sebi:WTM/GM/EFD/26/JUNE/2017

SEBI · SEBI · 2016-10-20 · G Mahalingam, 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

Show Cause Notice dated October 20, 2016 disposed of without any directions under Sections 11 and 11B of the SEBI Act, 1992 against Mr. S Rajagopal and Mr. V K Ramani

Provisions invoked

• s. 11
• s. 205
• s. 207

Parties

• Mr. S. Rajagopal
• Mr. V K Ramani

Holding

The Show Cause Notice dated October 20, 2016 against independent directors Mr. S Rajagopal and Mr. V K Ramani for alleged violation of Sections 205(1A) and 207 of the Companies Act, 1956 was disposed of without issuing any directions under Sections 11 and 11B of the SEBI Act, 1992.

Full text

2 on liquidity position of the company. ZSL further submitted that Shri Sudarshan Venkatraman, Shri Ramanaujam Sesharathnam, Shri Parthasarathy Sirkanth, Shri Madurai Gajanathan, Shri S. Rajagopal, Shri V. K Ramani and Shri Vasanthakumar Ayyavu Palanichamy were the Directors of the ZSL as on the date of declaration of dividend i.e. September 25, 2012.

3 were independent directors and not associated with the day to day activities of the company. b. Mr. S Rajagopal stated that he was unaware of the default till November 12, 2016, when the same was brought to his notice as per the certificate furnished by the Company Secretary and Managing Director stating that Dividend for the year 2011-12 has not been paid yet. c. In order to support his contention, Mr. S Rajagopal, who was also the Chairman of the Audit Committee of the company submitted a copy of the minutes of the meeting of the Audit Committee of the company held on November 14, 2012. In the said minutes, it is recorded at para 3 as under:- “The committee also viewed seriously the inaction/ failure of the company in meeting the commitment related to the Dividend Distribution Tax which is a statutory obligation. Further the committee also noted that failure by the company to make the Dividend Payment within the prescribed time. As desired the matter needs to be brought upto the Board of Directors of the company with a direction to the management to make all the statutory payments including Dividend to be made forthwith.” d. Mr. V K Ramani submitted that he came to know about the non-payment of Dividend when the same was taken up in the board meeting of November 14, 2012. He further submitted that he was inducted as an independent director of the company on February 11, 2011 for his technical competence in the IT field. e. Both the noticees relied upon the copy of the boa

4  It was observed that there has been a delay in the payment of TDS and other statutory dues. Mr. S. Rajagopal requested the management to meet statutory commitments forthwith.  The board took note of the observations made by the Audit Committee on the financial position of the company.  Mr. S Rajagopal desired that drastic steps be taken with regard to the following “To ensure statutory dues are paid forthwith without delay and keep morale of staff high and salaries and dividends paid forthwith.  Certain serious observations are made with regard to statutory requirements which are as under: (i) Dividend declared for the year 31.03.2012 remain unpaid to the tune of Rs. 16.64 cr. (ii) Dividend distribution tax had not been remitted. (iii) Tax deducted at source not remitted. (iv) PF contribution not remitted.

Source: SecMarx — sebi:WTM/GM/EFD/26/JUNE/2017. 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.