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8/17/2019 Order in the matter of Tribhuvan Agro Project Limited
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WTM/PS/13/ERO/APR/2016
BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA
CORAM: PRASHANT SARAN, WHOLE TIME MEMBER
ORDER
Under Sections 11, 11(4), 11A and 11B of the Securities and Exchange Board of India Act, 1992
In the matter of Tribhuvan Agro Project Limited
In respect of:
1. Tribhuvan Agro Project Limited [PAN: AACCT6018N],2. Mr. Mohammed Sunwas Ali [PAN: AEOPA2984D],
3.
Mr. Shaikh Mokhlesur Rahaman [PAN: AXVPS8485R],4. Mr. Amal Sen [PAN: BNGPS8347N],5. Mr. Aloke Das [PAN: AINPD1762F],6. Mr. Sidhartha Sardar [PAN: BNOPS7521Q],7. Mr. Pradip Sardar [PAN: BGBPS1226C],8. Mr. Ranjit Gope [PAN: AILPG0108L],9. Mr. Mihir Baisnob [PAN: ANRPB4794Q] and10. Tribhuvan Agro Debenture Trust (represented by its Trustees, viz. Mr.
Sukumar Mondal, Mr. Sanjay Nayak, Mr. Sujit Kumar Goswami, Mr. Rajib Dasand Mr. Mohammed Sunwas Ali).
________________________________________________________________________
Date of Hearing: September 03, 2015
Appearances: Mr. Sidhartha Sardar appeared in person
For SEBI: Mr. Prashanta Mahapatra, General Manager, Mr. T. Vinay Rajneesh, Assistant General Manager, Mr. N. Murugan, Assistant GeneralManager and Ms. Nikki Agarwal, Assistant Manager.
Date of Hearing: November 23, 2015
Appearances: None appeared
_______________________________________________________________________
1. Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’ ), vide an ex-
parte interim Order dated February 24, 2015 (hereinafter referred to as ‘the interim order’ )
had observed that the company, Tribhuvan Agro Project Limited (hereinafter
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referred to as ‘ Tribhuvan’ or ‘the Company ’ ) is prima facie engaged in fund mobilising
activity from the public, through the Offer of Redeemable Preference Shares
(hereinafter referred to as ‘RPS’ ) and Secured Redeemable Non-Convertible
Debentures ( ‘NCD’ ) had allegedly violated the provisions of Sections 56, 60 (read with
Section 2(36)), 67, 73 117B and 117C of the Companies Act, 1956; the SEBI
(Disclosure and Investor Protection) Guidelines 2003 (hereinafter referred to as 'DIP
Guidelines') read with the SEBI (Issue of Capital & Disclosure Requirements)
Regulations, 2009 (hereinafter referred to as 'ICDR Regulations') and the relevant
provisions of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008
(hereinafter referred to as ‘the ILDS Regulations’ ).
The interim order also alleged that the debenture trustee, Tribhuvan Agro Debenture
Trust (represented by its Trustees, viz. Mr. Sukumar Mondal, Mr. Sanjay Nayak, Mr.
Sujit Kumar Goswami, Mr. Rajib Das and Mr. Mohammed Sunwas Ali) had acted as
an unregistered debenture trustee in violation of the provisions of Section 12(1) of the
SEBI Act, 1992 (hereinafter referred to as ‘SEBI Act’ ) and the SEBI (Debenture
Trustees) Regulations, 1993 (hereinafter referred to as ‘DT Regulations’).
