DC/172/2013

THE DISCIPLINARY COMMITTEE THE INSTITUTE OF COMPANY SECRETARIES OF INDIA

IN THE MATTER OF COMPLAINT OF PROFESSIONAL OR OTHER MISCONDUCT

DC/172/2013

Order Reserved On: 12th September, 2019

Order Issued On: ·1 5 [JCT Mis. James Hotel Limited .. ..Complainant

Vs

Shri Vikas Garg FCS-4777 (CP No. 4441). . . ..Respondent

CORAM: Shri Nalin Kohli, Presiding Officer Mrs. Meenakshi Datta Ghosh, Member CS B Narasimhan, Member CS Nagendra D Rao, Member

PRESENT Mrs. Meenakshi Gupta, Director (Discipline) Shri Gaurav Tandon, Assistant Director

FINAL-ORDER

1. The Disciplinary Committee on 27th June, 2019 had held the Respondent 'Guilty' of Professional or other misconduct under Clause (1) of Part II to the Second Schedule to the Company Secretaries Act, 1980. The Disciplinary Committee had further recommend~that the matter be referred to the Council once again for its consideration for filing a criminal Complaint against the Respondent for alleged violation of the Section 24 of the Company Secretaries Act, 1980. The Disciplinary Committee had further decided to provide an opportunity of being heard to the Respondent pursuant to sub-rule (1) of Rule 19 of the Company Secretaries (Procedure of Investigations of Professional and other Misconduct and Conduct of Cases) Rules, 2007.

2. The Respondent was called upon to appear before the Disciplinary Committee on 12th September, 2019 at New Delhi.

3. In the meantime; an email dated 6th September, 2019 was received from the Respondent providing the status of complaint I cases inter-alia related to the instant matter.

On 12th September, 2019 neither the Respondent appeared before the Disciplinary Committee nor was any communication received from the Respondent apart from the aforesaid email dated 6th September, 2019.

DC/172/2013

6. The Disciplinary Committee observed that the Respondent was ostensibly working as a Company Secretary of Mis. James Hotels Ltd ., even prior to obtaining the membership of the ICSI and thereby committed cheating, criminal breach of trust and conspired to defraud the Company and its shareholders. The Respondent was also corresponding with the then Registrar and Share Transfer Agent viz. Mis. Alankit Assignments Limited and the shareholders of the Company. It is seen that the data of the shares issued by the Company continued to be maintained in the hands of Shri Vikas Garg as is evident from the letter dated 18th February, 2008 issued by Shri Vikas Garg to Shri Y K Singhal (Sr. Vice-President, Mis. Alankit Assignments Limited New Delhi). It is apparent from this communication that they have appointed Mis. Alankit Assignments Limited only for maintaining connectivity with the two depositories for confirming the Demat request. Moreover, in the quarterly half yearly certification, it is wrongly menHoned that Mis. Alankit Assignments Limited is the common agency appointed by the Company for share registry work. This is in clear contravention of the circular issued by SEBI No. D & CC/FITICICIR-15/2002 dated 27th December, 2002 where it is mandated all listed Companies to appoint one agency alone for handling both the physical and electronic records. The operation on this circular was extended from 1 st February, 2003 to 31 st March, 2003. All this apparently has been done by Shri Vikas Garg to deliberately cover the mischief played by him while acting as a Company Secretary to forge and fabricate the records including the physical share certificates as well as the master data. It is seen that all the dematerialisation request electronically received from the Registrar and Share Transfer Agent was forwarded to the Respondent for his verification and confirmation of the demat request. It is further noticed from the Share Certificates which were dematerialised and produced for inspection were all type written and issued in the names not matching with the original master data base. The Respondent was able to perpetrate the crime of fraud by assigning himself the responsibility of acting as coordinator with the Registrar and Share Transfer Agent and maintaining the data base and records in his personal custody. Needless to mention that the Complainant has also stated that as per the Shareholder list provided by the previous management the Respondent was holding only 11,000 shares as on 17th March, 2006 but within a year i.e. the Respondent was able to acquire 1,19,700 shares in his name including that of his relatives without any proof of purchase of shares. In this case, the Respondent was signing those documents which ought to have been signed by the Company Secretary in employment. The Respondent therefore, has violated the resolution dated 12th May, 1991 passed by the Council of the ICSI prohibiting the members holding the Cer'l"ificate of Practice to engage in employment.

6. In view of the above and after considering all the material on record, previous orders of the Disciplinary Committee in this matter, and given the totality of the circumstances in the matter passes the following order against the Respondent under Section 21 B (3) of the Company Secretaries Act, 1980 read with Rule 19( 1) of the Company Secretaries (Procedure of Investigations of Professional and other misconduct and conduct of c:mes) Rules, 2007:

i) Fine of Rs. 1,00,0001- ( Rupees One lakh) payable within 60 days after expiry of 60 days of issu of this final order; and '"

DC/172/2013

ii) Removal of name of the Respondent from the Register of Members of the ICSI for a period of three year after expiry of 60 days of issuance of the Order; and

In the event of default in payment of fine of Rs. 1,00,000/- ( Rupees One lakh), j' W_ the removal of name of the Respondent from the Register of Members for a period one year.

vrvf~-.r ~

7. The Disciplinary Committee also recommends that the matter be referred to the Council once again for its consideration for filing a criminal Complaint against the Respondent for alleged violation of the Section 24 of the Company Secretaries Act, 1980.

~,~ Member Member