Mumbai, Sept. 16: Nudged into action by Bombay High Court, the chief metropolitan magistrate has taken cognisance of a criminal complaint filed by the Securities and Exchange Board of India (Sebi) against Hindustan Lever Ltd (HLL) and today issued summons against the company and its five former directors.
The summons, issued over charges of alleged insider trading by the FMCG major in the course of its merger with Brooke Bond Ltd, have been made returnable by October 18.
While Sebi had filed the complaint long ago, the case continued to be adjourned for three years. Aggrieved by the inordinate delay, Sebi finally filed a writ petition with Bombay High Court.
“The Bombay High Court allowed the writ petition filed by Sebi and directed the magistrate to proceed in the matter without any further delay,” Sebi said in a brief statement.
Hindustan Lever, in a late evening press communiqué said: “The additional chief metropolitan magistrate today accordingly issued summons to the company and its directors, which has been obtained by Sebi without bringing to the court’s notice the material portion of the Appellate Authority’s order.” “HLL is aggrieved by the order and would take appropriate legal steps to protect its position,” it added.
“The prosecution launched by Sebi before the additional chief metropolitan magistrate against Lever and its directors did not point out that the Appellate Authority quashed the prosecution of HLL and its directors in July 1998,” HLL said.
Quoting from the order of the Appellate Authority, which read: “We hold that Sebi was most unjustified in ordering prosecution of the appellants (HLL),” the company said this portion of the order was not stayed by Bombay High Court in its interim order of September 28, 1998. HLL wanted to bring to the notice of the additional chief metropolitan magistrate that Sebi had filed the complaint in utter disregard of the Appellate Authority’s order and without informing the court that Sebi’s order had been quashed.