Sebi orders six-month jail for defaulter in fraud case

Exercising its new powers to order imprisonment of defaulters, regulator Sebi today sent a Thane resident to civil prison for six months after he failed to pay over Rs 1.64 crore of penalty imposed for indulging in fraudulent activities.
This the first major case of Sebi ordering arrest of a defaulter since it was given these powers through amendments to the Sebi Act earlier this year. In a couple of other cases, Sebi has so far ordered brief detentions.
"Since the dues of the defaulter are more than Rs 1.64 crore and that due to the fraudulent activities of the defaulter in various capacities .... Number of innocent investors in the securities market have suffered.

"Therefore, I hereby order the civil imprisonment for a maximum period of six months," Sebi's Recovery Officer said in his order, while directing Byculla Prison Jailor to take the person into civil prison and keep him imprisoned for a maximum period of six months or untill the pending dues with further interest is paid.
Sebi began the latest recovery proceedings against the defaulter, Vinod Hingorani, in July this year after he failed to pay the penalty amount imposed on him for over four years.
After numerous adjournments sought by him, Hingorani finally appeared before Sebi's recovery officer today and was asked to pay the dues or submit a "concrete proposal" for the payment.

However, he failed to furnish any proposal for repayment of dues.
"No substantial cause has been established or shown by the defaulter as to why he should not be committed to civil prison in the present recovery proceedings," Sebi said.
Hingorani is non-executive chairman of Adam Consof Ltd and Kolar Biotech.