ROLE OF SEBI IN REGULATING THE PRIMARY

MARKET FOR SECURITIES

(RESEARCH PAPER PREPARED FOR INVESTMENT AND SECURITIES LAW UNDER THE
CURRICULUM OF B.A.LLB.(Hons.)

SUBMITTED TO: SUBMITTED BY:

Dr. Manoj Kumar Shweta

Assistant Professor 9TH SEMESTER

RMLNLU B. A. LL.B.(H)
 Enrollment number: 130101131

CERTIFICATE OF ORIGINALITY

This project report has been prepared by the Writer as a student under the curriculum of

B.A.LLB. (Hons.), 9th Semester, for academic purpose only. The views expressed in this work

are original and personal work of the student and in no ways reflect the views of the institution or

binds it in any manner. This research work is also the Intellectual Property of the writer and the

same or any parts of it may not be used in any way, in any manner, without her permission.
 ACKNOWLEDGEMENT

I express my sincere gratitude to Dr. Manoj Kumar, for giving me a wonderful opportunity to

intern under them. I am extremely grateful to my friends and colleagues for being the constant

support they were throughout. For taking out time not only to assist in picking up relevant topic

for research but also to share their precious insights.

I would also express my sincere gratitude to the entire staff of RMLNLU, Madhu Limaye

Library for their help and cooperation on daily basis and who were directly or indirectly

instrumental in enabling me to complete this work.

PREFACE
 TABLE OF CONTENTS

CERTIFICATE OF ORIGINALITY ......................................................................................... 2

ACKNOWLEDGEMENT ......................................................................................................... 3

PREFACE .................................................................................................................................. 4

TABLE OF CONTENTS ........................................................................................................... 5

LIST OF ABBREVATIONS ..................................................................................................... 7

LIST OF CASES........................................................................................................................ 9

INTRODUCTION ................................................................... Error! Bookmark not defined.

OBJECTIVE OF RESEARCH ................................................................................................ 10

The Kingfisher – How did Mr. Mallya fish all the fishes in the pond? .. Error! Bookmark not

defined.

Analysis of the violation of provision under different statutes Error! Bookmark not defined.

1. Diversion of funds and Manipulation of Accounts : A case for “fraud”Error! Bookmark

not defined.

2. Incorrect reporting and non-disclosures of material information: violation of Cl. 36 of the

Listing Agreement. .............................................................. Error! Bookmark not defined.

3. Buy out of Mr. Mallya’s stake on discovery of irregularities in the books: A case for

INSIDER TRADING ........................................................... Error! Bookmark not defined.

The order passed by the WTM under S.11 and 11B, barring him from accessing the securities

market and disgorgement of unlawful gains was correct in law.Error! Bookmark not defined.
 1. The order of Restrain from Access to securities market is well laid in law ..........Error!

Bookmark not defined.

2. Disgorgement of Wrongful gains made: An order in investors interestError! Bookmark

not defined.

METHODOLOGY .................................................................................................................. 11

CONCLUSION ........................................................................................................................ 11

BIBLIOGRAPHY .................................................................................................................... 13

Statutes/ Regulations ............................................................................................................ 13

Books ................................................................................................................................... 13

Articles ................................................................................................................................. 14

Reports ................................................................................................................................. 14

Other Authorities ................................................................................................................. 14

 LIST OF ABBREVATIONS
1. §/ S. Section
2. ¶ Paragraph
3. A.I.R. All India Reporter
4. All ER All England Reporter
5. Anr. Another
6. AO Adjudicating Officer
7. AoA Articles of Association
8. Apr. April
9. Art. Article
10. Aug. August
11. BOD Board of Directors
12. BSE Bombay Stock Exchange
13. Cal. Calcutta
14. CFO Chief Financial Officer
15. Ch. Chapter
16. CIT Commissioner of Income Tax
17. Cl. Clause
18. CLA Corporate Law Advisor
19. Co. Company
20. Comp LJ Company Law Journal
21. Cr. Crore
22. Feb. February
23. ILR Indian Law Reporter
24. Inc. Incorporation
25. Jan. January
26. Ltd. Limited
27. M&A Mergers and Acquisitions
28. Mfg. Manufacturing
29. Mum Mumbai
30. Nov. November
31. Oct. October
32. Ors. Others
33. P&H Punjab and Haryana
34. PFUTP SEBI (Prohobition of Fradulent and Unfair Trade Practice), 2003
35. PIT SEBI (Prohibition of Insider Trading) Regulations, 1992.
36. Pvt./(P) Private
37. r/w read with
38. Reg. Regulation
39. s. section
40. S.C. Supreme Court
41. S.C.C. Supreme Court Cases
42. SAT Securities and Appellate Tribunal
43. SCR Supreme Court Reporter
44. SEBI Securities and Exchange Board of India
45. SEC Securities Exchange Commission
46. Sec Section
47. Sep. September
48. ss. Section(s)
49. TCL Trivandrum Chemicals Limited
50. U.K. United Kingdom
51. U.P. Uttar Pradesh
52. U.S. United States
53. UOI Union of India
54. v. Versus
55. Vol. Volume
56. WLR WestLaw Reporter
 LIST OF CASES
STATUTES/ REGULATIONS

