The Supreme Court today dismissed the petition of CIL Nova Petrochemicals (CNPL), earlier known as Nova Polyyarn, challenging the ban imposed on it by the market regulator Sebi from trading in securities.
A Bench headed by the Chief Justice S H Kapadia dismissed CNPL's plea and upheld Sebi's action against the company for giving wrong information to stock exchanges.
The Securities and Exchange Board of India (Sebi) had found that CNPL made misleading corporate announcements in 2006. Following that, CNPL's shares shot up almost 50 per cent and its promoters off-loaded their stakes.
After investigations, Sebi imposed a ban of two years on CNPL in January, 2010. It was challenged before the Securities Appellate Tribunal (SAT), which rejected CNPL's plea.
Sebi had started the probe after it witnessed unusual rise in CNPL's scrip from January 2006 to March 2006.
It rose from Rs 96.95 on January 23, 2006 to Rs 146.85 on March 8, 2006 on the Bombay Stock exchange, and from Rs 91.80 to Rs 146.85 at the National Stock Exchange in the same period.
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Following the initial probe, CNPL was given a show cause notice in June 2009, but it did not responded to it.
CNPL had announced a bonus issue in January 2006. Later, in another announcement in February, 2006 to BSE, it informed of expansion plans at its Poly Condensation Plant and Power Plant, which was to be funded through a public issue.
Later, in June, 2006 it dropped the plans, saying they were unviable.
SAT had found that the second announcement had made difference to the share price. Moreover, when the expansion plan was dropped, CNPL did not inform the stock exchanges. The tribunal had also found variation in the audited and unaudited accounts of the company.