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TMI Blog2021 (9) TMI 1518X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Appeal No. 149 of 2021 With Misc. Application No. 43 of 2021 And Appeal No. 150 of 2021 Justice Tarun Agarwala, Presiding Officer Justice M. T. Joshi, Judicial Member For the Appellants : Mr. Pritesh Burad, Advocate with Mr. Chinmay Paradkar, Advocate i/b Pritesh Burad Associates. For the Respondent : Mr. Sharan Jagtiani, Senior Advocate with Ms. Nidhi Singh, Ms. Aditi Palnitkar, Advocates i/b Vidhii Partners. ORDER PER : JUSTICE TARUN AGARWALA, PRESIDING OFFICER 1. The appellants have challenged two sets of orders, namely, the order dated March 28, 2019 passed by the Whole Time Member (hereinafter referred to as 'WTM') and the order dated November 20, 2020 passed by the Adjudicating Officer (hereinafter referred to as 'AO' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here the company resolved to issue GDRs for the purpose of modernizing its company and expand in its subsidiary concern off-shore. The said resolution authorized Euram Bank to use the proceeds in connection with a loan. The investigation revealed that the Company made selective disclosure to Bombay Stock Exchange (BSE) and suppressed material information, namely, that Euram Bank was authorized to use the proceeds in connection with a loan and that the execution of the loan agreement and the pledge agreement was not disclosed. 5. Based on the aforesaid investigation, a show cause notice was issued to the company as well as to the directors to show cause as to why appropriate orders should not be passed under Section 12A of the Securities an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontended that the only charge in the show cause notice is, that the said appellants Jaiprakash Kabra, Gopaldas Maheshwari and Rajesh Jhunjhunwala were the signatories to the resolution of the board of directors dated May 7, 2010 which was the first step to the fraudulent scheme. It was contended that on the basis of being the signatories to the Board's resolution, the AO has given a finding that the directors play a key role in balancing the interest of management and shareholders and independent directors are required to ensure fairness and transparency in the dealings of the company and, therefore, are equally responsible for the affairs of the company and cannot get away on the ground that they are non-executive independent director. 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affairs of the company and, therefore, the order was upheld. Similar was the case in Mohandas Shenoy Adige (supra) wherein it was found that the non-executive independent director was holding similar post in various subsidiaries of the company and, therefore, was no longer an independent director. 11. In the instant case, we are of the opinion that the controversy involved in the present proceedings in so far as the Jaiprakash Kabra, Gopaldas Maheshwari and Rajesh Jhunjhunwala is concerned, is squarely covered by the decisions of this Tribunal in the cases of Adesh Jain vs. SEBI (Appeal No. 217 of 2020 decided on November 19, 2020), Adi Cooper vs. SEBI (Appeal No. 124 of 2019 decided on November 5, 2019), Govind Das Pasari vs. SEBI (Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TM that the resolution of the Board of Directors dated June 27, 2006 provides execution of a pledge or execution of a charge agreement is wholly erroneous, perverse and based on no evidence. The resolution also does not stipulate that the proceeds could be utilized by the bank as security in connection with a loan taken by another entity. 13. In the light of the aforesaid, we are of the view that the appellant cannot be debarred only on the basis of being present in the resolution of the Board of Directors dated July 27, 2006. In the absence of any evidence that the appellant had a role to play in the issuance of the GDR, the mere presence of the appellant in the resolution of the Board of Directors dated July 27, 2006 does not make him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. US$ 8.3 million was transferred to the account of the company and US$ 6 million was transferred to its subsidiary in UAE as per the GDRs offering. Thus, a genuine GDRs issue was made by the company which was not fraudulent nor the proceeds of the GDRs has been diverted to a third entity. In fact, there is no specific allegation about the non-utilization of the GDRs in the show cause notice. Thus, there cannot be any violation of any fraud or inducement under Regulations 3 and 4 of the PFUTP Regulations. 16. The AO while considering the factors under Section 15J of the SEBI Act found that there is nothing on record to show or indicate any disproportionality given or unfair advantages made by the appellants nor anything has come on record ..... X X X X Extracts X X X X X X X X Extracts X X X X
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