Decided on November 06,2003



A.K.Batra, - (1.) M/s Saatal Kattha and Chemicals Ltd (hereinafter referred to as "SKCL") having office at 42, Jaora Compound, M.Y Hospital Road, Indore - 452 001, came out with a public issue of 21,50,000 equity shares of Rs. 20/- each aggregating to Rs. 430,00,000. The public issue opened for public subscription on 30.1.95 and closed for subscription on 2.2.95. Central bank of India acted as a pre-issue lead manager and Rajashree Fiscal Services Ltd acted as the post issue Lead Manager.
(2.) SEBI received anonymous complaints alleging that the company has fraudulently changed the NRI subscription from competitive basis to firm basis in its public issue without the requisite approval of SEBI with a malafide intention to harm the investors. SEBI vide its letter dated July 11, 1997 forwarded a copy of the complaint to the Central Bank of India, Merchant Banking Division (pre-issue Lead Manager) seeking for comments. Central Bank of India vide their letter dated July 29, 1997 furnished their comments. Vide the said letter it contented that it was the pre-issue Lead Manager for the public issue of SKCL which opened for subscription on January 30, 1995 and closed on February 02, 1995. The post issue activities were handled by Rajashree Fiscal Services Ltd. The draft prospectus was submitted to SEBI vide letter no. CO:MBD:MJ:94-95:1972 dated 1.9.94. An acknowledgement card was issued by SEBI vide its letter dated November 02, 1994. As per the draft prospectus submitted to SEBI under the heading capital structure, 4,00,000 equity shares were reserved for preferential allotment to NRI's / OCB's /FII's on competitive basis. RBI's approval letter no. CO:FID(II)4754, 10.02.40 (5136)/94-95 dated 24/10/1994 was also obtained by SKCL. The SKCL appears to have changed the basis of reservation for NRI from "competitive" to "firm" basis in its final prospectus dated November 23, 1994. SKCL appears to have printed separate application forms inviting subscription from NRI's on firm basis. The same was done without the knowledge or approval of the pre-issue lead manager. Further the application form does not contain reference about date of the prospectus, date of opening of issue, application number or the name of the designated bank branch where the applications were to be deposited etc.
(3.) SKCL opened a current a/c with Central Bank of India, Churchgate Branch and deposited NRI applications along with the remittances from certain NRIs. This a/c was opened on 31.10.1995 i.e one day after the public issue had already opened for subscription. Central Bank of India, Mumbai Main Branch which was also the controlling branch had issued consolidated final certificate on March 20, 1995 on behalf of 28 designated branches. The said certificate did not indicate any collection received from NRI's.;

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