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TMI Blog2023 (9) TMI 574X X X X Extracts X X X X X X X X Extracts X X X X ..... Securities Market) Regulations, 2003 (hereinafter referred to as 'PFUTP Regulations'). 2. The facts leading to the filing of the present appeal is, that the matter is in respect of the issuance of GDRs by the Company whereby a fraudulent scheme was devised by the Company and its Directors. In this regard, the Board of Directors of the Company passed a resolution dated July 31, 2007 for opening a bank account with European American Investment Bank AG (hereinafter referred to as 'EURAM Bank') located outside India to receive the subscription money in respect of the GDR issued by the Company. The resolution further resolved that the appellant, Managing Director was authorised to sign, execute any application, agreement, documents as required by the EURAM Bank for the aforesaid purpose. The Board of Directors also resolved that the Bank was further authorised to use the funds so deposited in the Bank account of the Company as security in connection with loans, if any. 3. Based on the aforesaid resolution, a bank account of the Company was opened in EURAM Bank. Further, a loan agreement dated June 7, 2007 was entered into between EURAM Bank and Vintage FZE (hereinafter referred to as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the GDRs were successfully subscribed. It was also alleged that the Company furnished wrong information to SEBI by providing false list of GDR subscribers whereas only one entity had subscribed to the GDR issue. The show cause notice alleged that the announcement misled the Indian retail investors and induced investors to deal in the shares of the Company in the Indian capital market and, therefore, the scheme of issuance of GDR was fraudulent violating Section 12A(a), (b), (c) of the SEBI Act read with Regulations 3 and 4 of the PFUTP Regulations. 8. All the grounds taken by the appellant were considered by the AO. The contention so raised were rejected by the respondent holding that the Company had misled the investors in believing that the GDR issue was successful whereas there was only one subscriber, namely, Vintage. The respondent held that the arrangement made through a pledge and loan agreement for the purpose of issuance of GDR was fraudulent. The acts of the Company resulted in a fraud being committed on the investors of the securities market and created a false impression about the Company which was in violation of Section 12A read with Regulations 3 and 4 of the PF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfringer in not suffering the punishment which may be disproportionate to the seriousness of the Act." 13. Similar view was expressed by the Delhi High court in Rajkumar Dyeing and Printing Works Pvt. Ltd. In Rajendra Yadav, the Supreme Court held that the doctrine of equality applies to all those who are found guilty. The Supreme Court held :- "9. The doctrine of equality applies to all who are equally placed; even among persons who are found guilty. The persons who have been found guilty can also claim equality of treatment, if they can establish discrimination while imposing punishment when all of them are involved in the same incident. Parity among co-delinquents has also to be maintained when punishment is being imposed. Punishment should not be disproportionate while comparing the involvement of co-delinquents who are parties to the same transaction or incident. The disciplinary authority cannot impose punishment which is disproportionate, i.e., lesser punishment for serious offences and stringent punishment for lesser offences." 14. Undoubtedly, the doctrine of proportionality is now well established in our jurisprudence and is a recognised facet of Article 14 of the Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y is brought to make unequals equal. 16. In this regard, the appellants have produced various orders passed by SEBI against various companies and its Directors wherein different penalties have been imposed for similar / identical offence. In the instant case, the AO has penalised the appellant Company of Rs. 10.30 crore and the Managing Director of Rs. 20 lakh and other directors of Rs. 10 lakh. In similar matters lesser penalty has been awarded. For facility, a comparative table is given hereunder :- Penalty Orders Sr. No. Name of the GDR issuer company Date of Issue GDR size (million $) Subscriber Combined Penalty Date of the Order 1. ABL Biotechnologies Ltd. June 2008 6.68 Clifford Capital Partners Rs.50,00,000/- (Rupees Fifty Lakhs) 23rd April 2018 2. Syncom Healthcare Ltd. September 2010 20.74 Vintage Rs.25,00,000/- (Rupees Twenty Five Lakhs) 30th August 2019 3. Visu International Ltd. April 2006 9.66 Seazun Rs.1,25,00,000/- (Rupees 1 Crore Twenty-Five Lakhs) 18th March 2021 4. GV Films Ltd. April 2007 40 Whiteview Rs.25,00,000/- (Rupees Twenty-Five Lakhs) 29th January 2020 5. Aksh Opti- Fibre Ltd. Sept 2010 25 Vintage Rs.10,15,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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