sebi:ORDER/SBM/KL/2021-22/14423

SEBI · SEBI · 2013-07-15 · Suresh B Menon, Adjudicating Officer

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Facts / Headnote

Noticee held in violation of Regulation 3(b), (c) and (d) of PFUTP Regulations; penalty imposed (amount not specified in extract)

Provisions invoked

• s. 15
• s. 19
• s. 12A
• s. 15H
• s. 15I
• s. 15J
• s. 15F

Regulations

• Reg. 3
• Reg. 2(1)(c)
• Reg. 2

Parties

• Harshadbhai Modi (Noticee)

Holding

The Noticee, along with Mr. Nitesh Doshi (proprietor of Nirvani Enterprises), was found to have aided and abetted Paramount Printpackaging Ltd. (PPL) in a fraudulent scheme to divert/mis-utilise IPO proceeds of Rs. 98,36,670/- by generating a fake bill in the name of PPL, in violation of Regulation 3(b), (c) and (d) of the PFUTP Regulations.

Full text

Adjudication order in the matter of Paramount Printpackaging Ltd. Page 2 of 23 an amount of Rs. 98,36,670/- from PPL on May 07, 2011 out of the IPO proceeds. It was further mentioned in the letter dated July 15, 2013 that the aforementioned amount was returned to PPL by Nirvani after withholding a nominal amount as facilitation fees. Further, it is observed that SEBI received a complaint dated June 16, 2014 from PPL, which was signed by its director viz. Mr. Divyesh Sukhadia, wherein, he mentioned that PPL had made payments to various vendors, including Nirvani, in connection with the IPO of PPL, on the instructions of Mr. Pandoo Naig, the MD of OCAL. The director of PPL further submitted that PPL had not received any service/work from the aforesaid vendors against the payments made to them. It was further alleged by the director of PPL that the IPO proceeds to the tune of Rupees Thirty-Seven crores were duped by OCAL and Mr. Pandoo Naig in the process and requested SEBI to launch an enquiry in the matter.

Adjudication order in the matter of Paramount Printpackaging Ltd. Page 3 of 23 for the purpose of undertaking some work/contract for PPL. The bill was raised by Nirvani immediately after the IPO proceeds were credited into the escrow account of PPL. It is observed that in respect of the aforementioned bill, PPL paid an amount of Rs. 98,36,670 /- to Nirvani out of the IPO proceeds on May 07, 2011, for the purpose of ‘cost towards interior designing charges’. However, during the course of investigation, it emerged that PPL had not received any service from Nirvani, in lieu of the payment made and it is also alleged that the name of Nirvani was also not figuring in the list of vendors as per the disclosures made in the prospectus of PPL. In this regard, pursuant to investigations, it is alleged that Mr Nitesh (Prop- Nirvani) in connivance with the Noticee had accommodated the promoters of PPL by raising the said bill in the name of PPL and thereafter, returned the amount received by Nirvani to PPL after withholding a nominal amount towards facilitating the above transaction, without providing any service/work in return. During the course of investigations, it was observed that Noticee has admitted to the fact that he was the one who was managing the day to day affairs of Nirvani and he was also operating the bank account of Nirvani. It was further affirmed by the Noticee during the proceedings that he had raised the bill on PPL for Rs 98.36 lacs along with Mr Nitesh in return fo

Adjudication order in the matter of Paramount Printpackaging Ltd. Page 4 of 23 SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING

Source: SecMarx — sebi:ORDER/SBM/KL/2021-22/14423. 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.