9911796707
TMI Blog2019 (11) TMI 1380X X X X Extracts X X X X X X X X Extracts X X X X ..... ord suggests that he was a Whole Time Director and Vice Chairman of the company from October 11, 2005 to October 10, 2008. The other appellant Mr. Kishore Hegde, in Appeal No. 300 of 2019 was an independent director from 2008 to 2013 and was also Chairman of the audit committee of the company. 3. On January 30, 2008, the Board of Directors of the company passed a resolution resolving to open a bank account with European American Investment Bank AG (hereinafter referred to as, 'EURAM Bank') for the purpose of receiving subscription money in respect of the GDR issue of the company. The resolution also authorized the Chairman and Managing Director Ketan Sheth to sign all documents and process necessary transaction in relation to the GDR issue. The resolution further authorized the EURAM Bank to use the subscription money as security in connection with loans, if any. By another resolution of the Board of Directors dated April 4, 2009, the company finalized and resolved to issue the GDR. On April 5, 2009, Ketan Sheth Chairman and Managing Director of the company signed a pledge agreement with EURAM Bank pledging the GDR proceeds as security for the loan taken by Vintage FZE (hereinaft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noticees, passed the impugned order dated February 28, 2019 under Section 11 and 11B of the SEBI Act restraining the appellant Adi Cooper and Kishore Hegde from accessing the securities market and further prohibiting them from buying, selling and otherwise dealing in securities market directly or indirectly for a period of two years and further freezing their mutual funds for the same period. Both the appellants, being aggrieved by the said order, have filed two separate appeals. 5. We have heard Mr. Vikram Nankani, the learned senior counsel assisted with Ms. Sabeena Mahadik, Mr. Pankaj Uttaradhi, Mr. Aayush Kothari, the learned counsel for the Appellant in Appeal No. 124 of 2019 and Mr. Rajesh Khandelwal, the learned counsel for the Appellant in Appeal No. 300 of 2019 and Mr. Kumar Desai, the learned counsel assisted with Mr. Mihir Mody, Mr. Sushant Yadav, the learned counsel for the respondent. 6. It was contended by the learned senior counsel for the appellant Adi Cooper that he was only party to the resolution of the Board of Directors of the company dated January 30, 2008 wherein it was decided that the company would issue a GDR and earmarked a bank where the GDR proceeds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t acts of the company, namely, pledging the GDR proceeds as collateral for the loan taken by Vintage for making subscription to the GDR. 8. The finding of the WTM against the appellant Adi Cooper is wholly misconceived, farfetched and cannot be accepted to come to a conclusion that the said appellant was party to a resolution which had an intention to manipulate the market or defeat its mechanism. Admittedly, the appellant Adi Cooper was party to a resolution of the Board of Directors dated January 30, 2008 which only resolved the company to open an account with the EURAM bank for the purpose of deposit of the GDR proceeds. The resolution further authorized the bank to use the proceeds as security in connection with a loan. The resolution did not stipulate that the proceeds would be used as security in connection with a loan taken by another entity. The resolution could also mean that the proceeds would be utilized by the bank as security in connection with a loan taken by the company itself. Thus, from the resolution dated January 30, 2008 one cannot arrive at a conclusion that this was the first step or the starting point of a fraudulent arrangement through which the company co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posed to be listed in a recognized stock exchange, any manipulative or deceptive device or contrivance in contravention of the provisions of the Act or the rules or the regulations made thereunder; (c) employ any device, scheme or artifice to defraud in connection with dealing in or issue of securities which are listed or proposed to be listed on a recognized stock exchange; (d) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person in connection with any dealing in or issue of securities which are listed or proposed to be listed on a recognized stock exchange in contravention of the provisions of the Act or the rules and the regulations made thereunder." "4. Prohibition of manipulative, fraudulent and unfair trade practices (1) Without prejudice to the provisions of regulation 3, no person shall indulge in a fraudulent or an unfair trade practice in securities. (2) Dealing in securities shall be deemed to be a fraudulent or an unfair trade practice if it involves fraud and may include all or any of the following, namely :- (a) ............ (b) ............ ................... (f) publishing or c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s presence in the resolution of the Board of Directors dated January 30, 2008 but has not disputed his presence in the other resolutions that were passed by the Board of Directors of the company. Thus, his involvement in day to day affairs of the company cannot be ruled out. The contention of this appellant that he was not involved in the day to day running of the company cannot be accepted as he was found to be part of the resolution process of the company and his involvement in the issuance of the GDR proceeds. Apart from the above, we also find that the appellant was also the Chairman of the audit committee of the company. The WTM found that being the Chairman of the audit committee, he did not place any objection as to why the GDR proceeds did not reach the company and how the proceeds were utilized. We are thus, of the opinion that in the light of the findings given by the WTM, the appellant Kishore Hegde 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
