TaxTMI 
TaxTMI 
2021 (5) TMI 1029
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..... 393 of 2020, 394 of 2020 and Appeal No. 428 of 2021 and Appeal No. 203 of 2021 are against the orders passed by the Adjudicating Officer ("AO" for convenience) of the Securities and Exchange Board of India ("SEBI" for convenience) dated March 31 2020 whereby a penalty has been imposed. Appeal No. 64 of 2020 and Appeal No. 184 of 2020 are against the order dated September 30, 2019 passed by the Whole Time Member ("WTM" for convenience) of SEBI. Appeal No. 487 of 2020 has been filed by Vipin Sharma against the order of the WTM dated September 25, 2020 and another Appeal has been filed by him being Appeal No. 488 of 2020 which is against the order of the AO dated August 28, 2020 imposing a penalty. 3. The facts leading to the filing of the present appeals are, that investigation in the scrip of Chromatic India Limited was carried out to ascertain whether the appropriate disclosures were made by the appellants with regard to the Global Depositories Receipts ("GDRs" for convenience) issue made in October 2010 and whether the GDR issue was carried out in accordance with the procedures prescribed by law. Based on the investigation a show cause notice dated June 28, 2017 was issued by t....
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....im to be careful and exercise due diligence in future. The AO also passed another order dated August 28, 2020 against Vipin Sharma imposing a penalty of Rs. 3 lakhs. 6. The brief facts are, that a Resolution of the Board of Directors was passed on August 13, 2010 for opening a bank account for the purpose of the GDR issue based on which in October 2011 GDR issue amounting to USD 35.78 million which is approximately 159 crores were subscribed. According to the replies given by the appellants the GDR issues was in accordance with the prescribed procedure and proper disclosures were duly made under the SEBI Act and the PFUTP Regulations. It was urged that the GDR was issued to expand the business and that the company would get the benefit of flow of foreign capital and that the company will get the benefit of the global stock exchange. The WTM and the AO after perusing the evidence give separate findings but came to a conclusion that Vintage FZE ("Vintage") was the only subscriber to the issue which misled the investors. The authority found that the company misled the regulatory authorities in giving a list of subscribers which upon investigation was found to be fictitious and non ex....
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.... high and excessive and does not commensurate with the offence. It was urged that the principle of proportionality has been disregarded. In this regard, the learned counsel has placed a comparative chart indicating various orders that has been passed by SEBI against various entities with regard to the GDR issue and submitted that a perusal of the subscription generated from the GDR in many cases the penalty imposed upon the company and upon the directors was far less than what was imposed upon the appellants in the instant case. It was contended that the managing directors in other companies were penalized Rs. 20 lakhs to Rs. 1 crore whereas in the instant case the appellant Vinod Kumar Kaushik has been penalized Rs. 5 crore. 11. Having heard the learned counsel for the appellants, we find that under the penal provision a maximum penalty of Rs. 25 crores could be imposed. In the instant case, the company has been penalized a sum of Rs. 10 crores. We find that the imposition of this amount is appropriate and is neither arbitrary nor excessive. When we compare the penalty imposed upon the appellant-company with the comparative chart we find that all the companies were imposed a sum ....
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....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 the investors, as well as to the shareholders and, the action of the appellant Kishore Hegde was in violation of Section 12A of the SEBI Act read with Regulations 3 and 4 of the PFUTP Regulations." 15. In view of the aforesaid, the orders of the WTM and the AO does not suffer from any error of law. 16. In so far as the managing director / directors are concerned we find from the perusal of the ....
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....irectors dated August 13, 2010. The WTM considering the fact that the appellant had already underwent a debarment of 5 months pursuant to the earlier order dated September 30, 2019 did not find it fit to further pass an order of debarment and disposed of the appeal cautioning the appellant to be careful and exercise due diligence in future. 18. The AO in its order dated August 28, 2020 penalized the appellant Vipin Sharma a sum of Rs. 3 lakhs only on the basis that he was present in the meeting of the Board of Directors when the Resolution dated August 13, 2010 was passed for opening a bank account with Euram Bank. 19. The appellant has vehemently contended that he was not present in the meeting of Board of Directors when the Resolution dated August 13, 2010 was passed and that he was not involved in the day to day affairs as he was only an additional director. It was strongly contended, that no proof has been filed by the respondent to show that he was present in the meeting of the Board of Directors dated August 13, 2010 and further submitted that the signatures on the certified copy of the Resolution dated August 13, 2010 is the forged signature. 20. Without dwelling on the a....