SAT Slams SEBI's ‘Vested Interest’ In Stalling Complaint Related To Bennett, Coleman & Company Ltd For Six Years

The Securities Appellate Tribunal (SAT) has come down heavily on the Securities & Exchange Board of India (SEBI) for not performing its duties and keeping a complaint involving the investment companies of Bennett, Coleman & Company Ltd (BCCL), and its managing directors, Vineet Jain and Samir Jain, pending for six years.

It may be noted that BCCL, which also calls itself Times Group, publishes The Times Of India daily newspaper. According to the BCCL, its flagship brand, which is The Times of India, is the world’s largest circulating English daily and The Economic Times is the world’s second largest circulating English Business daily. It also runs television news channels.

In an order passed on Thursday, November 14, 2019, the SAT lashed out at SEBI, saying that it has failed to perform its duties and kept the complaint pending for six years.

“We have no hesitation in stating that the SEBI as a regulator in the instant case has not performed its duties and has kept the complaint pending for more than six years which speaks volumes by itself,” it said.

The SAT also used strong words to criticize the “vested interests” of SEBI officials for not deciding the complaint. “The Tribunal fails to fathom as to why the complaint could not have been decided unless SEBI officials had a vested interest in not deciding the matter,” it said.

The SAT ordered SEBI to conclude in a time-bound manner its investigations into a complaint filed on its online platform SCOREs, which alleged that wrongful disclosures were made by the promoters of Bharat Nidhi Ltd (BNL), PNBF and Camac.

The three companies are owned and controlled (through series of crossholdings) by Vineet Jain and Samir Jain, chairman and vice-chairman of Bennett, Coleman & Co. Ltd. (BCCL) (along with its group companies commonly known as the ‘Times Group’), the complainant Ashok Shah has said.

The SAT observed that complainant Ashok Shah has repeatedly highlighted various facts which would go on to demonstrate that BNL, PNBF and Camac, which are part of the Times Group, have repeatedly incorrectly declared that they are professionally managed companies without any promoters. BNL, PNBF and Camac hold 24.41%, 9.29% and 13.30% shares, respectively, in BCCL.

The complainant Ashok Shah alleged that these companies, listed in regional stock exchanges, had failed to meet the minimum public shareholding norm.

Besides, various complaints have been filed with SEBI in a matter involving undervaluation of the proposed buyback offer by BNL, which is one of the promoters of BCCL. BNL was listed on one of the regional stock exchanges and wanted to delist, for which it had to offer an exit to its shareholders. Hence, a buyback offer.

As per the complaint filed by minority shareholders, BNL, PNBF and Camac hold 24.41%, 9.29% and 13.30% shares respectively in Bennett, Coleman & Company Ltd (BCCL) which is alleged to be India's largest media conglomerate.

Vineet Jain and Samir Jain, respondent number 5 and respondent number 6, are the Managing Directors of BCCL through inheritance and the complaint contended that it is the case of the appellants that the companies –respondent number 2, respondent number 3 and respondent number 4—are under the effective control of the Jains and their family members.

Vineet Jain and Samir Jain exercise control over BCCL by virtue of their ownership/ control of respondent nos. 2, 3 and 4 and eight other entities who are the shareholders of BCCL, they said.

It is the further case of the appellants that since 2013, some of the appellants have jointly or individually filed several complaints before the SEBI, urging it to investigate and take action in respect of two violations.

These include incorrect disclosures being made by BNL, PNBF and Camac regarding their promoter shareholding, thereby failing to disclose the true promoters, and thus failing to comply with minimum public shareholding norms prescribed under applicable securities laws.

The contention of the appellant is that BNL, PNBF and Camac are companies which are owned and controlled by Vineet Jain, Samir Jain and their family members who are the Managing Directors of BCCL, more commonly known as the Times Group.

It was further urged that Vineet Jain and Sameer Jain exercise total control over these three companies and are the ultimate beneficial owners of the Company and have wrongly classified themselves as public shareholders of these companies which facts are so glaring, but for the reasons best known, SEBI has turned a blind eye and has disposed of the complaints in a cursory manner.

Some of the respondents have raised a preliminary objection that the appeal is not maintainable under Section 15T of the SEBI Act, 1992 as no order has been passed. It was urged that an appeal lies only against an order passed by an Authority.

SAT noted in its order, “We also find it strange to note that SEBI in the said order/ communication states that the information submitted by the appellants would be analyzed and investigation would be made in a holistic manner but, on the other hand, in the same breath, states that SEBI would neither confirm nor deny the existence of any investigation conducted by them”.

“We find that before the Delhi High Court, SEBI informed that the matter is under investigation by them. We find it strange that while disposing of the complaint, SEBI would neither confirm nor deny as to whether investigation in the complaint is going on or not,” SAT said.

“We find the approach adopted by the respondents to be a strange one. Such computer generated disposal of a serious complaint speaks volume on the conduct of the respondents in treating the minority shareholders in this shabby manner. It seems that the respondents have lost sight of the mandate provided to them under Section 11 of the SEBI Act which mandates SEBI to safeguard the interest of the investors. Disposal of the complaint in this manner in the instant case indicates non-application of mind and non-consideration of the interest of the investors,” SAT said in its order.

“We set aside the communication or order passed by the SEBI on the SCORES platform. The appeal is allowed. We direct the appellants to file a consolidated representation/complaint before SEBI annexing the earlier complaints within four weeks from today.

“If such an application is filed SEBI will consider and decide the matter by a reasoned and speaking order within six weeks from the date of the presentation of the complaint along with the certified copy of our order,” the order said.