AI Drafter 
TaxTMI 
TaxTMI 
2020 (12) TMI 1219
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....Magnum Industrial Alliance Traders AIJPD7329J 6 Shri. Satendra Kumar & its Proprietorship firm viz. Nisha Traders AWWPK8525E 7 Avisha Credit Capital Pvt. Ltd. AAACA5715D 8 Shri. Sumit Kumar & its Proprietorship firm viz. Durga Prasad & Co. ARUPK1589P 9 Shri. Raj Kumar & its Proprietorship firm viz. Bright Securities BNBPK2681L 10 Shri. Prakash Gupta & its Proprietorship firm viz. Shiv Traders ARVPG7849R 11 AMS Powertronic Pvt. Ltd. AAECA8718H (The entities mentioned above are individually known by their respective name or Noticee no. and collectively referred to as "Noticees") In the matter of IPO of HPC Biosciences Limited Background: 1. The present proceedings are arising out of a common show cause notice dated December 11, 2017 (hereinafter referred to as "SCN") alleging that a scheme was deployed in the Initial Public Offer (IPO) of equity shares of HPC Biosciences Limited (hereinafter referred to as "HPC/the Company"), wherein certain applicants of the IPO were funded by the entities connected with the Company itself and subsequently, the IPO proceeds were not utilized towards the objects of raising funds and....
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....ised through the issuance of securities with supporting documents to substantiate the utilization of funds as per its claim, however, it did not furnish any supporting documents. v. In the IPO, the Company had received 563 applications for 48,60,000 shares (1.08 times of the offer size). After rejecting numerous application for various reasons, a total of 45,60,000 shares were allotted to 540 applicants, thereby raising INR 15.97 Crore in the IPO. The details of applications received, shares allotted etc., are tabulated herein below: Table no. 3: Break up of Applications Date of Bid No. of shares applied No. of shares allotted No. of Allottees whom shares allotted No. of shares Application rejected QIB/MARKET MAKER 232,000 232,000 1 - HNI 2,852,000 2,624,000 113 184,000 RII 1,776,000 1,704,000 426 72,000 Total 4,860,000 4,560,000 540 256,000 vi. It was also revealed during the investigation that certain entities which were directly/indirectly connected with HPC had funded few of the IPO applicants so as to enable them to make applications under the IPO of the Company. The connection betw....
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.... V Sales had issued 8 cheques of INR 1.40 Lakh each to the Company on behalf of 8 Non ASBA retail investors. (7 applicants got allotment) • N V Sales had received funds of INR 6.00 Lakh from Nisha Traders. • N V Sales Corporation had received INR 1.00 Crore from IPO proceeds of HPC. Subsequently the same were transferred to Shiv Om Sales Corporation. Yes Bank - 013683900002209 • Magnum Industrial had issued 15 cheques of INR 1.40 Lakh each to the Company on behalf of 15 Non ASBA retail investors. (15 applicants got allotment) • Magnum Industrial had received INR 21 Lakh from Bright Securities of Satendra Kumar. Yes Bank - 13683900002242 • Alliance Traders had issued 25 cheques of INR 1.40 Lakh each to the Company on behalf of 25 Non ASBA retail investors. (25 applicants got allotment) • Alliance traders had received INR 42.50 Lakh from Shiv Om Sales Corporation. 3. Satendra Kumar Proprietorship Firm: Nisha Traders (Noticee no.6) Yes Bank- 013683900002254 • Nisha Traders had issued 25 cheques of INR 1.40 Lakh each to the Company on behalf of 25 Non ASBA retail investors. (23 ....
