sebi:WTM/AB/IVD/ID19/14342/2021-22

SEBI · SEBI · 2020-08-19 · Ananta Barua, Whole Time Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

AIPL found in violation of multiple LODR Regulations provisions; Noticees 4, 5 and 6 restrained from securities market for six months; penalties imposed on Noticees 1 to 6 and 8

Provisions invoked

• s. 11A
• s. 11
• s. 15A
• s. 19
• s. 11(1)
• s. 11B
• s. 12A
• s. 11(2)
• s. 15H
• s. 27
• s. 15J
• s. 15F
• s. 21
• s. 23E
• s. 23H
• s. 149(12)
• s. 118
• s. 12A(1)
• s. 23(3)
• s. 18(3)

Regulations

• Reg. 3
• Reg. 4(1)
• Reg. 4(2)
• Reg. 200
• Reg. 3(b)
• Reg. 2(1)
• Reg. 4(2)(f)
• Reg. 4
• Reg. 4(1)(a)
• Reg. 33
• Reg. 13(3)
• Reg. 48
• Reg. 18(3)
• Reg. 17(8)
• Reg. 4(1)(c)
• Reg. 4(2)(f)(i)
• Reg. 33(2)(a)
• Reg. 25(5)
• Reg. 17(7)
• Reg. 33(1)(d)

Holding

AIPL was found in violation of Regulations 4(1)(c), 13(3), 17(7), 17(9)(a), 23(3), 33(1)(d), 34(2)(b), 36(3) and 48 of the LODR Regulations for failures including non-disclosure of related party transactions, failure to place minimum information before the Board, failure to specify indicative base price in omnibus approvals, non-disclosure of relationship between directors, and non-compliance with accounting standards. Noticees 4, 5 and 6 were restrained from accessing the securities market for six months, and penalties were imposed on Noticees 1 to 6 and 8 under Sections 15A(a) and 15HB of the SEBI Act, 1992.

Full text

Final Order in the matter of ARSS Infrastructure Projects Limited Page 1 of 95 WTM/AB/IVD/ID19/14342/2021-22 SECURITIES AND EXCHANGE BOARD OF INDIA FINAL ORDER

Final Order in the matter of ARSS Infrastructure Projects Limited Page 2 of 95 Exchange Board of India (hereinafter referred to as “SEBI”). The SCN was issued to the Noticees asking them to show cause as to why suitable directions be issued and/or penalty be not imposed, as deemed fit under Sections 11(1), 11(4), 11(4A), 11A and 11B(1), 11B(2) read with Sections 15A(a), 15HA and 15HB of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as “SEBI Act, 1992”), Sections 12A(1) and 12A(2) read with Sections 23E and 23H of Securities Contracts (Regulations) Act, 1956 (hereinafter referred to as “SCRA, 1956”) against them. The SCN, inter alia, alleged that ARSS Infrastructure Projects Limited (hereinafter also referred to as “AIPL” / “the Company”) had failed to present true and fair financial statements and had executed transactions which are non-genuine in nature tantamounting to misrepresentation of the accounts/ financials statement and misuse of account/ funds of the Company. It was further alleged that AIPL had misused funds/ misrepresented books of accounts which are detrimental to the interests of genuine investors and are fraudulent in nature. It was also alleged that the directors, Chief Executive Officer (hereinafter referred to as “CEO”) and the Chief Financial Officer (hereinafter referred to as “CFO”) (i.e. Noticee nos. 2 to 8) of Noticee no.1 had failed to exercise duty of care, by misrepresenting the financials/misusing the funds. It was o

Final Order in the matter of ARSS Infrastructure Projects Limited Page 3 of 95 Regulations 3(b), (c) & (d), 4(1) and 4(2) (f) & (r) of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (hereinafter referred to as “PFUTP Regulation, 2003”), Regulations 4(1) (a), (b), (c), (e) & (g), 4(2)(f)(i)(2), 4(2)(f)(ii)(6) & (7), 4(2)(f)(iii)(3),(6) & (12), 13(3), 17(6), 17(7), 17(9)(a), 17(9)(b), 18(3), 23(3), 33(1)(d), 33(2)(a), 34(2)(b), 34(3), 36(3) and 48 of SEBI (Listing Obligation and Disclosure Requirements) Regulation, 2015 (hereinafter referred to as “LODR Regulations”) read with Clause 50 of the erstwhile Listing Agreement and Section 21 of SCRA, 1956. The SCN further alleged that the directors of the company i.e., Mr. Subash Agarwal (noticee no. 2), Mr. Rajesh Agarwal (noticee no. 3), Mr. Swarup Chandra Parija (noticee no. 4), Mrs. Rima Dhawan (noticee no. 5), Mr. Krishna Chandra Raut (noticee no. 6), Mr. Sunil Agarwal (noticee no. 7) and Mr. Soumendra Keshari Pattanaik (noticee no. 8) have violated Section 11(2)(i) and 11(2)(ia), 12A (a), (b) and (c) of the SEBI Act, Regulations 3(b), (c) and (d) and 4(1) and 4(2) (f) and (r) of the PFUTP Regulations, 2003, Regulations 4(1) (a), (b), (c), (e) & (g), 4(2)(f)(i)(2), 4(2)(f)(ii)(6)&(7), 4(2)(f)(iii)(1),(3),(6) & (12), 13(3), 17(6), 17(7), 17(8) read with Part B of Schedule II, 17(9)(a), 17(9)(b), 18(3), 23(3), 33(1)(d), 33(2)(a), 34(

Source: SecMarx — sebi:WTM/AB/IVD/ID19/14342/2021-22. 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.