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SEBI - Case Laws
Showing 421 to 440 of 555 Records
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2018 (3) TMI 1888
No show cause notice issued - principle of natural justice denied - HELD THAT:- It would be more appropriate if Respondent Nos.1 and 2 are granted permission to file a statutory appeal before the Securities Appellate Tribunal (SAT) challenging the order dated 23rd July, 2011.
Thirty days' time is granted to the respondents to file an appeal. If the appeal is filed by the respondents within a period of thirty days from today, the Securities Appellate Tribunal will hear the appeal on merits.
In the meanwhile, the interim order passed by this Court will continue to the effect that any proceedings, decision or action taken in pursuance of the order dated 23rd July, 2011 passed by the Forward Markets Commission (now SEBI) shall abide by the final result of the appeal.
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2018 (3) TMI 1830
Claims of the appellants against their broker rejected by the DC - NSE liability to compensate the appellants - Claim of the appellant provided as margin money to Kassa Finvest Private Ltd. a defaulter stock broker of the NSE, was not admitted for payment from the Investor Protection Fund ('IPF') of the NSE - claim was rejected on the ground that the said amount purportedly provided as margin money for trading in securities was in fact a transaction in the nature of loans.
HELD THAT:- Securities and Exchange Board of India ('SEBI') had issued an interim order against Kassa on March 19, 2015 and the final order was passed on September 5, 2017 whereby, inter alia, Kassa was directed to refund / return client's money / securities with 15% interest thereon. It was also stated in the order that Kassa admitted to taking loans from clients by offering fixed returns.
The appellant before us is unable to produce any evidence relating to her trading in securities. The appellant is neither able to provide any convincing reason why no trading was done for about a year of having the trading account except a vague statement that her instructions to the broker was never implemented.
Record produced before us clearly indicate that interest was paid to the appellant by Kassa. The statement on dividend itself is not very convincing as there are entries to the effect that the same company has paid dividend twice during a period of three months. All these clearly show that the amount deposited by the appellant with Kassa was in the form of loans.
Since the By-laws of the NSE clearly prohibit compensating claims in the nature of loans given to defaulting brokers, we find no fault in the Defaulters' Committee's decision that the appellant's claim cannot be entertained from the IPF which is meant for safeguarding the interests of genuine investors. Appellant is at liberty to approach the appropriate forum to settle her claim against Kassa in case Kassa is not honouring her claim of the deposited amount.
No merit in the argument of the appellant that NSE is liable to compensate the appellant for having failed in their duty as a regulator of brokers.
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2018 (2) TMI 2119
Chargesheet filed pursuant to the F.I.R.s - Offences punishable u/s 420, 467, 468 and 471 read with 34 of the IPC. The said F.I.R.s have been lodged by the SEBI - The gravamen of the allegations is relating to the cornering of the shares meant for retail investors in the IPO of YES Bank - petition has been filed in January 2018 challenging the chargesheets which have been filed on 02/03/2009.
HELD THAT:- Petitioner endeavoured to demonstrate to us that there is no complicity of the Petitioner in the offences alleged. In our view, it is not possible to accept the said contention at this stage.
Having regard to the facts as aforestated, we do not deem it appropriate to exercise our writ jurisdiction under Article 226 of the Constitution of India. The Writ Petition is accordingly dismissed. Needless to state that the Trial Court would try the case in question on its own merits and in accordance with law.
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2018 (1) TMI 1589
Fraud made by Directors - Person responsible for issuance of the redeemable preference shares - as argued on behalf of the appellant that the appellant was not a director when the resolution regarding issuance of redeemable preference shares was passed by the company thus he should not be made responsible for the acts of other directors - HELD THAT:- Senior Counsel fairly submits that the appellant is being held responsible, particularly in clause "f", because he continues to be a director as per the records of ROC as reflected on MCA portal. The concern of SEBI seems to be that the present directors, wrongly or rightly, who have been shown as directors on MCA portal should be made responsible for ensuring the repayment of the amount collected illegally by the company pursuant to resolution passed on 15th February, 2012, although the appellant was not a director at that time remains an admitted position.
We are of the considered opinion that this appeal can be disposed of with a direction to the appellant to obtain appropriate documents/orders from the competent authority to the effect that he was fraudulently appointed as director of the company in question on 10th February, 2015. For this purpose, the appellant is granted time up to one year to do the needful and submit the same to SEBI. In the eventuality of appellant producing the documents to the satisfaction of SEBI that he was fraudulently inducted as one of the directors of the company, SEBI will pass appropriate orders as per law.