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....and INR 21 Lakh to Search Finvest Pvt. Ltd. • Panchsheel Securities Pvt. Ltd. and Search Finvest Pvt. Ltd. had also applied in the IPO of HPC. • It had received INR 1.00 Crore from S P Enterprise which were the IPO proceeds of HPC. 8. AMS Powertronic Pvt. Ltd. (Noticee no.11) Axis Bank - 912020004151524 • AMS Powertronic had given INR 35 Lakh to Search Finvest Pvt. Ltd. and INR 35 Lakh to Guardian Portfolio Consultants Pvt. Ltd. who had applied in HNI category. • It had received INR 58.00 Lakh from IPO proceeds of HPC. • AMS Powertronic had received funds from Bright Securities. x. The summary of amounts financed by the above noted 8 entities as well as the allotments of shares made by the Company based on such financing are presented below: Table no. 5 Sr. No Funding Entity Amount funded (INR in lacs) No. of allottees got allotment No of shares allotted 1 Goldline International Finvest Ltd 82.60 55 220000 2 Madhukar Dubey 67.20 47 188000 3 Satendra Kumar 35 23 92000 4 Avisha Credit Capital Ltd 36.40 23+1(ASBA) 920....
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.... on November 14, 2019. On the said date, only Noticee no. 2 appeared before me and he also represented on behalf of Noticee no. 1 and 3 however, no one appeared on behalf of the other Noticees. The details of the service of hearing notices which were served to the Noticees for hearing held on November 14, 2019 are as under: Table no. 6 Noticee no. Name of the Noticee Hearing on 14.11.2019 1 HPC Biosciences Ltd Navbharat Times and Hindustan Times- Delhi Edition - 05.11.2019 2 Shri. Tarun Chauhan -do- 3 Ms. Madhu Anand -do- 4 Goldline International Finvest Ltd. -do- 5 Shri. Madhukar Dubey & its Proprietorship firm viz. N V Sales Corporation, Magnum Industrial Alliance Traders Times Day and Hindustan Times- Ghaziabad Edition- 12.11.2019 6 Shri. Satendra Kumar & its Proprietorship firm viz. Nisha Traders Navbharat Times and Hindustan Times- Delhi Edition - 05.11.2019 7 Avisha Credit Capital Pvt. Ltd. -do- 8 Shri. Sumit Kumar & its Proprietorship firm viz. Durga Prasad & Co. Times Day and Hindustan Times- Ghaziabad Edition- 12.11.2019 9 Shri. Ra....
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.... Manager (Guiness Corporate Advisors Pvt. Ltd.) and Registrar to the Issue (Cameo Corporate Services Ltd.) to carry out all legal procedure and compliances for the purpose of IPO. The said entities as well as BSE have advised and ensured due compliances of extant regulations for the purpose of IPO. iv. Cooperation has been extended by providing relevant documents during the investigation and perusal of the SCN does not reflect that the investigation was hampered due to lack of information or remained incomplete for the reasons attributable to the Company. Rather, the SCN reflects that SEBI was able to conclude its investigation and the instant SCN was issued after conclusion of the investigation. v. Vide order dated September 06, 2017, proceedings against 110 entities were disposed of who were initially prima facie charged in the interim order including entities having alleged association with the Company. The same shows that SEBI has not found any obnoxious irregularity pertaining to price rise and allocations in the IPO of the Company. vi. The provisions of Section 12 A (a), (b) and (c) of SEBI Act, 1992, and Regulation 3 and 4 of PFUTP Regulations are ....
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....g perused the list of documents so required for inspection we are of the opinion that the documents sought for is nothing but a roving and fishing enquiry. We accordingly do not find any merit in the submission of the learned counsel for the appellant that these documents are essential for the purpose of filing an appropriate reply. 3. However, we are of the opinion that if any document is relied by the respondent while disposing of the matter such document should be made available to the appellant........" 9. Further, similar observations have also been made by Hon'ble SAT in the matter of Shruti Vora Vs. SEBI (Date of decision: February 12, 2020). In the said matter, the appellant therein had challenged the rejection of her request to inspect all the documents collected during the investigation. While rejecting the said challenge, Hon'ble SAT inter alia held: "...A bare reading of the provisions of the Act and the Rules as referred to above do not provide supply of documents upon which no reliance has been placed by the AO, nor even the principles of natural justice require supply of such documents which has not been relied upon by the AO." (emphasis supplied). Theref....
