sebi:10236

SEBI · SEBI · G.N. Bajpai, Chairman, SEBI

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Facts / Headnote

Restrained Majestic Industries Ltd., its directors and associates from accessing the securities market and from being associated with the securities market for a period of 5 years; Amit Gupta discharged from the proceedings.

Provisions invoked

• s. 4(3)
• s. 11(4)

Regulations

• Reg. 2(c)
• Reg. 3

Parties

• Majestic Industries Ltd.
• Shri VS Gupta
• Shri N K Gupta
• Shri Vinod Gupta
• Shri Subhash Gupta
• Shri G K Gupta
• Prof. RK Gupta
• Smt Indu Gupta
• Seema Gupta
• Kamlesh Gupta
• Amit Gupta
• M/s Majestic Metaliks Pvt Ltd.
• M/s. Bhatia Financiers
• M/s. Goyal Finance & Investment Co.

Holding

MIL, its directors and associate entities were found guilty of financing applications in the rights issue after closure by diverting company funds, constituting fraud and violations of the PFUTP Regulations, and were restrained from accessing the securities market for 5 years.

Full text

of Rs.50/- per share aggregating to Rs.16,80,00,000. The public issue opened on 14.03.1996 and closed on 19.03.1996. The Bankers to the Rights Issue were Punjab National Bank, State Bank of Patiala and Vysya Bank. SEBI had conducted an investigation into the price rigging in the share of MIL during 1996-97. During the course of investigation and analysis of the bank statements of MIL, its directors and their associates, it emerged that MIL had shown subscription in the Rights Issue through fraudulent means.

Ø MIL transferred Rs.14,75,000/- to the account of M/s Bhatia Financiers ( PNB Sector 9 A/c 988) on 11.4.96 and after receiving this amount M/s Bhatia Financiers paid Rs. 14,60,000/- into the account of Smt. Indu Gupta who used this money to submit her application form in State Bank of Patiala. Ø Subsequently, Rs. 2,10,08,000/- were transferred from the account of MIL (PNB A/c No. 953) to the account of M/s Bhatia Financiers (PNB Sector 9 A/c 988) & Rs. 90,05,000/- were transferred to the account of M/s Goyal Finance & Investment Co. ( PNB Sector 9 A/c No. 988) on 15.4.96. Ø M/s. Bhatia Financiers transferred Rs. 2,10,00,000/- from their account (PNB Sector 9 A/c No. 988 ) to the account of Shri Subhash Gupta ( PNB Sector 9 A/c 2368) on 15.4.96 and M/ s. Goyal Financiers transferred Rs. 90,00,000/- from their account (PNB A/c No. 989 ) to the account of M/s. Majestic Metaliks Pvt. Ltd. on 15.4.96. Ø Sh. Subhash Gupta later submitted his application form at State Bank of Patiala, Chandigarh Branch on 10.04.1996 with Cheque No. 489324 for Rs 2,10,00,000/- drawn on his PNB A/c No. 2368. Ø M/s. Majestic Metaliks Pvt. Ltd. also submitted its application form at State Bank of Patiala, Chandigarh Branch on 10.04.1996 accompanied with Cheque No. 732207 for Rs 90,00,000/- drawn on their account (PNB A/c No. 302). Ø Rs. 2,10,00,000 was debited from the account of Sh. Subhash Gupta ( PNB A/c No. 2368) on 15.4.96 and Rs. 90,00,000 were debited to the account of M/s. Majestic Metaliks Pvt

transferred Rs 3,35,50,000 to the account of M/s. Goyal Finance on 19.4.96. Ø M/s. Goyal Finance transferred Rs. 3,35,00,000 to the account of Sh. Vidya Sagar Gupta on 19.4.96 at Bank of India, Sector 17, Chandigarh. Subsequently Sh. Vidya Sagar Gupta deposited his application with Cheque No. 276336 dated 10.4.1996 in PNB Sector 9. (As per letter dated 4.9.2003 received from PNB Sector 9 the application was dated 10.4.1996. They have also confirmed that Cheque No. 276336 was sent for clearing on 22.4.1996 and realized on the same day). Ø Rs 3,40,00,000 was transferred from MIL Rights Issue Collection Account ( PNB, Sector 9 A/c No. 580) to MIL Rights Issue Main Account Collection Account ( PNB, Sector 9 A/c No. 580) on 23.4.96 where collections made at various branches were being accumulated. On the same day i.e. Rs.3,53,00,000 was transferred to the account of MIL ( PNB Sector 9 A/c No. 953). Ø MIL then released Rs. 4,08,00,000 from its account ( PNB Sector 9 A/c No. 953) to the account of M/s Bhatia Financiers ( PNB Sector 9 A/c No. 988 ) on 24.4.96. Ø M/s Bhatia Financiers used this amount of Rs 4,08,00,000 to transfer the following amounts to the following persons as per details given below :- Name Date of transfer Amount ( in Rs ) Cheque No. Seema Gupta 24.4.96 412000 851163 Kamlesh Gupta 24.4.96 1060000 851162 N.K. Gupta 24.4.96 13100000 851160 G.K. Gupta 24.4.96 13100000 851159

Source: SecMarx — sebi:10236. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.