Final Order in the matter of Five Core Electronics Ltd.

(b) The Noticee nos. 1 to 7 are restrained from being associated with any intermediary registered with SEBI or any listed entity or its material unlisted subsidiary, till further orders.

(c) The Noticee nos. 1 to 7, are restrained from disposing, selling or alienating, in any other manner, their assets or divert funds, till further orders.

(d) NSE shall appoint an independent Auditor/ Audit Firm for conducting a detailed forensic audit of the books of accounts of the company to confirm mis-utilization of IPO proceeds by the company. Such appointment of forensic auditor shall be done within 30 days of this order. (e)The Noticee nos. 1 to 7 shall extend necessary co-operation to the independent Auditor/ Audit Firms appointed as per this Order and shall furnish all information/documents sought from them from time to time.

(f)The independent Auditor/ Audit Firm so appointed as per this Order shall submit a Report to SEBI through NSE within 3 months of date of its appointment."

2. In the interim order, Noticees were provided time of 21 days to file their reply, however, no reply came to be filed by any of the Noticees. Subsequently, directions given in the interim order were confirmed vide confirmatory order dated July 08, 2021, against all the Noticees. However, the interim directions that were confirmed qua Noticee no. 1 were made subject to any order to be passed by Hon'ble NCLT, since, Noticee no. 1 was undergoing Corporate Insolvency Resolution Process under Insolvency and Bankruptcy Code, 2016.

3. In terms of the directions given in the interim order, NSE appointed BDO India LLP as a forensic auditor for conducting a detailed forensic audit of the books of accounts of Noticee No. 1. NSE, vide email dated January 25, 2021 submitted a final report of the forensic auditor, the findings of which required detailed investigation by SEBI. After completion of investigation by SEBI, a show cause notice dated August 12, 2022 (hereinafter referred to as "the SCN"), came to be issued to all the Noticees.

4. The SCN's were sent at the last known address of the Noticee no. 2 to 7 in Mumbai, and at the alst known address of Noticee no. 1 in Delhi. However, all the Speed Post parcels returned undelivered. Subsequently, service of SCN was also attempted by Affixture/ hand delivery, but the same was also unsuccessful. Ultimately, the SCN's was served through paper publication. For Noticee no. 1 the paper publication was done in Delhi edition of the Times of India and Navbharat

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Times, and for Noticee no. 2 to 7, the paper publication was done in the Mumbai edition of the Times of India, Navbharat Times and Maharashtra Times. The copy of the unserved SCN's to the Noticees were also published on the SEBI website under the following path Enforcement>Unserved Summons/ Notices. The fact that the SCN's were available for access on the SEBI website was also mentioned in the advertisement of paper publication. I note that no replies were received from any of the Noticees. Subsequently, an opportunity of personal hearing was granted to all the Noticees on January 11, 2023. The Hearing Notice dated November 30, 2022, retuned undelivered from Speed Post at the last known address of the Noticees in Delhi. Delivery of Hearing Notice to Noticee no. 1 and Noticee no. 4 was successful at the email address available on record. Ultimately, the Hearing Notice to all the Noticees were served through paper publication in the Delhi Edition of the Times of India and Navbharat Times. The copy of the unserved Hearing Notice to the Noticees were also published on the SEBI website under the following path Enforcement>Unserved Summons/ Notices. The fact that the Hearing Notice were available for access on the SEBI website was also mentioned in the advertisement of paper publication. I note that no one turned up for the personal hearing that was scheduled on January 11, 2023.

5. I shall now proceed to examine the veracity of the allegations made in the SCN on the basis of material available on record and note my findings thereon.

Allegation 1: Mis-utilization of IPO proceeds with intent to defraud the investors:

5.1. With regards to the aforesaid allegation, SCN states the following:

Noticee No. 1 raised an amount of ₹46.67 Cr through IPO and as per forensic audit report, the utilization of the IPO proceeds is as under:

Amount Utilisatio Object to the issue (in ₹ n (in ₹ Utilisation as per Forensic Audit Crores) Crores)

Meeting the working Payment to Amount (in ₹ capital requirement Crores)

33.20 42.08

of the company and Domestic Vendors 22.42 its subsidiary

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General Corporate Related parties 13.41

