AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 1457
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....5. As per the petitioner, the allegations made by the SEBI against respondent no. 1 are broadly as under:- (a) The irregular allotment of 1,17,200 shares of Bharthari Financial Services Limited ("BFSL") involving irregular subscription of 27,00,000 shares with an application money of Rs. 2.70 crores by way of stock invests issued by Sangli Bank, Karol Bagh, Delhi. (b) The irregular allotment of 57,600 shares of BFSL involving irregular subscription of 14,40,000 shares with an application money of Rs. 1.44 crores by way of stock invests issued by State Bank of India, Ashram Road, Ahmedabad. (c) The filing of incorrect information regarding encashment of stock invests. 3. The SEBI wrote a letter dated 10.06.1999 to the petitioner pointing out certain irregularities in the public issue of BFSL. The respondent no. 1 herein is a qualified Chartered Accountant and member of the Institute of Chartered Accountant of India ("ICAI") and also the Chairman and whole-time Director of BFSL. The petitioner after perusing the letter as received from SEBI wherein irregularities in public issue of BFSL were pointed out, requested the respondent no. 1 to offer a clarific....
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.....1995. Even after that the respondent no. 1 did not stop the allotment of shares and issued the share certificates to the applicants, which is detrimental to the general investors. IV. The BFSL without receiving any amount released the share certificate and while being aware of this irregular allotment took no action. 6. Mr. Sahni stated that the respondent no. 1 submitted a written representation on 11.12.2017 and thereby denied all the allegations and charges leveled against him by the petitioner through the information letter dated 15.12.2005. 7. As per Mr. Sahni, the petitioner after having considered the report of the Disciplinary Committee dated 10.02.2014 and the written representation of the respondent no. 1 dated 11.12.2017 observed that the involvement of respondent no.1 with the Chartered Accountant Ashok Chawla in arranging finances for the purposes of obtaining ante-dated stock-invests, which were issued at a higher amount for subscription at the public issue of BFSL, which was after the closure of its issue has been clearly established. 8. The petitioner accepted the report of the Disciplinary Committee and it is the case of the petitioner that the r....
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....SEBI directions u/s 11B of the SEBI Act in relation to CA. Ashok Chawla, the Committee observed that CA. Ashok Chawla was to receive consideration of 6% on the investment. Since, he did not receive the consideration, he got the applications withdrawn vide withdrawal notices dated 1st December, 1995 sent to BFSL. The BFSL vide letters dated 14th December, 1995 returned the original stock invests. 8.3 The Committee noted that the Respondent in his reply before SEBl had contended that he had not received the applications from CA. Ashok Chawla and further stated that withdrawal application were received too late, almost near finalization of public issue. The Committee noted from the orders of SEBl U/s 11B in relation to Respondent that, the withdrawal of applications was made on 1st December, 1995 which was much before the approval of basis of allotment on 8th December, 1995 and the date of listing on 14th December, 1995. Further, the applications were acknowledged by BFSL vide their letters dated 14th December, 1995 addressed to applicants returning the original stock invests to CA. Ashok Chawla. The returning of stock invests to CA Ashok Chawla instead of the applicants clea....
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....ing sl. No. 361258 were issued on 30.11.l!995. Therefore, this prima-facie proves that stock invests used in subscribing to the shares of BFSL were subsequent to 30.11.1995, but it is also clear that the public issue was closed on 05.10.1995. This fact clearly shows that the concept of antedating appeared in the BFSL. Further, it is noted that stocks invests by CA. Ashok Chawla bore the date of 23.11.1995. 8.8 It was also noted by the Committee that SEBI had permanently debarred the Respondent from associating with the capital market related activities. The Hon'ble Securities Appellate Tribunal (SAT), Mumbai vide order dated June 2, 2006 (in appeal No. 51 of 2003) while affirming the findings recorded by SEBI against the company and its Chairman cum Whole Time Director i.e the Respondent, modified the period of prohibition to 7 years. In the said order, Hon'ble SAT inter alia observed, "The Board referred to two of its earlier orders, debarring Shri S.K. Gupta from accessing the capital market for a period of 5 years each. In one of those cases, Shri S.K. Guptb was found to have indulged in identical manipulative activities where the public issue had been ....
