It was alleged that PAA had misguided the stock exchanges and facilitated the promoters to sell shares in the company prior to expiry of lock-in period, by issuing false certificates.
As per the showcause notice, the shares were not to be "sold/ transferred/ hypothecated" before the specified expiry period.
PAA was alleged to have violated various Sebi norms.
In an order passed on Thursday, Sebi Whole Time Member Rajeev Kumar Agarwal said the showcause notice issued in the matter was "ambiguous and vague" with regard to charge of violation of the DIP (Disclosure and Investor Protection) Guidelines as the notice did not bring out as to what was obligation of PAA.
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"With regard to charge of violation of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, it is relevant to mention that it is settled position that there must be convincing preponderance of probability to support the allegation of fraud and fraudulent practices," he said.
Further, he noted that merely endeavouring to prove the fact on the basis of preponderance of probability and incomplete circumstantial evidence is not sufficient to establish a serious charge of fraud and fraudulent act.
The Sebi order said the showcause notice is unclear as to how the auditor had facilitated the promoters to commit fraud by his act of falsely certifying a fact as true, which fact he did not know to be true or correct as alleged.
Citing these and other factors, Agarwal said, "I do not find the noticee (PAA) guilty of any charge levelled in the show cause notice".
Vikas WSP is a leading maker of guar gum powder, as per its website.