5.60

Purposes Import vendors 3.67 Salary Payment 0.78

Repayment of

Income Tax 0.52

unsecured loans of 3.20 Self-Withdrawal 0.24 promoters / directors *Others 1.04

Issue expenses 4.67 4.59 Lead Manager Total 46.67 46.67 -

*Utilization for an amount of ₹45.80 Cr was identified in forensic audit. The remaining amount of ₹0.87 Cr is included under the heading 'others' above.

i. In terms of LODR Regulations, Noticee No. 1 made a corporate disclosure on October 30, 2018, confirming that there was no deviation from the objects of the issue under the signature of Noticee no. 2. However, no itemized details of utilization were provided in this regard.

ii. With respect to the utilization of IPO proceeds, the forensic auditor identified that majority of the funds were utilized by Noticee No. 1 for the payments to (i) Lead Manager (ii) Domestic Vendors (iii) Related Parties (iv) Import Vendors which were analyzed as under:

A. Payment to the Lead Manager: During the forensic audit, it has been observed that an amount of ₹4.59 Cr was transferred by Noticee No. 1 to the lead manager of the issue i.e. Sarathi Capital Advisors Private Limited. The payment to the lead manager is a part of issue expenses and within the disclosed limit of ₹4.67 Cr in the Objects of the Issue. B. Payments to domestic vendors:

I. Based on the vendor documentation received from Directorate of Revenue Intelligence and transfers from Noticee No. 1 bank account, the forensic auditor has observed that payment of ₹22.42 Cr was made to domestic vendors. Of these, based on the information on public domain like trade websites, GST details on invoices, following were observed:

 Major payments of Noticee No. 1 were made to 26 domestic vendors for payment of ₹15.73 Cr (70% of ₹22.42 Crores) in the range of ₹1.78 Crores to ₹0.20 per vendor.  Based on profile mismatch, turnover mismatch & GST cancellation records, there is a potential mis-utilization for an amount of ₹3.39 Crores in case of six vendors namely Balaji Sales Corporation, Reliable Technologies, Bansal Steels, S Enterprises, Shreeji Enterprises and Ensons Trading LLP.

II. In this regard, based on the transactions in Noticee No. 1 bank account held with Andhra Bank, SEBI obtained bank details of top 5 counter party and six vendors with potential mis-

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utilization as identified in forensic audit report (total 10 entities - one common entity). The counter party banks were requested to provide the KYC of respective counter party account holder. Of 10 entities, received KYC of eight entities to whom the letters were sent seeking details of transactions w.r.t. payments received from Noticee No. 1 and details of any connection with seven entities against whom interim order was passed. Of the eight entities, five entities confirmed that funds received from Noticee No. 1 were against the purchases made by Noticee No. 1 from them and also submitted that they have, except business relationship, no relationship with the seven entities against whom interim directions were passed. Of the five entities, four entities submitted copies of the invoices and e-way bills. One entity, Reliable Technologies, submitted that its documents were seized by Director General of GST Intelligence Chandigarh on September 11, 2019. Letters sent to the two entities returned undelivered. No reply was received from one entity. The entity wise details are as under:

(amount in ₹ Crores)

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Total 8.57 - The information submitted by the said five entities is analyzed as under:

(amount in ₹ Crores)

Name Products Invoices submitted by Invoices Post Listing i.e. May 31, as per Vendors 2018

Invoices

Date of No. Amo Date of No. Amou Pay

Invoices of unt Invoices of nt ment

Inv Inv from

oic oic IPO

es es Proc

eeds

Radius Electronic 31/07/2017 - 64 6.47 07/06/2018- 42 3.98 0.90 Industries Compone 07/03/2019 07/03/2019

nts

Balaji Electronic 06/10/2017 - 55 5.78 28/05/2018- 26 2.99 1.44 Sales Compone 28/02/2019 28/02/2019

Corporati nts &

on Cables

Bansal Steel 16/05/2018- 9 0.7 16/05/2018- 9 0.7 0.54 Steels Sheets 09/06/2018 09/06/2018

(GP &

CR)

Reliable LED TV 26/08/2017 - 36 6.03 28/06/2018- 29 4.15 1.50 Sales Panel, AV 19/12/2019 26/02/2019

