sebi:ORDER/NH/RJ/2024-25/30719

SEBI · SEBI · 2013-03-15 · N Hariharan, Adjudicating Officer

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Facts / Headnote

Penalty imposed on Noticee for violations of DT Regulations and SEBI Circulars

Provisions invoked

• s. 15
• s. 19
• s. 15H
• s. 15J

Regulations

• Reg. 16
• Reg. 25
• Reg. 14
• Reg. 12
• Reg. 8(1)
• Reg. 12(3)
• Reg. 6
• Reg. 21
• Reg. 59
• Reg. 7
• Reg. 15(1)(r)
• Reg. 15(1)(s)
• Reg. 59(1)

Parties

• Vistra ITCL (India) Limited

Holding

The Adjudicating Officer held that Vistra ITCL (India) Limited, as debenture trustee, violated Regulations 15(1)(r), 15(1)(s) and 16 and Clauses 4, 13 and 15 of Schedule III of DT Regulations along with multiple SEBI Circulars by failing to exercise due diligence regarding PSCL's non-compliance with Regulation 59 of LODR, failing to disclose PSCL's default on its website, failing to inform the CRA about the default, and failing to update default history in the Centralized Database in a timely manner, and imposed a penalty of Rs. 12,00,000 under Section 15HB of the SEBI Act.

Full text

Adjudication Order in the matter of inspection of Vistra ITCL (India) Limited Page 2 of 38 3.3. Clause B of Annexure of SEBI Circular CIR/MIRSD/3/2013 dated March 15, 2013, 3.4. Clause 4(c)(vii) read with Annexure II of SEBI Circular CIR/IMD/DF/17/2013 dated October 22, 2013, 3.5. Clause C of SEBI Circular SEBI/HO/MIRSD/CRADT/CIR/P/2020/230 dated November 12, 2020, 3.6. Clause 3.5 read with Annexure III of SEBI Circular SEBI/HO/DDHS/DDHS1/P /CIR/2021/572 dated June 04, 2021 and 3.7. Clause 2.5 of Chapter XIV of SEBI Circular SEBI/HO/DDHS/P/CIR/2021/613 dated August 10, 2021.

Adjudication Order in the matter of inspection of Vistra ITCL (India) Limited Page 3 of 38 6.1. Failure to carry out due diligence with regard to Material change in NCDs and default recognition in the case of Paranjape Scheme (Construction) Limited (hereinafter referred to as ‘PSCL’) Failure to carry out due diligence with regard to Material change in NCDs 6.1.1. Regulation 59 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as ‘LODR’) inter alia states as under: “59. (1) The listed entity shall not make material modification without prior approval of the stock exchange(s) where the non-convertible debt securities or non-convertible redeemable preference shares, as applicable, are listed, to: (a)the structure of the non-convertible debt securities debenture in terms of coupon, redemption, or otherwise. …” (Emphasis added) 6.1.2. During the course of the inspection, it was observed that the Noticee was acting as the DT for non-convertible debentures (hereinafter referred to as ‘NCDs’) issued by Paranjape Schemes (Construction) Limited (hereinafter referred to as ‘PSCL’). Initially, the date of redemption of the said NCDs was October 31, 2019. It was observed that the redemption date of the said NCDs issued by PSCL was changed three times vide 4th, 5th and 6th amendments to the trust deed. The details of the said 4th, 5th and 6th amendments to the trust deed are provided below:  Vide 4th amen

Adjudication Order in the matter of inspection of Vistra ITCL (India) Limited Page 4 of 38  Vide 6th amendment to the trust deed dated November 24, 2021, the date of redemption of the said NCDs was extended to March 31, 2022. 6.1.3. In the PIA, it is alleged that Noticee vide email dated April 21, 2023 to SEBI has, inter alia, mentioned that the prior approval of the Stock Exchange was not taken by PSCL before undertaking the aforesaid modifications to the structure of said NCDs. In this context, it is alleged that the said 4th, 5th and 6th amendments to the trust deed were made without the prior approval of the Stock Exchange in contravention of Regulation 59 of LODR. 6.1.4. It is noted that Regulation 15(1)(r) of DT Regulations inter alia requires DT to inform SEBI immediately of any breach of the trust deed or provision of any law, which comes to the knowledge of the trustee. Further, Regulation 15(1)(s) of DT Regulations inter alia requires DT to exercise due diligence to ensure that the Issuer complies with the provisions of the Companies Act, LODR or any other regulations issued by the Board. 6.1.5. In this regard, it is alleged in the PIA that the Noticee has failed to exercise due diligence to ensure compliance by PSCL with the provisions of Regulation 59 of LODR. Further, it is alleged that the Noticee has not informed SEBI about the breach of Regulation 59 of LODR by PSCL as per the mandate of Regulation 15(1)(r) of DT Regulations. 6.1.6. Therefore, Noticee is alle

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