Securities Exchange Board of India(SEBI) on Friday imposed penalty of Rs. 5 Lakhs on Jahman Dealers Pvt. Ltd under Section 15A(a) of SEBI Act, 1992 for non-compliance of Summons in the matter of Dwitiya Trading Ltd.
The Bombay Stock Exchange (BSE) had initially sought certain documents from certain companies which had raised funds through preferential issue. Subsequently, BSE appointed an Auditor’s Committee to scrutinize these documents submitted by the companies, such as Auditor’s certificates, Article of Association, Memorandum Of Association, Ledger accounts, invoices, bank account statements, loan agreements, etc. Pursuant to the examination of the same, BSE had concluded prima facie that there was misutilization of funds received against the issue of equity shares on a preferential basis by several companies. The case was then taken up by SEBI for detailed investigation to ascertain the possible violations inter alia of the provisions of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (PFUTP Regulations), Securities and Exchange Board of India Act, 1992 (SEBI Act), Securities Contracts (Regulation) Act, 1956 (SCRA) and any other Regulations made thereunder, if any. During the period of investigation for SEBI was from February 28, 2013, to May 10, 2013, It was prima facie observed that the company had mis-utilized its fundraised through the issue of preferential shares and a part of the said funds was transferred to certain entities purportedly for purchasing shares from the said entities.
Summons was issued to Jahman Dealers Pvt. Ltd.on September 27, 2019 and subsequently two reminder summonses were issued on October 23, 2019 and November 01, 2019 asking for details pertaining to the utilization of funds. But there were no responses therefore failing to furnish information sought through summons thereby violating section 11C (2) and (3) of SEBI Act, 1992. The contents of section 11C (2) and (3) of SEBI.
Adjudicating Officer G. Ramar while passing the order imposing the fine noted, “The conduct of the Noticee in not paying heed to the summonses issued by SEBI and resultant non-cooperation with the process of investigation cannot be taken lightly. . . . These powers of issuing summons have been granted to SEBI keeping in mind the statutory mandate of safeguarding the securities market and the interests of the bona fide investors/ participants in the securities market. It is also noted that the Noticee has failed to comply with three summonses that were issued and served upon him. The conduct of the Noticee shows brazen unwillingness on its part to cooperate with the investigation of SEBI, a statutory regulator and such defaults seriously compromise the regulatory framework. A lenient view in such cases would defeat the legislative intent of section 15A(a).”
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