ORDER UNDER SECTION 11(1) AND 11B OF THE SEBI ACT, 1992- IN THE MATTER OF SHRI J.P. GUPTA, THE FORMER DIRECTOR OF M/S SUKHCHAIN CEMENTS LTD. -VANISHING COMPANY. WTMN/3/CFD/6/04 1. Securities and Exchange Board of India (hereinafter referred to as SEBI) vide its order dated 17.12.99, passed under Section 11(1) and 11B of the Securities and Exchange Board of India Act, 1992 (SEBI Act) had directed, interalia M/s Sukhchain Cements Ltd. and its two directors namely Shri J.P. Gupta and Shri Parampal Singh Mann to disassociate themselves in every respect from the capital market related activities, not to raise funds from the capital market, not to deal in securities and not to be associated with any of the intermediaries in the capital market for a period of 5 years. 2. These directions were issued to the company and its directors as the company was not complying with the various clauses of the Listing Agreement entered into by them with the concerned stock exchanges viz. not submitting statutory reports, directors reports and other required reports, not furnishing financial results including Cash flow Statements, Balance Sheet and Profit & Loss Accounts etc. to the concerned Stock Exchanges in violation of Section 21 of the Securities Contact (Regulation) Act, 1956 (SCRA). It was further found that the registered office of the company did not exist at the address mentioned in the Prospectus by which the company had raised the monies. 3. Having found these violations, a show cause notice was issued to the directors of the company asking them to explain as to why action should not be initiated against them under the provisions of Section 11B of the SEBI Act and SCRA including prohibiting them from associating with any capital market related activity for a period of 5 years. The said show cause notice forwarded to their addresses as given in the prospectus, however, returned undelivered from the company and its director Shri J P Gupta. 4. SEBI therefore got Public Notice dt. 14.09.99 issued to M/s Sukhchain Cement Ltd. and one of its director Shri J.P. Gupta giving them an additional opportunity to submit their reply to the show cause notice which was issued to them but returned undelivered. As no response to this Public Notice also was received interalia from M/s Sukhchain Cements Ltd. and its director namely Shri J.P. Gupta the directions mentioned above were passed interalia against Shri J.P. Gupta on 17.12.99. 5. Shri J P Gupta, vide his letter dt. 11.11.02 submitted that the prospectus of the company indicated his address incorrectly as 83, Sector 18, Chandigarh instead of 83, Sector 19, Chandigarh. He further submitted that as the show cause notice from SEBI was forwarded to him on the above mentioned address, it never reached him and thus he could not submit his reply to the show cause notice issued by SEBI. He further submitted that he had resigned from the Board of the company before its Public Issue opened for subscription on 20.09.93. He submitted that even during his tenure as director of the company, he was never invited to attend any board meeting/AGM/EGM etc. Shri Gupta also submitted copies of certain documents including letter from the company accepting his resignation w.e.f. 01.09.93, copy of annual returns in support of his claim of resignation before opening the issue of the company. 6. Shri Gupta vide his letter dt. 02.05.03 submitted that he did not hold shares of the company either before or after his resignation. He further confirmed that his spouse, family members or associates do not have any post resignation association/connection with the company. Shri J P Gupta vide his letter dated 05.08.03 submitted a letter of company dated 01.08.03 confirming that Shri J P Gupta or any of his family members never held any equity of the company. 7.1 Pursuant to the letter dated 05.08.03 it was decided to grant Shri Gupta personal hearing in order to take a view in the matter. Accordingly, SEBI vide its letter dated 03.09.03 advised him to appear for personal hearing before me on 26.09.03 at Mumbai. Shri Gupta, however, vide his letter dated 06.09.03 while expressing his inability to appear for personal hearing at Mumbai due to his old age and financial constraint, proposed to appear for personal hearing at Delhi. Further, he vide same letter made following additional submissions: 7.2 From the date of his appointment as Director till the date of resignation he did not receive any notice for attending the meetings of Board of Directors, Agenda Notes and copies of decisions taken in the meetings of the Board. He was also not invited to attend Annual / Extra Ordinary General Meeting of the company and no notice thereof was sent to him or received by him. In the meetings of Board of Directors, held after his appointment as a director, he was given leave of absence without his consent or request. He had signed a power of attorney in favour of Shri Vivek Chalana, the promoter director of the company. The said director signed as his attorney at the end of the prospectus, which only certified the compliance of the Companies Act. 7.3 He was not at any stage involved in any of the decisions which culminated in the public issue. Even a copy of the Technical Report alleged to be prepared by Northern India Technical Consultancy Organization was not shown to him. Therefore all that is stated in the prospectus is the responsibility of the promoter directors and other directors who attended meetings of the Board from time to time. 7.4 The company was bound to issue a public notice of his withdrawal as director after his resignation, which the company failed to do. 8. Conceding to his request the hearing scheduled for 26.09.03 was cancelled and final hearing in the matter took place before me on 01.05.04 at New Delhi which was attended by Shri Gupta. In the said hearing while reiterating all his submissions made earlier, Shri Gupta requested that the order dated 17.12.99 against him be withdrawn. 9.1 I have carefully considered the facts of the case, material on record and various correspondences exchanged between SEBI and Shri Gupta. I have also considered the submissions made by Shri Gupta during the personal hearing and I note that Shri Gupta, with no shareholding in the company had been inducted as an independent director of the company and was no longer on the Board of the company when it defaulted in the compliance of the listing agreement. This is clear from the undertaking/ submission of Shri Gupta and also from the letter dt. 01.08.03 of M/s Sukhchain Cements Ltd. 9.2 I have also noted that no order was passed against the main promoters and other directors of the company as they had responded to the show cause notices forwarded by SEBI. As it transpires, Shri Gupta could not respond because he did not receive the show cause notice, which is found to have been sent / forwarded to the wrong address. Further, Shri Gupta had resigned even before public issue opened for subscription and the default of the company occurred much after his resignation. 10. In view of the above facts and circumstances, I am of the view that Shri J.P. Gupta cannot be held responsible for the violations committed by M/s Sukhchain Cements Ltd and the original order dated 17.12.99 of SEBI in so far as it relates to Shri J. P. Gupta, needs to be revoked in the interest of justice. 11. I therefore, in exercise of powers conferred upon me under Section 19 read with Section 11 and 11B of the SEBI Act, 1992, hereby revoke the order dt. 17.12.99 of SEBI in so far as it relates to Shri J.P.Gupta, ex. Director of M/s Sukhchain Cements Ltd. 12. This order shall come into force with immediate effect.
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