sebi:WTM/GA/20/ISD/10/05

SEBI · SEBI · 2005-05-05 · G Anantharaman, 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

Ex-parte ad interim order dated 27th May 2005 confirmed with all directions therein, effective immediately; formal investigations to be initiated based on findings.

Provisions invoked

• s. 11

Regulations

• Reg. 3

Parties

• Pentamedia Graphics Ltd. (PMGL)
• Mr. V Chandrasekaran
• Dr. S Ramani
• Mr. T V Krishnamurty
• Ms. Usha Ganesarajah
• Mr. S D Viswanathan
• Vijay Advertising Private Limited (VAPL)
• Mr. M Vardharajan
• Mrs. Bhuvaneswari

Holding

The ex-parte ad interim order dated 27th May 2005 was confirmed, continuing the prohibition on PMGL and VAPL and their directors from accessing the capital market or dealing in securities, directing PMGL not to issue further shares or alter share capital, and impounding VAPL's sale proceeds.

Full text

1.1. During the period March – May 2005, SEBI received complaints from Oriental Bank of Commerce, Mylapore Branch (erstwhile Mylapore Branch of the Global Trust Bank Ltd.) [hereinafter referred to as “OBC”], against Cameo Corporate Services Ltd., Chennai, (hereinafter referred to as “Cameo”) Share Transfer Agents for Pentamedia Graphics Ltd. (hereinafter referred to as “PMGL”). In their complaints, OBC, inter alia, stated that they had sent to Cameo, share certificates for 34,00,000 equity shares of PMGL, held in the name of Vijay Advertising Private Limited (hereinafter referred to as “VAPL”), for transfer in the name of the Bank. OBC alleged that Cameo did not respond, despite repeated follow-up by OBC over a period of four months. OBC further informed that these shares were pledged in favour of the Bank as security for the huge dues payable by PMGL. 1.2. Further to the above complaint of OBC, SEBI sought certain clarifications from Cameo. In response, Cameo stated as under: “As the distinctive nos. and certificate nos., comprised in the documents sent to us for transfer of 34 lacs shares did not match with the records maintained at our end, we could not effect the transfer of shares in the name of Oriental Bank of Commerce. In view of the above, we had, vide our letter dated 5.5.2005 returned the transfer documents to Oriental Bank of Commerce”. 1.3. As the aforesaid reply given by Cameo raised doubts regarding the genuineness of the share certificates in question, SEBI ad

VAPL by PMGL etc. from the depositories viz. National Securities Depository Ltd. (NSDL) and Central Depository Services (I) Ltd. (CDSL) and The Stock Exchange, Mumbai (BSE). 1.5. Based on the information obtained, the following facts emerged: 2.0. Facts of the Case: 2.1. PMGL is a listed company. Its shares are listed on BSE, NSE and Madras Stock Exchange (MSE). As on June 30, 2003, the paid up capital of PMGL consisted of 21,99,54,125 shares of Rs. 10/- each. PMGL has also issued GDRs with underlying equity shares. 2.2. On September 12, 2003, PMGL had issued 95,00,000 equity shares of Rs.10/- each on preferential basis at Rs.11.36 per share as approved by its Board of Directors. The details of the preferential allotment made to VAPL and Sathya Securities P Ltd. (hereinafter referred to as “SSPL”) are as under: Sl. No. Name of the Allottee No. of shares allotted Rate Amount (Rs. In Lakh) % of Post Issue Capital of PMGL

Vijay Advertising P Ltd. 2.3. PMGL originally issued the certificates in physical form (printing of certificate done by PMGL directly) and sent the same to the allottees as above directly. PMGL vide its letter dated September 18, 2003 sent details regarding the above allotment / allottees to Cameo, for master updation. These shares were subject to lock-in up to September 11, 2004. 2.4. These shares, which were in physical form, were pledged by VAPL with OBC as security for the huge dues payable to OBC by PMGL. 2.5. Thereafter, while the physical shares were still under pledge to OBC, VAPL vide Demat Request Form No.3116548 dated July 17, 2004 sent another set of physical shares pertaining to the same distinctive number (as those pledged with OBC) to Cameo (the Registrar cum Share Transfer agent of PMGL) for dematerialization of the shares. The said demat request was sent by VAPL through IL&FS Ltd., a Depository Participant. 2.6. Cameo seems to have effected the dematerialization and uploaded the data in the normal course. 2.7. On December 30, 2004, OBC sent the original share certificates of PMGL lying with it as pledged along with Transfer Deed to Cameo with a request to transfer the shares (which were in the name of VAPL) to its name.

Source: SecMarx — sebi:WTM/GA/20/ISD/10/05. 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.