Card for

DTH

Reliable - 16/05/2018- 7 0.57 24/05/2018- 5 0.41 0.55 Technolo 14/09/2018 14/09/2018

gies

Total 171 19.5 - 111 12.23 4.93

5

III. From the above tables, it is observed that the four vendors namely Bansal Steels (₹0.54 Crores), Shreeji Enterprises (₹0.23 Crores), Ensons Trading LLP (₹0.20 Crores) and Reliable Sales (₹0.41 Crores) totaling to ₹1.38 Crores to which Noticee No. 1 made payments were not in the same line of business of Noticee No. 1. Noticee No. 1, in its object of the issue stated that IPO funds will be used for the working capital of the company whereas the funds paid to the said four entities do not appear as working capital expenditure. C. Payment to Related Parties:

I. During the forensic audit, it has been observed that an amount of ₹10 Crores was transferred by Noticee No. 1 to its subsidiary (5core Acoustics Pvt. Ltd) and ₹3.25 Crores to its

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promoters namely Noticee no. 2 (₹1.35 Crores) and Noticee no. 4 (₹1.90 Crores). As per the prospectus, Noticee No. 1 disclosed that an amount of ₹10 Crores will be utilized towards the working capital requirement of the Company and it's Subsidiary. Further, it is also disclosed that Noticee No. 1 availed long term loans from lenders including promoters and directors to the extent of ₹3.19 Crores (as on April 12, 2018) for which IPO proceeds will be utilized for repayment.

II. Noticee No. 1 transferred ₹10 Crores to its subsidiary i.e., 5 core Acoustics Pvt. Ltd ('5Core') during May 22-24, 2018. From the MCA filings, it is noticed that Noticee No. 1 held 99.99% of the holdings of its subsidiary. Noticee no. 2, Noticee no. 4 and Noticee no. 6 are the directors of the subsidiary. As per MCA filings, 5core is non-compliant with filings. The last filing of 5core was form MGT-7 (Annual Return) on November 30, 2018. No filings thereafter were noticed. The 5core received funds from Noticee No. 1 to this bank account number 5427000600001301 held with Karnataka Bank. SEBI sent email dated December 22, 2021 to Karnataka Bank requesting the status of the said account. Karnataka Bank, vide email dated December 22, 2021, submitted that the said account is active but last transaction was made on March 26, 2019. Karnataka Bank also submitted that balance in 5Core account is overdue for ₹3.09 Crores and suit was filed after classifying the account as NPA.

III. In this regard, it is pertinent to note that Noticee no. 2, Noticee no. 4 and Noticee no. 6, the only directors of 5Core are not available or traceable from February 27, 2019. 5Core have no other director.

IV. Noticee No. 1, in its objects of the issue stated that it will utilize IPO funds towards the working capital of company/subsidiaries. However, post transfer of the funds by Noticee No. 1 to 5Core, it stopped operations. The promoters/ non-independent directors of Noticee No. 1 i.e., Noticee no. 2, Noticee no. 4 and Noticee no. 6 are the only directors of 5Core who managed its operations.

V. In absence of the directors from February 27, 2019 and no transactions in the bank account from March 26, 2019, it appears that 5Core stopped its functioning within a year from the receipt of the funds from Noticee No. 1.

VI. With regard to the utilization of IPO funds for the repayment of unsecured loans of promoters/directors, Noticee No. 1 has transferred ₹0.05 Crores (Amount Transferred i.e.,

3.25 Crores - Amount disclosed at Objects of the Issue i.e., 3.20 Crores) in excess of the amount disclosed in Objects of the issue.

D. Payment to Import Vendors:

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I. During the forensic audit, based on the invoices and bill of entries submitted by Andhra Bank, it has been observed that Noticee No. 1 made a payment of ₹3.66 Crores to three overseas entities. The information available in public domain on the said three entities is as under:

Amount in ₹ Crores

II. As books of accounts of Noticee No. 1 is not available due to the closure of the company and with the limited information available on the aforesaid three entities, the veracity of Noticee No. 1 purchases could not be confirmed.

iii. Conclusion on mis-utilization of IPO funds:

A. Noticee No. 1 and its promoters/ non-independent directors namely Noticee no. 2, Noticee no. 3, Noticee no. 4 and promoters viz. Noticee no. 5, Noticee no. 6 and Noticee no. 7 raised ₹46.67 Crores from IPO in May 2018. Noticee No. 1 utilized the IPO proceeds for payments to Lead Manager for issue expenses (₹4.59 Crores), Payment to Domestic Vendors for purchase of goods (₹22.42 Crores), Payment to Promoters & Subsidiary (₹13.41 Crores), Payments for importing goods (₹3.67 Crores) and other expenses.

