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6. I have heard Sri.P.I.Davis and Sri.P.C.Haridas, learned counsel appearing for the petitioners, Sri.P.Gopinatha Menon, learned Standing Counsel for M/s.Canfin Homes Ltd., and the learned Assistant Solicitor General for the official respondents.

7. The petitioners in W.P.(C)No.6106/15 are existing shareholders of the fourth respondent company, namely M/s.Canfin Homes Ltd. The petitioners say that shares of the company, which a public limited one, is listed for trade in the National Stock Exchange and the Bombay Stock Exchange and that they came out with a Rights Issue to the existing shareholders in the ratio of WPC 32874/09 & 6106/15 4 3:10 with a premium of Rs.440/- per share. The total price per share, therefore, was Rs.450/- and the petitioners say that the shareholders were also entitled to apply for more shares if they had applied for shares already alloted to them. For the purpose of this Rights Issue, the petitioners say that the Company had forwarded to them three Composite Application Forms (CAF) and that they had submitted the same to the Registrars to the issue, namely Karvy Computer Share (P) Ltd., Hyderadad, the fifth respondent herein, for an aggregate number of 10,583 shares on Rights Entitlement and for additional shares, along with four demand drafts drawn from Dhanalakshmi Bank Ltd., aggregating to Rs.48,58,953/-, after excluding DD charges of Rs.10,947/-. According to the petitioners, even though this was received by the Registrars to the issue, they have not issued the shares allegedly for the reason that the petitioners had not applied for the Rights Entitlement and additional shares through the means of WPC 32874/09 & 6106/15 5 ASBA process. The petitioners concede that they were informed by the respondents that as per the Letter of Offer dated 04.02.2015, all applicants, whose application amount exceeds Rs.2 lakhs could participare in the issue only through the ASBA process. The petitioners have produced the Letter of Offer, which has been appended to this writ petition as Exhibit P5. They contend that such restrictions in the Letter of Offer are without any reason and that it has no nexus to the object to be achieved, namely protection of the investors.

9. I notice that a counter affidavit has been filed on behalf of the fourth respondent and according to them, the conditions in the Letter of Offer, namely those contained in Section I - General - Definitions and Abbreviations, which mandate that all applicants, whose application amount exceeds Rs.2 lakhs, shall participate in the issue only through ASBA process is designed to protect them and for nothing else.

10. To understand the controversy in this case, one will have to understand what is meant by ASBA process. This process requires the investor to issue an authorisation to a Self Certified Syndicate Bank (SCSB) to block the application money in the bank account for WPC 32874/09 & 6106/15 7 subscribing to an issue. In other words, if an investor applies though the ASBA process, his application money shall be debited from the bank account only if his/her application is selected for allotment after the basis of allotment is finalised. What is intended obviously is, therefore, the protection of the investor.

11. This is a process developed by the India's Stock Market Regulator SEBI for applying to an IPO. Under this process an IPO applicant's account does not get debited until shares are alloted to them. The ASBA process facilitates investors bidding at a cut off, with a singular option, to apply through Self Certified Syndicate Banks (SCSBs), in which the investors have bank accounts. SCSBs are those banks which satisfy the conditions laid by the SEBI. SCSBs are authorised to accept applications, verify the same, block the fund to the extent of bid payment amount, upload the details in the web based bidding system of NSE or the BSE and WPC 32874/09 & 6106/15 8 unblock the funds once the basis of allotment is finalised and finally to transfer the amount for alloted shares to the issuer. The investor who applies through ASBA process is completely protected because his application money will remain in his account with SCSBs of his choice and it will get debited from his account only if his/her application is selected for allotment after the basis of allotment is finalised. This is a supplemental process of applying in an IPO through the Book Building route and co-exists with the extant process of using Cheque/Demand Drafts as a mode of payment.

18. In view of the factual factors as recorded above and since the petitioners have supported their applications for shares honestly and bona fide through valid demand drafts, it would be unfair and unjust to subject them to a detriment merely because they have not applied under the ASBA process. As I have already shown above, the ASBA process is intended to the benefit of the petitioners and merely because they had not made WPC 32874/09 & 6106/15 15 payment under that process, it would be a paradox that they are refused allotment of shares. This is more so because the petitioners' action in not applying through ASBA process would not and has not in any manner prejudiced any of the respondents, including respondents 4 and 5.