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2018 (1) TMI 1553
NSE liability to pay the amounts admissible to the appellants - HELD THAT:- Fact that the claim held liable to be paid (admissible) by the erring broker to the appellants comes to ₹ 1,70,69,707.50/- does not mean that NSE is liable to pay the said admissible amount to the appellants. Since the guidelines framed by NSE provide for maximum payment of ₹ 15 lakh from IPF, the appellant is not justified in seeking amount in excess of ₹ 15 lakh from IPF.
WTM of SEBI has accepted the explanation given by NSE and accordingly discharged the show-cause notice issued to the NSE. In such a case, question of making NSE liable to pay the amounts admissible to the appellants does not arise at all. We see no merit in the appeal and the same is hereby dismissed
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2017 (11) TMI 2043
Company mobilized resources by issuing RPS to the public - Number of investors exceeded for RPS [Redeemable Preference Shares] issue - accountability of a Director to the actions of the Company - demanding refund the money collected by the Company through the issuance 'RPS' with interest at the rate of 15% from the date when the repayment became due till the date of actual payment - liability of Directors not in-charge of day-to-day management of a Company - HELD THAT:- The appellant was a Director of the Company during the entire period 01.04.2009 to 11.08.2011 during which the RPS was issued and monies collected from the investors. As such he was present during the entire period and therefore no benefit of apportioning the time period is available to him as in the case of Mr. Nandi.
The accountability of a Director to the actions of the Company is now well settled in law as particularly set out in the judgment passed in the matter of N. Narayanan vs Adjudicating Officer, Securities and Exchange Board of India [2013 (4) TMI 652 - SUPREME COURT]
Reliance placed by Counsel for the appellant in K.K. Ahuja [2009 (7) TMI 758 - SUPREME COURT] and Rahul H. Shah [2004 (9) TMI 702 - SECURITIES APPELLATE TRIBUNAL, MUMBAI] are not relevant as those decisions are in the context of the role of the Director as an officer in default under the Negotiable Instruments Act.
In the present context the role of the Director is to be seen as under the provisions of the Companies Act, 1956, SEBI Act, 1992 and SEBI (Disclosure and Investor Protection) Guidelines, 2000 / SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009. When the appellant was a Director of the Company, the Company mobilized resources by issuing RPS to the public, which is not in dispute. As such, the impugned order holding the appellant jointly and severally liable for the action of the Company cannot be faulted.
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2017 (11) TMI 2008
Maintainability of appeal against circulars issued to the stock exchanges in relation to all the companies exclusively listed on de-recognized/ non-operational stock exchanges - orders under regulation 28(2) of the Delisting Regulations - Exit route for the shareholders of the companies exclusively listed on de-recognized/ non-operational stock exchanges - Order seeking direction SEBI to ensure that the companies listed exclusively on regional stock exchanges get listed either on the Bombay Stock Exchange or on the National Stock Exchange automatically - HELD THAT:- Merely because SEBI has referred the orders passed under regulation 28(2) of the Delisting Regulations as ‘circulars’ cannot be a ground to deny the appellant his right to file an appeal against the said circulars which are in fact orders passed under the Delisting Regulations.
In our opinion, the argument advanced on behalf of the appellant is wholly misconceived.
Impugned circulars issued by SEBI contain administrative directions given by SEBI to the stock exchanges in relation to all companies which are exclusively listed on de-recognized / non-operational stock exchanges. Since the directions contained in the said circulars are not restricted to any particular company but are generally applicable to all the companies exclusively listed on de-recognized/ non-operational stock exchanges, it is abundantly clear that the impugned circulars are nothing but the administrative circulars issued in the interest of the investors in the securities market.
None of the companies to whom the directions contained in the impugned circulars apply have deemed it appropriate to challenge the impugned circulars and the appellant who is an investor in those companies has deemed it appropriate to challenge the impugned circulars. Assuming that the appellant has any grievance against the impugned circulars, in view of the decision of the Apex Court in case of NSDL [2017 (3) TMI 1061 - SUPREME COURT] proper course to be adopted by the appellant is to take appropriate steps in judicial review proceedings and not by way of an appeal before this Tribunal.
Argument of the appellant that the impugned circulars constitute orders under regulation 28(2) of the Delisting Regulations is totally frivolous to say the least. By circular dated 22.05.2014 SEBI directed the stock exchanges to give various options specified therein to the companies exclusively listed on de-recognized/ non-operational stock exchanges to get listed on the nationwide exchanges.