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....690 25.11.1995 1.20 05.10.1995 12.00 21. 322691 25.11.1995 1.20 05.10.1995 12.00 22. 322692 25.11.1995 1.10 05.10.1995 11.00 23. 322693 25.11.1995 1.10 05.10.1995 11.00 24. 322694 25.11.1995 1.10 05.10.1995 11.00 25 322695 25:11.1995 1.00 05.10.1995 10.00 26. 322696 25.11.1995 1.00 05.10.1995 10.00 27. 322697 25.11.1995 1.00 05.10.1995 10.00 TOTAL 29.30 293.00 The details of share applied and shares allotted above stock invests are as under: SI. No. Stock Invest No. Shares applied Shares Allotted but surrendered 1. 322671 10000 4000 2. 322672 10000 4000 3. 322673 11000 4400 4 322674 11000 4400 5. 222675 10000 4000 6. 322676 10000 4000 7. 322677 10000 4000 8. 322678 10000 4000 9. 322679 10000 4000 10 322680 11000 4400 11. 322681 11000 4400 12. 322682 11000 4400 13 322683 11000 4400 14 322684 11000 4400 15 322685 11000 440....
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....wal notice dated 1st December, 1995 marking the attention of the Respondent. The Committee further noted that the Respondent in spite of aware of the withdrawal of the applications vide letter dated 1st December, 1995, returned the stock invests vide letter dated 14th December, l995 subsequently, however, did not stop the allotment of shares and issued the share certificates to these applicants to the detriment of the general investors. The allotment is done by the Board and not by the intermediary of the SEBI. The Committee noted that the Company without receiving any amount released the share certificates and being aware of the same that there was irregular allotment, no internal action was taken. This shows that it was done at the Respondent's behest. The aforesaid act of the Respondent is unbecoming of a Chartered Accountant and thus, the Respondent is guilty of "Other Misconduct" under Section 22 read with Section 21 of the Chartered Accountants Act, 1949. CONCLUSION : 9. In conclusion, in the considered opinion of the Committee, the Respondent is Guilty of "Other Misconduct" under Section 22 read with Section -21 of the Chartered Accountants Act, 1949." ....
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....e to submit as under: 1. That I qualified as Chartered Accountant and enrolled as a member of the Institute of Chartered Accountants of India (hereinafter referred to as "The ICAl") and obtained Certificate of Practice on 25^th February, 1985. Presently 1 am practicing under the name of M/s S.K. Sethi & Associates, Chartered Accountants (FRN 008808N). 1 became fellow member of the ICAI on 25th February, 1990. 2. That during my career of more than 32 years, this is the first time any allegation of professional misconduct is made against me. There is no past record of any misconduct or any allegation. 3. All the information received against me is-baseless, without any legs and nullity which can be more specifically clear by following submissions: a. I was never the Managing Director of the alleged company M/s Bharthari Financial Services Ltd. and a director simplicitor and was only Chairman of the company which is a non-executive designation. b. It is pertinent to mention here that after the opening of any public issue all the onus/control lies with the intermediaries to the issue. In my case the State Bank of Travancore (A Nationalised Pu....
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....eriod of one year. It is pursuant thereto that the present reference has been made. In the absence of any reply filed by the respondent no. 1, the reference has gone uncontested by the respondent no.1. 15. It may be stated here that similar allegations were made against another Chartered Accountant namely A. K. Chawla of A. K. Chawla and Associates and a similar recommendation was made in the case of A. K. Chawla i.e. for removal of his name for a period of one year. The reference has been answered by a Coordinate Bench of this Court in Council of the Institute of Chartered Accountant Of India v. Ashok Kumar & Anr., 2017:DHC:7218-DB wherein the Court while relying on the judgment of the Supreme Court in the case of council of the Institute of Chartered Accountants & Anr. v. B. Mukherjea, AIR 1958 SC 72, had accepted the reference in exercise of its powers under Section 21(6) of the Act as existed at the relevant time to direct that the respondent therein shall be suspended from the membership of ICAI for a period of one year. He was restrained from rendering any service as a Chartered Accountant as recognized under the Act. 16. Thus, it is clear that the respondent no. 1 was ....
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....turned the original stock invests. The Respondent also admitted that these stock invests were returned to him. However, the letters of BFSL show that the stock invests were addressed to the applicants. The returning of stock invests to the Respondent instead of the applicants clearly shows, the association of the Respondent with Mr. S.K. Gupta and establishes his connivance with him." 25. The DC further notes that when the letter of withdrawal was sent to the company, the stock invests were actually returned to him instead of the investors and this is a clear evidence of connivance between the respondent with Sh. S.K. Gupta by using the names of the applicants. 26. The most glaring fact that completely belies the case of the respondent is that the fixed deposits which were given as security for issuance of the stock invests belonged to the respondent. This is clear from both SEBI's investigation as also the statement recorded by the DC of the ICAI. The respondent admitted that the fixed deposits that were given as security for the issuance of stock invests. Thus there can be no doubt that the respondent was guilty of the misconduct and has failed in his profes....