sebi:Order/PM/NK/2019-20/4575-4578
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Facts / Headnote
Show Cause Notices disposed of without imposition of penalty; alleged violations not established
Provisions invoked
- s. 11B
- s. 11A
- s. 11
- s. 15
- s. 19
- s. 21
- s. 15H
- s. 15J
- s. 108
- s. 149
- s. 177
- s. 203
- s. 101
- s. 178
- s. 185
- s. 121
- s. 138
Regulations
- Reg. 3
- Reg. 4(1)
- Reg. 3(b)
Parties
- Pacific Finstock Limited (Noticee 1)
- Jayesh Raichandbhai Thakkar (Noticee 2)
- Bhavesh Desai (Noticee 3)
- Chandresh V. Kahar (Noticee 4)
Holding
The alleged violations of sections 12A(a), (b) and (c) of the SEBI Act, 1992 and Regulation 3(b), 3(c), 3(d) and Regulation 4(1) and 4(2)(f) and 4(2)(r) of the SEBI (PFUTP) Regulations, 2003 were not established against the Noticees, and the Show Cause Notices were disposed of without imposition of penalty.
Full text
Page 2 of 23 2. The Forensic Audit Report (hereinafter referred to as FAR), furnished by BSE, inter alia, concluded that during the period under audit i.e., April 01, 2015 till January 15, 2018, the company had undertaken certain transactions which are pre-judicial to the interest of the Company. The FAR categorised its observation broadly into I) Misrepresentation, II) Misuse of books of Accounts /Funds and III) Other Observations.
Page 3 of 23 2 Jayesh Raichandbhai Thakkar (hereinafter referred to as Noticee 2 / Jayesh) EAD/AO-PM/NK/PFL/13534/2/2019 Dated May 29, 2019 3 Bhavesh Desai (hereinafter referred to as Noticee 3 / Bhavesh) EAD/AO-PM/NK/PFL/13534/3/2019 Dated May 29, 2019 4 Chandresh V. Kahar (hereinafter referred to as Noticee 4 / Chandresh) EAD/AO-PM/NK/PFL/13534/4/2019 Dated May 29, 2019
Page 4 of 23 for last 3 financial years. A perusal of few loan agreements further revealed the interest and repayment clause mentioned in the agreement as under – Interest clause - At an interest rate mutual decided by the management and penal interest for late payment of repayment @ 1 % p.a. Repayment Clause - 45 Months. Repayment schedule such as the EMI or installment, commencement of repayment has not been prescribed in the agreement. Moreover, the agreements entered by the company were on plain paper and neither notarized nor on Non-judicial stamp paper which does not have any legal sanctity and are not enforceable in the court of law. Further, till 2017, the company had neither recovered nor charged any interest on the loans and advances given which is prejudicial to the interest of the company. However, the company started charging interest from 2017-18 onwards. Long outstanding (almost for more than 5 years) loans & advances and investment in shares related to Mr. Jayesh Raichand Thakkar (one of the directors) were adjusted by passing of book entries in the books of account without actual transaction taking place. Giving loans & advances without interest is pre-judicial to the interest of the company and is a contravention to the object clause of the company. Non- Disclosure of facts and figures in the financial statements with regard to related parties. The company had not disclosed the names of the related parties in its Audited Financial statements under the
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Source: SecMarx — sebi:Order/PM/NK/2019-20/4575-4578. 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.