Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

Council of The Instt. Of Chartered Accountants of India Versus Kailash Chander Agarwal & Anr.

2017 (2) TMI 414 - DELHI HIGH COURT

Professional misconduct - default under Chartered Accountants Act - non explanations of three certificates issued to the company on the strength of which the company started trading its shares on the two stock exchanges - Held that:- SEBI has noted that the respondent was confronted with the bank statement of account issued by the banker of the company. Indeed respondent had no answer. - Interestingly the order passed by SEBI brings out that in his stand before SEBI the respondent had inter- .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ute of Chartered Accountants constituted a Disciplinary Committee, forming a prima-facie opinion that the respondent was guilty of professional misconduct. Proceedings were initiated by the Disciplinary Committee. The respondent was served. His reply was taken on record. He was heard on various dates. The report of the Committee dated November 02, 2009 is a reflection of the order passed by SEBI. In the interregnum CBI had stepped in. Record of the company had been seized by CBI. - No assist .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

es, and suffice it to record that said form could not form the basis on which the respondent issued the certificates because the date of issue of said form under signatures of the Company Secretary of the Company, is much after the date when the three certificates were issued by the respondent. - Accepting the report of the Disciplinary Committee, the Council at its meeting recommended penalty of removal of the name of the respondent from the Register of Members of the Institute for a period .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Ltd. the company invited applications on June 20, 1999 for allotment of 1,80,00,000 preferential shares for cash at par. These shares were listed for trading at Delhi Stock Exchange on December 23, 1999 and with the Bombay Stock Exchange on December 30, 1999 on the strength of three certificates issued by the respondent. The certificate dated June 30, 1999 certified that the company received ₹ 8,52,50,000/- as share money in respect of the preferential shares. The language of the certific .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

te of even date, being a due diligence certificate, issued by the respondent reads as under:- DUE DILIGENCE CERTIFICATE Re: Padmini Polymers Limited Preferential Allotment of 2,00,00,000/- Equity Shares of ₹ 10/- each aggregating to ₹ 20,00,00,000/- i) We have examined various documents and materials facts/papers in connection with the Preferential Allotment. ii) On the basis of such examination and discussion with the Company, its Directors and other Officers, Other Agencies, indepe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ority in this behalf have been duly complied with 4. The third certificate dated November 13, 1999 issued by the respondent reads as under:- TO WHOMSOEVER IT MAY CONCERN This is to certify the detail of receipt of Share Application Money aggrebgating to ₹ 8,52,50,000/- realised & credited to the account of M/s Padmini Polymers Limited is given as under:- S.No. NAME OF ALLOTIES CHQ NO. CHQ. DT DRAWN ON AMOUNT 1. Contessa Commercial Co Pvt. Ltd 175826 21.05.99 State Bank of Hyderabad 90, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

50,000.00 9. Royal Bengal Exports P. Ltd 750970 03.05.99 The Fedral Bank Ltd. 22,50,000.00 10. Prakash Kumar Damani (HUF) 612294 01.06.89 Vijaya Bank 22,50,000.00 11. Carna Enterprises P. Ltd 43565 01.06.99 Vijaya Bank 22,50,000.00 12. Raj Kumar Kishorepuria 931394 01.06.99 State Bank of Hyderabad 22,50,000.00 13. Zinga Chemicals Pvt. Ltd 22965 02.06.99 Vijaya Bank 22,50,000.00 14. Hennonite Consultants P Ltd. 42454 02.06.99 Vijaya Bank 22,50,000.00 15. Savara Tic-up Pvt. Ltd 739153 03.06.99 The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ses of the fate of the respondent, we need to highlight that in the third certificate the respondent mentioned the name of the allottee, the cheque number issued by the allottee, the date of the cheque, the bank on which the cheque was drawn. The date of encashment of the cheque has consciously not being recorded in the certificate. We shall deal with this aspect while reasoning. 6. It came to the notice of the SEBI that the share price of the company unduly increased from December 13, 1999 to M .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

value (Rs./share) 1. 31.5.1998 Unit Trust of India 2000000 10 2. 20.5.1999 Contessa Commercial Co. P Ltd. 900000 2.5 3. -do- Billumenfeld Ltd. 900000 10 4. -do- Jiwansagar Promoters Pvt. Ltd 900000 2.5 5. -do- Bhagwandas Sagarmal 900000 2.5 6. -do- Raj Kumar Kishorepuria 900000 2.5 7. -do- Pramod Kumar Kishorepuria 900000 2.5 8. -do- Alok Khetan 900000 2.5 9. -do- Savera Tie-up P Ltd 900000 2.5 10. -do- Royal Bengal Exports Pvt. Ltd 900000 2.5 11. -do- S. Benwal 900000 2.5 12. -do- Prakash Kuma .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to 21 were Delhi based. For purposes of further investigation SEBI recorded the entities as Kolkata based entities and Delhi based entities. 9. It was noted by SEBI that the company had allotted 1,80,00,000 shares to these entities (other than UTI to which 20 lac shares were allotted on May 31, 1999). To the other allottees the shares were allotted for cash at par on June 20, 1999. The preferential shares were not subject to lock-in. 10. With reference to the bank statement of account maintained .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

