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2019 (11) TMI 1380 - AT - SEBIDirector guilty for violating Section 12A of the SEBI Act - scheme to defraud any shareholder or investor - pledging the GDR proceeds as collateral for the loan taken by Vintage for making subscription to the GDR - appellant Adi Cooper was a director and had attended the meeting of the Board of Directors on January 30, 2008 in which the GDR proceeds were authorized to be pledged as security for loan which was the starting point of the fraudulent arrangement through which the company facilitated the financing of the GDR subscription by Vintage which arrangement was not disclosed to the shareholders of the company or to the investors of the securities market through the platform of the stock exchange - HELD THAT:- Appellant Adi Cooper was neither directly or indirectly involved in any fraudulent activity nor employed any scheme to defraud any shareholder or investor. The WTM committed a manifest error in holding that the appellant Adi Cooper cannot be absolved of the consequences of the resolution of January 30, 2008 even though he was not present in the time when the issuance of GDR and execution of the loan and pledge agreements. We are of the opinion that the resolution of January 30, 2008 does not indicate any resolution or execution of the loan or the pledge agreement and, thus, holding the appellant that he was actively involved in the manipulation of the market through this fraudulent scheme is patently erroneous and farfetched. In the light of the aforesaid, we are of the opinion that the order of the WTM debarring the appellant Adi Cooper from accessing the securities market for two years cannot be sustained. Appellant Kishore Hegde Kishore Hegde as an independent director from 2008 to 2013 was part of the scheme through which issue of GDR by the company was effected through a fraudulent arrangement of loan agreement and pledge agreement. We are also of the opinion that the conduct of the appellant Kishore Hegde was inimical to the interest of the company, to the investors, as well as to the shareholders and, the action of the appellant Kishore Hegde was in violation of Section 12A of the SEBI Act read with Regulations 3 and 4 of the PFUTP Regulations. The order of the WTM debarring the appellant Kishore Hegde from accessing the securities market, etc. for a period of two years does not suffer from any error of law.
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