SEBI discontinues the prohibition issued against Parekh Aluminex Ltd.

SEBI discontinues the prohibition issued against Parekh Aluminex Ltd.

The Securities and Exchange Board of India (SEBI) has directed the discontinuation of restraint/prohibition from accessing the securities market issued against Parekh Aluminex Limited (Parekh/Noticee Company) vide the interim order and disposed of the proceedings against the Noticee Company without any further directions.

In this matter, a reference was made from the State Bank of India (SBI) wherein it was informed that in the Due Diligence Report carried out for the period 2012-2013 by Deloitte Touche Tohmatsu India Pvt. Ltd. (Deloitte), for the Noticee Company, various irregularities in the day to day affairs of the Noticee were observed.

Based on the aforesaid report, a preliminary investigation was conducted by SEBI into the affairs of the Company, so as to ascertain if there were any violations of securities laws committed by it, Mr. Rajendra Gothi (ex-Director of the Company) and C.V. Pabari & Co., Chartered Accountants (Statutory Auditor of the Company).

In the preliminary investigation/examination, owing to certain acts committed by the aforesaid entities, prima facie violations of provisions of Securities and Exchange Board of India Act, 1992 (SEBI Act, 1992) and SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (PFUTP Regulations) were noticed.

SEBI vide its interim order had restrained the Noticee Company from accessing the securities market and further prohibited it from buying, selling or otherwise dealing in securities in any manner whatsoever, directly or indirectly till further orders.

The proceedings against the two entities, viz. Mr. Rajendra Gothi and Pabari & Co., had culminated in passing of a final order dated October 31, 2018. The said entities had been held guilty of violation of provisions of SEBI Act, 1992 and PFUTP Regulations, 2003 and accordingly, Mr. Rajendra Gothi was debarred from accessing the securities market directly or indirectly for a period of 10 years while Pabari & Co. had been restrained from issuing certificates of audit of listed companies for a period of 5 years.

The Whole Time Member (WTM) observed that by virtue of the interim order, the Noticee Company was already under the restraint from accessing the securities market with effect from August 30, 2017. It was also reiterated that the equity shares of the Noticee Company had already been delisted from BSE Limited w.e.f July 04, 2018 and as a statutory consequence to the same, the Noticee Company was debarred from accessing the securities market for a period of 10 years from the date of the said delisting.

Further, the proceedings emanating from the interim order against the Ex-Director of the Noticee Company as well as the Statutory Auditor had already been concluded by issuance of the final order qua them dated October 31, 2018.

The WTM relied on certain developments and opined that actions and developments pertaining to actions by the Noticee Company under the securities laws, the Noticee Company had already been ordered to be liquidated. The records suggested that during the said order directing liquidation, no counter/objections was filed by any of the Directors of the Noticee Company, objecting to the said order of liquidation.

Moreover, the interim order of SEBI had provided an opportunity to the Company also to file its reply to the observations so made in the said interim order, however, the Company had not filed any objection/reply in response to the observation recorded in the interim order.

It was noted that the Company had already remained under restraint from accessing the securities market for a period of more than three years in terms of the interim order and further by virtue of the action of compulsory delisting, it shall remain prohibited from accessing the capital market till July, 2028.

Additionally, the Ex-Director and Statutory Auditor had already been proceeded against by passing of the final order.

It was observed that along with the attendant facts and circumstances of the present case, particularly the fact that the Noticee Company was under liquidation, its equity shares had been compulsorily delisted, it had already restrained from dealing in securities for a reasonable period and further prohibited from accessing the capital market in terms of SEBI (Delisting of Equity shares) Regulations, 2009. Hence, it was observed that the restraint/prohibition imposed on the Companyvide the interim order need not continue.