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Informist, Monday, Sep 9, 2024

 

NEW DELHI – The Supreme Court today set aside a Bombay High Court order to impose a fine of 80 mln rupees on the Securities and Exchange Board of India, the National Stock Exchange Ltd and BSE to be paid by them to Pradeep Mehta and his son Neil Pradeep Mehta for "illegally" freezing the demat accounts of the latter. The demat accounts were frozen as Pradeep Mehta happened to be one of the promoters of Shrenuj & Co Ltd, which could not file its quarterly earnings for Apr-Jun, Jul-Sep and Oct-Dec in 2016.

 

The apex court said that the high court had reserved its order in March on petitions by the father and son for interim relief, seeking direction to National Securities Depository Ltd to transfer their securities lying in the omnibus system to their demat account pending disposal of the case. But in its August verdict, the high court set aside the freezing orders on the father-son's demat account, the apex court said, adding that it was an error on behalf of the high court. 

 

The apex court restored Pradeep Mehta and his son's case in the high court. The top court said it would be open to the parties to move the high court to seek interim relief. The high court could either decide the case for interim relief or dispose of the case after hearing it for final relief, it said. 

 

Last month, the high court said Pradeep Mehta and his son were free to deal with all their shares held in their demat accounts. The court said the action of freezing the petitioners' demat account was "grossly illegal, arbitrary and unconstitutional".

 

The high court had noted that Pradeep Mehta, a senior citizen, faced difficulties since 2017 as his entire shareholdings as maintained in the demat account could not be used by him, and this was valuable property under Section 300A of the Constitution. Regarding Neil Pradeep Mehta's case, the high court said "this is a gross case and more particularly considering that the petitioner in this case was not the promoter of Shrenuj and merely for the reason that he held a demat account along with his father Pradeep Mehta, who was the second holder".

 

The high court had also pulled up SEBI, NSE and BSE and said the actions by the statutory bodies when taken against a person like Neil Mehta were also likely to shake the confidence of investors who were non-resident Indian. "This is certainly not what can be expected from the conduct of these entities. The duty to safeguard the investor's sentiment and confidence is paramount which stand breached in every possible manner in the present case," the high court had said.  End

 

Reported by Surya Tripathi

Edited by Avishek Dutta

 

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