sebi:Order/GR/KG/2021-22/14437-14441

SEBI · SEBI · 2019-05-17 · G. Ramar, Adjudicating Officer

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Facts / Headnote

Proceedings against Noticee No. 5 (Mr. Narendra Patel) disposed of without directions due to his death; penalties imposed on remaining Noticees for violations of PFUTP Regulations and Listing Agreement clauses; proceedings continued ex-parte against Noticees who did not respond.

Provisions invoked

• s. 11B
• s. 15A
• s. 15
• s. 19
• s. 12A
• s. 12
• s. 21
• s. 15H
• s. 27
• s. 15J
• s. 11C
• s. 28A
• s. 11C(2)
• s. 23I
• s. 27(1)
• s. 23E
• s. 77(2)
• s. 29
• s. 2(60)

Regulations

• Reg. 3
• Reg. 3(a)
• Reg. 12A

Parties

• Sterling Biotech Limited (Noticee No. 1)
• Mr. Nitin Sandesara (Noticee No. 2)
• Mr. Chetan Sandesara (Noticee No. 3)
• Mr. Rajbhushan Dixit (Noticee No. 4)
• Mr. Narendra Patel (Noticee No. 5)
• Mr. Vilas Joshi (Noticee No. 6)
• Mr. P B Mehta (Noticee No. 7)

Holding

The Adjudicating Officer held that Sterling Biotech and its directors violated Section 12A(a),(b),(c) of the SEBI Act read with PFUTP Regulations by financing the subscription of its own GDRs through a pledge arrangement without disclosure, and that Sterling violated Section 21 of SCRA read with Listing Agreement clauses 32, 36(7) and 50 for non-disclosure of price-sensitive information and non-compliance with accounting standards. Penalties were imposed on the Noticees, while proceedings against Mr. Narendra Patel were disposed of due to his death.

Full text

Adjudication Order in repsect of the Directors of Sterling Biotech Limited in the matter of its GDR issue Page 2 of 62 BACKGROUND: 1. SEBI had conducted investigation into the GDR issue by M/s.Sterling Biotech Ltd (‘hereinafter referred to as ‘Sterling /Company’) for the period September 01, 2003 to October 31, 2003 (hereinafter referred to as ‘Investigation Period’). The investigation had prima facie observed that Sterling had financed the subscription of its own GDR.

Adjudication Order in repsect of the Directors of Sterling Biotech Limited in the matter of its GDR issue Page 3 of 62 i. Under Section 15HA of the SEBI Act, 1992, and Section 23E of Securities Contracts (Regulation) Act, 1956 (‘SCRA, 1956’) the alleged violations of the provisions of Section 12(a), (b) and (c) of SEBI Act, 1992 read with Regulation 3(a), (b), (c), (d), 4(1), 4(2)(f), (k) and (r) of SEBI (Prohibition of Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (hereinafter referred to as ‘PFUTP Regulations’), and Section 21 of SCRA, 1956 read with Clauses 32, 36(7) and 50 of Listing Agreement by Sterling (Noticee No.1). ii. Under Section 15HA of the SEBI Act, 1992 the alleged violations of the provisions of Section 12(a), (b) and (c) of SEBI Act, 1992 read with Regulation 3(a), (b), (c), (d), 4(1) of PFUTP Regulations by Mr. Nitin Sandesera (DIN 00255496) (Noticee No.2), Mr. Chetan Sandesara (DIN 00255671) (Noticee No.3), Mr. Rajbhusan Dixit (DIN 00025484)(Noticee No.4), Mr. Narendra Patel (DIN 01624527) (Noticee No.5), Mr. Vilas Joshi (DIN 00507833) (Noticee No.6), and Mr. P B Mehta (DIN 01392227) (Noticee No.7). iii. Under Section 15A(a) of SEBI Act, 1992, the alleged violation of the provisions of Section 11C(2) of SEBI Act, 1992 by Mr. Nitin Sandesera Noticee No.2

Adjudication Order in repsect of the Directors of Sterling Biotech Limited in the matter of its GDR issue Page 4 of 62 Subsequent to the transfer of Shri Biju S., the case was transferred to Shri Satya Ranjan Prasad, Chief General Manager and upon his transfer, the undersigned was appointed as the AO, vide order dated May 17, 2019.

Source: SecMarx — sebi:Order/GR/KG/2021-22/14437-14441. 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.