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.... any device, scheme or artifice to defraud in connection with issue or dealing in securities which are listed or proposed to be listed on a recognised stock exchange; (c)engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person, in connection with the issue, dealing in securities which are listed or proposed to be listed on a recognised stock exchange, in contravention of the provisions of this Act or the rules or the regulations made thereunder. SEBI (PFUTP) Regulations, 2003 Prohibition of certain dealings in securities Regulation 3. No person shall directly or indirectly- (a) buy, sell or otherwise deal in securities in a fraudulent manner; (b) use or employ, in connection with issue, purchase or sale of any security listed or proposed 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 b....
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....¢ Alliance Traders • N V Sales Corporation • A One Furniture • Magnum Industrial (Noticee no.5) • N V Sales Corporation had received INR 100.00 Lakh from IPO proceeds of HPC (Company). • N V Sales Corporation had fund movement with AMS Powertronic Pvt. Ltd. • A One Furniture had received funds from Magnum Industrial. • Alliance Traders had received funds from Columbia Sales, AMS Powertronic Pvt. ltd., Mayfair Infosolution Pvt. Ltd., A One Furniture. • Address: Plot No. 3, Gali No. 3, East Guru Angad Nagar, Laxmi Nagar, Delhi - 110092. (Bank KYC) • Proprietorship firm of Sumit Kumar, Madhukar Dubey and Satendra Kumar were having common address. (Bank KYC) 3. Satendra Kumar Proprietorship Firm • Bright Securities • A R Enterprise • Nisha Traders (Noticee no. 6) • It had fund movement with Goldline (Noticee no.4), AMS Powertronic Pvt. Ltd. (Noticee no. 11), Mayfair Infosolution Pvt. Ltd., Alliance Traders, N V Sales Corporation and Bright Securities. • It had received fu....
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....p; • Address of Bright Securities, A R Enterprise, Nisha Traders: Plot No. 3, Gali No. 3, East Guru Angad Nagar, Laxmi Nagar, Delhi - 110092. (Bank KYC) • Proprietorship firm of Raj Kumar, Sumit Kumar, Madhukar Dubey and Satendra Kumar were having common address. (Bank KYC) • Nisha Traders of Raj Kumar was having fund movement with AMS Powertronic Pvt. Ltd., Shiv Om Sales, Mayfair Infosolution Pvt. Ltd. • A R Enterprise and Nisha Traders of Raj Kumar (Noticee no. 9) had received INR 100 Lakh each from IPO proceeds of HPC. 7. Prakash Gupta Proprietorship Firm: • Shri Trading Co. Shiv Traders (Noticee no. 10) • Shiv traders had received INR 100.00 Lakh from S P Enterprise which were the IPO proceeds of HPC (Company). • Shiv Traders had fund movement with S P Enterprise, Mayfare Infosolution Pvt. Ltd. AMS Powertronic Pvt. Ltd., Shiv Om Sales. 8. AMS Powertronic Pvt. Ltd. (Noticee no.11) • It had received INR 58.00 Lakh from IPO proceeds of HPC (Company). • It had fund movement with Goldline, Shiv Traders, Shiv Om Sales, Mayfair Infosolutio....
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...., no such evidence or supporting material has been made available to me to explain the bonafide/rational of the said transfers of funds made by the Company involving substantial amounts evidently transferred to Noticee no. 4 out of the IPO proceeds. 15. I note from the Table no.7 presented above that the Noticee no. 4 was having fund transactions with various other entities viz., Noticee nos. 7, 9, 11 and few other entities. Further, the address of the proprietorship firms of Noticee nos. 5, 6 and 8 was common. It is also noted that the majority of the remaining Noticees were also found connected based on inter-se fund transactions. Further, Noticee no. 8 (Mr. Sumit Kumar) is one of the Directors of Noticee no. 11 and is also a Director in another company viz., Mayfair Infosolution Pvt. Ltd. The said company (Mayfair Infosolution Pvt. Ltd.) had not only received INR 80.00 Lakh from the IPO proceeds of HPC but also had fund transactions with Noticee no. 5, Shiv Traders (Proprietorship firm of Noticee no. 10), and Aviva Buildtech Pvt. Ltd. (which had received INR 1.00 Crore from the IPO proceeds of HPC). It was thus observed that the aforesaid Noticees were enjoying interconnected....
