SEBI v. Shivamshree Businesses Ltd. and others (diversion of preferential issue proceeds, 2022)

Judgment entered

✓ Checked against the primary document on October 9, 2026. The library's summary, tags and figures for this record were compared with the regulator's own document by an AI model (Claude) following written instructions, in a single reading of the order; an independent second reading of 60 SEBI records agreed on every field for 56, the four misses being penalty amounts; a later sample of 50 of the SEBI records added on 9 October agreed on every field for 46. No lawyer has reviewed them. A checked record can still contain errors, and checked does not mean endorsed. See how we check records or report a correction.

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A SEBI adjudicating officer fined a listed company and two of its directors Rs 5 lakh, jointly and severally, in October 2022 for diverting about 96 per cent of a 2013 preferential issue's proceeds to uses not stated to shareholders. A further Rs 2 lakh on the company for a listing-disclosure breach depends on a pending Supreme Court appeal.

The record

What was ordered

Civil penalty

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Disgorgement

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Prejudgment interest

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Total relief

—

Alleged gain

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Penalty as published

700k INR

A dash means the release did not state a figure we could extract, not that the figure is zero. Penalty and disgorgement are stored separately so aggregates across the library do not double-count the same dollars. This regulator states penalties in INR. The figure is recorded as published and is not converted, so it does not appear in the USD totals or medians used elsewhere on this site.

What is alleged to have happened

A SEBI adjudicating officer in Mumbai decided this matter on 18 October 2022. The noticees were Shivamshree Businesses Ltd., a listed company, its executive director Rakesh Vashist, its independent director Sudharshan Jha and its director Avnish Srivastava.

BSE had flagged apparent misuse of money raised through preferential issues by several companies, and SEBI examined the period October 2013 to March 2014. It alleged that of Rs 4.33 crore raised on 13 December 2013, about Rs 4.16 crore, or 96 per cent, was spent on buying cattle, giving loans and advances, repaying a liability to another company and miscellaneous cash and transfers, none of which were among the objects stated in the October 2013 postal ballot notice. It alleged fraud under PFUTP Regulations 3, 4(1), 4(2)(f) and 4(2)(r) and section 12A of the SEBI Act, against the company and the directors as having known of it, and a breach of the listing agreement's disclosure duty on deviations in use of proceeds.

The officer found the charges made out against the company, Mr Jha and Mr Srivastava. Mr Vashist, who resigned before the relevant events, was not penalised. The order imposes Rs 5,00,000 under section 15HA on the company, Mr Jha and Mr Srivastava, payable jointly and severally, and Rs 2,00,000 on the company under section 23E of the Securities Contracts (Regulation) Act for the disclosure breach.

The Rs 2 lakh is enforceable only depending on the outcome of SEBI's pending Supreme Court appeal in the Suzlon Energy matter, on whether section 23E applies to listing-agreement breaches. The total stated is Rs 7 lakh, of which Rs 2 lakh is contingent.

The record does not show whether the money was recovered, whether the order was appealed, or any investor loss.

This library tags the matter as misleading issuer disclosure (use of preferential issue proceeds contrary to the stated purpose). The tagging is ours, not the regulator's.

For the regulator's own account of the facts, read the primary document linked above. This page deliberately summarises the structured record rather than reproducing the order.

What technique is this, and how does it work?

This action is tagged with one technique in our taxonomy. The tagging is ours: regulators charge statutory provisions, not technique names, so the mapping is an editorial judgement described in our editorial policy.

• Misleading issuer disclosure — see how it works, what statute it engages, and every other action tagged the same way.

Timeline

1. 2022-10-18 SEBI adjudication order

Primary documents

Everything on this page derives from the documents below. Where our summary and the primary document disagree, the primary document is right.

• SEBI order
• SEBI order (PDF)

The linked release is published by the issuing regulator under its own terms. Our summary and narrative above are our own writing.

Related actions

Other actions in the library sharing at least one technique tag with this one.

Record added October 8, 2026. submit a correction.