Adjudication Order in respect of Arun Panchariya, Mukesh Chauradiya and Sanjay Aggarwal the matter of GDR issue by Aqua Logistics Limited

BEFORE THE ADJUDICATING OFFICER
SECURITIES AND EXCHANGE BOARD OF INDIA

[ADJUDICATION ORDER NO: Order/GR/KG/2020-21/9271-9273]

ORDER UNDER SECTION 15-I OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 READ WITH RULE 5 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (PROCEDURE FOR HOLDING INQUIRY AND IMPOSING PENALTIES) RULES, 1995

In respect of:
1. Mr. Sanjay Agarwal [PAN: AAFPA4428F]
2. Mr. Mukesh Chauradia [PAN: AAVPC0966A]
3. Mr. Arun Pachariya [AEVPP6125N]

In the matter of GDR Issue by Aqua Logistics Limited

BACKGROUND IN BRIEF

1. The Securities and Exchange Board of India (hereinafter referred to as “SEBI”) conducted investigations into the alleged irregularities in the GDR (Global Depository Receipts) Issue by Aqua Logistics Limited (hereinafter referred to as “Company” /”AQUA”) during the period from January 15, 2011 to February 28, 2011 (hereinafter referred to as “Investigation Period”).

2. AQUA is a company whose shares are listed on the NSE and BSE Ltd. The investigations, prima facie, revealed that AQUA had issued 4.112 million GDRs (amounting to USD 62.379 Million, approximately Rs. 284.32 Crore at RBI exchange rate of Rs. 45.58 per USD) on February 10, 2011, equivalent to 9,45,76,000 equity shares of Re. 1 each, and the said issue was subscribed by one entity viz. Vintage FZE (now known as Alta Vista International FZE) (hereinafter referred to as “Vintage”). It was observed that the subscription amount was paid by Vintage by obtaining a loan from European American Investment Bank AG (EURAM Bank) by entering into Loan Agreement dated February 3, 2011 with EURAM Bank. It was observed that directors of AQUA in its board meeting held on September 9, 2010, had passed board resolution inter alia authorizing the opening of an account with EURAM Bank for the purpose of receiving subscription money in respect of the GDR issue of AQUA and also for using the funds deposited in the said bank account as security in connection with loans, if any. AQUA had signed a pledge agreement dated February 3, 2011 with EURAM Bank pledging GDR proceeds as collateral against the loan availed by Vintage, executed by Mr. M.S. Sayad, Whole Time Director (hereinafter referred to as “WTD”) of AQUA. Vide the said loan agreement, AQUA had pledged the GDR proceeds against the loan availed by Vintage FZE for subscribing to GDRs of AQUA, thus securing Vintage FZE’s loan.

3. Therefore, it was alleged that the scheme of issuance of GDRs was fraudulent. Annual Report of AQUA for FY 2010-11 was examined and it was observed that 12 board meetings of AQUA were held in the FY 2010-11 and three directors namely 1) Mr. Rajesh G Uchil 2) Mr. M.S.Sayad and 3) Mr. Harish G Uchil had attended all the 12 board meetings of AQUA held in FY 2010-11. Therefore, it is observed that two directors namely Mr. Rajesh G Uchil and Mr. Harish G Uchil had attended the AQUA’s board meeting dated September 09, 2010 and authorized EURAM Bank to use the GDR proceeds in connection with loan, if any and Mr. M.S.Sayad was authorized to sign the agreement related to GDR issue of the AQUA.

Further, Mr. Mukesh Chauradiya had signed the Loan Agreement dated February 3, 2011 on behalf of Vintage in the capacity of its Managing Director and on a perusal of copy of Know Your Customer documents (signed on June 06, 2007) of Vintage available with EURAM Bank, it was observed that Arun Panchariya was the beneficial owner of Vintage. Further it was observed that Mr. Sanjay Aggarwal, the beneficial owner of ‘Sea Dragons Worldwide Limited’ who had acted as a conduit of Arun Panchariya and Vintage in the instant case through whom monies were routed to Vintage. It was therefore alleged that AQUA and the individuals named above had acted as parties to the fraudulent scheme.

To read more in details, find the enclosed file