HC orders notice to SEBI on plea against DHFL

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Chennai, Jun 29 (PTI) The Madras High Court on Tuesday ordered notice to the Securities and Exchange Board of India (SEBI) on a PIL demanding investigation by it into the alleged fraudulent activities of the Dewan Housing Finance Corporation Ltd (DHFL).

The first bench of Chief Justice Sanjib Banerjee and Justice Senthilkumar Ramamoorthy ordered the notice to SEBI returnable by July 13.

The matter involves what the petitioner perceives to be the 'biggest scam in the capital market in this country,' the bench said.

'According to the petitioner, investors may have lost in excess of Rs 40,000 crore, with regulators, credit-rating agencies, auditors and others who were required to vet and look into the functioning of DHFL, its activities and how the funds received from depositors were...lacking in their functioning,' the bench said.

In his PIL petition, Ranganathan of Mylapore in the city prayed for a direction to the SEBI to statutorily perform its duty by taking action in furtherance to his representation dated June 15 as per SEBI (Prohibition Fraudulent and Unfair Trade Practices Regulations), SEBI (Issue and Listing of Debt Securities) Regulations, Securities Contracts (Regulation) Act, SEBI (Listing Obligations and Disclosure Requirements) Regulations read with Securities Exchange Board of India Act and allied rules and regulations issued thereunder.

He wanted SEBI to launch a fact finding investigation and exercise necessary powers under the Securities Exchange Board of India Act, 1992 and SEBI (Prohibition Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 to investigate, solve and settle the crisis arising out of the fraudulent affairs of the erring entity, DHFL and its key managerial personnel.

According to the petitioner, he had invested Rs 30 lakh to purchase Non-Convertible Debentures issued by DHFL.

But the company neither paid the interest nor returned the invested money, petitioner contended.

The petitioner alleged that the DHFL fraud is the largest economic fraud in the history of India and has caused a gargantuan loss to the exchequer as well as the general public investors who had reposed the entire trust and faith to invest in the Non-Convertible Debenture of the DHFL.

Therefore, this scam ridden entity along with the key managerial personnel ought to be proceeded under the provisions of the SEBI Act, 1992 considering the enormous powers available to the SEBI, petitioner said.PTI CORR SA PTI PTI

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