sebi:Order/SRP/AE/2018-19/2441

SEBI · SEBI · 2008-03-31 · Satya Ranjan Prasad, Adjudicating Officer

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Provisions invoked

• s. 15
• s. 12A
• s. 15H
• s. 372A
• s. 12
• s. 15J
• s. 376

Regulations

• Reg. 2(c)
• Reg. 3
• Reg. 2(1)(c)
• Reg. 200
• Reg. 3(a)
• Reg. 3(d)
• Reg. 3(b)
• Reg. 3(c)

Parties

• Mr. Umesh Kumar Mittal

Holding

The Adjudicating Officer found that the entire scheme of GDR issuance by Sybly Industries Ltd was fraudulent, as the GDR subscription was facilitated through a loan to Vintage FZE secured by a pledge of the GDR proceeds, rendering the proceeds unavailable to the company. The Noticee, Mr. Umesh Kumar Mittal, was found to have acted as a party to the fraudulent scheme by approving the board resolution of March 31, 2008 and executing the Pledge Agreement dated May 30, 2008.

Full text

Adjudication Order in respect of Mr. Umesh Kumar Mittal in the matter of GDR issue by Sybly Industries Ltd Page 2 of 29 Managing Director and Mr. Umesh Kumar Mittal, Director (hereinafter referred to as “Noticee”) to sign any application, agreement etc. as may be required by the EURAM Bank. Subsequently, the Noticee and Mr. Mahesh Chand Mittal executed a Pledge Agreement between Sybly and EURAM Bank on May 30, 2008, whereby Sybly pledged the GDR proceeds against the loan availed by Vintage FZE for subscribing to GDRs of Sybly, thus securing Vintage FZE’s loan. Investigations 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 t

Adjudication Order in respect of Mr. Umesh Kumar Mittal in the matter of GDR issue by Sybly Industries Ltd Page 3 of 29 APPOINTMENT OF THE ADJUDICATING OFFICER

Adjudication Order in respect of Mr. Umesh Kumar Mittal in the matter of GDR issue by Sybly Industries Ltd Page 4 of 29 A. Submission in respect of violation of 12A of SEBI Act, 1992 : No person shall directly or indirectly; i. use or employ, in connection with the issue, purchase or sale of any securities listed or proposed to be listed on a recognised stock exchange, any manipulative or deceptive device or contrivance in contravention of the provisions of this Act or the rules or the regulations mad e thereunder; Reply : It is humbly submitted that Company and the Directors had engaged only in reputed and authorized Agencies in connection with the GDR issue. Since the GDRs were issued and listed with Luxembourg Stock Exchange, Company and the Directors had followed all the compliances as were required to be made as per rules of Luxembourg Stock Exchange. Further, the Company and the Directors had followed all Law(s), rule(s) and regulation(s) as were applicable in India i.e. Companies Act 2056, FEMA, SEBI Act & Regulation and Listed Agreement. Further, you will appreciate that in your SCN also there were no allegation that either of the Company or the Directors had manipulated or used any deceptive device. ii. employ any device, scheme or artifice to defraud in connection with issue or dealing in securities which are listed or proposed to be listed on a recognised stock exchange. Reply : It is humbly submitted that 3,02,05,000 No. of equity Shares was issued in connection o

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