Order in the matter of Sumeet Industries Limited

1. The instant proceedings are arising out of and in compliance with the order dated December 21, 2021 passed by the Hon’ble Securities Appellate Tribunal (hereinafter referred to as the “SAT/ Tribunal”) in Appeal No. 431 of 2019. Vide the aforesaid order, the Hon’ble Tribunal have held that the violations allegedly committed by the Noticees stand established and while upholding the directions as passed vide order dated September 30, 2019 of Securities and Order in the matter of Sumeet Industries Limited

Exchange Board of India (hereinafter referred to as "SEBI"), including disgorgement of unlawful gains with interest, the Hon’ble Tribunal has remitted the matter to SEBI with a direction that unlawful gains should have been calculated while taking the average cost of acquisition of shares by the Noticees on October 03, 2006, i.e., INR 5.34. The exact findings of the Hon’ble SAT are being reproduced herein:

11. We find that since the appellants purchased shares on 3rd October, 2006 the price per share on that date can easily be found out. From a perusal of table 3 of the impugned order we find that the appellants had purchased 1,67,950 shares valuing Rs.8,97460. As per the statement of the learned counsel for the appellant the valuation of one share on 3rd October, 2006 works out to Rs.5.34 per share.

12. Whereas the WTM has taken the opening price of 3rd October, 2006 as the cost price, namely, Rs.4.33. Since the appellants had purchased the shares on that date at a value of Rs.5.34 per share the same should be taken into consideration as the acquisition price.

13. To that extent the order of the WTM requires modification ….

17. For the reasons stated aforesaid the appeal is partly allowed. The WTM is directed to calculate the disgorgement amount taking the acquisition price as Rs.5.34/- per share as on 3rd October, 2006 and the sale price at Rs.18.98/-per share. The calculation shall be made by the WTM within four weeks from today alongwith interest.”

2. Pursuant to the above order of the Hon’ble SAT, the limited issue that requires consideration is re-calculation of the amounts of unlawful gains as earned by the Noticees while trading in the scrip of the Company, by considering the cost of acquisition as INR 5.34 per share instead of INR 4.33 per share and the sale price as INR 18.98 per share and accordingly, the revised computation is as under:

TABLE-1

Net Sell Acquisition Buy Unlawful Qty or price as per Value of gains for S. Sell Sell Buy Buy Excess Net Sell Hon’ble excess disgorgement No. Name Qty Value* Qty Value** Shares Value SAT order shares INR) E = (A- F = (B- H = A B C D C) D) G (E*G) I = B-(D+H) Sumeet 600000 11388000 0 0 600000 11388000 5.34 3204000 8184000 Menthol Pvt. Ltd. (now Siddhipriya Poly Fab 1 Pvt. Ltd.) Rajkumar 545000 10344100 50000 267000 495000 10077100 5.34 2643300 7433800 Sitaram 2 Somani Shankarlal 334250 6344065 50000 267000 284250 6077065 5.34 1517895 4559170 Sitaram 3 Somani Sumeet 300000 5694000 0 0 300000 5694000 5.34 1602000 4092000 Processors 4 Pvt. Ltd. Sitaram 300000 5694000 0 0 300000 5694000 5.34 1602000 4092000 Prints Pvt. 5 Ltd. Urmila 250000 4745000 0 0 250000 4745000 5.34 1335000 3410000 Shyam 6 Sunder Ganga 250000 4745000 0 0 250000 4745000 5.34 1335000 3410000 Devi 7 Somani Bajranglal 250000 4745000 0 0 250000 4745000 5.34 1335000 3410000 Siyaram 8 Somani Sumandevi 250000 4745000 0 0 250000 4745000 5.34 1335000 3410000 Madan 9 Somani Somani 195000 3701100 67950 362853 127050 3338247 5.34 678447 2659800 Overseas 10 Ltd. Ambaji 150000 2847000 0 0 150000 2847000 5.34 801000 2046000 Syntex Pvt. 11 Ltd. TOTAL 3424250 64992265 167950 896853 3256300 64095412 17388642 46706770

