Authority: Securities and Exchange Board of India (SEBI) - Whole Time Member Amarjeet Singh
Order Date: Not explicitly stated in the provided text (Order reference: WTM/AS/CFID/CFID-TPD/32680/2026-27)
Case Overview
SEBI investigated Varanium Cloud Limited (VCL) and its officials following media reports and preliminary examination that revealed flagrant violations of securities laws. The investigation covered violations of SEBI Act, PFUTP Regulations, LODR Regulations, ICDR Regulations, and SAST Regulations.
The principal allegations included:
- Fabrication of financial statements showing fictitious sales and purchases totaling ₹742.96 crores in FY 2022-23 and FY 2023-24
- Misrepresentation in IPO prospectus and financial disclosures
- Diversion of ₹62.51 crores from IPO (₹40.39 crores net) and Rights Issue (₹48.45 crores) proceeds to promoter group entities and personal accounts
- Failure to disclose material litigations in prospectus, including an arbitral award against Managing Director Harshawardhan Sabale
- Making 25 misleading corporate announcements that manipulated share price
- Unlawful gains of ₹128.77 crores by promoters through share sales during the fraudulent scheme
The scheme involved creating fictitious transactions with entities like Amtelfone Incorporated (85.10% of sales in FY 2022-23), false claims of establishing Edge Data Centers and Digital Learning Centers, and routing funds through BM Traders which received ₹138 crores from VCL and Mr. Sabale's personal account.
Final Outcome
SEBI found multiple violations and imposed the following directions:
Directions under Sections 11(1), 11(4) and 11B(1):
- VCL must bring back ₹62.51 crores of diverted funds with 12% interest within 3 months
- VCL and Harshawardhan Sabale debarred from securities market for 7 years
- Harshawardhan Sabale restrained from director/KMP positions in listed companies/SEBI intermediaries for 7 years
- Harshawardhan Sabale must disgorge ₹128.77 crores unlawful gains with 12% interest to IPEF within 45 days
- Athos Capital and Jinesh Mehta debarred for 2 years with director restrictions
- Raj Jagtani (BM Traders) debarred for 4 years with director restrictions
- Executive Directors (Vinayak Jadhav, Mukundan Raghavan, Fahim Shaikh) debarred for 1 year with director restrictions
- First Overseas Capital Limited debarred for 2 years from issue management business
Monetary Penalties under Sections 11(4A) and 11B(2):
- Varanium Cloud Limited: ₹1.30 crore
- Harshawardhan Hanmant Sabale: ₹20.40 crore
- Vinayak Vasant Jadhav: ₹6 lakh
- Mukundan Raghavan: ₹6 lakh
- First Overseas Capital Limited: ₹10 lakh
- Athos Capital Advisors Private Limited: ₹50 lakh
- Jinesh Narottamdas Mehta: ₹50 lakh
- Raj Jagtani: ₹10.10 crore
- Fahim Iunus Shaikh: ₹6 lakh
Proceedings against Hetal Somani and Kalpesh Acharekar were disposed of without any directions or penalties.
Topics: Securities Fraud, IPO Misrepresentation, Fund Diversion