The order also said that V K Sukumaran had entered into prohibited transactions with some others, thereby violating the provisions of SCRA (Securities Contracts (Regulation) Act).
Markets regulator Sebi has imposed a total penalty of Rs 80 lakh on six individuals for various violations, including disclosure lapses, in the matter of VKS Project Ltd. The individuals who have been penalised are V K Sukumaran, Saritha Sukumaran, Piyush Kothari, Mohammed Azhar Khan, Mehul Modi and Nelesh Devendra Vora.
An investigation conducted by the regulator into the shares of VKS during July 18, 2012 to December 31, 2014 period had found certain irregularities. V K Sukumaran and Saritha Sukumaran were the promoters of the company. In 2013-14, they had acquired more than 5 per cent stake in the company. Under Sebi norms, such transactions need to be disclosed and the entities concerned have to make an announcement of an open offer since their shareholding increased beyond a particular threshold.
However, they failed to make the mandatory public announcement of open offer in violation of SAST (Substantial Acquisition of Shares and Takeovers) norms, Sebi said in an order dated August 5. As per the order, it was also found that V K Sukumaran had failed to make necessary disclosures on various occasions, including share transactions with Mohammed Azhar Khan and Mehul Modi.
“… the noticee 1 & 2 (V K Sukumaran and Saritha Sukumaran) have been debarred from accessing the capital market or dealing in securities for a period of 2 years by Sebi vide order dated November 28, 2019. “Further, the noticee 1 has also submitted that the company is under liquidation and has also been delisted now. Taking into consideration, the facts and circumstance of the case and mitigating factors as mentioned above, an appropriate penalty needs to be imposed upon the noticees 1 & 2 to meet the ends of justice,” Sebi noted.
The order also said that V K Sukumaran had entered into prohibited transactions with some others, thereby violating the provisions of SCRA (Securities Contracts (Regulation) Act). Referrring to the SCRA provisions, the order said that if a transaction in securities has to be validly entered into, such a transaction has to be either between the members of a recognised stock exchange or through a member of a stock exchange or with a member of a recognised stock exchange.
“… it can be said every contract in securities must be executed through the stock exchange mechanism unless it is a spot delivery contract. The transactions entered by the noticees 1, 2, & 4 to 7 (V K Sukumaran, Saritha Sukumaran, Piyush Kothari and Nelesh Devendra Vora), were neither executed on the stock exchange,” it added.