Sebi court convicts firms in Brooks IPO case

Charul Shah Joshi mumbai

A special SEBI court has convicted Sunshine Housecon Ltd and Shardaraj Tradefin Ltd for failing to pay penalties imposed by the market regulator for alleged irregularities in the IPO of Brooks Laboratories Ltd. The directors of the firms have now been fined for non-payment of the penalty amount. 

According to the prosecution, Sunshine Housecon directors Chiranjit Mahanta, Sudip Nath and Rajlaksmi Bhattacharjee have been asked to pay a fine of ₹1 crore, ₹50 lakh and ₹50 lakh respectively. Besides, Mahanta and Bhattacharjee, who are also directors of Shardaraj Tradefin, have been asked to pay a fine of ₹50 lakh and ₹25 lakh respectively.

The SEBI had conducted a preliminary investigation and found several irregularities committed by Brooks Laboratories Ltd and its directors in its IPO during the period from June 2011 to September 2011.

It is alleged that Sunshine Housecon Ltd had received a total of ₹8 crore as Inter Corporate Deposits (ICD) from Shitalnath Buildcom Pvt Ltd. Investigation revealed that Brooks Laboratories had transferred huge funds to Suryamukhi Projects Pvt Ltd, which in turn transferred funds to Shitalnath Buildcom Pvt Ltd. SEBI had, by an order dated Aug 16, 2017, held the company guilty of round-tripping and imposed a fine of ₹1 crore. A similar case was found with Shardaraj Tradefin Ltd. SEBI had, by an order dated Jan 31, 2013, held the company guilty and imposed a penalty of ₹50 lakh.

As both firms failed to pay the penalty, SEBI initiated criminal proceedings in 2021.  The special court accepted the prosecution's contention and held the directors guilty of non-payment of the penalty amount. The fine amount will be used for the recovery of the penalty imposed by SEBI on the two firms.