SEBI Recovery Proceedings for Outstanding Disgorgement and Interest in IPO Irregularities

BEFORE THE RECOVERY OFFICER SECURITIES AND EXCHANGE BOARD OF INDIA 
Certificate No. 424 of 2014 

Mr. Bhargav Ranchodlal Panchal (PAN: AFUPP7738M)......................Defaulter 

ORDER UNDER RULE 11 OF THE SECOND SCHEDULE OF THE INCOME TAX ACT, 1961 READ WITH SECTION 28A OF THE SEBI ACT, 1992 IN THE MATTER OF IPO IRREGULARITIES. 

BACKGROUND: 

1. Securities and Exchange Board of India (SEBI), vide Order dated February 25, 2011, directed Mr. Bhargav Ranchodlal Panchal (hereinafter referred to as the “Defaulter”) to disgorge unlawful gains amounting to Rs. 8,97,024/- along with simple interest at the rate of 10% per annum for a period of five years (2005–2010), amounting to Rs. 4,48,512/-, within 45 days from the date of the Order. The Order further stipulated that in the event of failure to remit the aforesaid amounts within the prescribed period, the Defaulter would be restrained from buying, selling or dealing in the securities market in any manner whatsoever, or accessing the securities market, directly or indirectly, for a further period of nine years, without prejudice to SEBI’s right to enforce disgorgement. It was also directed that the securities held in the demat accounts of the Defaulter shall remain frozen until realization of the said amounts. 

2. As the Defaulter failed to deposit the aforesaid amount within the stipulated time, recovery proceeding was initiated under Recovery Certificate No. 424 of 2014 dated July 18, 2014. A Notice of Demand (NoD) dated July 18, 2014 was issued  by  the Recovery  Officer,  Western  Regional  Office,  Ahmedabad, directing the defaulter to make payment within 15 days. Further, Notices of Attachment of even date were issued attaching the bank accounts and demat accounts of the Defaulter. 

3. Despite issuance of the aforesaid notices, the Defaulter failed to discharge the dues. Subsequently, vide letter dated February 03, 2015, the Defaulter stated that, 
“...in our letter dated 10.12.2013 and 06.03.2014, we requested for certified copy of the order passed by the WTM dated 25.02.2011 but till date we have not received the same. Since we have not received the certified copy of the order dated 25.02.2011 of SEBI, we are unable to challenge the said order. Now we are in the process to challenge the said order before Hon’ble SAT by downloading the copy of said order from the website of SEBI...” 

4. Thereafter, vide notice dated June 16, 2015, the Defaulter was advised to appear before the Recovery Officer on June 24, 2015. Subsequently, another notice dated  October  29,  2015  was issued  advising  the  Defaulter  to  appear  on December  2,  2015.  However,  the  Defaulter  did not  appear  for  any  of  the aforesaid hearings. Further, vide letter dated December 2, 2015, the Defaulter reiterated that