B. Further, Noticee no. 2 to 7 (Mr. Amarjit Singh Kalra, Mrs. Surinder Kaur Kalra, Mrs. Jagjit Kaur Kalra, M/s Amarjit Singh Kalra HUF, Mr. Surinder Singh Kalra and M/s Surinder Singh Kalra HUF) raised ₹143.08 Crores from Banks/Financial institutions. Noticee no. 2 manufactured goods with the raised funds and exported goods to his connected entities. Just one week prior to the Department of Revenue Intelligence search on Noticee No. 1, Noticee no. 2 to 7 become not available or non-traceable from February 2019, with in period of eight months, without any intimation/ information to the independent directors/ shareholders of Noticee No. 1.

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C. During the NSE visit to Noticee No. 1, it was observed that Registered Office and Factory of Noticee No. 1 are closed. At present, Noticee No. 1 is in Corporate Insolvency Resolution Process (CIRP) before NCLT. Further, from the Forensic Auditor's observations and a copy of the FIR filed by Union Bank of India (UBI) with CBI, it was observed that Promoters/ Non- independent directors of Noticee No. 1 obtained loans from Andhra Bank (merged with UBI) by discounting export bills and defrauded for an amount of ₹51.92 Crores. D. Forensic Auditor, based on the public domain information, also noticed that promoters/ non- independent directors of the Noticee No. 1 and their relatives incorporated companies in USA and were involved in trading of products similar to Noticee No. 1 products such as Woofers, Speakers, Public Address Systems etc., through e-commerce websites such as Walmart, Sears, Kmart. From the bill discounting documents submitted by Andhra Bank, it is observed that FCEL had exported goods to five entities. Of these, on examination, it is noticed that three entities are connected to FCEL. Details of the said 3 entities are as under:

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Manager, Raheem Khalid is the General manager and Rajesh Singh is the Executive.

As per trade website 'bizlok.in', 'Gurpreet Singh' is one of the contact person of FCEL along with Mr. Amarjit Singh Kalra.

Total 29.12 0.00 - *Foreign Bill Purchase (FBP) /Foreign Bill Discounting (FBD) E. From the foregoing discussions, it may be concluded that Noticee No. 1 and its promoters/ non-independent directors raised ₹46.67 Crores in IPO with an intent to defraud the investors of IPO and become non-available or non-traceable thereafter.

F. The findings that Noticee No. 1 made payments to its subsidiary 5 Core, which itself shut its operations, and to various vendors who had a different line of business corroborates the mis- utilization. Even though Noticee No. 1 made payments to various entities from IPO proceeds, the investors did not realize any benefit as the promoters/non-independent directors were untraceable and the company stopped its operations and did not publish its Annual Report. The fact that the promoter-directors abandoned the company and also their fiduciary duty towards the shareholders and other stakeholders after raising money through IPO from the investors is a mis-utilization of the entire IPO proceeds and an act of fraud on the investor. Hence, the corporate disclosure made by Noticee No. 1 on October 30, 2018 stating that there was no deviation in the utilization of IPO proceeds from the objects of the issue can also be construed as false and misleading.

5.2. From the aforesaid allegations and on perusal of the material available on record, I find that Noticee no. 1 made payments to certain domestic vendors which SEBI's investigation has revealed, were engaged in absolutely unconnected line of business, thus, exhibiting mis-utilization of IPO proceeds. The four vendors, namely, Bansal Steels (₹0.54 Crores), Shreeji Enterprises (₹0.23 Crores), Ensons Trading LLP (₹0.20 Crores) and Reliable Sales (₹0.41 Crores) to which Noticee No. 1 made payments were not in the same line of business of Noticee No. 1. Noticee No. 1, in its object of the issue stated that IPO funds will be used for the working capital of the Company whereas the funds paid to the said four entities do not appear as working capital expenditure.

