Home Case Index All Cases SEBI SEBI + AT SEBI - 2021 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (4) TMI 1367 - AT - SEBIFraudulent GDR issue - Fraudulent and Unfair Trade Practices relating to Securities Market - Sigle entity subscriber to the GDR issue - penalty on directors - HELD THAT:- As appellant Mr. Govind Das, Mr. Bharat Kumar and Mr. Avichal were admittedly independent non executive directors. The resolution itself would show that they did not participate in the issue of GDR proceeds at any point of time after passing of the resolution. All the necessary followup was to be carried by the Managing Director. No case of adverse inference that they should have taken efforts to bring back GDR proceeds was made out against them in any of the impugned order as argued before us and, therefore, they could not have been penalised or restrained as detailed supra. Appellant Mrs. Jyoti Bankda is concerned, admittedly on the very day of the passing of the resolution she had resigned from the Directorship of the Company and the same was accepted. Necessarily she cannot be made liable for the subsequent acts of entering into account charge agreement by appellant Mr. Ajay Bankda, the Managing Director with the EURAM Bank on the strength of the resolution. Therefore, she also could not have been penalised or restrained by the respondent SEBI. Appellant Mr. Ajay Bankda the then Managing Director of the Company, the Company itself and appellant Mr. Jagdish Bagaria, the Whole Time Director are concerned, they cannot escape the liability. The Company would be liable for the acts of the Managing Director. So also the Managing Director is also liable for any default committed by the Company. Appellant Mr. Jagdish Bagaria was the Whole Time Directors and, therefore, he cannot plead that he was not aware of the day to day affair of the Company which included non return of GDR proceeds to the Company. Their involvement in the fraudulent activity as detailed supra is writ large from the record. Though the appellant Mr. Ajay Bankda claims that he had merely signed the documents religiously on instructions by the Lead Manager, being a Managing Director he cannot claim that he was not aware of the result of the account charge agreement i.e. misappropriation of the GDR proceeds.
|