Market regulator Sebi today revoked its interim order barring a former independent director of PG Electroplast from the market in connection with a probe into alleged IPO-related irregularities at the firm.
The Securities and Exchange Board of India (Sebi) said it has decided to revoke its earlier order against Subhash Chandra Gupta, as he was an independent director for a short period of time, was never involved in day-to-day affairs of the company, has resigned from the position, and has already already undergone debarrment for about eight months.
Sebi had passed an ad imterim ex-parte order in December last year, prohibiting Gupta from buying, selling or dealings in securities market till further directions.
The order was passed after a Sebi investigation in various IPOs, including that of PG Electroplast, prima facie revealed that a major portion of the IPO proceeds was diverted by the company for operations in equity market and "questionable land deals and raw material purchases leading to suspicion that the issue was for siphoning off and/or diversion of funds."
It further came to light that PG Electroplast (PGEL), which raised Rs 121 crore through an IPO late last year, had suppressed several material facts in the offer documents for its IPO and made several mis-statements, Sebi said.
Gupta, however, told Sebi that he agreed to join PGEL board based on trust of Managing Director Promod Gupta, a fellow student in 1960s and was never involved in day-to-day affairs of the company during his short tenure.
He further said that the promoters and management suppressed Sebi's letter dated November 9, 2011 about its probe, during a board meeting held on November 14, 2011.
"The company and its promoters have deliberately suppressed vital information from the independent directors," Gupta said, while adding that he resigned on January 5, 2012 after receiving the Sebi order dated December 28, 2011.
Gupta said he had "neither the knowledge nor the reason to believe that something improper was happening in the company."
Sebi observed that Gupta was a signatory of IPO documents and investors were deprived of vital information due to a failure on the part of the company and its directors.
However, as Gupta has resigned from PGEL board and has already faced debarment for about eight months, Sebi decided to revoke its earlier interim order.
The regulator said further that the probe was still under progress in relation to the PGEL IPO and it is expected to complete it expeditiously.
"This order shall be without prejudice to the rights of Sebi to initiate further action, if any, against Gupta on completion of investigation," the regulator said, while asking Gupta to co-operate in its ongoing probe and furnish all required documents and information in this matter.