sebi:WTM/AB/IVD/ID4/26034/2023-24

SEBI · SEBI · 2020-03-06 · Ananta Barua, Whole Time Member

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Facts / Headnote

Noticee no. 8 restrained from accessing the securities market and prohibited from buying, selling or otherwise dealing in securities including units of mutual funds, directly or indirectly, or being associated with the securities market for 5 years, with set-off of debarment already undergone from March 06, 2020 to December 21, 2021

Provisions invoked

• s. 19
• s. 12A
• s. 283(1)
• s. 260
• s. 283

Regulations

• Reg. 3(a)

Parties

• Mr. Rajinder Singh (Noticee no. 8)

Holding

Noticee no. 8 violated Section 12A(a), (b) & (c) of SEBI Act, 1992 read with Regulations 3(a), (b), (c) & (d) and 4(1) of PFUTP Regulations, 2003 by executing the Account Charge Agreement pledging MPS GDR proceeds as security for Clifford's loan to subscribe the GDRs. He was restrained/prohibited from the securities market for 5 years with set-off for debarment already undergone.

Full text

Final Order in respect of Mr. Rajinder Singh in the matter of GDR issue of MPS Infotechnics Ltd. Page 2 of 21 4. Accordingly, we are of the opinion that since the appellant was not served with the show cause notice, he was denied the opportunity of filing a reply or appear before the WTM. Consequently, the impugned order dated March 6, 2020 and addendum order dated March 12, 2020 in so far as it relates to the appellant cannot be sustained and is quashed. The appeal is allowed. The matter is remitted to the WTM to decide the matter afresh after serving a show cause notice and proceeding from there onwards. In this regard, the appellant will appear before the WTM on January 5, 2022 on which date the show cause notice would be served.”

Final Order in respect of Mr. Rajinder Singh in the matter of GDR issue of MPS Infotechnics Ltd. Page 3 of 21 Credit Agreement dated October 29, 2007 (‘Credit Agreement’) with Banco. It was further revealed that MPS had provided security, for the loan taken by Clifford, by pledging the proceeds of GDR issue. For this purpose, Noticee no. 8, acting on behalf of MPS, had signed an Account Charge Agreement dated October 30, 2007 (‘Account Charge Agreement’) with Banco. Thus, the bank account in which GDR proceeds were held, was in the name of MPS but the amount deposited in the account was not at the disposal of MPS as the same was pledged as a collateral even prior to issuance of GDRs, for the loan availed by Clifford.

Final Order in respect of Mr. Rajinder Singh in the matter of GDR issue of MPS Infotechnics Ltd. Page 4 of 21 5. In compliance with the directions of Hon’ble SAT, copy of the SCN alongwith its annexures, was provided to the Authorised Representatives of Noticee no. 8 on January 5, 2022. Subsequently, Noticee no. 8 had sought physical inspection of documents in the matter. However, due to the prevailing pandemic situation, the Advocates representing Noticee no. 8 were informed that physical inspection could not be provided, however, scanned copies of the documents relied upon in the SCN were provided to them. Subsequently, vide its email dated January 13, 2022, the said Advocates had sought copies of the minutes of certain board meetings of MPS. Since, these documents were not relied upon in the SCN, SEBI had initially refused to part with the same. However, after the decision of the Hon’ble Supreme Court of India in T. Takano v. SEBI and Anr. pronounced on February 18, 2022 (Civil

Source: SecMarx — sebi:WTM/AB/IVD/ID4/26034/2023-24. 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.