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2021 (8) TMI 1314 - SECURITIES APPELLATE TRIBUNAL, MUMBAIViolation of the securities laws - Misstatement in the prospectus - IPO proceeds were diverted and misutlised by the Company - some amount of the IPO proceeds were disbursed to certain entities under the pretext of advances towards work contracts for IPO objectives, but in fact, no substantial work contracts were executed - Directors of the Company known as Birla Pacific Medspa Ltd. have been restrained from accessing the securities market directly or indirectly, in any manner and further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner for a period of two years - HELD THAT:- Merely because the word ‘ICD’ was not mentioned in the interim use of funds in the prospectus does not become a case of misstatement in the prospectus nor does it become a deliberate part of larger design to come out with an IPO and, thereafter, funding the operations of its group company through ICDs thereby siphoning of the money from the genuine investors. In our opinion, the word ‘liquid instrument’ is wide enough to include ICDs The finding that because the word ‘corporate’ was included in the resolution of the Board of Directors dated 11 July, 2011 indicates that the prospectus lacked material particulars is patently erroneous as we have held that liquid instruments includes ICDs and, therefore, there was no misstatement in the prospectus. Consequently, the prospectus did not lack material particulars. Further, the resolution of 11 July, 2011 was not in contradiction or in violation of the terms indicated in the prospectus but only clarified the deployment of the IPO proceeds on a temporary basis. Such clarification in our opinion was in consonance with the use of the word ‘liquid instruments’ given in the prospectus. The offer document is required to contain all material disclosures to enable the investors/subscribers to take an informed decision and that such disclosure must be prompt, true and fair. In the instant case, the disclosures made in the prospectus were material disclosures which were true, fair and adequate. There is no finding of the WTM that the disclosures made in the prospectus were not true and fair or were inadequate. The use of the word ‘corporate’ in the resolution of the Board of Directors dated 11 July, 2011 does not make the prospectus untrue or inadequate. In our view, the resolution of the Board of Directors was in accordance with the disclosures made in the prospectus. The usage of the word ‘corporate’ in the resolution does not dilute the statement made in the prospectus. In fact, it only clarifies it. Thus, there is no breach of Regulation 57(1), 60(4)(a) and 60(7)(a) of ‘ICDR Regulations, 2009’ and Clause 2 (XVI) (B) (2) of Part A of Schedule VIII read with Regulation 57(2)(a) of ICDR Regulations, 2009. The contention raised by appellant that they were denied inspection of documents in violation of the principles of natural justice or on the issue that the proceedings were initiated belatedly or on the issue that the appellants being Non-Executive Director/Non Independent Executive Director no liability could be fastened upon them as they had a limited role to play in affairs of the Company need not be gone into as we are satisfied that the appellants did not commit any breach of the ICDR Regulations nor made any misstatement in the prospectus. The impugned order in so far as it relates to the appellants cannot be sustained and is quashed. All the appeals are allowed. In the circumstances of the case, parties shall bear their own costs. All the misc. applications are accordingly disposed of.
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