Even a conservative estimate suggests that money siphoned away by unscrupulous companies, which have simply vanished, runs into tens of thousands of crores of rupees. No meeting of investor groups is still possible without an impassioned denouncement of the regulators SEBI, the Department of Company Affairs (DCA) or stock exchanges which list these companies and worsen the problem by delisting them. Yet, not a single company has been punished.

It is a fact that investors were also foolish in 1995-96. It is also a fact that there are scandalousprospectuses, which all but declared the dishonest intentions of the promoters, confessed the absence of even basic licences/permissions and infrastructure, yet investors have invested in them simply because they were greedy. Yet for every such company there are at least three others who have simply cheated investors and falsified facts and accounts.

Several court cases filed across the country have been dismissed so far, but a positive fallout of their action is that regulators are working at initiating punitive action and are open to making it harsh enough to send a deterrent signal through the market.

A case filed by the Midas Touch Investors Association before the Lucknow bench was disposed of in April, because the judges were convinced that a joint action committee set up by SEBI and the DCA, assisted by seven separate task forces to identify vanished companies would lead to action. The DCA has initiated winding up action against a few companies, but this too would not give any relief to investorswho bought the equity. SEBI has compiled a list of 80 companies (out of 400 complaints received by SEBI) which are presumed to have vanished since they are not available at the addresses listed in the prospectus. SEBI chairman D.R.Mehta told investor associations last week that 275 show- cause notices had already been issued to the directors of these companies of which 67 replies have been received and action would be initiated within the next few days. What has perplexed SEBI officials, however, is the fact that 43 out of these 80 companies which are presumed as vanished do not have a single investor complaint against them, even though the money involved amounts to Rs 193 crore. The IGF has gone a step further. It has collated a list of 300 companies, which had simply tried to escape investors by changing their names. It is also in the process of compiling the names of companies delisted by various stock exchanges for non-payment of fees; so that it can reframe its petition with regard to vanishedcompanies.

The DCA on its part has started two public initiatives to collect information. It has issued a circular to all its regional directors at the Registrar of Companies to collect information in a set format and timeframe which was to be submitted by them to the DCA, but it is not clear if the target has been met. Clearly, the response of courts indicates that investor associations need to launch a drive to collate information from around the country. At least three associations are actively in the process of collecting such information with a view to force action through the courts. These are -- Consumer Education and Research Centre, Suraksha Sankool, Thaltej, Ahmedabad-Gandhinagar Highway, Ahmedabad--380054. (email: cerc@ ad1.vsnl.net.in); Investor Grievances Forum, 9C Neelam Nagar, Gavhanpada Road, Mulund (E), Mumbai -- 400 081; Midas Touch Investor Association, Agarwala Building, The Mall, Kanpur -- 208004 (e-mail:midas@ lw1.vsnl.net.in). Why do investor groups have to look to the courts forhelp? Simply, because the government is in no hurry to resolve issues relating to sharing of powers between SEBI and the DCA. The courts may expect that joint action by the DCA and SEBI will yield results but interaction with both these organsations makes it clear that such committees cannot solve the problem.

There has to be a clear separation of powers and responsibility of both bodies, leading to quick punitive action against cheating companies and promoters. In both cases, the law also needs to provide for settlement/compounding of offences in order to avoid delay and litigation in each case (on the condition that the offence and fines paid by the companies/persons are published). Unless that happens, investors will stay away from the IPO market and investor groups will continue their efforts to seek justice through the courts. At the least they expect that the courts will direct the government to clarify the responsibility and powers of the two regulators so that investors who are cheated can haveaccess to proper investigation and a fighting chance of recovering their money.

Author's e-mail: suchetadalal@yahoo.com