SEBI Bars Debock Industries, MD Mukesh Singh For 7 Years, Slaps Penalty

The Securities and Exchange Board of India (SEBI) has barred Debock Industries Ltd and managing director Mukesh Manveer Singh from the securities market for seven years and ordered disgorgement of Rs 59.30 crore in unlawful gains in a case involving alleged accounting fraud and diversion of investor funds.

In its 121-page final order issued on Friday, SEBI said Debock, under Singh’s leadership, inflated its financials through fictitious sales and purchases, circular transactions and fraudulent ledger entries after its listing on NSE Emerge. The manipulation allegedly helped the company migrate to the NSE main board.

The regulator found that fictitious transactions were used to create free reserves, which were subsequently utilised for a bonus issue. It also found that forged bank statements were submitted to conceal the fictitious preferential issues and inflated books.

SEBI said the alleged manipulation resulted in misstatements in the company’s financials for FY2021-22, FY2022-23 and FY2023-24. Following the main board migration, Debock carried out preferential allotments, a bonus issue and a rights issue, increasing its capital base.

According to the regulator, around 4.21 crore shares worth Rs 59.30 crore obtained through fraudulent preferential and bonus issues were eventually dumped on investors. Sebi attributed the alleged scheme to Singh, with assistance from Sunil Kalot, Priyanka Sharma and Gaurav Jain.

Of the Rs 59.30 crore unlawful gains, Rs 37.67 crore was attributed to Kalot, Rs 4.24 crore to Singh and Rs 17.40 crore jointly to Singh and Jain.

SEBI also found that Rs 49 crore from Debock’s 2023 rights issue was diverted to persons and entities connected with the promoters. It ordered the company to bring the amount back into its account within three months, along with 12 per cent annual interest calculated from July 24, 2023.

The regulator imposed penalties of Rs 20.10 crore on Singh and Rs 1.10 crore on Debock. Kalot was fined Rs 5 crore, Sharma Rs 1 crore and Jain Rs 50 lakh, while other entities received penalties ranging from Rs 5 lakh to Rs 1 crore.

Besides the seven-year ban on Debock and Singh, Kalot was barred for five years, while Sharma and Jain were restrained from accessing the securities market for three years. Singh was also prohibited from holding key positions in listed companies and SEBI registered intermediaries.