SAT upholds order against Ram Kaashyap Investment and promoter

Securities Appellate Tribunal today upheld regulator Sebi's order against Ram Kaashyap Investment and its promoter in a case related to non-compliances with norms concerning the company's rights issue.
Among other discrepancies, the Securities and Exchange Board of India (Sebi) had found that Ram Kaashyap Investment had failed to dispatch 'Composite Application Forms (CAFs)' to all the eligible shareholders for subscription of the firm's rights issue back in 2010.
Accordingly, the firm and its promoter, A Venkatramani, had been barred from dealing in the capital markets for a period of two years by Sebi on December 31, 2012.
Subsequent to Sebi ruling the company and its promoter had approached SAT challenging Sebi order.

Upholding Sebi ruling in the case, SAT in an order today said that "since appellant No 1 (Ram Kaashyap Investment) had floated the rights issue, it was the primary responsibility of appellant No.1, to ensure that CAFs are dispatched in the manner specified under... ICDR(Issue of Capital and Disclosure Requirements) Regulations".
"Since appellant No 1 failed to discharge that responsibility, appellant No 1 cannot escape liability by alleging that the violations are committed by RTI (Registrar to Issue) appointed by appellant No 1," it added.

Among others, SAT also observed that the company's promoter "knowing fully well that funds are insufficient" had issued cheques for Rs 28.25 crore only to ensure that on the basis of cheques, the company announces that the rights issue has been fully subscribed.

"In these circumstances, restraint order passed against appellant No 2 (Venkatramani) cannot be faulted," SAT said.
Ram Kaashyap had offered to its shareholders 3.51 crore equity shares of Rs 10 each for cash at par aggregating to Rs 35.16 crore on rights basis. The rights issue opened on November 18, 2010 and closed on December 16, 2010.
As per Sebi norms, CAFs have to be dispatched through registered post or speed post to all the eligible shareholders at least three days before the opening of the issue.