sebi:WTM/GA/113/ISD/12/2006

SEBI · SEBI · 2001-11-13 · G. Anantharaman, Whole Time Member

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Facts / Headnote

Directions issued: (A) restraint on divesting/transferring/selling shareholding in Gammon Infrastructure Projects Ltd for 3 years from allotment in GIPL public issue; (B) Gammon India Ltd, Shri Abhijit Rajan, Nikhita and Devyani barred from accessing capital market directly or indirectly for 1 year; (C) Reliance Silicones (I) Pvt Ltd barred from accessing capital market directly or indirectly for 1 year.

Provisions invoked

Regulations

Parties

Holding

The order finds that Gammon's company funds were routed through RSPL and promoter-controlled entities Nikhita and Devyani to subscribe to Gammon's rights issue, violating SEBI (PFUTP) Regulations, 1995 read with Section 77 of the Companies Act, 1956, and accordingly restrains the noticees from transferring their GIPL shareholding for 3 years and bars them from accessing the capital market for 1 year.

Full text

2 3. During the course of investigation it was brought out that RSPL and Nouveau had entered into a hire purchase agreement dated August 09, 2001 for use of a plant of RSPL and certain facilities thereof and there was another agreement dated November 12, 2001 between RSPL, Nikhita Estate Developers Pvt Ltd (hereinafter referred to as Nikhita), Devyani Estate and Properties Pvt Ltd (hereinafter referred to as Devyani) and Pacific Energy Pvt Ltd (company controlled by Shri Abhijit Rajan), interalia with respect to procurement, installation and commissioning of a power plant for RSPL. It was further brought out that a bank account no 102921 was opened by RSPL in the Allahabad Bank, Juhu Branch, Mumbai on November 09, 2001. Investigation revealed that this bank account was used for routing of funds of the company – Gammon for subscription in the rights issue. In effect the promoters did not use their own monies to subscribe to the issue but the company’s funds were used. Funds were routed through RSPL and promoter (Shri Rajan) controlled entities namely Devyani and Nikhita. This is discussed subsequently.

3 was deposited by Gammon India Ltd vide cheque no. 168060. The amount was thus paid by Gammon into the bank account of RSPL on 13/11/2001. It was also seen that the bank account was opened only 4 days previously (on 9/11/2001).The account was to be operated severally by Mr Y Sachdeva (Chairman of RSPL) and Mr O P Gandhi (admitted by RSPL to be a Gammon representative). It is pertinent to note that the amount was paid by Gammon in the Juhu bank branch of Allahabad Bank while the company – RSPL is located at New Mumbai and also had an account with UTI bank located in New Mumbai at that point of time

4 It is seen that Devyani issued cheque nos. 507804 and 507805 dated 13-11- 2001 from its account no. 108870 maintained with the Juhu Vile Parle Branch of Allahabad Bank for a total amount of Rs. 1.5 crores in respect of 5 lakh shares totally allotted to it. Similarly, Nikhita issued cheque nos. 244458 and 244459 dated 13-11-2001 from its account no. 101869 maintained with the Juhu Vile Parle Branch of Allahabad Bank for a total amount of Rs. 1.275 crores in respect of 4,25,000 shares totally allotted to it.

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Source: SecMarx — sebi:WTM/GA/113/ISD/12/2006. 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.