2. In order to protect the interest of investors and to ensure that only legitimate fund
raising activities are carried on by the Company and its directors, SEBI had issued the
following directions:
“… … 8. In view of the foregoing, I, in exercise of the powers conferred upon me under Sections 11,11(4), 11A and 11B of the SEBI Act, hereby issue the following directions –
i. TAPL (PAN: AACCT6018N) shall not mobilize funds from investors through the Offerof Redeemable Preference Shares and Offer of NCDs or through the issuance of equity sharesor any other securities, to the public and/or invite subscription, in any manner whatsoever,either directly or indirectly till further directions;
ii. TAPL and its present Directors, viz. Shri Mohammed Sunwas Ali (PAN: AEOPA2984D; DIN: 00539576), Shri Shaikh Mokhlesur Rahaman (DIN:
00539589), Shri Amal Sen (PAN: BNGPS8347N; DIN: 02126612), Shri AlokeDas (PAN: AINPD1762F; DIN: 02875515), Shri Sidhartha Sardar (PAN:BNOPS7521Q; DIN: 03396975), and its past Directors, viz. Shri Pradip Sardar(PAN: BGBPS1226C; DIN: 03431576), Shri Ranjit Gope (PAN: AILPG0108L;DIN: 03397859) and Shri Mihir Baisnob (PAN: ANRPB4794Q; DIN:
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03382493), are prohibited from issuing prospectus or any offer document or issueadvertisement for soliciting money from the public for the issue of securities, in any mannerwhatsoever, either directly or indirectly, till further orders;
iii. TAPL and its abovementioned past and present Directors, are restrained from accessing the
securities market and further prohibited from buying, selling or otherwise dealing in the
securities market, either directly or indirectly, till further directions;iv.
TAPL shall provide a full inventory of all its assets and properties;v. TAPL's abovementioned past and present Directors shall provide a full inventory of all their
assets and properties;vi. TAPL and its abovementioned present Directors shall not dispose of any of the properties or
alienate or encumber any of the assets owned/acquired by that company through the Offer ofRedeemable Preference Shares and Offer of NCDs, without prior permission from SEBI;
vii. TAPL and its abovementioned present Directors shall not divert any funds raised from public at large through the Offer of Redeemable Preference Shares and Offer of NCDs, whichare kept in bank account(s) and/or in the custody of TAPL;
viii. The Debenture Trustee, viz. Tribhuvan Agro Debenture Trust (represented by its Trustees,viz. Shri Sukumar Mondal, Shri Sanjay Nayak, Shri Sujit Kumar Goswami, Shri Rajib
Das and Shri Mohammed Sunwas Ali), is prohibited from continuing with its assignmentas debenture trustee in respect of the Offer of NCDs of TAPL and also from taking up anynew assignment or involvement in any new issue of debentures, etc. in a similar capacity, fromthe date of this order till further directions.
9. The above directions shall take effect immediately and shall be in force until further orders.10. … 11.
This Order is without prejudice to the right of SEBI to take any other action that maybe initiated against TAPL and its abovementioned Directors and Promoters; itsDebenture Trustee, viz. Tribhuvan Agro Debenture Trust (represented by its Trustees,viz. Shri Sukumar Mondal, Shri Sanjay Nayak, Shri Sujit Kumar Goswami, Shri
Rajib Das and Shri Mohammed Sunwas Ali), in accordance with law.”
3. The interim order observed that the prima facie observations made therein were on the
basis of the correspondences exchanged between SEBI and the Company, complaint
received by SEBI and the information/ documents obtained from the ‘MCA-21’
portal. The interim order advised the Company, its directors and the debenture trustee
to file their replies within 21 days from the date of its receipt and also seek an
opportunity of personal hearing.
4.
The interim order was forwarded to the Company and its directors namely Mr.
Mohammed Sunwas Ali, Mr. Shaikh Mokhlesur Rahaman, Mr. Amal Sen, Mr. Aloke
Das, Mr. Sidhartha Sardar, Mr. Pradip Sardar, Mr. Ranjit Gope, Mr. Mihir Baisnob and
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the debenture trustee namely Tribhuvan Agro Debenture Trust vide letters dated
February 25, 2015. The letters issued to Mr. Shaikh Mokhlesur Rahaman, Mr. Amal
Sen and Mr. Aloke Das had returned undelivered. The letter of Mr. Aloke Das had
returned undelivered with the remark ‘deceased’, however, no supporting document
was provided. Mr. Ranjit Gope and the Company vide letters dated March 12, 2015
and March 16, 2015 respectively, replied to the interim order.