Securities Exchange Board of India Act, 1992, No. 15, Acts of Parliament, 1949 (India)
Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices)
Regulation, 2003, Gazette of India, pt.II sec.3 (Jul. 17, 2004)

Securities and Exchange Board of India (Prohibition of Insider Trading) Regulation, 1992,
Gazette of India,pt.III sec.4 (Nov. 19, 1992)
Securities and Exchange Board of India (Prohibition of Insider Trading) Regulation, 2015,
Gazette of India,pt.III sec.4 (Jan. 15, 2015)
CASES

Paramjit Gill & Ors. v. SEBI, SAT Appeal No. 52 of 2017 (Aug. 11, 2017)

Milan Mahendra Securities Pvt. Ltd v. SEBI, SAT Appeal No. 66 of 2003 (Nov. 15, 2006)

Narayanan v. Adjudicating Officer SEBI, [2013] 114 CLA 232 (SC)

SEBI Order In the Matter of Transgene Biotek Limited, WTM/RKA/ISD/30 /2016,

Adjudication Order In the Matter of Shri Sunder Lal Dugar, IVD-ID9/RDB/AO/DRK-

AKS/EAD3-565-569 /109-113/2014

Basic Inc. v. Levinson, 485 U. S. 224 (USA)

Ashok Jain v. SEBI, SAT Appeal no. 79 of 2014

Adjudicating Order In the Matter of M/s. Helios and Matheson Information Technology Ltd.,

PKB / AO-8 / 2011

Adjudication Order In the Matter of FCGL Industries Ltd., PB/AO/117-120/2010,

ROLE OF SEBI IN REGULATING THE PRIMARY MARKET FOR
SECURITIES

INTRODUCTION

OBJECTIVE OF RESEARCH
 METHODOLOGY
The methodology used in this project is primarily doctrinal research with help of books, articles,

case laws etc. all of which have been provided in the bibliography below.

CONCLUSION
 BIBLIOGRAPHY

Statutes/ Regulations

Securities Exchange Board of India Act, 1992, No. 15, Acts of Parliament, 1949 (India)

Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices)

Regulation, 2003, Gazette of India, pt.II sec.3 (Jul. 17, 2004)

Securities and Exchange Board of India (Prohibition of Insider Trading) Regulation, 1992,

Gazette of India,pt.III sec.4 (Nov. 19, 1992)

Securities and Exchange Board of India (Prohibition of Insider Trading) Regulation, 2015,

Gazette of India,pt.III sec.4 (Jan. 15, 2015)

Books

Francis Beaufort Palmer and Geoffrey Morse, Palmer’s Company Law-Principles of Modern

Company Law, (25th ed. Sweet and Maxwell Publishers 2010)

Sandeep Parekh, Fraud, Manipulation and Insider Trading in Indian Securities Market 217 (2nd

ed. Wolters Kluwer 2016).

Sumit Agrawal, Robin Joseph Baby, Amit Agrawal, Agrawal and Baby on SEBI Act, (1st ed.

Taxmann Publications 2011).

Bhuwneshwar Mishra, A Comprehensive Commentary on SEBI ( Prohibition of Insider Trading

) Regulations 2015, (1st ed. Taxmann Publications 2015).

Articles

Gaurav Pingle, Analysis of Sebi & Sat Orders Passed on Insider Trading Matters In 2014, [2015]

61 taxmann.com 43 (Article)

Rajat Sethi, Sudip Mahapatra and Jinaly Dani, Insider Trading Regulati ons: Implicati ons for

M&A Transacti ons, SEBI’s Investi gati ve Powers and Penalties Imposed (Jul 15, 2017),

http://www.nlsblr.in/uploads/3/7/6/7/37673841/04.pdf

V. Keshavdev, Till Pledge Do Us Apart, ( Jun. 09, 2012), https://www.outlookbusiness.com/the-

big-story/lead-story/till-pledge-do-us-apart-2205

Reports

The High Level Committee Report under the Chairmanship of NK Sodhi on the review of the

1992 Regulations, (Dec. 7, 2012),

http://www.sebi.gov.in/sebi_data/attachdocs/1386758945803.pdf

Other Authorities

Discussion Paper on review of Clause 36 and related clauses of equity listing agreement, SEBI

(Sep.12, 2014), http://www.sebi.gov.in/sebi_data/attachdocs/1408444809721.pdf,

Guidance Note on SEBI (Prohibition of Insider Trading) Regulations, 2015 (Aug. 24, 2015),

http://www.sebi.gov.in/sebi_data/attachdocs/1440413398668.pdf.

Secretarial Standards, Secretarial Standard No. 1 § 5.1.2 (Institute of Company Secretaries of

India 2015).