In view of the representation made by some of the companies exclusively listed on derecognized/ non-operational exchanges, SEBI issued circular dated 17.04.2015 thereby giving extension of time to all the companies exclusively listed on de-recognized non-operational stock exchanges to get listed on nationwide stock exchanges. Thus, the appellant is wholly unjustified in arguing that the impugned circulars constitute orders under regulation 28(2) of the Delisting Regulations. Conduct of the appellant in pursuing the appeal by raising such frivolous grounds inspite of the decision of the Apex Court in NSDL (Supra) is reprehensible.
The appeal is dismissed with costs quantified at ₹ 10,000/- to be paid by the appellant.
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2017 (11) TMI 1802
Grant in principle approval for delisting of the equity shares refused - Is a decision of a Stock Exchange refusing to grant in principle approval to an application for voluntary delisting of shares from such Stock Exchange appealable under the provisions of Securities Contracts (Regulation) Act, 1956? - maintainability of petition - denial appealable under Section 21A(2) of the Securities Contracts (Regulation) Act, 1956 - Petitioners have statutory alternative remedy available - HELD THAT:- Section 23L on the other hand relates to an appeal in respect of an order or decision of a recognised Stock Exchange or an adjudicating officer or by SEBI passed or taken under Section 4B or Section 23I(3) of the Act of 1956. These differences allow one to infer that they operate on different fields. Provisions of Section 23L are not attracted to an appeal against the decisions of the Stock Exchange taken in the delisting process. Such a decision would attract Section 21A(2) for the purpose of appeal. In the present case, the impugned writing of the Calcutta Stock Exchange contains its decision to refuse in principle approval of voluntary delisting of shares. The same is appealable under Section 21A(2) - The first issue is answered in the affirmative by holding that, a decision of a Stock Exchange refusing to grant in principle approval to an application for voluntary delisting is appealable under Section 21A(2) of the Securities Contracts (Regulation) Act, 1956.
In the present case, there appears to be public shareholders and such shareholders are required to have an exit opportunity. In the facts of the present case, it appears that, the company has obtained the prior approval of the Board of Directors of the company in its meeting to apply for permission to delist from the Stock Exchange. It has received the prior approval of the shareholders of the company by special resolution passed through postal ballot, after disclosure of all material facts in the explanatory statement sent to the shareholders in relation to such resolution. The special resolution does not stand defeated by reason of the proviso to Regulation 8(1)(b) being satisfied. The company has made an application to the concerned Stock Exchange for in principle approval in terms of Regulation 8(1)(c). It is at this stage that, the Stock Exchange has refused the grant of in principle approval. Therefore, the question of the company proceeding any further under the Regulation 8 does not arise. It has been contended on behalf of the petitioners that, the exit opportunity contemplated under Chapter IV will become applicable only after the receipt of the in principle approval for delisting. Therefore, the company cannot be said to have defaulted in complying with Chapter IV of the delisting Regulations of 2009, at the present moment in the facts of the present case. According to the petitioners, the Calcutta Stock Exchange has exercised jurisdiction erroneously and therefore, notwithstanding the statutory appeal, the writ petition should be entertained.
Notwithstanding the availability of alternative remedy including a statutory alternative remedy of appeal, a writ petition has been held to be maintainable so long, the impugned action is substantiated to be without jurisdiction, non-speaking, or is perverse or tainted with mala fides. Simplicitor on the ground that there exists, an alternative remedy, a writ petition cannot be said to be not maintainable - The second issue is answered by holding that, the present writ petition is maintainable in view of the availability of statutory alternative remedy. The petitioners have not established that, the impugned decision is without jurisdiction, or is perverse, or non-speaking or tainted with mala fides. No provision of any of the statutes or regulations governing the process of delisting is under challenge.
In the facts of the present case, it cannot be said that, the Calcutta Stock Exchange has acted beyond the jurisdiction vested upon it in law. The impugned decision of the Calcutta Stock Exchange is amenable to appeal under Section 21A(2) of the Securities Contracts (Regulation) Act, 1956. The petitioners, therefore, have a statutory alternative remedy available to itself. The petitioners would be better placed to ventilate their grievance that, the materials produced before the Calcutta Stock Exchange were not appreciated correctly and that, a different view as that returned in the impugned decision is plausible and ought to be taken before the appellate authority. A Writ Court need not undertake the reappreciation of the evidence as an appellate authority and substitute the impugned decision with its own acting as an appellate authority. Third issue is answered in the negative and against the petitioners.
