Odd Defence: Company says no one stopped it from committing violation; Sebi issues Rs 5 lakh fine

The company was under suspension from May 13, 2002, and the suspension was revoked on April 7, 2022. But the company issued securities during this period to raise Rs 30-32 lakh, which it claimed it needed as reinstatement fees (paid to revoke suspension) and no bank was extending credit.

It said that it intimated the stock exchange and did not receive "any negative revert" from the exchange. As the order stated, the company submitted that "Stock Exchange did not ask Noticee (the company) to not proceed with the further raising of funds through preferential allotment".

That is the stock exchange did not ask it not to raise the funds.

The company also claimed that it checked with two to three merchant bankers on this issue, and the merchant bankers too did not reply saying that the company cannot go ahead with such an issue.

The Sebi order stated that these "are not acceptable reasons as the Noticee (company) was under obligation to comply with all the rules and regulations of securities market".

In the order, Sebi's adjudicating officer Shashi Kumar Valsakumar noted that the company "cannot remain ignorant of securities law and it cannot take shelter under such reasons that Stock Exchange did not inform or Stock Exchange did not give restrictive instruction to Noticee. Noticee was liable to comply with the applicable regulatory provisions, which it failed to do so".

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The other violations of the company noted in the order include failure to obtain in-principle approval from stock exchange before issuing securities, failure to hold shares in dematerialised form and conversion of convertible securities after the tenure of 18 months.