*Sell value has been calculated using sale price of INR 18.98 as per Hon’ble SAT’s direction **Buy value has been calculated using acquisition price of INR 5.34 as per Hon’ble SAT’s direction

3. It is also noted that the Hon’ble SAT has further directed to calculate the disgorgement amount along with interest after adjusting the amount of INR 2.00 Crore paid collectively by the Noticees in compliance with the order dated

October 25, 2019 passed by the Hon’ble Tribunal. Accordingly, while calculating the liability along with interest accrued on the amount to be disgorged, the amount deposited collectively on March 04, 2020 by the Noticees needs to be duly factored in for the purpose of calculation of liability accrued so far. Therefore, keeping in view the findings made in SEBI’s orders dated May 21, 2014, September 30, 2019, and orders of the Hon’ble Tribunal dated October 25, 2019 and December 21, 2021, the amount to be disgorged and interest on the disgorgement amount are calculated in the following manner:

Table no. 2

Sr. Date of event Description of amount Amount (in INR) No.

1. D ecember 21, In terms of Tribunal Order, 2021. while taking acquisition price as INR 5.34 per share and the sale price at INR 18.98 per share. 4,67,06,770 2. M arch 12, 2007 – Interest @ 12% on the total June 30, 2016 amount of INR 4,67,06,770

Period from the amount of disgorgement becoming due (last day of investigation period, i.e., March 12, 2007) till the date of order passed by 5,21,93,855.75 the Hon’ble SAT.

3. S eptember 30, Interest @ 12% on the total 2019 – March 03, amount of INR 4,67,06,770 2020

Period from the date of order passed by SEBI in compliance with the Hon’ble SAT’s order dated June 30, 2016 till date of deposit of INR 2.00 Crore. (Deposit made by Noticees in compliance with the order dated October 25, 2019) 23,95,481.46 4. M arch 04, 2020 Payment of INR 2.00 Crore

Payment of INR 2.00 Crore by - (2,00,00,000)

the Noticees in compliance with the order dated October 25, 2019 of the Hon’ble SAT.

5. P eriod from Interest on balance amount March 04, 2020 of INR 2,67,06,770. till January 12, 2022 (date of passing of present order)

59,70,609.40 6. Net disgorgement amount=

Actual unlawful gains+ interest (as calculated at Serial no. 2, 3 and 5 above)- INR 2 Crore ( as shown in Serial no. 4) 8,72,66,716.60

4. The computation as tabulated above, has been done in pursuance of the directives of the Hon’ble SAT. I, therefore, in compliance with the directions of the Hon’ble SAT issued vide its order dated December 21, 2021, hereby direct disgorgement of the unlawful gains as mentioned in Table no. 1 above by directing that:

a) Noticee nos. 1 to 11 shall disgorge the amounts of wrongful gains, as mentioned in the aforesaid table no. 2 along with further interest @12% from date of this order till the date of payment.

b) Noticees shall pay the said amount by way of demand draft drawn in favour of “Securities and Exchange Board of India”, payable at Mumbai, in terms of order dated December 21, 2021 passed by the Hon’ble SAT.

c) The Noticees are also directed not to dispose of or alienate any of their assets/ properties/ securities, till such time the direction of this order is complied with. Further, the Noticees are directed to provide, within 15 days of this order, a full inventory of all their assets and properties and details of all their bank accounts, demat accounts and holdings of shares/ securities, if held in physical form and details of companies in which they hold substantial or controlling interest.

d) The amount of INR 2.00 Crore as deposited by the Noticees in compliance with the order dated October 25, 2019 of the Hon’ble SAT, stands disgorged and appropriated along with the interest accrued thereto.

5. This order shall come into force with immediate effect.

6. A copy of this order shall also be served upon the Noticees, Depositories, Stock Exchanges and Registrars and Transfer Agents for necessary action on their part.

-Sd- DATE: JANUARY 12, 2022 S. K. MOHANTY PLACE: MUMBAI WHOLE TIME MEMBER