sebi:WTM/SM/IVD/ID4/9169/2020-21

SEBI · SEBI · 2010-10-12 · S. K. Mohanty, Whole Time Member

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Facts / Headnote

Proceedings disposed of with a word of caution to the Noticee

Provisions invoked

• s. 19
• s. 260
• s. 77(2)
• s. 161

Parties

• Mr. Vipin Sharma

Holding

The Noticee, Mr. Vipin Sharma, was held liable for violating the SEBI Act, 1992 and PFUTP Regulations, 2003 for his role in the fraudulent GDR scheme of Chromatic India Ltd., but given the circumstances including his resignation and prior debarment, the proceedings were disposed of by issuing only a word of caution.

Full text

Order in respect of Mr. Vipin Sharma in the mater of Chromatic India Ltd. Page 2 of 17 2010, calling upon them to show cause as to why suitable directions shall not be issued against them under Sections 11, 11B and 11(4) of the SEBI Act, 1992. In the SCN, it was alleged that the Company and its Noticee Directors have indulged in a fraudulent scheme of issuance, allotment of GDR. The said fraudulent scheme was executed behind the back of the shareholders and investors, who were not informed about the said pre-fabricated scheme whereby the GDR proceeds were observed to have been pledged as security with EURAM Bank to facilitate the loan availed by Vintage from EURAM Bank solely for subscribing to the GDR of Chromatic, by entering into a Pledge Agreement dated October 12, 2010 with EURAM Bank (hereinafter referred to as the “Pledge Agreement”). It was therefore alleged that the Noticees have committed fraud within the realm of provisions of Securities and Exchange Board of India Act, 1992 (hereinafter referred to as “SEBI Act, 1992”) and SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (hereinafter referred to as “PFUTP Regulations, 2003”). The SCN has also narrated that the GDR were subsequently converted into equity shares and sold in the Indian Securities Market, the GDR proceeds were made available to the Company i.e. Chromatic for its utilisation only after the repayment of loan by Vintage.

Order in respect of Mr. Vipin Sharma in the mater of Chromatic India Ltd. Page 3 of 17 with a copy of SCN and relevant documents. Accordingly, the Hon’ble SAT vide Order dated February 6, 2020, have allowed the Noticee’s appeal and directed him to appear before SEBI on February 20, 2020 and collect the SCN. Accordingly, the Noticee was duly served with a copy of the SCN in response to which, he has submitted a written reply dated March 6, 2020, stating that: a) He has not been provided with a copy of Investigation Report and has not received a copy of Annexure-2 to the SCN as mentioned in his letter dated February 24, 2020. b) That the present proceedings are barred by limitation due to delay and latches. c) He was appointed as Additional Director of the Company w.e.f. September 7, 2009, and, was not appointed as regular Director at the Annual General Meeting (AGM) held by the Company dated September 29, 2009. He was not aware that by operation of Section 161 of Companies Act, 2013, he had ceased to hold the office as a Director w.e.f. September 30, 2009 and he continued to attend Board Meetings after September 30, 2009. d) He had submitted his resignation letter dated September 4, 2010 to the Company through registered post-dated September 23, 2010. However, the Company, in violation of Section 161 of the Companies Act, 2013 appointed him as regular Director at its AGM on September 20, 2010. Therefore, he sent another resignation letter dated September 29, 2010 which was tak

Order in respect of Mr. Vipin Sharma in the mater of Chromatic India Ltd. Page 4 of 17 19 pandemic). The Noticee’s Authorised Representative attended the Personal Hearing on behalf of the Noticee and presented oral arguments on the lines of his written reply. After hearing the arguments on behalf of the Noticee, the Authorised Representative was asked to respond to a few queries raised during the Personal Hearing and to furnish certain information as requested for during the Hearing. The Noticee has furnished that information vide email dated August 5, 2020.

Source: SecMarx — sebi:WTM/SM/IVD/ID4/9169/2020-21. 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.