The matter relates to SEBI's investigation into the affairs of BoR for a period between June 2007 and December 2009. SEBI said allegations of breach of relevant regulations by these two do not stand established and therefore, they are absolved of the charges
Mumbai: Market regulator Securities and Exchange Board of India (SEBI) dropped its charges against two persons in relation to a probe into the affairs of Bank of Rajasthan (BoR) for alleged irregularities on part of the company's former promoters, reports PTI.
In two separate orders, SEBI said allegations of breach of relevant regulations by Utpalkumar Anilkumar Mukhopadhya and Tharmapuram Subhramaniam Narayanasami do not stand established and therefore, they are being absolved of the charges.
Both of them had served as directors of Krishna Knitwear Technology Ltd (KKTL), a company alleged to be a person acting in concert (PAC) entity of BoR's former promoters.
It was alleged that the two had violated various sections of the SEBI Act and the regulations for prohibition of fraudulent and unfair trade practices. For these violations, SEBI can impose monetary penalties.
However, SEBI absolved them of any charges after finding out that they were not KKTL directors during the period for which the probe was conducted by SEBI.
The matter relates to SEBI's investigation into the affairs of BoR for a period between June 2007 and December 2009. Since then, BoR has been acquired by ICICI Bank.
The probe revealed that BoR's then promoters, led by Pravin Kumar Tayal, along with some companies that were connected to him and his relatives, by way of their continuous disclosure publicly announced that their stake had come down from 44.2% as on quarter ending June 2007 to 28.6% as on quarter ending December 2009.
However, it was alleged, though as per disclosure their holding seemed to have reduced, but in reality the holding of the promoters actually increased with the active collusion of front entities.
Thus, the shareholding of the promoters of BoR with PACs had increased from 46.8% in June 2007 to 63.15% in December 2009. Krishna Knitwear Technology was alleged to be one such PACs.
It was alleged that while the promoters conveyed the impression that they were reducing their shareholding, they did not dilute their controlling stake in BoR.
On the contrary, it was alleged that they had actually increased their holding in a deceptive manner with the active collusion with their front entities.
SEBI appointed an Adjudicating Officer on 25 January 2012 to look into the alleged violations by Mukhopadhya and Narayanasami and the two were issued show cause notices and granted personal hearings later.
Narayanasami, however, told SEBI that he was not a director of any of the companies mentioned in the notice during the investigation period and he was appointed as an Additional Director of Krishna KnitWear Technology Ltd for the first time on 15 October 2010, which is beyond probe period.
Narayanasami ceased to be a Director of KKTL with effect from 2 February 2012.
Taking into account the reply and the documents, SEBI observed that the allegation in the case mainly was about promoters of BoR and their PACs by their act of concealment of correct disclosure, defrauding the investors of BoR and the market at large.
SEBI's adjudicating officer further said submissions made by Narayanasami and the data available with the Ministry of Corporate Affairs show that he was appointed as a Director of KKTL on 15 October 2010 and he was not a director during the relevant period.
"After taking into consideration all the facts and circumstances of the case and material available on record, I do not find it a fit case to impose any monetary penalty. The case is accordingly disposed of," the SEBI officer ruled.
In his submission before SEBI, Mukhopadhya also said he was not a director of any of the companies named in the notice during the investigation period.
He appointed as an Additional Director of KKTL for the first time on 5 May 2010, which is after the investigation period and ceased to be a Director of KKTL with effect from 24 February 2012.
"Without going into the merits of the alleged manipulation in the matter, if any, evidence shows that the Noticee (Mukhopadhya) was not a director of the company during the relevant period," SEBI order said, while absolving him of the alleged charges.