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....o are also Noticees in this proceedings), has furnished any explanation justifying its action of paying by drawing cheques directly in favour of the Company, on behalf of the IPO applicants. I observe that the Company has not only accepted such applications for subscription to the IPO with cheques drawn from accounts of funding entities (not from applicants' accounts) but has also allotted 13,24,000 shares to those applicants/subscribers under its IPO, in gross violation of the extant norms governing issue of shares under IPO, which mandates that the IPO applicants must pay his application money from his own account. 22. Apart from the above, certain funding group entities are found to have provided funds directly to the IPO applicants which were in turn, used by the applicants to support their applications filed under ASBA category. The above representation and the Table no. 4 have sufficiently indicated the fund movements pertaining to funding of the applicants for the IPO of HPC. For illustration, it is noted from the aforesaid details that Noticee no. 7, Avisha Credit Capital Pvt., has not only provided 7 cheques on behalf of 7 non-ASBA applicants (all of which got allotment....
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....ng filed written replies to explain the merit of their case, the said Noticees have evaded the main issue pertaining to the above noted funding group entities issuing cheques on behalf of or to the IPO applicants for financing their applications for the IPO of HPC. It is observed that the Company and its Directors have merely stated that the said transactions (involving funding of the applicants) were of commercial in nature and those transactions executed by third parties cannot lead to any adverse inference against them. I find such an explanation to be casual, evasive, and completely irresponsible, since except for a few instances, the Company (HPC) has directly received cheques from the funding group Noticees which accompanied the IPO applications made by various applicants. I find that in such type of financial transactions, the onus to prove that such financial transactions were genuine, bonafide and within four corners of law, lie equally on the funding group entities who have provided those cheques either on behalf of or to the IPO applicants as well as on the Company itself, since the Company has received and accepted such third party cheques from funding entities (instead....
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....l source behind the IPO applications of a huge chunk representing 29.03% of the total shares allotted, it is apparent that due to the aforesaid financial support/funding made by the Company and its connected entities, and only due to the concreted efforts made by them in funding such large number of applicants, the IPO of the Company was able to smoothly sail through the statutory threshold of 90% of the shares offered, as envisaged under Regulation 14(1) of ICDR Regulations. 25. Had the Noticees not acted on the lines of a pre-fabricated scheme as glaringly evident from their actions highlighted above, the IPO of the Company would not have been able to achieve the mandatory subscription threshold of 90%. I note that in case the Company would not have been able to garner subscription applications at least for 90% of the shares offered under IPO, it was under a statutory obligation to refund the amount so collected, as has been prescribed under Regulation 14(2) of ICDR Regulations, which was intended to be avoided by the Company at any cost. 26. I further note that the Company has in its reply contended that its IPO was 100% underwritten which completely nullifies the allegati....
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.... Equity Shares has been made, by the applicant prior to allotment of the Equity Shares subscribed by such applicant; 5.3 The Underwriter shall be liable to discharge its underwriting obligations as follow: The Underwriter will be required for themselves, to the extent of applications procured by them, to make good any default by such applicants." (underlines supplied) 28. A careful consideration of the aforesaid clauses of the Underwriting Agreement reveals that the obligation of the underwriter was limited/restricted to only those IPO applications that was to be procured by it (Clause 5.3), only in case of default of payment by an applicant after allotment of shares (Clause 5.2.1.) or in case of withdrawal of such applications by applicants (to whom allocation of equity shares has been made) just prior to allotment of shares to those applicants (Clause 5.2.2). There is no other clause in the aforesaid agreement that can be shown to have imposed a contractual obligation on the underwriter to subscribe to the entire unsubscribed portion of the IPO so as to cross the minimum threshold of 90% subscriptions of total quantity of shares offered in the IPO. T....
