sebi:WTM/PS/56/IVD/ID-08/OCT/2013

SEBI · SEBI · 2011-12-28 · Prashant Saran, 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

Directions issued in the ad-interim ex-parte order dated December 28, 2011 against Taksheel Solutions Limited, Mr. Pavan Kumar Kuchana and Mr. Ramaswamy Kuchana are confirmed and continue in force till further orders; directions against the three erstwhile Independent Directors are vacated with immediate effect.

Provisions invoked

• s. 19

Regulations

• Reg. 57
• Reg. 60

Parties

• Taksheel Solutions Limited
• Mr. Pavan Kumar Kuchana
• Mr. Ramaswamy Kuchana
• Mr. Venkata Ramana Nadimpalli
• Mr. Vijay Kumar Devarkonda
• Mr. Pramod Chada

Holding

The directions in the interim order against Taksheel Solutions Limited and its two promoters/directors (Pavan Kumar Kuchana and Ramaswamy Kuchana) are confirmed and will remain in force until further SEBI orders, while directions against the three resigned Independent Directors are vacated with immediate effect.

Full text

Page 2 of 21 It was also revealed that there were inaccurate and untrue statements in the electronic media when the issue was open for subscription. The preliminary findings also raised serious concerns about the status of clients and vendors of Taksheel.

Page 3 of 21 to the interim order. 5. The submissions of Taksheel in brief are as follows: a. Taksheel had maintained a healthy growth before the passing of the interim order and its profits had been continuously surging upwards. However, after the interim order, the operations of Taksheel have come to stand still and it is not able to complete the pending assignments/ work orders. b. The directions issued against Taksheel are neither preventive/ remedial nor curative but penal. The bulk of the direction contained in paragraph 88(c) of the interim order are impossible to fulfil. The compliance of the such directions would require Taksheel to inter alia commit a breach of concluded contracts, thus making the company liable to pay the damages for such breach. c. All the independent directors of Taksheel have already resigned including several of its employees. d. Status of the land allotment at Warrangal: The land at Warangal was allotted by Andhra Pradesh Industrial Infrastructure Corporation Limited (hereinafter referred to as 'APIICL') for SEZ development on February 23, 2006. Initially it could not comply with certain conditions within the time frame provided. The fact that Taksheel paid electricity and telephone bill shows that it was never aware of the cancellation and at no point the land was taken back by APIICL. Taksheel had made regular expenditures towards the site. Before the opening of the IPO, Taksheel had already started its non SEZ Software Development Centre at

Page 4 of 21 business. It has been said that the ICDs were taken by Taksheel in the months of May-June 2011 and September 2011 i.e. after the filing of the DRHP. It had disclosed the facts of raising of ICDs to PNB Investment Services Limited (hereinafter referred to as 'PISL'), the Merchant Banker to the issue along with the names of the entities from whom the amount was borrowed, however, PISL was of the view that there was no requirement to mention the details of ICDs raised in the offer document. After the completion of the IPO, Taksheel's Board decided to repay the ICDs raised through the IPO proceeds. It has also been said that they had not made any payment towards interest and the same are still due. Taksheel has also argued that the ICDs were outstanding overdrafts and its decision to repay the same is for the purpose that were mentioned in the prospectus. g. The Merchant Banker is a professional and an expert adviser, who drafts the prospectus and Taksheel has merely relied on it. h. Arrangement with regard to Buy Back of shares: With regard to the buy back arrangement with one Mr. Dinesh Kumar Singhi, it has been submitted that in terms of the Sale Purchase Agreement (hereinafter referred to as 'SPA'), Mr. Singhi had received an allotment of 10 lakh shares of Taksheel and he had to be provided with an exit route if Taksheel fails to come out with an IPO within the 18 months from the date of allotment. It has been said that Mr. Singhi had not exercised such right on

Source: SecMarx — sebi:WTM/PS/56/IVD/ID-08/OCT/2013. 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.