sebi:WTM/KMA/SRO/IVD/408/07/2011
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Facts / Headnote
Notice dated August 20, 2008 disposed of: (a) Company restrained from issuing further shares or altering share capital and from accessing/dealing in securities market until it reconciles physical and dematerialised shares with issued capital and submits CA/PCS-audited report confirmed/satisfied by SEBI; (b) Mr. M. Sudhakar Rao, Mr. V. Manohar and Mr. G. Krishna Mohan restrained from dealing in securities for six years, counting debarment already undergone under Orders dated September 29, 2005 and February 1, 2006; (c) proceedings against Mr. S. Surya Prakasa Rao and Mr. K. Satyanarayan abated due to death.
Provisions invoked
- s. 19
Regulations
- Reg. 11
- Reg. 3
Parties
- Consortex Karl Doelitzsch (India) Limited, formerly known as Andhra Pradesh Power Tools Limited
- Mr. M. Sudhakar Rao
- Mr. V. Manohar
- Mr. G. Krishna Mohan
- Mr. S. Surya Prakasa Rao
- Mr. K. Satyanarayan
Holding
SEBI held the Company guilty of issuing fake/counterfeit certificates in violation of Regulations 3 and 6(a) of the PFUTP Regulations and of failing to file the directed reconciliation audit report, restraining the Company until reconciliation to SEBI's satisfaction, debarring three directors for six years with set-off, and abating proceedings against two deceased directors.
Full text
Page 2 of 16 1.1 SEBI had received a complaint from the Andhra Pradesh Industrial Development Corporation Limited (hereinafter referred to as APIDC) vide letter dated September 5, 2005, stating that it had invested `80 lakhs in 8,00,000 equity shares of `10/- each in Consortex Karl Doelitzsch (India) Limited, earlier known as Andhra Pradesh Power Tools Limited (hereinafter referred to as the Company). APIDC had stated that though they submitted their physical share certificates in respect of the said 8,00,000 shares to their depository participant, UTI Securities Limited, Hyderabad, along with a demat request form dated July 8, 2005 for dematerialization of the said shares, the demat request was rejected by Ikon Vision Private Limited (the share transfer agent of the Company during the relevant time) for the reason "security certificates received not available for demat" along with a footnote "contact the company for exchange of shares". It was also stated that APIDC made enquiries with the said share transfer agent and was informed that shares with the distinctive numbers as submitted by it for dematerialization have been dematerialized prior to December 2002 itself. The details of shareholding of APIDC in the Company, including the distinctive numbers of the shares, were given in Annexure 1 to the aforesaid notice. 1.2
Page 3 of 16 the distinctive numbers as they had were already dematerialised prior to December 2002, and the discrepancies in the share holding pattern disclosed by the Company and its share transfer agent, it was prima facie observed that the Company could have issued fake shares and dematerialised earlier for trading in the securities market. Based on such prima facie findings, SEBI issued an ex-parte Order dated September 29, 2005 issuing the following
Page 4 of 16 “5.5. While the records of Consortex and Ikon showed a huge gap between the shares held actually by APIDC in physical form and the figures maintained by the company, the letter of APIDC dated September 9, 2005 evidences their holding of 8 lakh shares in physical form.
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Source: SecMarx — sebi:WTM/KMA/SRO/IVD/408/07/2011. 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.