SEBI v. Mystic Electronics Ltd and others (preferential issue proceeds, 2022)

Judgment entered

✓ Checked against the primary document on October 8, 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 found in November 2022 that Mystic Electronics, a BSE-listed company, told shareholders that money from a 2013 preferential share issue would fund business purposes but instead lent or invested it elsewhere, which she treated as fraud under the PFUTP rules. The company was penalised Rs 17 lakh in total and its three directors were not held liable.

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

1.7m 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

Adjudicating officer Soma Majumder of SEBI issued this order on 30 November 2022. The noticees were Mystic Electronics Limited (earlier Pearl Electronics Limited), listed on BSE, and three persons linked to it: its directors Krishan Khadaria and Asha Khadaria, and Madhumati Gawade. The matter began with a reference from the Director General of Income Tax (Investigation), Delhi, about price movement in the stock and avoidance of long-term capital gains tax, and SEBI's investigation looked at 19 March 2013 to 31 December 2015.

SEBI alleged that the company raised funds through a preferential issue in 2013 on the basis of stated objects put to shareholders at an extraordinary general meeting, and then did not use the money as stated. The company was also charged with listing-agreement breaches over its reports on use of funds and over late reporting of public shareholding changes. The directors were charged as responsible for the company's conduct.

The officer found that money raised initially and through the premium was deployed otherwise than as presented, including loans of about Rs 7.61 crore to other entities and share purchases in unlisted companies. The company's own replies admitted loaning funds, and its explanation about a property deal with Ms Gawade was not supported by bank statements. The officer held that the objects had been presented to shareholders in a deceitful, distorted way and that the company had committed fraud under the PFUTP Regulations, and that it had breached the listing agreement by not reporting the deviation and by not updating the public shareholding pattern for June-December 2013.

The directors were not held liable. On the legal position then prevailing, the officer found that being a director of the company did not make them liable under the PFUTP Regulations, and that there was no evidence from board minutes of their role in the listing breaches. The company was penalised Rs 10,00,000 under section 15HA of the SEBI Act, Rs 5,00,000 under section 23E of the Securities Contracts (Regulation) Act and Rs 2,00,000 under section 23A, Rs 17,00,000 in all. The Rs 5,00,000 under section 23E is payable only depending on the outcome of a pending Supreme Court appeal on that section.

The record does not show whether the company paid or appealed, or whether any of the funds were recovered. The order does not make any finding on trading or price manipulation in the shares, although the original referral concerned price movement. No criminal case is described.

This library tags the matter as misleading issuer disclosure. 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. 2022-11-30 SEBI 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

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.