5. Thereafter, SEBI proceeded further and granted an opportunity of personal hearing
to the Company, its directors and the debenture trustee on September 03, 2015. The
scheduled date was communicated vide SEBI letter dated August 07, 2015. The date
of hearing was also communicated vide the public notice in the newspapers namely
‘ Ananda Bazar Patrika ’ and ‘Times of India ’ both dated September 03, 2015. The
Company and its directors were advised that in case they fail to appear for the personal
hearing before SEBI on the aforesaid date, then the matter would be proceeded ex-
parte on the basis of the material available on record.
6. On the date fixed for personal hearing i.e. September 03, 2015, Mr. Sidhartha Sardar
appeared and made submissions. He also requested liberty for filing written
submissions. Considering the request, he was granted 15 days’ time was granted to him
for making written submissions. The other directors of the Company and thedebenture trustee remained absent.
In the meantime, Mr. Mohammed Sunwas Ali, Mr. Shaikh Mokhlesur Rahaman and
the Company vide fax dated August 25, 2015, requested for one month time. Similarly,
the Company also vide letter dated September 03, 2015, requested for one month time.
Considering the request, another opportunity of personal hearing was granted on
November 23, 2015.
Mr. Ranjit Gope vide his letter dated September 16, 2015, submitted that as he is
currently not stationed in Kolkata (due to his job) and he saw the hearing letter only
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on September 16, 2015. Vide the said letter, he also requested that his submissions be
taken on record.
On November 23, 2015, again no one had turned up for the personal hearing
Considering the reasonable opportunities already afforded for making submissions in
the matter, I am inclined to proceed further with the matter.
7. The submissions in brief are as under:
a.
The Company vide its letter dated March 16, 2015, submitted as under:
- The provisions of Section 67(1) and 67(3) of the Companies Act, 1956 have not
been violated as, it had never offered RPSs and NCDs to more than 50 persons in
a single day.
-
The RPSs were issued on private placement basis after complying with the
provisions of Section 81(1A) of the Companies Act, 1956.
- The Company had before receipt of the interim order had initiated sale of its land
located at Ganeshpur, Suri and Jaynagar, 24 Pgs in West Bengal from which the
Company expects to get an amount of ₹20 lacs to ₹25 lacs, which is at a final stage.
- The Company is repaying its investors and has already refunded maximum part of
the funds so mobilized.
b.
Mr. Ranjit Gope vide his letter dated March 12, 2015 and September 16, 2015,
submitted as under:
- He was inducted as additional director of the Company on February 24, 2011 and
had resigned from the post on October 10, 2012 without attending any meeting of
the Board of Directors. He was not involved in day to day affairs of the Company,
in any manner.
- The Company had started issuing RPSs in the year 2007-08 and had stopped such
issuance in the year 2010-11. The Company had also issued NCDs in the year2007-08 and 2008-09. Such issuances are prior to h is appointment as ‘additional
director’.
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- He was not authorised to sign any instrument including cheques on behalf of the
Company at any time as such he is not responsible for any such mobilization of
funds of the Company during his tenure as director.
8.
I have considered the interim order and the material available on record. The following
are the observations from the interim order:
“… i. TAPL was incorporated on July 29, 2006, with the ROC, Kolkata with CIN No. as
U02005WB2006PLC110897. Its Registered Office is at Room No. 3, Ground Floor,
Dudhnai, P.O. – Piyali Town, 24 PGS (S), Baruipur, West Bengal – 743387, India.
ii.
The present Directors in TAPL are Shri Mohammed Sunwas Ali, Shri Shaikh Mokhlesur
Rahaman, Shri Amal Sen, Shri Aloke Das and Shri Sidhartha Sardar.
iii. Shri Pradip Sardar, Shri Ranjit Gope and Shri Mihir Baisnob, who were earlier Directors
in TAPL, have since resigned.