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....Company got listed on BSE-SME segment on March 19, 2013. When the information with respect to utilisation of the funds was sought by SEBI, the Company vide its letter dated January 14, 2016 furnished a break up of utilisation of the said amount of INR 15.96 Crore which have been duly indicated in Table 2 of the present order. 31. It is noted from the SCN that despite being categorically asked during investigation, the Company did not provide documents to support the utilisation of the IPO proceeds as per its claim which inter alia, included INR 3.00 Crore paid towards development of Green Housing Cultivation; INR 9.28 Crore (approx.) spent towards development of farm land for transition to organic farming and INR 2.18 Crore (approx.) remaining as unutilised portion. 32. In its submissions made during the present proceedings, the Company has only furnished the details of utilizing INR 8.99 Crore towards development of farm land; INR 27.03 Lakh towards Issue expenses; and INR 2.20 Lakh towards miscellaneous expenses like brokerage, market making etc., aggregating to INR 9.28 Crore (approx.). Thus, out of the total amount of INR 15.96 Crore raised in the IPO, the Company has bee....
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....ime Objects of the Issue, i.e., expenses of INR 8.99 Crore towards development of farm lands. 35. Admittedly, the Company had raised INR 15.97 Crore in the IPO, out of which, within a span of three days (March 19, 2013 to March 21, 2013), it executed transactions with 20 different entities. A careful analysis of the reply filed on behalf of the Company (as confronted with the pictorial representation under para 8 of the SCN) reveals that out of the 20 entities named in the above said pictorial representation of the SCN, the Company has only explained transactions executed by it with 04 (four) entities viz., N V Sales Corporation, A R Enterprises, Nisha Traders and S P Enterprises. It is pertinent to mention here that the said 04 (four) entities have been clubbed by the Company in a separate category of total 7 entities with whom the Company had purportedly entered into agreements for land development just prior to the IPO. The Company has not commented anything on the transactions allegedly executed with the remaining 16 entities (out of those 20 entities as alleged in the SCN). 36. It is observed that the Company through its post hearing written submissions has provided inte....
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....INR 1.10 Crore/48.97 acre INR 60 Lakh on 27.12.12 INR 50 Lakh on 27.02.2013 4. Nisha Traders INR 1.49 Crore 20.12.2012/ INR 1.50 Crore/66.78 acre INR 49 Lakh on 27.02.2013 INR 1 Crore on 19.03.2013 5. N.V. Sales Corporation INR 1.50 Crore 01.01.2013/ INR 1.50 Crore/66.78 acre INR 50 Lakh on 27.02.2013 INR 1 Crore on 19.03.2013 6. Shiv Traders INR 60 Lakh 19.12.2012/ INR 60 Lakh/26.71 Acre INR 60 Lakh on 27.12.2012 7. S.P. Enterprises INR 2.20 Crore 01.12.2012/ INR 2.20 Crore/97.94 acres INR 70 Lakh on 28.12.2012 INR 50 Lakh on 27.02.2013 INR 1 Crore on 20.03.2013 Total INR 8.99 rore 37. At the outset, I observe that these documents were never filed by the Company during the investigation conducted by SEBI nor were filed along with the initial reply to the SCN and have come on record for the first time only by way of the post hearing submissions filed by the Company. Nevertheless, I have minutely perused the contents of the said agreements and when those conten....
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.... the IPO and from the table above, it is also noticed that huge amounts of funds have been transferred by the Company in favour of those 7 entities prior to the IPO as well. The quantum of such amounts which have been paid (pre- IPO) to those entities going by the aforesaid table comes to INR 4.49 Crore, which therefore cannot be stated to have been utilized from the IPO proceeds. However, the Company has claimed that the entire sum of INR 8.99 Crore was paid to those 7 entities for farm land development including the aforestated pre-IPO transactions of INR 4.49 Crore, has been utilized out of the IPO proceeds. Under the circumstances, the claim of the Noticee Company stands on a false ground to begin with as far as its claim of utilization of IPO proceeds towards the Object of development of farm land is concerned. 38. In view of the aforesaid discrepancies, the Company cannot claim itself to be the absolute owner of the subject land at the time of executing those agreements with the proprietors of various entities, as the same would render the corresponding relevant disclosure made in the Prospectus as false proclamations and reduce those declarations to nullity. I observe tha....
