IN RE : TUSCON EXPORTS LIMITED AND ITS DIRECTORS Vs. STATE
SECURITIES APPELLATE TRIBUNAL
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(1.) 0 Background
1.1 A Co-ordination and Monitoring Committee (hereinafter referred to as the 'CMC') was set up jointly by the Department of Company Affairs (hereinafter referred to as 'the DCA') and the Securities and Exchange Board of India (hereinafter referred to as 'SEBI') in 1999 in respect of companies which raised money from the public and which were not traceable. These companies were identified as vanishing companies. A Task Force for each region was also set up consisting of Officers of DCA, SEBI and the concerned Stock Exchange to assist the CMC in identifying vanishing companies in the region and recommending the action to be taken by DCA and SEBI against such companies.
1.2 In the fifth meeting of the CMC held on 1.7.2000, the criteria for identifying vanishing companies has been laid down and companies that met the following criteria were to be considered as vanishing companies:
a) Companies which have not complied with listing requirements / filing requirements of Stock Exchange / Registrar of Companies respectively for a period of 2 years.
b) Where no correspondence has been received by the Exchange from the company for a long time.
c) Where no office of the company is located at the registered office address at the time of Stock Exchange inspection.
1.3 The Calcutta Stock Exchange (CSE) vide letter dated 7.3.2000 stated that Tuscon Exports Ltd. (hereinafter referred to as "TEL") could not be traced at its Registered Office address during the physical verification conducted by CSE. In the meeting of the co-ordination and Monitoring Committee held on 25.2.2003, was identified as one of the vanishing companies in the Eastern Region. Further, in the meeting of the Calcutta Task Force held on 18.6.2003 it was decided to initiate prosecution and lodge First Information Report (FIR) against TEL.
(2.) 0 Public issue by TEL
2.1 TEL came out with a public issue of 66, 15, 000 equity shares of Rs 10/- each for cash at premium of Rs. 20/- through a prospectus dated 12.12.1995. The issue opened on 30.1.1996, the earliest closing date was 3.2.1996 and the latest closing date 9.2.1996. It has been stated in the prospectus that applications have been made to the Stock Exchanges at Mumbai, Madras and Calcutta for listing of the shares.
2.2 In the prospectus, the address of the registered office of TEL is given as BA-80, Sector I, Salt Lake Calcutta. The names, addresses, qualifications and experience of the directors are mentioned below :
1. Shri Ranjeet Chouraria Director Tuscon Exports Ltd. 8-, B-A, Block, Salt Lake, Kolkata
2. Shri Ramesh Fatehpuria Director Tuscon Exports Ltd. 29/6, Chetla Centre Road, Kolkata - 700 029
Shri Pradeep Chouraria
(3.) SMT. Manju Chouraria
3.0 TEL - a vanishing company.
3.1 After the said public issue, the shares of TEL were listed at The Stock Exchange, Mumbai (BSE), Madras Stock Exchange, Calcutta Stock Exchange, its Regional Stock Exchange and Calcutta Stock Exchange (CSE). It has been found that TEL could not be traced at its registered office during physical verification conducted by CSE. Further, TEL has not been complying with various clauses of the Listing Agreement entered into by it with the Stock Exchange viz., not submitting statutory reports, directors reports and other required reports, not furnishing financial results including Cash Flow Statements, Balance sheet and Profit & Loss Account etc. to the concerned Stock Exchange. The non-compliance of listing agreement by the said company is in violation of the provisions of section 21 of the Securities Contracts (Regulation) Act, 1956 (hereinafter referred to as SCRA). TEL was suspended from CSE w.e.f. 6.6.1997. This was communicated to SEBI by the CSE by its letters dated 10.7.2002.
4.0 Show cause notice
4.1 In view of the above, a show cause notice dated 2.5.2000 was issued by SEBI to TEL calling upon them to explain why action, including specific directions under section 11B of the SEBI Act prohibiting them from accessing the capital market for a period of five years should not be taken under the SEBI Act and the Securities Contracts (Regulation) Act, 1956. Similar show cause notices dated 16.11.2000 were also issued to the directors, after getting their relevant details from CSE. The Calcutta Stock Exchange (CSE) vide letter dated 7.3.2000 stated that TEL could not be traced at its Registered Office address during the physical verification conducted by CSE. Further, in the meeting of the co-ordination and Monitoring Committee held on 25.2.2003, was identified as one of the vanishing companies in the Eastern Region and in the meeting of the Calcutta Task Force held on 18.6.2003 it was decided to initiate prosecution and lodge First Information Report (FIR) against TEL.
4.2 TEL and its directors were also given an opportunity of a personal hearing before me on 14.8.2003. TEL and its directors namely Shri Ranjeet Chouraria and Shri Ramesh Fatehpuria failed to respond and appear for personal hearing. Shri Pradeep Chouraria and SMT. Manju Chouraria were represented by M/s Halai & Co. in the hearing before the member. They submitted that Pradeep Chouraria and Manju Chouraria had resigned from the Board of Directors w.e.f 15.12.2000 and 1.5.1997 respectively and submitted copies of Form 32 in evidence of the same. They also submitted the said persons were not involved in the management of the company.;
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