iv. Form 2 (Form for Return of Allotment – filed by TAPL with the ROC in accordance with
the provisions of the Companies Act, 1956) for the Financial Years 2007 – 08, 2008 – 09,
2009 – 10 and 2010 – 11, reveals that TAPL issued "Redeemable Preference Shares"
(" Offer of Redeemable Preference Shares ") to investors, details of which are
provided below –
Type ofSecurity
Year No. of persons to whom preference shares were allotted
Total Amount
( ₹ in Crores)
RedeemablePreference
Shares
2007 – 08 807 0.702008 – 09 2474 2.29
2009 – 10 4553 2.65
2010 – 11 3048 3.61TOTAL 10882 9.25
v. From the material available on record, it is noted that TAPL also issued Secured
Redeemable Non – Convertible Debentures (" Offer of NCDs "), details of which are
provided below –
Year Type of Security Amount Raised
( ₹ in Crores)
Number of Allottees
2007 – 08 Secured Redeemable
Debentures
0.25 20
2008 – 09 0.24 50Total 0.50 70
…”
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9. Having considered the above, it is now necessary to determine whether the Company
had made a public issue as alleged in the interim order and if so, whether the Company
had complied with the public issue norms. The liability of the directors of the
Company also needs to be determined as they have also been alleged in the interim
order.
10. In order to ascertain whether an issue of securities is a ‘public issue’ or done on ‘private
placement’, it is necessary to make a reference to Section 67(3) of the Companies Act,
1956, which reads as under:
“67. (1) Any reference in this Act or in the articles of a company to offering shares ordebentures to the public shall, subject to any provision to the contrary contained in this Actand subject also to the provisions of sub-sections (3) and (4), be construed as including areference to offering them to any section of the public, whether selected as members or debenture
holders of the company concerned or as clients of the person issuing the prospectus or in anyother manner.(2) ...(3) No offer or invitation shall be treated as made to the public by virtue of sub- section (1)or sub- section (2), as the case may be, if the offer or invitation can properly be regarded, inall the circumstances-(a) as not being calculated to result, directly or indirectly, in the shares or debentures becomingavailable for subscription or purchase by persons other than those receiving the offer orinvitation; or(b) otherwise as being a domestic concern of the persons making and receiving the offer orinvitation …
Provided that nothing contained in this sub-section shall apply in a case where the offer orinvitation to subscribe for shares or debentures is made to fifty persons or more:Provided further that nothing contained in the first proviso shall apply to non-banking financial companies or public financial institutions specified in section 4A of the Companies Act, 1956 (1 of 1956).”
11. In terms of Section 67(3), as amended by the Companies (Amendment) Act, 2000, with
effect from December 13, 2000, no offer or invitation shall be treated as made to the public
by virtue of sub-sections (1) or (2), as the case may be, if the offer or invitation can
properly be regarded, in all circumstances - (a) as not being calculated to result, directly
or indirectly, in the shares or debentures becoming available for subscription or
purchase by persons other than those receiving the offer or invitation; or (b) otherwise
as being a domestic concern of the persons making and receiving the offer or
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invitation. In terms of the first proviso to the aforesaid section, the provisions of Section
67(3) shall not apply in a case where the offer or invitation to subscribe for shares
or debentures is made to fifty persons or more. Therefore, the number of
subscribers becomes relevant to conclude whether an issue of shares are for public or
on a private placement basis. In view of the same, if an offer of securities are made to
fifty or more persons, it would be deemed to be a public issue.
