sebi:AO/SBM/EAD1/2022-23/16303-16304

SEBI · SEBI · 2011-12-28 · Suresh B Menon, Adjudicating Officer

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Facts / Headnote

Noticees held liable for violations of ICDR Regulations 57(1), 57(2) read with Schedule VIII Part A (16)(b) and 60(4), and sections 12A(a)-(c) of SEBI Act read with Regulations 3 & 4 of PFUTP Regulations; violations of sections 62, 63, 68 read with section 55A of Companies Act not applicable as it falls under Central Government domain; clause 49 Listing Agreement violation against Noticee 2 disposed of by separate order dated August 27, 2018.

Provisions invoked

• s. 15
• s. 19
• s. 12A
• s. 12
• s. 372A
• s. 55A
• s. 15J
• s. 23
• s. 21
• s. 171
• s. 58
• s. 171(2)
• s. 192

Regulations

• Reg. 3
• Reg. 47
• Reg. 3(a)
• Reg. 57(1)
• Reg. 57
• Reg. 60
• Reg. 55
• Reg. 60(4)
• Reg. 57(2)(b)

Parties

• RDB Rasayans Ltd (Noticee no. 1)
• Mr. Shanti Lal Baid (Noticee no. 2)

Holding

The Noticees violated Regulations 57(1) and 57(2) read with Schedule VIII Part A (16)(b) and Regulation 60(4) of ICDR Regulations for non-disclosure of material information in the prospectus and mis-utilisation of IPO proceeds, and also violated sections 12A(a) to (c) of the SEBI Act and Regulations 3 & 4 of the PFUTP Regulations by adopting manipulative and deceptive devices to suppress material facts from investors.

Full text

Page 2 of 49 opened at Rs. 85 and closed at Rs. 26.95 on the day of listing i.e. October 07, 2011. Thus, there was wide fluctuations and volatility in the scrip of RDB on the date of the listing of the scrip.

Page 3 of 49 and 15HA of the SEBI Act and also under section 23 H of the SCRA ( in respect of Noticee no. 2). 5. It was observed that, against the aforementioned interim order dated December 28, 2011, both Noticee nos. 1 & 2 had filed a writ petition (Writ Petition no. 1971(W) of 2012) before the Hon’ble Calcutta High Court contending inter alia that sections 11(1), 11B and 19 of the SEBI Act are ultra vires the Constitution of India and prayed for a stay on the operation of the said interim order. By an order dated February 08, 2012, while the Hon’ble Calcutta High Court observed that it did not find any reason to stay the impugned interim order, the same shall not prevent SEBI from carrying on further investigation into the matter. Pursuant to the same, the two petitioners i.e Noticee nos. 1 & 2, filed an application before the Ld. Single Judge of the Hon’ble Calcutta High Court seeking modification of the Order dated February 08, 2012 to the extent that RDB be allowed to withdraw an amount of Rs 6.5 crores from the amount deposited in the escrow bank account. Vide an interim

Page 4 of 49 application and while disposing of the SLP, the Hon’ble SC directed the following:- a. The parties to withdraw their writ petition filed before the Calcutta High Court and the same is therefore dismissed as withdrawn; b. All interim orders in the aforesaid writ petition filed before the Calcutta High Court to stand vacated and the appeal filed by SEBI dismissed as infructuous. c. The parties not to transfer/encumber and/or alienate the fixed assets of RDB to the value of Rs 6.5 crores or raise further capital in the market and the monies lying deposited in the escrow account to remain so deposited till further orders are passed by WTM - SEBI. d. SEBI to pass an order in accordance with law in the matter after consideration of the objections / reply to the SCN already submitted by the parties, within a period of three months. e. The SLP to stand disposed of accordingly.

Source: SecMarx — sebi:AO/SBM/EAD1/2022-23/16303-16304. 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.