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2017 (10) TMI 1512
Violations committed in relation to the GDR issue - WTM of SEBI has directed Cals Refineries Limited (‘Cals’) not to issue equity shares or any other instruments convertible into equity shares or any other security for a period of 10 years - also prohibited other appellants who at the relevant time were the Directors of Cals, from accessing the capital market, directly or indirectly, and dealing in securities or instruments with Indian securities as underlying, in any manner whatsoever, for a period of 10 years - Argument of Cals that it is a victim of fraud and not a vehicle of fraud -
HELD THAT:- As rightly contended by Counsel for SEBI, Apex Court’s decision in case of Iridium India Telecom Ltd. vs. Motorola Inc. & Ors. reported in (2010 (10) TMI 85 - SUPREME COURT), which is binding on this Tribunal, clearly postulates that criminal liability of a corporation would arise when an offence is committed in relation to the business of the corporation by a person or body of persons in control of its affairs. In such a case, what is to be ascertained is, whether the degree and control of the person or body of persons was so intense that a corporation could be said to think and act through the person or the body of persons controlling its affairs.
In the present case, the liability imposed on Cals is a civil liability and not a criminal liability. Sometime in May/June, 2007, Sanjay Malhotra, one of the promoters of Spice Energy group approached Goorha (promoter & director of Cals) with a proposal to take over Cals for implementing the refinery project of SRM which was a Spice Energy group company. As Cals had virtually become a defunct company, the BoD of Cals in its meeting held on 23/7/2007 approved the proposal and accordingly 4 nominees of the Spice Energy group viz. Kansagra, Chilikuri, Roy and Sundararajan were appointed as additional directors of Cals. It was inter alia resolved in the said meeting that for implementing the refinery project, Cals would raise funds through issuance of GDR/FCCB. Accordingly, Cals had issued GDRs amounting to USD 200 million.
According to SEBI, by opening an account with Banco and executing the Account Charge Agreement, Cals has financed subscription of its own GDRs which is prohibited under the Securities laws - Fact that the minutes as per the minute book of Cals does not contain any resolution to open a bank account with Banco cannot be a ground to infer that Cals had not intended to open an account with Banco because, firstly, on the basis of the Board resolution dated 30/10/2007 certified by Sundararajan, director of Cals, an account was in fact opened in the name of Cals with Banco for depositing the GDR subscription amount. Secondly, on issuance of GDRs, the GDR subscription amount was in fact deposited in the said account of Cals with Banco. Thirdly, apart from the Board resolution dated 30/10/2007 certified by Sundararajan, there is no other resolution passed by Cals to open an account for depositing the GDR subscription amount. Fourthly, the GDR subscription amount deposited in the said bank account with Banco has been withdrawn by Cals in installments from time to time which is in consonance with the Account Charge Agreement executed by Cals. Without opening a bank account, Cals could not have opened the GDR issue. Very fact that Cals operated the account opened with Banco on the basis of resolution dated 30/10/2007 certified by Sundararajan clearly falsifies the case put up by Cals that it had not authorized any one to open an account with Banco for depositing the GDR subscription amount.
Argument that Cals had never authorized any person to sign any Account Charge Agreement is also without any merit, because, the Account Charge Agreement was signed by Goorha promoter-director of Cals. The Account Charge Agreement provides that all communications in relation thereto should be addressed either to Goorha or Sundararajan as they were the two authorized signatories to operate the Bank account of Cals with Banco. It is relevant to note that Goorha was the founder, promoter, director of Cals, whereas, Sundararajan was the director of Cals nominated by the Spice Energy group which had taken over Cals with a view to implement its refinery project through Cals by raising funds through issuance of GDRs. Admittedly, Sundararajan was in-charge of the entire GDR process. Thus, the bank account with Banco for depositing the GDR subscription amount was opened by Sundararajan, director representing the Spice Energy group and the Account Charge Agreement was signed by Goorha, director representing the promoter group of Cals. In these circumstances, the conclusion drawn by SEBI that opening a bank account with Banco and executing the Account Charge Agreement were the acts done by Cals through its directors to finance Honor for subscribing the GDRs issued by Cals in gross violation of Section 77(2) of the Companies Act, 1956 and the provisions contained in the SEBI Act and the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (‘PFUTP Regulations’ for convenience), cannot be faulted.
In the facts of present case, involvement of Cals controlled by the Spiece Energy group is so intense that it can be easily seen that the fraudulent acts and deeds were executed by Cals through its directors. In these circumstances, argument that Cals was not aware of the actions of its directors cannot be accepted. Consequently, the finding recorded in the impugned order that Cals and its directors had financed for the subscription of its own GDRs in gross violation of Section 77(2) of the Companies Act, 1956 and the provisions contained in the SEBI Act and the PFUTP Regulations cannot be faulted.