12. I now place my reliance on the order of Hon'ble Supreme Court of India in the matter
of Sahara India Real Estate Corporation Limited & Others Vs. SEBI and another (Civil
Appeal Nos. 9813 and 9833 of 2011; decided on August 31, 2012) ( ‘the Sahara case’ )
had inter alia held that -
“ Section 67(1) deals with the offer of shares and debentures to the public and Section 67(2)deals with invitation to the public to subscribe for shares and debentures and how thoseexpressions are to be understood, when reference is made to the Act or in the articles of acompany. The emphasis in Section 67(1) and (2) is on the “section of the public”. Section67(3) states that no offer or invitation shall be treated as made to the public, by virtue ofsubsections (1) and (2), that is to any section of the public, if the offer or invitation is notbeing calculated to result, directly or indirectly, in the shares or debentures becoming available for subscription or purchase by persons other than those receiving the offer or invitation orotherwise as being a domestic concern of the persons making and receiving the offer orinvitations. Section 67(3) is, therefore, an exception to Sections 67(1) and (2). If thecircumstances mentioned in clauses (1) and (b) of Section 67(3) are satisfied, then theoffer/invitation would not be treated as being made to the public.The first proviso to Section 67(3) was inserted by the Companies (Amendment) Act, 2000w.e.f. 13.12.2000, which clearly indicates, nothing contained in Sub-section (3) of Section67 shall apply in a case where the offer or invitation to subscribe for shares or debentures ismade to fifty persons or more. … Resultantly, if an offer of securities is made to fifty or more persons, it would be deemed to bea public issue, even if it is of domestic concern or proved that the shares or debentures are notavailable for subscription or purchase by persons other than those received the offer orinvitation. … I may, therefore, indicate, subject to what has been stated above, in India that any share ordebenture issue beyond forty nine persons, would be a public issue attracting all the relevant provisions of the SEBI Act, regulations framed thereunder, the Companies Act, pertaining
to the public issue. …”
13. In the present case, I note that the Company had offered and allotted RPSs to 10,882
persons during the financial years 2007-08, 2008-09, 2009-10 and 2010-11 and had
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raised ₹9.25 crore. The Company had also issued NCDs during the financial years
2007-08 and 2008-09 and had raised ₹50 lakh from 70 investors.
I have perused the relevant ‘Form 2’ (return of allotment) for the respective allotments
of RPS and note that the list of allottees have not been submitted by the Company.
The details of the allotment as per ‘Form 2’ are as under:
Year Date of allotment No. of personsto whom issued
Total Amount
raised (₹)
2007-08 04/03/2008 807 70,00,000.00 Total 807 70,00,000.00
2008-09 30/06/2008 712 70,00,000.0029/09/2008 681 79,50,000.00
07/02/2009 1,081 80,00,450.00
Total 2,474 2,29,50,450.00
2009-10 10/06/2009 1,296 82,71,850.00
30/08/2009 802 43,08,070.0030/09/2009 979 64,29,820.00
31/10/2009 1,476 75,86,450.00 Total 4,553 2,65,96,190.00
2010-11 30/04/2010 1,692 1,57,87,780.0030/06/2010 1,356 2,02,65,500.00
Total 3,048 3,60,53,280.00
Grand Total 10,882 9,25,99,920.00
The Company in its submissions dated March 16, 2015, has stated that it had never
offered RPSs and NCDs to more than 50 persons in a single day and the RPSs were
issued on private placement basis. In this regard, I note that the total number of
persons to whom RPSs were issued by the Company are 10,882, i.e. clearly more than
49 persons. I note that the Company has not submitted the details to show that all the
allotments were out of different offers. In the absence of the same, it can be presumed
that all these tranches of allotment of RPSs were out of a single offer to more than 49
persons. Further, the Company has failed to adduce any evidence to show that the
issue was a domestic concern of the members of the Company. Thus on the face of it,the issue made by the Company cannot be considered as a private placement.
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Likewise, from the list of NCD holders as submitted by the Company, it is noted that
NCDs were issued to 50 persons in the financial year 2008-09 and to a total of 70
investors during the financial years 2007-08 and 2008-09. .
From the discussion above, it can be said that the Company had clearly allotted RPSs
and NCDs to more than 49 persons, thereby making a public issue of RPSs and NCDs
(in terms of the first proviso to Section 67(3) of the Companies Act, 1956) during the
period alleged in the interim order.
14. By making a public issue of RPSs and NCDs, as discussed above, the Company was
mandated to comply with all the legal provisions that govern and regulate public issue
of such securities, including the Companies Act, 1956 and the SEBI Act and
regulations. In this context, I refer and rely on the below mentioned observation made
by the Hon'ble Supreme Court of India in the matter of Sahara case :
“ ... ... that any share or debenture issue beyond forty nine persons, would be a public issueattracting all the relevant provisions of the SEBI Act, regulations framed thereunder, theCompanies Act, pertaining to the public issue . …”
15.
