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2021 (9) TMI 1518 - AT - SEBIFraudulent and Unfair Trade Practices relating to Securities Market - issuance of the GDRs - inadequate disclosures to the investors - 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 - Penalty imposed - HELD THAT:- The company is now under liquidation. The loan taken by Vintage has been repaid to the company. 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. 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 to show any loss suffered by the investors. In view of this specific finding coupled with the fact that no fraudulent scheme was initiated by the company, we are of the opinion that the findings given by the WTM and the AO against the appellants Pradip Mundhra and Sanjay Taparia relating to the penalty is excessive and arbitrary and is required to be modified. Appeals of Jaiprakash Kabra, Gopaldas Maheshwari and Rajesh Jhunjhunwala being covered by the decision of this Tribunal in Praful Shah [2021 (6) TMI 1159 - SECURITIES APPELLATE TRIBUNAL, MUMBAI] the impugned orders of the AO in so far as it relates to these appellants are quashed. Their appeals are allowed with no order as to costs. In so far as the appeals of Pradip Mundhra and Sanjay Taparia are concerned, they being on the helm of the affairs of the the company on a day to day basis, they are responsible for nondisclosure of vital information. However, the penalty imposed by the AO and the WTM are disproportionate and excessive, therefore, while affirming the findings of violation in so far as it relates to nondisclosure, the penalty of Rs. 50 lac imposed by the AO is reduced to Rs. 20 lac each and debarment of five years made by the WTM is reduced to two years and six months. The appeals of Pradip Mundhra and Sanjay Taparia are partly allowed.
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