It is interesting to note that Cals (controlled by the Spice Energy group) not only financed Honor (owned by Malhotra, promoter of the Spice energy group) for subscribing to the GDRs of Cals, but also resolved in its BoD meeting held on 19/1/2008 to appoint Malhotra as an advisor to Cals for setting up the refinery in Haldia on a monthly consultancy charge of ₹ 15 lac. Thus, it is evident that Malhotra was not a stranger to Cals and all acts done by Cals in relation to the GDRs were at the instance of Malhotra, promoter of the Spice Energy group. As the promoter directors of Cals have also participated in the fraud committed in relation to the GDRs, Cals cannot escape liability for the misdeeds committed by its entire BoD.
Neither in the Memo of Appeal nor during the course of arguments, Cals has disputed the finding of fact recorded in the impugned order that USD 200 million was received by Cals from Honor and not from the alleged 10 foreign investors. In these circumstances, decision of SEBI that by furnishing false information to the Stock Exchange that the GDRs have been fully subscribed by 10 foreign investors, Cals has misled the investors in India cannot be faulted.
For all the aforesaid reasons, the findings recorded and the directions issued against Cals in the impugned order dated 23/10/2013 cannot be faulted.
Liability of directors - Argument of Goorha that he signed the Account Charge Agreement without knowing the contents of that agreement is ex facie untenable because, the very name of the document ‘Account Charge Agreement’ itself suggests that the amounts in the account of Cals would stand charged as per the terms set out in the Account Charge Agreement. At the relevant time, there was only one account of Cals with Banco for depositing the GDR subscription amount and there was no proposal on part of Cals to take any loan from Banco. Thus, the title of the document ‘Account Charge Agreement’ itself indicates the object with which it is being executed and to ascertain the object it was not necessary to read the entire document.
Explanation given by Sundararajan relating to the discrepancy in the resolution dated 30/10/2007 recorded in the minute book of Cals and the resolution dated 30/10/2007 certified by him is not worthy of acceptance because, assuming that there was lapse on part of the Company Secretary of Cals to record the said resolution in the minute book of Cals on 30/10/2007, then, Sundararajan would have got the error corrected in the subsequent Board meeting. However, in the meeting of BoD of Cals held on 19/1/2008, the minutes of BoD meeting dated 30/10/2007 as recorded in the minute book of Cals was approved. Very fact, that Sundararajan who was present in the BoD meeting dated 19/1/2008 did not take any steps to get the alleged error in the minutes of meeting dated 30/10/2007 rectified, clearly shows the mala fide intention on part of Sundararajan.
Sundararajan has also admitted that he had sent an e-mail to Goorha on 13/11/2007 expressing his inability to go to London for executing the documents on behalf of Cals and requested Goorha to sign necessary documents on behalf of Cals. Accordingly, Goorha had signed the Account Charge Agreement on 12/11/2007 (as per the date in London). Apart from signing the Account Charge Agreement, no other agreement was signed on behalf of Cals on 12/11/2007. These facts clearly demonstrate that Sundararajan was clearly aware that the document to be executed on behalf of Cals at London on 12/12/2007 was the Account Charge Agreement. Therefore, argument of Sundararajan that he did not know anything about the Account Charge Agreement is a blatant lie.
Inference drawn in the impugned order that Sundararajan was aware of the fact that Deep Rastogi had significant influence over Cals as contemplated under AS-18 and failure to disclose the related party transaction between Cals and Asia Texx was in violation of the Securities laws, cannot be faulted.
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2017 (10) TMI 1490
Fresh representation to SEBI - Suggestion was made by counsel for SEBI and not by the counsel for the appellant - HELD THAT:- Since counsel for appellant has accepted the suggestion, we see no reason to modify our order.
Second grievance of the applicant is that the applicant must be permitted to make representation on all issues relating to the violation of securities laws by the respondent No. 2 and not restricted to the violation set out in the appeal - In our opinion, permitting the appellant to make representation on issues which are not subject matter of appeal would amount to enlarging the scope of the representation beyond the grievances set out in the memo of appeal. Therefore, we see no reason to modify our order on this issue as well.
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2017 (10) TMI 1489
Representation before appropriate authority of SEBI - Appellant states that in relation to the grievances made in the appeal, the appellant would make a fresh representation within a period of two weeks from today before the Securities and Exchange Board of India (“SEBI” for short).
HELD THAT;- If the appellant makes a representation within two weeks from today then the appropriate authority of SEBI shall consider the said representation and pass appropriate order thereon in accordance with law within a period of eight weeks from the date of receiving the representation.
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2017 (9) TMI 2010
Violation of provisions of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) - HELD THAT:- As pursuant to the interim orders, SEBI conducted a detailed investigation of the entire scheme employed in the instant matter, role and connection amongst the concerned entities, funds used for the price manipulation of the scrip of Radford, etc., so as to ascertain the violation of securities laws.