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....Company. However, no such document in the nature of either a Board Resolution or an authorization letter in favour of any Director or official permitting him to negotiate and enter into any contractual obligations with any third parties regarding the proposed land development for contract farming has been produced before me. 40. Strangely enough, the Company had transferred huge amounts of money through agreements which are un-registered, un-notarized, rendering such agreements to be ab initio unenforceable in law. Further, there is no witness to such agreements, which further corroborates that these agreements do not possess any qualities to be called as valid or enforceable documents. I find that the Company has not been able to produce any third party verifiable document/details like the details of profit/revenue earned or return from the funds so deployed by the Company for the land development, or any approval of land development plan/layout from local authorities, or any latest entry in the balance sheet certified by the statutory auditors indicating tangible outcome of the funds so transferred for land development or even any photographs of the development work that was s....
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....the funds that have been paid to different entities mentioned in the table no. 9 above were indeed paid in pursuance of the Objects of the IPO for which such funds were raised by the Company through public issue. 43. To sum up the discussion, I find that the Company has furnished partial details of utilization of IPO proceeds to the extent of only INR 9.28 Crore while for the remaining amount (INR 6.68 Crore), no details or explanation have been furnished at all and nothing is known with respect to the fate of the said amount which was also raised from the investors by offering its securities under IPO. Even for the details so furnished in support of the utilization of IPO proceeds of INR 9.28 Crore, as per the detailed examination and analysis made thereof in the earlier paragraphs, it is clearly revealed that the claim of having spent the said amount towards meeting the objects of the IPO turned out to be false, baseless and unsubstantiated. As recorded above, the Company has failed to substantiate those unenforceable agreements by any kind of third party verifiable documents like purchase /lease agreement of the land, details of payments of purchase consideration, if any, aud....
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....ady been found to be baseless and has been rejected by me. For the rest of the transactions that formed part of the transfers detailed in the said graphical representation, including a transfer of INR 3.18 Crore to Goldline (Noticee no. 4), the Company has merely stated that the said transactions were in the nature of commercial transactions without supporting its claim by any underlying details, agreements, invoices, income-expenditure statement for those pay-outs, or any other verifiable document to explain the rational of those commercial transactions which involved such significant amounts of fund transfers. 46. It is interesting to note that the amounts of these transactions entered with various individuals, proprietorship firms, companies etc., ranged from INR 10 Lakh to INR 3.18 Crore which were promptly executed by disbursing the funds in a short span of only 3 days (March 19, 2013 to March 21, 013) from the date of listing of shares of the Company (March 19, 2013). It shows that the Company had a pressing need of funds to meet huge amounts of pending obligations to carry out its business as per the objects of IPO, hence one can assume that the supporting documentations/....
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....irst stage, financially supported the applications of the 161 IPO applicants who were allotted 13,24,000 shares. Subsequently, out of INR 15.97 Crore received under the IPO, the Company siphoned off INR 15.60 Crore (approx.) by transferring the same to various entities out of which, INR 10.59 Crore (approx.) was transferred to the funding group Noticees. By acting in tandem and in concert to fructify their scheme, all the Noticees in this proceedings have been able to make the IPO of HPC successful by way of funding the IPO applications to the extent of 29.03% of the total shares subscribed under the IPO in the absence of which, the IPO would have been hit by non-achievement of the mandatory 90% of shares offered in the IPO and resultantly the scrip of Company would have failed to reach the listing platform of the stock exchange. 50. I may hasten to add here that in its reply to the SCN, it was submitted by the Company that the matter requires re-investigation taking a plea that selected transactions have been picked up by SEBI and had the Company furnished complete information, the proceedings would not have been initiated. It is observed that the Company while making request f....
