TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 81
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....ting Officer), SEBI imposing a monetary penalty of Rs.20 Lakhs on the first appellant and Rs.15 Lakhs on the second appellant for violation of Section 12A(a),(b),(c) of SEBI Act,1992 (Securities and Exchange Board of India Act, 1992) read with Regulations 3(a), (b), (c), (d), 4(1) of SEBI (PFUTP) Regulations, 2003 (Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003) 2. We have heard Shri Jaimin Dave, learned Advocate for the appellants and Shri Sumit Rai, learned Advocate for the respondent. 3. Brief facts of the case are, in 2010, Nakoda Limited ('Nakoda' for short), a listed company issued two million Global Depository Receipts (GDRs) for USD 24.25 million. 4. SEBI had conducted an investigation against several Indian companies that had issued GDRs and it was observed that the issuance of GDRs was a fraudulent act by the company in question, i.e., Nakoda. It was stated that Nakoda had entered into a pledge agreement with EURAM Bank for a loan that was availed by an entity company called 'Vintage FZE' (now known as 'Alta Vista International FZE') which invested in the said GDR issue....
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.... for itself. The AO, by the impugned order has imposed monetary penalty on the appellants. 7. At the outset we may record that the according to the SEBI several Indian companies had issued GDRs in overseas market to defraud the Indian investors. In several cases, the modus operandi used by these companies was that, a company called 'Vintage FZE (now known as Alta Vista International FZE') would avail loan against the GDR proceeds from the EURAM Bank. The company issuing the GDR would pledge the GDRs to secure the loan. Thus, in effect no foreign investment is received by the companies issuing the GDRs. However, disclosures would be made with the stock exchanges that the GDRs were fully subscribed by the foreign investors giving an impression that the company had received huge foreign investment. In the instant case, Nakoda had made similar disclosure that its GDRs worth USD 24.25 million were subscribed by foreign investors. 8. In this case, following points arise for our consideration:- (a) Whether Nakoda Limited had pledged its GDRs with EURAM Bank as security to enable Vintage FZE to avail the loan; (b) Whether Nakoda Limited actually received any foreign....
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....representing your bank at Dubai. The representative from Euram Bank Asia Limited had kept the original signed Agreement (all pages) and had not given us any copy thereof. We were informed that a copy of the Agreement signed by all parties would be sent to us in due course, but the same was never received by us. 4. It is mentioned in the copy of Agreement sent by you that we have received a copy of Loan Agreement no. K121110- 002 between you and Vintage FZE, and that we had acknowledged the terms and conditions of the said Agreement. However, we deny having received a copy of any such Agreement, and hence, the question of our agreeing to its terms and condition does not arise. 5. It is stated in the copy of your Agreement that you have executed a Loan Agreement with Vintage FZE; whereas two mails sent from your end-viz by Ms. Julia Batliner on 9th August 2012 and by Mr. Patrick Kneifel on 13th August 2012 mentioned that the account is pledge as security for loan granted to Alta Vista International FZE. Please note that we do not know either of them and we are not aware of any borrowings made by Vintage FZE or Alta Vista International FZE. 6. The Agreement ....
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....ware about the pledge agreement and the subscription money remained only in the 'Escrow account' and was never received by Nakoda. 14. We may record that the document annexure - 9 extracted hereinabove and the exchange of e-mails dated August 9 2012 and August 13, 2012 between Nakoda's Company Secretary and EURAM Bank with regard to the transfer of interest amount are not denied by the appellants. It is also not disputed that Nakoda did not receive any money. 15. Shri Rai also adverted to the board resolution passed by Nakoda Ltd. authorizing the appellants to sign and execute any agreement, escrow agreement etc. as may be required by the bank. The resolution reads as follows:- ".... RESOLVED FURTHER THAT ANY ONE of Shri BG Jain and Shri DB Jain, Directors of the company, be and are hereby severally and singly authorized to sign, execute, any application, agreement, escrow agreement, documents, undertaking, confirmation, declaration and other paper(s) from time to time, as may be required by the Bank and to carry and affix, Common seal of the company thereon, if and when so required. " 16. To a query made by us with regard to the resolution, Shri Jaimin Dave, Advo....