February 02, 2000
PR No. 26/2000
COURT CONVICTION OF M/S XEDD TELECOM LTD. AND ITS DIRECTORS FOR NON-TRANSFER OF SHARES PURSUANT TO PROSECUTION PROCEEDINGS LAUNCHED BY SEBI
INVESTIGATION, ENFORCEMENT AND SERVILANCE DEPARTMENT
On the basis of large number of unresolved Investor’s complaints received by SEBI against the captioned Hyderabad based company pertaining to non-transfer of shares SEBI had filed a Criminal Complaint against the company and its directors in the Court of Shri O. Uttama Reddy the Special Judge for Economic Offences, Hyderabad.
The investors complaints were mainly pertaining to non-transfer of shares in defiance of the provision of Section 113 (1) the Companies Act which make it mandatory for every company to transfer the shares within 2 months after their registration with the Company by the investor. Further, according to the provisions of Section 113(2) of the said Act, if default is made in transferring the shares in compliance of the above provision, the company and every officer of the company who is in default, shall be punishable with fine which may extend to Rs. 500/- for every day during which the default continues.
Before filing the complaint SEBI gave number of opportunities to the company and its directors and requested them to redress of the investors complaints. However, these requests remain mostly unattended though company sometimes gave unsatisfactory and unacceptable explanations for such default.
SEBI therefore, launched Prosecution before the Court. In its Judgement and Order the Court has convicted the Company and its Managing Director and sentenced them to pay fine of Rs. 53,150/- each. The Court has directed that in case of default in payment by the company its Managing Director Shri P.K. Jain would undergo simple imprisonment for six months. Further, in case Managing Director defaults in payment, he would also undergo simple imprisonment for six months. However, the court made it clear that in case, both the company and its Managing Director default in payment of the fine, both imprisonment shall run consecutively.
In addition to this, the Court in exercise of its powers under Section 636 of the Companies Act, ordered that out of the amount collected from the Company and its Managing Director, a sum of Rs. 5,000/- shall be paid to SEBI towards cost of the proceedings.