 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 Continental Construction Ltd. Continental Construction Ltd is advised to continue with its efforts to bring down the remaining dematerialization requests of investors to zero level at the earliest and report compliance.