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5.3. Further, Noticee No. 1, in its objects of the issue stated that it will utilize IPO funds towards the working capital of company or its subsidiaries. However, post transfer of Rs.10 Crores by Noticee No. 1 to its wholly owned subsidiary - 5 Core Acoustics Pvt. Ltd., the subsidiary company stopped its operations. Thus, the funds transferred to the subsidiary appears to have been mis- utilized. The promoters/ non-independent directors of Noticee No. 1 i.e., Noticee no. 2, Noticee no. 4 and Noticee no. 6 are the only directors of 5 Core Acoustics Pvt. Ltd. who managed its operations.

5.4. With regard to the utilization of IPO funds for the repayment of unsecured loans of promoters/ directors, I find that Noticee No. 1 has transferred ₹0.05 Crores (Amount Transferred i.e., 3.25 Crores - Amount disclosed at Objects of the Issue i.e., 3.20 Crores) in excess of the amount disclosed in Objects of the issue, for this purpose.

5.5. I note that no material has been brought on record to indicate that the Company has taken approval from its shareholders in a general meeting by way of special resolution, authorizing the Company to make changes in the objects of the issue of the prospectus in terms of Section 27(1) of the Companies Act, 2013. Thus, from the discussion at para 5.2, 5.3 and 5.4, I find that the proceeds of IPO have been utilized not in line with the objects of the IPO disclosed in the Prospectus. Further, the corporate disclosure made by Noticee No. 1 to the stock exchange on October 30, 2018 stating that there was no deviation in the utilization of IPO proceeds from the objects of the issue can also be construed as not correct.

5.6. I note that Noticee no. 3 is the promoter cum non-executive director of the Company and Noticee no. 4 is the non-executive director and member of promoter group of the Company. Noticee no. 2 is the promoter and Managing Director of the Company. Noticee no. 5, 6 and 7 are members of the promoter group (as disclosed in the Prospectus) of the Company and are holding 1.04%, 10.88% and 1.30% shares of total outstanding shares of Noticee no. 1,

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respectively. Noticee no. 5 is an HUF wherein Noticee no. 2 is Karta, who is Managing Director of Noticee no. 1. Noticee no. 6 is the father of Noticee no. 2 and director of its wholly owned subsidiary - 5 Core Acoustics Pvt. Ltd. Noticee no. 7 is an HUF wherein Noticee no. 6 is Karta. I note that it is a matter of record that Noticee no. 2 to 7 have abandoned the Company and become non-traceable. From the facts and circumstances of the present case, I also note that the Noticees were part of the scheme of mis-utilization of IPO proceeds of the Company from the beginning, wherein the promoters came out with an IPO promising to deploy the funds of the Company for certain pre- determined objects, however, soon after the receipt of funds, the Noticees pursued their sinister plan to mis-utilize the funds for different purposes such as transfer to subsidiary and subsequent closure of its operations, transfer to unrelated entities not in the same line of business, etc. and ultimately abandon the Company and become untraceable. Thus, I find that the Noticees had intention to defraud the investors of IPO from the beginning itself. Therefore, I find that Noticee nos. 1 to 7 have violated Regulation 3(b), 3(c), 4(2)(f), 4(2)(k) read with Regulation 4(1) of SEBI (PFUTP) Regulations, 2003.

Allegation 2: Mismatches in balances of financial statements

5.7. With regards to the aforesaid allegation, SCN states the following:

The Noticee No. 1's drawing power statement dated September 30, 2018 from Andhra Bank was compared with its disclosed financial statements as on September 30, 2018 and noticed that inventory was overstated, debtors and creditors were shown short. The details of the same is as under:

(Amount in Crores)

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5.8. From the above, I find that Noticee No. 1 has misstated the financial statements for the half year ended September 30, 2018 which does not give a true and fair view to its investor. Noticee no. 1 has understated the Debtors and Creditors and overstated the inventory as on September 30, 2018. The non-independent directors of Noticee no. 1, namely, Noticee no. 2, Noticee no. 3, Noticee no. 4 knowingly published and disseminated financial results with mis-statements. The said financial results were disclosed on NSE website on November 13, 2018. From the price volume of the Noticee No. 1, it is noticed that the price of the scrip increased from ₹110.05 (close price) as on November 12, 2018 to ₹117.00 (close price) as on November 14, 2018 i.e., 6.32% increase in close price as on November 12, 2018. In view of the above, I find that false disclosure of Noticee No. 1's financial statements had resulted into increase of price in the scrip of the Company by 6.32%. which has led to violation of Regulation 3(d), 4(1) and 4(2)(f) of SEBI (PFUTP) Regulations, 2003 by Noticee no. 1, 2, 3 and 4.

