sebi:ORDER/SBM/KL/2021-22/14426

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

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Facts / Headnote

Penalty imposed under Section 15HA of the SEBI Act for aiding and abetting fraudulent diversion of IPO proceeds

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

• Mr. Nitesh Doshi (Proprietor of Nirvani Enterprises)

Holding

The Noticee, as sole proprietor of Nirvani Enterprises, aided and abetted Paramount Printpackaging Ltd. (PPL) in the fraudulent diversion/mis-utilisation of IPO proceeds to the tune of Rs. 98,36,670/- by raising a fake bill in the name of PPL without rendering any service in return.

Full text

Adjudication order in the matter of Paramount Printpackaging Ltd. Page 2 of 23 received 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 signed by its director viz. Mr. Divyesh Sukhadia, wherein, he submitted that PPL had made payments to the vendors, including Nirvani, in connection with the IPO of PPL, on the instructions of Mr. Pandoo Naig, the MD of OCAL. He further submitted that, PPL however, did not receive any service/work from the aforesaid vendors against the payments made to them. Further, he alleged that the IPO proceeds to the tune of Rupees Thirty-Seven crores were duped by OCAL and Mr. Pandoo Naig in this process and requested SEBI to launch an enquiry in the matter.

Adjudication order in the matter of Paramount Printpackaging Ltd. Page 3 of 23 was raised by Nirvani to show that Nirvani was one of the vendors of PPL for the purpose of undertaking some work/contract for PPL. The said 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 ‘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 further alleged that the name of Nirvani was also not figuring in the list of vendors in the disclosures made in the prospectus of PPL. In this regard, it is observed that the Noticee vide his letter dated July 15, 2013 submitted that he 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.

Adjudication order in the matter of Paramount Printpackaging Ltd. Page 4 of 23 2021 was issued to the Noticee in terms of Rule 4 (1) of the Adjudication Rules read with Section 15-I of the SEBI Act to show cause as to why an inquiry should not be held against the Noticee and why penalty be not imposed on him in terms of section 15HA of the SEBI Act for the violations alleged to have been committed by the Noticee. The SCN, inter-alia, alleged the following :- a. Vide letter dated July 15, 2013, Noticee no.1/Mr. Nitesh, who was the proprietor of Nirvani Enterprises (hereinafter referred to as ‘Nirvani’), submitted before SEBI that the promoters of PPL had approached Nirvani, through Mr. Pandoo, to accommodate them and raise bills in the name of PPL. Accordingly, Nirvani had raised bills in the name of PPL and thereafter received an amount of Rs. 98,36,670/-. Noticee no. 1 further submitted that as per the understanding, the aforementioned amount was returned to PPL (promoters of the company), after withholding a nominal amount by Nirvani, towards facilitation fees.

Source: SecMarx — sebi:ORDER/SBM/KL/2021-22/14426. 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.