In Re Ripu Sudan Kundra, Shilpa Shetty & Viaan Industries in the matter of Viaan Industries Limited (SEBI)
FACTS OF THE CASE
1. Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) had conducted an investigation into the trading/dealings in the scrip of Viaan Industries Limited (formerly known as Hindustan Safety Glass Industries Limited), during the period September 01, 2013 to December 23, 2015 (hereinafter referred to as the ‘investigation period’). Pursuant to the investigations, it was observed that Mr. Ripu Sudan Kundra (hereinafter referred to as ‘Noticee no.1’/‘Mr. Ripu’), Ms. Shilpa Shetty Kundra (hereinafter referred to as ‘Noticee no. 2’/‘Ms. Shilpa’) and Viaan Industries Ltd. (hereinafter referred to as ‘VIL’/‘Noticee no. 3’/’Company’) had allegedly violated the provisions of Regulations 7(2)(a) and 7(2)(b) of SEBI (Prohibition of Insider Trading) Regulations, 2015 (hereinafter referred to as ‘PIT Regulations’). In view of the same, adjudication proceedings have been initiated against Noticee nos. 1, 2 & 3 under the provisions of section 15 A (b) of the Securities and Exchange Board of India Act, 1992 (hereafter referred to as ‘SEBI Act’). In the context of the present proceeding, Noticee nos. 1 to 3 are also hereinafter collectively referred to as ‘Noticees’.
2. The shares of VIL are listed on the Bombay Stock Exchange (‘BSE’) and Noticee nos 1 and 2 are the promoters of VIL. It is observed that, on October 29, 2015, VIL made a preferential allotment of 5,00,000 equity shares to four persons and in the said preferential allotment 1,28,800 shares each were allotted to Noticee nos 1 & 2. In this regard, pursuant to the allotment of the shares through the preferential allotment, both Noticee nos 1 & 2 were required to make the necessary disclosure to the company in terms of the provisions of Regulation 7(2) (a) of the PIT Regulations, as the relevant transactions in question through the aforementioned preferential allotment exceeded Rupees Ten Lakh in value. Further, in terms of Regulation 7 (2) (b) of the PIT Regulations, the Company was required to make the necessary disclosures to the stock exchange within two trading days of the receipt of the disclosures from Noticee nos 1 and 2 or from becoming aware of such information pertaining to the transactions. During the course of investigation, it is observed that the Noticees allegedly failed to make the relevant disclosures required under Regulations 7 (2) (a) and 7 (2) (b) of the PIT Regulations within the stipulated time period. In view of the same, it is alleged that Noticees have violated the aforementioned provisions of the PIT Regulations and therefore, adjudication proceedings have been initiated against the Noticees under the provisions of section 15 A (b) of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as ‘SEBI Act’).
APPOINTMENT OF ADJUDICATING OFFICER
3. Vide Order dated February 01, 2021 under Section 19 of the SEBI Act r/w Section 15-I of the SEBI Act and Rule 3 of SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995 (hereinafter referred to as ‘Adjudication Rules’), the undersigned has been appointed as the Adjudicating Officer in the matter to inquire into and adjudge under section 15 A(b) of the SEBI Act, the aforementioned alleged violation of the provisions of law by the Noticees.
SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING
4. Show Cause Notice (‘SCN’) ref no. SCN/SEBI/EAD1/SBM/KL/9354/2021 dated April 26, 2021 was issued to the Noticees in terms of Rule 4 (1) of the Adjudication Rules r/w Section 15-I of the SEBI Act to show cause as to why an inquiry should not be held against the Noticees and why penalty be not imposed on them in terms of the provisions of section 15A(b) of the SEBI Act for the violations alleged to have been committed by the Noticees. The SCN, inter-alia, alleged the following :-
a. VIL was incorporated as Hindustan Safety Glass Industries Limited on October 19, 1982, as a public limited company. It was initially listed on the Calcutta Stock Exchange (CSE) and thereafter, it got listed on Bombay Stock Exchange (BSE) with effect from February 20, 2014, under direct listing. It is observed that the trading at CSE had stopped since 2013 and thereafter no trading took place in the scrip at CSE. Further, the shareholding pattern of the company and the promoters’ shareholding observed during the investigation period/examination period are given in the following tables.
Table 1 – Promoters’ shareholding during the investigation period/ examination period