Upon completion of investigation by SEBI, investigation did not find any adverse evidence/adverse findings in respect of violation of provisions of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (PFUTP Regulations) in respect of following 82 entities (against whom directions were issued vide the interim orders as confirmed vide the above said confirmatory orders) warranting continuation of action under Section 11B r/w 11(4) of SEBI Act.
Considering the fact that there are no adverse findings against the aforementioned 82 entities with respect to their role in the manipulation of the scrip of Radford, directions issued against them vide interim orders dated December 19, 2014 and November 9, 2015 which were confirmed vide Orders dated October 12, 2015, March 18, 2016 and August 26, 2016 are liable to be revoked.
As in exercise of the powers conferred upon me under Section 19 of the Securities and Exchange Board of India Act, 1992 read with Sections 11, 11(4) and 11B of the SEBI Act, hereby revoke the Confirmatory Orders dated October 12, 2015, March 18, 2016 and August 26, 2016 qua aforesaid 82 entities (paragraph 9 above) with immediate effect.
The revocation of the directions issued vide the abovementioned orders (at paragraph 11) is only in respect of the entities mentioned at paragraph 9 of this order in the matter of Radford Global Limited. As regards remaining entities in the scrip of Radford, violations under SEBI Act, SCRA, PFUTP Regulations, etc., were observed and SEBI shall continue its proceedings against them.
Hence, the directions issued vide Orders against the remaining 24 entities shall continue. This revocation order is without prejudice to any other action SEBI may initiate as per law
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2017 (9) TMI 1921
Fraudulent IPO - Restraint orders - interim ex parte orders as restrained 238 and 16 entities respectively from accessing the securities market and buying, selling or dealing in securities, either directly or indirectly, in any manner, till further directions - HELD THAT:- Since, the prima facie findings are not observed in the Investigation reports in respect to aforementioned 216 entities at paragraph 4 the directions issued earlier vide interim orders need not be continued and hence need to be revoked
In exercise of the powers conferred upon me under section 19 of the Securities and Exchange Board of India Act, 1992 read with sections 11, 11(4) and 11B thereof, hereby revoke the directions issued vide interim orders qua aforesaid 216 entities with immediate effect.
The revocation of the directions issued vide the interim orders is only in respect of the entities mentioned at paragraph 4 of this order. As regards remaining entities, violations under SEBI Act, PFUTP Regulations, SEBI (Issue of Capital and Disclosure Requirements) Regulations 2009 and Securities Contracts (Regulation) Act, 1956 were observed and SEBI shall continue its proceedings against them.
A copy of this Order shall be served on the Stock Exchanges and Depositories, for necessary action.
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2017 (8) TMI 1714
Company mobilized resources by issuing RPS to the public - default of RPS [Redeemable Preference Shares] issue - accountability of a Director to the actions of the Company - as per DR Directors including the appellant are jointly and severally directed to forthwith refund the money collected by the company through the issuance by Redeemable Preference Shares with interest at the rate of 15% from the date when the repayment became due till the date of actual payment - As argued Director of the company had confirmed that the resignation letter of the appellant as been accepted in the Board Meeting, neither involved in the business activities/operations nor the appellant took part in any Board Meetings, General Meetings, thus nor the appellant was paid with any remunerations or fees or had not taken any monitory benefits whatsoever in cash or kind.
HELD THAT:- In the Memorandum of Appeal the appellant has annexed a letter which is written by appellant to the Managing Director of the company wherein the appellant has clearly stated that he intends to discontinue as a Director of the company with effect from 15.05.2010. This letter addressed by the appellant to the company completely falsifies the case sought to be made out in the Appeal that he had resigned on 10.03.2009 and the same was accepted by the company on 12.03.2009.
Even the letter addressed by the Whole Time Director and Authorised Signatory to the effect that the appellant during the period from 24.11.2008 to 12.05.2010 was not at all involved in the business activities/operation of the company is falsified by the letter addressed by the appellant on 12.05.2010 wherein the appellant intended to discontinue as a Director of the company with effect from 15.05.2010. Argument advanced byappellant was compelled to write the aforesaid letter on 12.03.2009 is clearly an afterthought and totally unbelievable. In these circumstances, we are clearly of the view that there is no merit in the appeal and the case sought to be made out in the appeal is totally false.
At this stage, counsel for SEBI fairly stated that liability of the appellant to refund the amount along with the company and other Directors would be in relation to the amount collected by the company up to 02.05.2010 as the appellant had ceased to be a Director of the Company with effect from 15.05.2010. Statement made by counsel for SEBI is accepted.