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....rtunities, and in spite of furnishing various explanations and documents, the Noticees including the Company have not been able to produce any tangible material or evidence so as to justify the transfer of huge sums of IPO proceeds to different entities, in gross violation of the stated Objects of the IPO. 51. The scheme that was crafted intricately and implemented in coordination with other Noticees is self-evident and self explains as to how the funding group entities first fraudulently supported the IPO applications of various applicants by funding their application money so as to enable the IPO cross the threshold of minimum applications of 90% of the shares offered. The facts also explain the reasons as to why immediately after completion of the IPO, the IPO proceeds were transferred to various entities including the funding group entities. The said transfer of funds immediately after the IPO coupled with the evasive and unsubstantiated explanations offered by the Company with respect to claimed utilization of IPO proceeds, further explain the reasons as to why the Company had not actually utilized the IPO proceeds towards the Objects of its IPO. In reality, the specious cl....
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....nnected entities and has eventually paid back to those funding group entities out of the IPO proceeds under the garb of utilization of IPO proceeds as per the objects of IPO. 56. There is no material placed on record or no ground has been taken before me by any of the Noticees so as to distinguish the case of the two Directors viz., Noticee nos. 2 and 3, from the case of Company in so far as the violations committed by the Noticee no. 1 Company in the process of raising money from the public and diverting such money with the help of Noticee no. 2 and 3 for various purposes other than the objects for which the money was raised from public under the IPO. 57. At this stage, I am seeking guidance from the decision of Hon'ble Supreme Court passed in the matter of N. Narayanan Vs. Adjudicating Officer, SEBI (2013) 12 SCC 152, wherein it was observed that: "33. Company though a legal entity cannot act by itself, it can act only through its Directors. They are expected to exercise their power on behalf of the company with utmost care, skill and diligence. This Court while describing what is the duty of a Director of a company held in Official Liquidator v. P.A. Tendolkar (19....
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....by the Noticee nos. 4 to 11 to the IPO applicants as well as the amounts so received back by the Noticee nos. 4 to 11 out of the IPO proceeds. It is relevant to state here that the Noticee nos. 4 to 11 have not stated anything in their defense and therefore can be deemed to have accepted the charges made against them in the SCN. 60. To sum up, the Noticees in this case have crafted the scheme with intricacies and in such a manner that the degree of proof to expose their fraudulent acts would be of preponderance of probabilities which, as held by me earlier are clearly tilted against the Noticees. In this regard, in a case involving fraudulent activity by a company, the Hon'ble Delhi High Court has observed inter alia as: "Clearly, given the manner in which fraudulent acts are undertaken under deceit and camouflage, if done with the affairs of a company/trust etc., the standards of proof required to prove such fraudulent conduct would necessarily be less stringent." [SEBI Vs. CRB Capital Markets Ltd. (date of decision: December 05, 2019)] 61. I note that the present case is built upon the statutory requirement of achieving subscription of at least 90% of shares being offered u....
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.... purchased as directed at (i) above, and compulsorily delist the Company, if the public shareholding reduces below the minimum level in view of aforesaid purchase. iii. The Noticee no. 1 is hereby restrained from accessing the securities market by issuing prospectus, offer document or advertisement soliciting money from the public in any manner for a period of 8 years. iv. Noticee no. 2 and 3 are hereby restrained from holding post of director, any managerial position or associating themselves in any capacity with any listed public company and with any public company which intends to raise money from the public, or with any intermediary registered with SEBI for a period of 3 years. v. The Noticees, as mentioned below are hereby restrained and prohibited from buying, selling or otherwise dealing in the securities market, directly or indirectly in any manner whatsoever manner, for the period specified in their respective columns: Sr. No. Name of Entity Debarred vide interim order Period of debarment Sr.No. Name of Entity Debarred vide interim order Period of debarment 1. HPC Biosciences Ltd Yes Till date of this order ....