TaxTMI 
TaxTMI 
2021 (9) TMI 1519
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....) and two orders have been passed by the Whole Time Member ('WTM' for short) of the Securities and Exchange Board of India ('SEBI' for short). Appeal no. 406 of 2020 has been filed by Mr. Gurmeet Singh against an order dated June 30, 2020 whereby the AO has imposed a penalty of Rs. 1 crore. Appeal no. 408 of 2020 has been filed by Mr. I.S. Sukhija against an order dated June 30, 2020 whereby the AO has imposed a penalty of Rs. 20 lakh. In Appeal no. 483 of 2020 filed by Mr. Gurmeet Singh and Appeal no. 491 of 2020 filed by Mr. I.S. Sukhija are against the order of WTM dated October 27, 2021 whereby Mr. Gurmeet Singh has been debarred for a period of two years from accessing the securities market and Mr. I.S. Sukhija has been debarred for a period of one year from accessing the securities market. Appeal no. 100 of 2021, Appeal no. 101 of 2021 and Appeal no. 102 of 2021 have been filed by Mr. Gurmeet Singh, Mr. I.S. Sukhija and Mr. H.S. Anand respectively against the WTM's order dated October 27, 2020 whereby Mr. Gurmeet Singh has been debarred for two years and Mr. I.S. Sukhija and Mr. H.S. Anand have been debarred for one year. Appeal no. 337 of 2021, Appeal no. 338 of 20021 and Ap....
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....lan of the Company and whereas Vintage was the sole subscriber which received loan in order to subscribe to the GDR issue which device / scheme was fraudulent and such non-disclosure of the Loan Agreement and Pledge Agreement created a false impression in the minds of genuine investors. The authorities held that the resolution was passed wherein the Managing Director to authorized to sign the documents and therefore the Managing Director was fully aware of the fraudulent scheme. Insofar as Mr. I.S. Sukhija and Mr. H.S. Anand were concerned it was alleged that these appellants who are directors facilitated the execution of the scheme by passing the resolution dated February 21, 2008. The transactions undertaken by the Company pursuant to the resolution was not intimated to the Stock Exchange and that the independent directors who acted as Trustees of stakeholders should have taken steps and measures in furtherance of the interest of the shareholders which in the instant case was not carried out with due diligence. In one of the appeals it has also been stated that Mr. I.S. Sukhija was a Member of the Audit Board and should have raised objections as to why the GDR proceeds has been g....
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....as part of the decision making process relating to the GDR issue, the said appellant cannot be held guilty only on the basis of being a signatory to a resolution. In Prafull Anubhai Shah vs. SEBI, Appeal No. 389 of 2021 decided on June 28, 2021, we have held that being a signatory to a resolution is not sufficient to point fingers of committing a fraud. Thus, the order of the AO imposing a penalty upon Mr. H.S. Anand and the order of the WTM debarring him for one year cannot be sustained. 10. Insofar as Mr. I.S. Sukhija is concerned the stand is that he was non-executive independent director and was never involved in the day-to-day affairs of the Company nor was part of the decision making process relating to the GDR. The appellant further contended that he had not signed any Agreement with any entity and that his role as non-executive independent director was very limited and restricted and therefore had not violated provisions of Section 12A of the SEBI Act, 1992 or Regulation 3 and 4 of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 ('PFUTP Regulations' for short). In this regard a stand has been taken by the re....
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....of setting up a subsidiary in UAE the funds have been utilized for the purpose for which the GDR was issued. Thus, in our view merely because the appellant Mr. I.S. Sukhija was part of the resolution which approved the issuance of the GDR and opening of a bank account with Euram Bank does not lead to a conclusion that the appellant was part of the scheme of the alleged fraud which in any case was not in existence. Thus, imposition of penalty by the AO and debarment by the WTM was wholly erroneous on this appellant. 12. Insofar as the case of Mr. Gurmeet Singh is concerned, we find that admittedly he was the Managing Director of the Company and was involved in the day-to-day affairs of the Company. He cannot contend that he was not aware of the affairs of the Company. Further, he is the signatory to the execution of the Loan Agreement and Pledge Agreement. In fact, he was authorized to sign various documents on behalf of the Company. Admittedly, the Company was required to disclose the Loan Agreement and the Pledge Agreement to the Stock Exchange under the Listing Agreement. By not disclosing, the shareholders and the investors have been misled and consequently there has been a v....