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2017 (4) TMI 1500
Securities to more than 49 persons - public issue and the provisions of Section 56 not followed - no private placement - HELD THAT:- In the instant matter the appellant have violated these provisions and their argument that they have issued the NCDs in multiple tranches and no tranche has exceeded 49 people has no meaning. Similarly, the appellant has also violated provisions relating to redemption reserve as provided under Section 117C of the Companies Act, 1956. The argument that the appellant had engaged IDBI Trustee as custodian for the issue absolves them from the charge of violation has no merit. In fact, the IDBI Trustee in its letter dated November 27, 2014 confirmed that though the appellant had taken their consent for acting as the trustee for the NCD issue aggregating an amount of ₹ 10 crore the appellant had issued the same in tranches without even any intimation to them. It was also stated by the IDBI Trusteeship that the appellant has defaulted on various other compliances particularly with respect to timely payment of quarterly interest and furnishing periodical information and reports and no responsible officer of the appellant was available in the company to ensure the compliances.
Present appeal is squarely covered by the order of the Hon'ble Supreme Court in the Sahara [2012 (9) TMI 559 - SUPREME COURT] matter and undoubtedly the appellant went for a public issue in a truncated manner. Given this the finding in the impugned order that the appellant company failed to comply with the provisions relating to public issue such as issue of prospectus, listing, provision of redemption reserve in terms of sections 56, 60, 73 and 117C of the Companies Act, 1956 as well as provisions of the ILDS Regulations while issuing the NCDs cannot be faulted.
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2017 (3) TMI 1811
Penalty by Adjudicating Officer u/s 15A of SEBI Act - documents which has been asked for has been furnished are false - whether power of the Adjudicating Officer to impose penalty is limited and can be exercised only in the event of failure to furnish documents? - HELD THAT:- It appears from the order which was passed that the Adjudicating Offier had specifically stated in para 31 “that the appellant has already furnished the materials which are available on record”. Since the materials have already been furnished, in our opinion, the said Section is not attracted on the given facts.
Appellate Tribunal was not justified in upholding the order passed by the Adjudicating Officer on the basis of drawing adverse inferences against the appellant which is based on no material facts and no positive evidence has been furnished is totally erroneous.
Adjudicating Officer has also failed to take into consideration that there was no non-compliance of summons, if she considered that in the first instance the summons was not issuable to the appellant. SEBI had all the information and the appellant (like many other non-registered entities) was under the bonafide belief that it did not come under the ambit, purview, compass and jurisdiction of SEBI.
Having regard to the submissions made, we are of the view that that the order passed by the Tribunal is not sustainable and hence the same is set aside.
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2017 (2) TMI 1506
Sale transactions without holding the scrips - Suspension of the trading membership of the appellant - ban/prohibition from trading for 5 days - HELD THAT:- We have not permitted counsel for the appellant to raise that plea, because, firstly, no such plea was raised in the Review Application filed by the appellant before the DAC of NSE. Secondly, even if there are some discrepancies in the quantum of amounts moved from the clients beneficiary accounts, very fact that the appellant has moved funds and securities from the clients beneficiary accounts itself is sufficient to hold the appellant to be guilty of violating the norms required to be followed by a member of the exchange.
In the present case Naveen Kumar Gupta, operating on behalf of the appellant had executed sale transactions without holding the scrips and in fact, the appellant has accepted that the sale obligations of Naveen Kumar Gupta were met by using securities of other clients. Thus, it is established that in the present case securities belonging to the clients’ of the appellants have been utilized to meet the pay in obligation of Naveen Kumar Gupta which is in gross violation of the code of conduct prescribed for members of the exchange. Reliance placed by the appellant on the Circular of NSE dated June 27, 2013 is totally misplaced. The said circular clearly stipulates that serious action could be taken depending upon the gravity of the violations committed. In the present case, the violations committed by the appellant being serious DAC of NSE was justified in taking stern action.
Penalty of ₹ 10 lac and suspending the trading membership of the appellant for 5 trading days cannot be said to be unreasonable or excessive.
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2017 (1) TMI 1656
Scheme of arrangement and amalgamation - freezing order of June 4, 2013 passed by SEBI in respect of such part of the promoters’ shareholding in the amalgamated company that exceeds 75% of the paid-up capital by treating the shares held by the trust to be a part of the promoters’ quota, till such time that the minimum public shareholding was achieved by the amalgamated company - According to SEBI, the public holding of shares in any listed company may not go below 25% of its paid-up capital - HELD THAT:- There is no dispute that 4.32% of the paid-up capital in DPSCL is held by members of the public who have no connection with the promoters. For the public shareholding in the amalgamated company to reach the 25% mark, a further 20.68% of the shares in DPSCL has to be offered to the public by some transparent mechanism so that the holders thereof cannot be seen or regarded as persons acting in concert with the present promoters of the amalgamated company.
