sebi:Order/SRP/AE/2018-19/2397
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Facts / Headnote
Violations found under Section 12A(a),(b),(c) of SEBI Act read with Regulations 3(a),(b),(c),(d) and 4(1) of PFUTP Regulations, and Section 21 of SCRA, 1956 read with Clauses 32, 36(7) and 50 of Listing Agreement
Provisions invoked
- s. 15
- s. 12A
- s. 21
- s. 15H
- s. 372A
- s. 12
- s. 15J
- s. 23J
- s. 23E
- s. 23
- s. 376
Regulations
- Reg. 36
- Reg. 2(c)
- Reg. 3
- Reg. 2(1)(c)
- Reg. 200
- Reg. 3(a)
- Reg. 103
- Reg. 3(d)
- Reg. 3(b)
- Reg. 3(c)
Parties
- Sybly Industries Ltd
- Mr. Mahesh Chand Mittal
- Mr. Umesh Kumar Mittal
- Mr. Vimal Prakash Mittal (Noticee No. 4, deceased May 2011)
Holding
The Adjudicating Officer found that Sybly Industries Ltd and its Noticees violated Section 12A(a),(b),(c) of the SEBI Act read with Regulations 3(a),(b),(c),(d) and 4(1) of the PFUTP Regulations by executing a fraudulent GDR issuance scheme, and violated Section 21 of SCRA, 1956 read with Clauses 32, 36(7) and 50 of the Listing Agreement by failing to disclose the Pledge Agreement, GDR delisting/termination, and by not complying with Accounting Standards 1, 3 and 29.
Full text
Adjudication Order in respect of Sybly Industries Ltd in the matter of GDR issue by Sybly Industries Ltd Page 2 of 41 dated May 30, 2008 signed between Sybly and EURAM Bank, wherein Sybly pledged GDR proceeds against the loan availed by Vintage FZE for subscribing to GDRs of Sybly. Investigations, prima facie, observed that the aforesaid Pledge Agreement was an integral part of Loan Agreement entered into between Vintage FZE and EURAM Bank, and these agreements enabled Vintage FZE to avail the loan from EURAM Bank for subscribing GDRs of Sybly. It was alleged that the GDR issue would not have been subscribed had Sybly not given such security towards the loan taken by Vintage. Investigations observed that the Company had reported to BSE that the GDR issue of the Company has been successfully subscribed which made investors believe that the said GDR issue was genuinely subscribed. Investigations also observed that the aforesaid arrangement (viz. Loan Agreement and Pledge Agreement) was not disclosed to the public, and the Company allegedly reported misleading news to the stock exchange which contained information in a distorted manner and may have influenced decision of investors. Therefore, it was alleged that the scheme of issuance of GDRs was fraudulent. Investigations further alleged that Sybly did not inform stock exchanges as required under Clause 36(7) of Listing Agreement with regard to Pledge Agreement entered into with EURAM Bank for subscription of GDRs, delisting of
Adjudication Order in respect of Sybly Industries Ltd in the matter of GDR issue by Sybly Industries Ltd Page 3 of 41 Regulations"), and under Section 23E of Securities Contracts (Regulation) Act, 1956 (hereinafter referred to as “SCRA, 1956”) for the alleged violation of the provisions of Section 21 of SCRA, 1956 read with Clauses 32, 36(7) and 50 of Listing Agreement. APPOINTMENT OF THE ADJUDICATING OFFICER
Adjudication Order in respect of Sybly Industries Ltd in the matter of GDR issue by Sybly Industries Ltd Page 4 of 41 3. The Noticees have acted during the entire course of action pertaining to the GDR Issue, in the Interest of Noticee No. 1 and every step and action within the frame work of the provision of the applicable Laws of the Land.
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Source: SecMarx — sebi:Order/SRP/AE/2018-19/2397. 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.