Allegation 3: Violations of SEBI (LODR) Regulations, 2015.

5.9. With regards to the aforesaid allegation, SCN states the following:

i. The interim order in the instant matter, has alleged violations of various provisions of LODR Regulations by Noticee No. 1 such as failure to disclose the resignation of independent directors/ KMP, financial results, reasons for delay to disclose financial results, investor grievance report & shareholding pattern. The details of the same is as under:

Event Observations Relevant provisions Provisions of

SEBI LODR

Regulations violated

1. Non-disclosure Disclosed on NSE In terms of SEBI LODR Clause A(7) of about Resignation of on April 27, 2019 Regulations, the Schedule III Mr. Amitabh Singh, with delay of 37 change in KMP, read with Reg. Chief Financial days Auditor and 30(6)

Officer Compliance Office is to

(w.e.f. 20.03.2019) be disclosed within 24

2. Non-disclosure Disclosed on NSE hours. about Resignation of on April 27, 2019 Mr. Saurabh Kumar The disclosure was Jain, Company delayed by 37 days

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Secretary & with delay of 31 and 31 days with Compliance officer days regard to the (w.e.f. 26.03.2019) resignation of CFO &

3. Non-disclosure No Disclosure CS respectively. about Resignation of was observed

Mr. Aditya Agarwal, No disclosures with (Independent regard to Independent Director) directors were made.

4. Non-disclosure No Disclosure about Resignation of was observed Mr. Neeraj Sharma,

(Independent

Director)

5. Non-disclosure of Last financial In terms of SEBI LODR Reg. 33(3) read Financial Results disclosure was Regulations, Noticee with 33(5), 34 and Annual Reports made on No. 1, SME listed

12.02.2019 for company, shall

quarter ended disclose half year and

December 31, yearly results.

2018. No However, Noticee No.

disclosures 1 failed to disclose

thereafter were results for FY 2018-19,

observed. 2019-20, 2020-21 and

half year ended

Noticee No. 1 September 2019 &

disclosed Annual September 2020 &

Report for FY September 2021.

6. No corporate 2017-18 and no In terms of SEBI Circular No. announcement for disclosure of Circular No. CIR/CFD/CMD- delay in disclosure of Annual Report CIR/CFD/CMD-1 1 /142/2018 financial results was made /142/2018 dated dated thereafter. November 19, 2018, November 19, Noticee No. 1 shall 2018

make a corporate

announcement with

detailed reasons

wherever there is a

delay in disclosure of

financial results.

7. Non-disclosure of No disclosures In terms of SEBI LODR Reg. 13(3) Investor Grievance were available on Regulations, Noticee Report NSE website. No. 1 shall file a

statement on investor

grievances on quarterly

basis. As per NSE

website, Noticee No. 1

made no such filings.

8. Non-disclosure of Latest In terms of SEBI LODR Reg. 31(1) Shareholding shareholding Regulations, Noticee Pattern pattern was made No. 1, SME listed on NSE for the company, shall

half year ended disclose shareholding

March 31, 2020. pattern for each half

year within 21 days.

Noticee No. 1 failed to

make disclosure for

half year ended

September 2021.

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ii. For the aforesaid non-compliance of LODR Regulations, Noticee No. 1 is also alleged to be in violation of Regulation 4(1)(a), (d), (e), (g), (h) & (j), 4(2)(e), Clause A(7) of Schedule III read with Regulation 30(6); Regulations 6, 10, 13(3), 30, 31(1), 33(3) read with 33(5), 34, 46 of LODR Regulations and SEBI Circular No. CIR/CFD/CMD-1 /142/2018 dated November 19, 2018.

iii. Promoters/ non-independent directors of Noticee No. 1 namely Noticee no. 2, Noticee no. 3 and Noticee no. 4 failed to conduct themselves to meet operational transparency to stakeholders, monitor and oversee the disclosures. Thus, they have violated Regulation 4(2)(f) of SEBI LODR Regulations.