The amalgamated company reports that out of the 40% shares in the amalgamated company held by the trust, 32,63,16,563 shares need to be sold to the public for the 25% minimum public shareholding in the amalgamated company to be achieved. Such 32,63,16,563 shares should be sold by April 30, 2017. The trust should also transfer the balance shares held by the trust in the amalgamated company in favour of such entities as the trust may, on its own or at the direction of the promoters, deem fit. The transfer of the balance shares, other than the 32,63,16,563 shares, should be completed by March 31, 2017 such that upon the sale of the shares to the public, the trust does not own or control any further shares in the amalgamated company. As to whether the trust will continue for the purpose of the other investments under the scheme, is not required to be gone into for the present purpose.
The trust will cite this order and make a public offer for sale of the said 32,63,16,563 shares. Advertisements in such regard will be published in such newspapers as may be suggested by SEBI within a week of the form of the advertisement being forwarded to the office of SEBI in Kolkata. Such form of the advertisement should be forwarded to the relevant office within three weeks from date. The directions herein are in modification of the interim order of February 20, 2015 that restrains the amalgamated company from dealing with its shares. However, the interim order will continue for all other purposes till such time that the trust transfers the balance shares, other than those to be sold to the public, and the shares meant to be sold to the public are so sold.
It is made clear that the sale of the 32,63,16,563 shares may be in several tranches as long as the entire quantum is sold by April 30, 2017. At any rate, the entire quantum of the said shares should be offered to be sold to the public at least a fortnight before April 30, 2017. The sale of the shares will be in accordance with the rules and regulations governing the same.
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2017 (1) TMI 1647
Penalty u/s 15HA of SEBI Act - violating the provisions contained in the SEBI Act and SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 - violating the Code of Conduct for Stock Brokers specified under the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 - HELD THAT:- It is an admitted fact that penalty of ₹ 1 crore has been imposed on Shri Purshottam Khandelwal and individual penalty of ₹ 80 lac has been imposed on Cosmo Corporate Services Ltd and Ishita Finstock Ltd., respectively who are the other entities involved in the present case. Therefore, the argument of the appellant that compared to other entities involved in the present case, penalty imposed against the appellant is excessive and exorbitant cannot be accepted.
No merit in Argument of the appellant that the AO has failed to consider the mitigating factors set out in Section 15J of the SEBI Act. As against the penalty of ₹ 25 crore imposable under Section 15HA of the SEBI Act, the AO after considering all mitigating factors has imposed penalty of ₹ 60 lac and as against penalty of ₹ 1 Crore imposable under Section 15HB of the SEBI Act, AO after considering all mitigating factors has imposed penalty of ₹ 15 lac. Therefore, the argument of the appellant that the AO has failed to consider the mitigating factors cannot be accepted.
Having committed serious violations under the PFUTP Regulations and Brokers Regulations, the appellant is not justified in contending that the penalty imposed is excessively harsh or exorbitant especially when penalty of ₹ 60 lac has been imposed as against the penalty of ₹ 25 crore imposable under Section 15HA of the SEBI Act and penalty of ₹ 15 lac has been imposed as against penalty of ₹ 1 crore imposable under Section 15HB of the SEBI Act.
Argument of the appellant that having recorded in para 32 of the impugned order that the contribution of the appellant towards LTP was not much, the AO ought not to have held that the appellant has aided and abetted in LTP variation is also without any merit.
What is held that even though the appellant has not directly indulged in LTP variations, since the appellant has indulged in synchronized trades and circular trades with those entities who had also indulged in LTP variations, it is apparent that the appellant had aided and abetted other entities in committing LTP variations. AO was justified in arriving at the aforesaid conclusions, because, all the trades in question were executed for manipulating the price of Gangotri scrip. Appeal dismissed.
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2016 (11) TMI 1662
SEBI reiterated an ex-parte order - order was treated as a show cause notice in the facts of this case, and detailed directions were issued by this order - HELD THAT:- We have been informed by learned Senior counsel appearing for SEBI that the ongoing investigations will be completed within six months from today, provided the respondents before us cooperate. We accept the said submission and expect that the ongoing investigations will decide one way or the other whether the respondents floated a Collective Investment Scheme (CIS).
In the unlikely event that SEBI's investigation does not or is not complete within the period of six months from today, it is open for the respondents to ask for a variation of the order dated 24.08.2015 of SEBI from this Court.
We further add that in case any alienation or encumbrance of assets is sought to be made by the respondents, they cannot do so without the prior permission of SEBI.
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