sebi:EAD-7/BD/NR/2019-20/7083-85

SEBI · SEBI · 2010-07-27 · B J Dilip, Adjudicating Officer

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Facts / Headnote

Monetary penalty imposed on the Noticees under Section 15HA of the SEBI Act for violations of SEBI (PFUTP) Regulations, SEBI Act and SEBI (ICDR) Regulations

Provisions invoked

• s. 15
• s. 12A
• s. 12
• s. 62
• s. 63
• s. 15H
• s. 55A
• s. 15I
• s. 15J
• s. 28A

Regulations

• Reg. 3
• Reg. 4
• Reg. 2(1)(c)
• Reg. 4(2)
• Reg. 57
• Reg. 57(1)
• Reg. 2(1)(b)

Parties

• Midfield Industries Ltd.
• Madhu Mohan Reddy (Noticee 2)
• M. Ashok Sagar (Noticee 3, Whole Time Director/Executive Director)

Holding

The Noticees were held to have violated Regulations 3(b), (c), (d), 4(1), 4(2)(f) and (k) of the SEBI (PFUTP) Regulations, 2003 read with Section 12A(a), (b) and (c) of the SEBI Act, 1992 and Regulation 57(1) of the SEBI (ICDR) Regulations, 2009, by diverting IPO proceeds for purposes not disclosed in the prospectus, and a monetary penalty was imposed under Section 15HA of the SEBI Act.

Full text

Adjudication Order in the matter of Midfield Industries Ltd., Page 2 of 25 2. Midfield was incorporated in the year 1990 and made an IPO through a prospectus dated July 27, 2010 with an issue size of 45,00,000 equity shares of face value ` 10/- and issue price of ` 133/-, aggregating ` 59.85 crores. The price band of the issues was between ` 126/- to ` 133/- The bids opened on July 19, 2010 and closed on July 21, 2010. The Book Running Lead Manager (hereinafter referred to as “BRLM”) for the issue was Atherstone Capital Markets Limited. The issue was graded by Brickwork Ratings India Private Ltd., and was assigned the IPO Grade 2 indicating below average fundamentals. The equity shares were proposed to be listed on the BSE Limited (hereinafter referred to as “BSE”) only. The issue was oversubscribed 12.92 times with 37,780 applications received during bidding period for 5,81,41,450 equity shares

Adjudication Order in the matter of Midfield Industries Ltd., Page 3 of 25 violation of the provisions SEBI Act, SEBI (ICDR) Regulations and SEBI (PFUTP) Regulations. Pursuant to internal restructuring, Shri Jeevan Sonparote was appointed as the Adjudicating Officer vide Order dated May 18, 2017 to inquire into and adjudge the alleged violations committed by the Noticees. Consequent upon change in the Adjudicating Officer, the undersigned has been appointed as the Adjudicating Officer vide Order dated September 26, 2019.

Adjudication Order in the matter of Midfield Industries Ltd., Page 4 of 25  M r. M. Ashok Sagar, Whole Time Director /Executive Director  Mr. Ashok Kumar Kolla Director Non-Executive, Non Independent  Mr. Raja Raju Kothapalli Independent Director Non-Executive, Independent  Mr. Kamlesh Kumar Bhargava Independent Director Non- Executive, Independent  Mr. V. G. Krishna Rao Independent Director Non-Executive, Independent (iv) After my resignation from the post of Executive Director in 2012 the other Board of Directors continued to be in the Board and they are only responsible for the decisions taken by the company. As is evident from the above it is succinctly clear that I am not at all responsible for the decisions taken by the Managing Director of the Company along with other Directors of Midfield Industries. (v) Hence, I earnestly request this authority to withdraw the show cause notice as I am no way responsible for the financial decisions taken by the above mentioned Directors.

Source: SecMarx — sebi:EAD-7/BD/NR/2019-20/7083-85. 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.