5.10. From the above, it is clear that Noticee no. 1 has failed to comply with many disclosure obligations under SEBI (LODR) Regulations, 2015. In some instances, they have been disclosed, but with delay, while in other instances, they have not been disclosed at all. I also note that Noticee no. 1 has failed to appoint a Compliance Officer after the resignation of Mr. Saurabh Kumar, and also failed to maintain a functional website. In view of the above, I find that Noticee no. 1 is in violation of Clause A(7) of Schedule III read with Regulation 30(6), Regulations 6, 10, 13(3), 30, 31(1), 33(3) read with Regulation 33(5), 34 and 46 of SEBI (LODR) Regulations, 2015 and provisions of SEBI Circular No. CIR/CFD/CMD-1 /142/2018 dated November 19, 2018. I note that by failing to ensure the timely and adequate disclosure of information/ reports to all stakeholders, Noticee no. 2, 3 and 4 have violated the mandate of Regulation 4(2)(f)(i)(2) of SEBI (LODR) Regulations, 2015.

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6. As discussed in Para 5.6, 5.8 and 5.10, Noticee nos. 1 to 7 have been found to have violated the provisions of Regulations 3(b), 3(c), 4(2)(f), 4(2)(k) read with Regulation 4(1) of SEBI (PFUTP) Regulations, 2003 and Noticee no. 1 has been found to have violated Clause A(7) of Schedule III read with Regulation 30(6), Regulations 6, 10, 13(3), 30, 31(1), 33(3) read with Regulation 33(5), 34 and 46 of SEBI (LODR) Regulations, 2015 and provisions of SEBI Circular No. CIR/CFD/CMD-1 /142/2018 dated November 19, 2018. Noticee no. 2, 3 and 4 have been found to have violated Regulation 4(2)(f)(i)(2) of SEBI (LODR) Regulations, 2015. I find that, for the aforesaid violations by Noticee nos. 1 to 7, appropriate directions under Section 11B(1) and 11(4) of SEBI Act, 1992, needs to be issued.

7. From the Confirmatory Order dated July 8, 2021, it is learnt that there is a proceeding under Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "IBC") against Noticee no. 1 before the Hon'ble NCLT, New Delhi Bench (Court II), wherein an order dated January 23, 2020 [IB-1671(ND)2019] has been passed declaring a moratorium in terms of Section 14 of the IBC. From the website of Hon'ble NCLT, the status of the aforesaid IBC proceedings was perused. It is learnt that no resolution plan under Section 31(1) of IBC has yet been approved by the Hon'ble NCLT nor any order for liquidation of Noticee no. 1 under Section 33 of IBC has been passed by the Hon'ble NCLT. Thus, I note that the CIRP of Noticee no. 1 is still in progress and consequently, the moratorium under Section 14 of IBC is still in force. In view of the forgoing, the directions issued hereunder qua Noticee no. 1 have been made subject to any directions that may be issued by Hon'ble

NCLT.

8. In view of the facts and circumstances of the case, I, in exercise of the powers conferred upon me under Section 19 read with Sections 11(4) and 11B(1) of the SEBI Act, 1992, hereby issue the following directions in supersession of the directions issued by the interim order dated July 23, 2020 and confirmatory order dated July 8, 2021:

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8.1. The Noticee no. 1 is restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner, whatsoever, for a period of five (5) years from the date of coming into force of this order, subject to any further orders of Hon'ble NCLT under the IBC proceedings.

8.2. The Noticee nos. 2, 3, 4, 5, 6 and 7 are restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner, whatsoever, for a period of five (5) years from the date of coming into force of this order.

9. The obligation of the aforesaid debarred Noticees, in respect of settlement of securities, if any, purchased or sold in the cash segment of the recognized stock exchange(s), as existing on the date of this Order, can take place irrespective of the restraint/ prohibition imposed by this Order only, in respect of pending unsettled transactions, if any. Further, all open positions, if any, of the Noticees debarred in the present Order, in the F & O segment of the stock exchanges, are permitted to be squared off, irrespective of the restraint /prohibition imposed by this Order.

10. The Order shall come into force with the immediate effect.

11. A copy of this Order shall be forwarded to all the Noticees, all the recognized Stock Exchange, depositories and registrar and transfer agents for ensuring compliance with the above directions.

Sd/-

Date: May 31, 2023 ANANTA BARUA Place: Mumbai WHOLE TIME MEMBER

SECURITIES AND EXCHANGE BOARD OF INDIA

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