000 22.50 lacs 7.6.99 19.1.00 RN Dyachem 25.8.99 7.1.00 Bhagwan Das Sagarmal 9,00,000 22.50 lacs 28.5.99 14.1.00 Shivesh Computers 25.7.99 12.1.00 Raj Kumar Kishorepuria 9,00,000 22.50 lacs 1.6.99 14.1.00 Cross Country Exports 15.7.99 6.1.00 Pramod Kumar Kishorepuria 9,00,000 22.50 lacs 22.5.99 18.1.00 Cross Country Exports 15.9.00 7.1.00 Alok Khetan 9,00,000 22.50 lacs 28.5.99 19.1.00 Shivesh Computers 15.7.99 12.1.00 Royal Bengal Exports 9,00,000 22.50 lacs 3.8.99 18.1.00 DKG Buildocn 25.6.99 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rcise revealed to SEBI as under:- b) Delhi Based entities: Name of Allottees Shares Allotted on 20.6.99 Amount due to Padmini (Rs.) Cheque Date Clearing Date Entities to whom preferential shares were sold by the respective allottees Shares Sold (at Rs. 20/each) Date of sale Date of receipt of sales consideration (DD date) Cherry Marketing P.Ltd 9,00,000 22.50 lacs 1.8.99 27.12.99 Panther Fincap 9,00,000 12.10.99 28.12.99 Hermonite Surgicals P Ltd 9,00,000 22.50 lacs 3.8.99 27.12.99 Miscellaneous .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

12.10.99 24.12.99 M/s JP Promoters P ltd 9,00,000 90 lacs 21.5.99 7.3.00 Classic Credits Ltd 9,00,000 12.10.99 24.12.99 13. The date of encashment of the cheques were noted to be after the shares were listed on the Delhi Stock Exchange and some after the shares were listed on the Bombay Stock Exchange. 14. The respondent obviously had to explain the three certificates issued by him to the company on the strength of which the company started trading its shares on the two stock exchanges. 15. The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Annexure-I of the show cause notice (mentioned in para 1.7 above), I note that the cheques issued by the allottees (except Unit Trust of India), got cleared only after they said their shares in off market transactions and in many cases after the receipt of the sale consideration. To cite few examples, cheque dated May 21,1999 issued by Contessa Commercial (one of the preferential allottees) for ₹ 90 Lacs was in fact cleared only on January 05, 2000 after the receipt of sale proceeds of th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, 1999 and November 30,1999. 4.9 I note from the bank statements of Padmini (maintained with Vijaya Bank Ansari Road Branch, New Delhi) that the cheques (towards the application/allotment money) of Cama Enterprises (cheques no. 43565) Hermonite Consultants Pvt Ltd (cheques no. 42454), Zinga Chemicals Pvt Ltd. (22985), Cherry Marketing Pvt Ltd. (Cheques no. 43226) Hermonite Surgicals Pvt. Ltd (cheques no. 19878) and HT Ferro Pvt. Ltd. (cheques no. 596160) were cleared and credited to the account .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

only false but also misleading. I observe that Shri Kailash Chandra Agrawal was in collusion with Padmini and its directors in defrauding the investors. He had also stated before the investigating officer that he had relled upon the certificate given by Padmini dated June 30,1999. Had he verified the bank statements of Padmini, he would have found out that the said certificate issued by Padmini was false, sice bulk of the credits came into the accounyt long after 30th June 1999. Namely in Decemb .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y on December 01, 1999. Rightly it has been held by SEBI that the respondent could not have acted on the strength of the form because the dates on which he issued the certificates preceded the date of Form No.2. 20. Proceeding to take cognizance of a report submitted by SEBI the Council of the Institute of Chartered Accountants constituted a Disciplinary Committee, forming a prima-facie opinion that the respondent was guilty of professional misconduct. Proceedings were initiated by the Disciplin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version