Sebi levies Rs 20 lakh fine on 2 individuals in Esaar India case

(Representative Image)

Capital markets regulator Sebi levied fines totalling Rs 20 lakh on two individuals for indulging in fraudulent practices in the matter of Esaar India Ltd (EIL). In its order, the regulator imposed a fine of Rs 10 lakh each on Geetaben Joshi and Shivshankar Joshi.

The order came after Sebi initiated adjudication proceedings against Geetaben and Shivshankar for the violation of PFUTP regulations for the period from April 2011 to February 2015. The regulator noted that noticees were allotted shares in the preferential allotment for which they had transferred Rs 30 lakh.

It also noted that Shivshankar Joshi received Rs 30 lakh from Surface Finance Pvt Ltd (SFPL) and in turn Shivshankar transferred Rs 15 lakh to his wife Geetaben and both of them have paid subscription amount to EIL. Also, SFPL has received Rs 1.52 crore from EIL, including Rs 30 lakh which were paid as the subscription amount by the two allottees -- Geetaben Joshi and Shivshankar Joshi.

"I note that funding of preferential allotment by the company would mean flow of money for buying preferentially allotted shares from the firm to the allottees (Geetaben Joshi, Shivshankar Joshi and Surface Finance), which is then used by allottees for payment to the company towards purchase of preferentially allotted shares," Sebi's Adjudicating Officer Sandeep P Deore said in the order.

He also noted, the transactions by noticees were meant only for funding of preferential allotment giving an impression of capital infusion in the company through preferential allotment, wherein EIL routed the allotment amount through SFPL.

Therefore, noticees have violated the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms while financing the subscription amount to the extent of Rs 30 lakh and subsequently received Rs 1.52 crore out of issue proceeds from EIL, and thereby funding the preferential allotment to the tune of Rs 30 lakh.

Meanwhile, in another order, the regulator levied a fine of Rs 25 lakh on Kaynet Commodities Pvt Ltd for misutilisation of client funds and securities, stock broker regulations and other violations.

The order came after after a joint inspection was conducted by Sebi along with the Multi Commodity Exchange of India (MCX) into the business of Kaynet Commodities Pvt Ltd for the period from April 2018 to June 2019.

In another order, the regulator imposed a fine of Rs 2 lakh on an individual in a case related to violation of insider trading rules in the matter of Hubtown Ltd.

In a separate order, the regulator slapped a fine of Rs 2 lakh on two individuals in a case pertaining to lapses in disclosure norms in the matter of Vaibhav Global Ltd.