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TMI Blog2021 (8) TMI 398X X X X Extracts X X X X X X X X Extracts X X X X ..... tory Receipts (for short, 'GDRs') and Offering Circular was issued offering of 1,165,750 Global Depository Receipts representing 58,287,500 underlying Shares of Rs. 5.00 each (offering at Rs. 20.00 each) at an offer price of USD 21.45 per Global Depository Receipt). 3. It is further stated that based on the terms and conditions of end use of funds mentioned in the Offering Circular, the petitioner-Company transferred USD 24 Million to a wholly owned subsidiary of the petitioner-Company namely; AOL FZE based in Dubai, UAE. The remittance was made between 29/10/2010 to 17/03/2010. The AOL FZE transferred further USD 18 Million to Africa One Telecom, RAK FTZ, a Dubai based company between 03/11/2010 to 23/12/2010 for acquiring telecom licenses in Africa. The said transfer of amount was treated by the petitioner in its books of accounts as an investment. The project for obtaining telecom licenses was of a total value of USD 180 Million and the aforesaid amount was the 1st installment. Further fund raising was, therefore, approved by the Board of Directors of the petitioner-company with confirmation from the shareholders. Another issue was, therefore, opened of USD 100 Million ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he settlement applications on 20/12/2018, the respondents imposed a condition that the respective settlement applications of the petitioner-company would be considered only if the funds raised by the petitioner-company through issue of GDRs in September, 2010 and transferred as above, are brought into the petitioner-Company or otherwise into India failing which the settlement applications would not be considered. 8. Mr. Rajendra Prasad, learned Senior Counsel for the petitioner-company submitted that the aforesaid condition was an act of coercion. The said condition was clearly arbitrary, unreasonable and it was imposed for the petitioner-company to bring the said amount to India or into its own account of the petitioner-company as the petitioner-company had no business being conducted in India. Learned Senior Counsel further submitted that faced with the said condition, the petitioner-company submitted representation requesting for not insisting on the said condition to the respondents but the same was not agreed upon and resultantly, the petitioner's and it's Directors were left with no option but to withdraw their settlement applications and accordingly the same was co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ab-initio since the same was done under coercion and duress. 9. Per-contra, Mr. Shyam Anil Mehta, learned Senior Counsel appearing on behalf of SEBI, pointed out that there have been several scams between the period from 2009 to 2011 regarding the issue of so-called GDRs in foreign countries by Indian Companies. He submitted that the SEBI has come down heavily on such frauds and scams and in the process, show cause notices were issued to the petitioner too relating to the GDR issues whereby huge money in USD was collected and siphoned to other subsidiary companies of the petitioner-company. It is a fraud played on the investors and the SEBI has, therefore, rightly issued show cause notices to the petitioner. With regard to the settlement applications, learned senior counsel submitted that there was no force, coercion or duress on the part of the respondents. The petitioner-company had applied under the Settlement Regulations and as per the procedure, the same was placed before the Internal Committee which laid down a condition for recalling of the GDR proceeds in the Company in India so that proper adjudication of settlement could be done. However, the petitioner-company did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lpa Stock Broker Pvt. Ltd. & Anr. Vs. Securities and Exchange Board of Iindia: (Writ Petition No.2120/2011) decided on 17/01/2012 to submit that no right is available to a person who is found to have committed fraud for claiming settlement as a right. The judgment holds the settlement proceedings as guidelines. However, he fairly admits that the said guidelines, which have been examined in Shilpa Stock Broker Pvt. Ltd. & Anr. (supra), are now statutory regulations framed under the Act known as Settlement Regulations, 2018. 10. After considering the submissions, this Court finds that the petitioner had applied for settlement under the Settlement Regulations, 2014. The Internal Committee directed the petitioner to repatriate the money back in Company/India which was collected through GDRs. The amout is of USD 18 Million. The petitioner vide its letter dated 26/12/2018 answered stating as under:- "4. Although the Company and other applicants are confident that they will be able to establish their bonafides and defend themselves against the allegations made in the Show Cause Notices dated June 8, 2018 and May 23, 2018, the Company and other applicants sought to settle the present p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r use of proceeds disclosed in the offer document. Thereafter, another hearing was granted before the IC wherein our clients repeated and reiterated that it was not possible at this point of time to bring the GDR proceeds transferred to AOL, FZE to the Company. However, it was informed to our clients that their Settlement Applications cannot beprocessed in such case as bringing back the GDR proceeds in Company is a pre-requisite for Settlement. d) Hence, in view of above, our clients have decided to withdraw their Settlement Applications in the matter of Aksh Optifibre Ltd with regard to the Show Cause Notices dated June 08, 2018 and May 23, 2018 and accordingly we hereby inform you of the same. Yours sincerely Joby Mathew & Associates Advocates" 12. A reading of the aforesaid letter reflects that the petitioner-Company has instructed to their counsels of their decision to withdraw their settlement applications unequivocally. There is no mention of any pressure, duress or coercion. 13. It is also noticed that after the aforesaid letter having been conveyed to the SEBI, the settlement applications were disposed of as withdrawn by the SEBI and conveyed to the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Members under regulation 15. (2) An applicant who withdraws an application under sub-regulation (1) shall not be permitted to make another application in respect of the same default. Provided that, as may be recommended by the High Powered Advisory Committee, such an application may be considered subject to an increase of at least fifty percent over the settlement amount determined in accordance with Schedule-II of these Regulations." 19. In view of above, this Court holds that the petitioners are entitled to move application for settlement even at the appellate stage. However, for the said purpose, the petitioners would have to move appropriate application before the appellate forum. The said applications thereafter be rooted to the High Powered Advisory Committee which may examine the aspect keeping in view the fact that other similarly situated two companies (supra) have been allowed to get the matter settled and settlement orders have been passed in relation to the other similarly situated companies (supra). 20. The issue with regard to the condition as laid down by the Internal Committee can also be examined by the High Powered Advisory Committee and it may take its ow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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