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9. The WTM and the AO after considering the evidence on record found that the entire scheme of using the GDR proceeds to fund a subscriber to the GDR issue was a fraudulent scheme and violative of Section 12A of the SEBI Act and Regulations 3 and 4 of the PFUTP Regulations. The authorities found that the GDR was subscribed by one entity, namely, Vintage and not by three entities as disclosed by the Company vide its letter dated 22nd December, 2016. The authority further found that on account of the pledge created by the Company with EURAM Bank the funds were not made available at the Company's disposal and the same became available in tranches as and when the loan amount was repaid by Vintage. Further, the loan agreement was not disclosed to the stock exchange and to the Indian investors. Further, the disclosure made by the Company to the stock exchange that the GDR issue was fully subscribed was misleading as the investors were not informed that the GDR was subscribed by only one entity and, therefore, the scheme hatched by the Company and its Directors was violative of Section 12A of the SEBI Act and Regulations 3 and 4 of the PFUTP Regulations.

11. We have heard Mr. Nihar Mody, Advocate assisted by Mr. Prakash Shah and Mr. Meit Shah, Advocates for the appellant and Mr. Shyam Mehta, Senior Advocate assisted by Mr. Nishit Dhruva, Mr. Yash Garach and Ms. Meghna Ashwin, Advocates for the respondent.

12. The contention of the appellant is, that they had no knowledge of the pledge agreement or the loan agreement and that they came to know for the first time when SEBI informed the appellant about it. It was alleged that during the process of issuance of GDR the appellant had signed numerous documents as advised by the Lead Manager and it was also possible that the pledge agreement was also unknowingly signed by the Managing Director/Director of the Company. It was contended that the appellants have appointed a Lead Manager and had signed the documents as per the advice of the Lead Manager. It was contended that when the appellant came to know about the fraud played upon them by the Lead Manager they chose not to take action by filing a complaint or FIR since the Company had received the money and the same was utilised in accordance with the object of the GDR. It was urged that the GDR proceeds were utilised in accordance with the objects of the GDR issue and that there was no diversion of money nor has the appellant indulged in any wrong dealings in securities. Further, there was no complaint from any investor with regard to the issuance of the GDR nor has the appellant made any disproportionate gain nor caused any loss to the shareholders or to the investors. It was, thus, urged that the appellant, being a small Company, has not played any fraud upon the market and the violation, if any, is only confined to the non-disclosure under the Listing Agreement for which purpose the direction of debarment by the WTM and the penalty awarded by the AO is wholly excessive, harsh and disproportionate to the alleged violations.

22. In this regard, the appellants have produced various orders passed by SEBI against various companies and its Directors wherein different period of debarment have been given for similar/identical offence. For facility, a comparative table is given below:

Debarment Order Sr. Name of the Period Total Subscriber Period of Date of Order No. GDR issuer of GDR Amount Debarment company issue raised by GDR issue (USD) million
"Without dwelling on the aforesaid aspect, we are of the opinion that in order to implicate a person, namely, a director of any fraudulent act it is necessary for the authority to further find any evidence which would show that the said person or director was involved in the fraud with regard to the GDR issue or that he was involved in the defalcation of the funds which was raised through GDR issue. In the instant case, we find that there is no such evidence against the appellant Vipin Sharma other than the fact that he was part of the Resolution dated August 13, 2010 which has been disputed by the appellant. We are of the opinion that the Resolution dated August 13, 2010 by itself does not create any suspicion nor create any fraudulent act. The Resolution by itself does not violate any provision of the SEBI Act or PFUTP Regulations."