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2020 (2) TMI 609 - AT - SEBIFraud scheme of issuance of GDRs - Pledge Agreement and the announcement that the GDRs were successfully subscribed without disclosing the Pledge Agreement to the investors resulted in misleading information to the public and thereby adversely impacting the investors - violation of Section 12A(a), (b), (c) of SEBI Act, 1992 read with Regulations 3(a), (b), (c), (d) and 4(1) of PFUTP Regulations, 2003 - HELD THAT:- Contention in the order that it is a fraudulent scheme created by the appellants along with some other entities cannot be faulted. In this context, it is relevant to note that in our order in the matter of PAN Asia Advisors Limited [2016 (12) TMI 1202 - SECURITIES APPELLATE TRIBUNAL MUMBAI] (Lead Manager) and Vintage (subscriber) whose beneficial owner was Arun Panchariya were all found to be guilty of the violations of Indian Securities Laws under the PFUTP Regulations, 2003. The same has been the modus operandi in respect of Cals Refineries Limited [2017 (10) TMI 1512 - SECURITIES AND EXCHANGE BOARD OF INDIA] though the entities connected therein were different. The contention that Pledge Agreement was not required to be disclosed under the Listing Agreement is not correct as the Listing Agreement, which forms the very basis of a disclosure based regulatory regime, requires every material information to be disclosed to the Stock Exchange at the earliest, sometime in a matter of minutes and others in a matter of days. When the company has lent the entire proceeds of the GDR issue to the tune of US$ 38.75 million as security for a third party abroad to avail a loan on the basis of that security and thereby potentially jeopardizing the entire proceeds is not a non-event but an important material information affecting all the stakeholders. We would hold that such events have to be disclosed in bold letters so that the investors of the company as well as those who are subscribing to its GDR issue etc. should be fully aware of those highly material facts. Arguments on delay in investigation and consequently affecting natural justice are also devoid of any merit in the matter since this Tribunal is aware of the complexity involved in the entire manipulative GDR issue. We also do not find any deficiency in the finding in the impugned order that money has been brought in fully by the company starting from December 14, 2010 and ending January 04, 2012 and, therefore, full repayment of loan taken by Vintage was done without resorting to sale in the Indian market as irrelevant. The basic question to be answered is whether the issue was subscribed by a loan taken by Vintage on the basis of pledging the proceeds of the GDR issue as security for the said loan taken by a third party and that too a party located abroad and whether sufficient disclosures of material events associated with the issue was properly done. We are of the considered view that the method adopted by the appellants was vitiated through fraud and hence finally whether the money has come back or not is relevant in the facts and circumstances. We are of the opinion that imposition of the restraint on the appellants herein has been done taking all the relevant factors into account as in similar matters like Cals Refineries Limited [2017 (10) TMI 1512 - SECURITIES AND EXCHANGE BOARD OF INDIA] the period of restraint imposed on the appellants was 10 years while in the instant matter restraint is only for 5 years.
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