sebi:WTM/GA/121/NRO/1/07

SEBI · SEBI · 1992-12-23 · G. Anantharaman, Whole Time Member

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Facts / Headnote

Shri Kailash Chandra Agrawal prohibited for 5 years from issuing any certificate with respect to compliance of obligations of listed companies under securities laws and Listing Agreement, and prohibited for 5 years from associating with securities market related activities or any intermediary; order effective immediately.

Provisions invoked

Regulations

Parties

Holding

Shri Kailash Chandra Agrawal issued false certificates dated June 30, 1999 and November 30, 1999 certifying receipt of Rs.8,52,50,000 for Padmini's preferential allotment, thereby violating Regulation 6(a) and 6(d) of the FUTP Regulations, 1995. He was prohibited for 5 years from issuing compliance certificates for listed companies and from associating with the securities market or intermediaries.

Full text

1.0 BACKGROUND 1.1 Padmini Technologies Limited was formerly incorporated as Padmini Packaging Private Limited. The name of the said company (Padmini Packaging Pvt. Ltd) was changed to Padmini Polymers Pvt. Ltd on December 23, 1992 and it was subsequently changed to Padmini Technologies Ltd. (hereinafter referred to as Padmini) with effect from June 14, 2000. The shares of Padmini were listed inter alia at the Stock Exchange Mumbai, now known as the Bombay Stock Exchange Ltd. (hereinafter referred to as BSE), Delhi Stock Exchange Association Ltd. (hereinafter referred to as DSE), and National Stock Exchange of India Ltd. (hereinafter referred to as NSE). 1.2 It was noticed that the share price of Padmini had continuously increased from Rs. 60.95/- on December 13, 1999 to Rs.266/- on March 09, 2000/- at DSE. Thereafter, the price of the said shares had declined to Rs.47/- on May 15, 2000. Subsequently, the price increased from Rs. 60.25/- on June 05, 2000 to Rs. 118.10/- on July 06, 2000 and touched a low of Rs. 55.65/- on August 8, 2000. The price of the shares of Padmini had again increased to Rs. 201.55/- on August 29,

Sl.no Allotment Date Name of allottees Shares allotted Paid up value (Rs/share) 1 31.5.1999 Unit Trust of India 2000000 10 2 20.6.1999 Contessa Commercial Co. P Ltd. 900000 2.5 3 -do- Bllumenfeld Ltd. 900000 10 4 -do- Jiwansagar Promoters Pvt. Ltd. 900000 2.5 5 -do- Bhagwandas Sagarmal 900000 2.5 6 -do- Raj Kumar Kishorepuria 900000 2.5 7 -do- Pramod Kumar Kishorepuria 900000 2.5 8 -do- Alok Khetan 900000 2.5 9 -do- Savara Tie-up P Ltd. 900000 2.5 10 -do- Royal Bengal Exports Pvt. Ltd. 900000 2.5 11 -do- S Beriwal 900000 2.5 12 -do- Prakash Kumar Damani (HUF) 900000 2.5 13 -do- Prakash Kumar Damani, 900000 2.5 14 -do- Cama Enterprises P Ltd. 900000 2.5 15 -do- Zinga Chemicals P Ltd 900000 2.5

16 -do- Hermonite Consultants P Ltd. 900000 2.5 17 -do- Cherry Marketing P Ltd. 900000 2.5 18 -do- HT Ferro P Ltd. 900000 2.5 19 -do- Hermonite Surgicals P Ltd. 900000 2.5 20 -do- V B Impex P Ltd. 900000 10 21 -do- J P Promoters P Ltd. 900000 10 2,00,00,000 1.4 For the sake of convenience, the aforesaid allottees (except Unit Trust of India) are broadly categorized into the following two groups: a) entities at sr. no.2 to 13 - Kolkatta based entities. b) entities at sr. no.14 to 21 - Delhi based entities. 1.5 It was observed that Padmini had allotted 1,80,00,000 shares to various entities (other than Unit Trust of India which was allotted 20 lakh shares on May 31, 1999) on June 20, 1999 for cash at par. The said allottees were shown as "other than promoter group". The preferential shares allotted by Padmini were not subject to lock-in, as none of the aforesaid allottees were shown as part of the promoter group of Padmini. The investigation conducted by SEBI inter alia revealed that Padmini had allotted preferential shares to the aforesaid allottees without the actual receipt of any application/allotment money (except from Unit Trust of India). Subsequent to the allotment, the Kolkata based and Delhi based allottees sold the said shares (allotted to them by way of preferential basis) in off-market transactions to various entities including Ketan Parekh (KP) group consisting of

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