In view of the above observations, by virtue of Section 55A(a) and (b), SEBI has
jurisdiction and would govern the issue of RPS and NCD as the same was clearly made
to more than 49 persons. In terms of Section 55A of the Companies Act, 1956, SEBI
shall administer various provisions (as mentioned therein) of the said Act with respect
to issue and transfer of securities by listed companies, companies that intend to list
and also those companies that are required to list its securities while making offer and
issue of securities to the public. While examining the scope of Section 55A of the
Companies Act, 1956, the Hon'ble Supreme Court of India in Sahara Case, had
observed that:
"We, therefore, hold that, so far as the provisions enumerated in the opening portion of
Section 55A of the Companies Act, so far as they relate to issue and transfer of securitiesand non-payment of dividend is concerned, SEBI has the power to administer in the caseof listed public companies and in the case of those public companies which intend to gettheir securities listed on a recognized stock exchange in India ."
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" SEBI can exercise its jurisdiction under Sections 11(1), 11(4), 11A(1)(b) and 11Bof SEBI Act and Regulation 107 of ICDR 2009 over public companies who have issuedshares or debentures to fifty or more, but not complied with the provisions of Section 73(1)by not listing its securities on a recognized stock exchange ".
Under Section 11A of the SEBI Act, SEBI is also empowered to regulate, byregulations/ general or special orders, the matters pertaining to issue of capital, transfer
of securities and matters related thereto. Accordingly, the Company, having made a
public offer and issue of securities, as observed above, is under the jurisdiction of
SEBI.
16. As alleged in the interim order, the Company was mandated to comply with the
provisions of Sections 56, 60, 73, 117B and 117C of the Companies Act, 1956 and the
provisions of the ILDS Regulations is required to be complied by the Company in
respect of its offer and issue of RPSs and NCDs. In terms of Section 56(1) of the
Companies Act, 1956, every prospectus issued by or on behalf of a company, shall
state the matters specified in Part I and set out the reports specified in Part II of
Schedule II of that Act. Further, as per Section 56(3) of the Companies Act, 1956, no
one shall issue any form of application for shares in a company, unless the form is
accompanied by abridged prospectus, contain disclosures as specified. Section 2(36)
of the Companies Act read with Section 60 thereof, mandates a company to register
its ‘prospectus’ with the RoC, before making a public offer/ issuing the ‘prospectus’.
17. The interim order further alleged that the Company had failed to comply with Section
73 of the Companies Act, 1956, in respect of its issuance of RPSs and NCDs. By
issuing RPSs and NCDs to more than 49 persons, the Company had to compulsorily
list such securities in compliance with Section 73(1) of the Companies Act, 1956. As
per Section 73(1) of the Companies Act, 1956, a company is required to make an
application to one or more recognized stock exchanges for permission for the shares
or debentures to be offered to be dealt with in the stock exchange. There is no material
on record to say that the Company has filed an application with a recognised stock
exchange to enable the RPSs and NCDs to be dealt with in such exchange. Therefore,
the Company has failed to comply with this requirement.
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18. Section 73(2) of the Companies Act, 1956 states that "Where the permission has not been
applied under subsection (1) or such permission having been applied for, has not been granted as
aforesaid, the company shall forthwith repay without interest all moneys received from applicants in
pursuance of the prospectus, and, if any such money is not repaid within eight days after the company
becomes liable to repay it, the company and every director of the company who is an officer in default
shall, on and from the expiry of the eighth day, be jointly and severally liable to repay that money with
interest at such rate, not less than four per cent and not more than fifteen per cent, as may be prescribed,
having regard to the length of the period of delay in making the repayment of such money" . As the
Company failed to make an application for listing such RPSs and NCDs, the Company
had to forthwith repay such money collected from investors. If such repayments are
not made within 8 days after the Company becomes liable to repay, the Company and
every director of the Company, who is an officer in default, is jointly and severally
liable to repay with interest at such rate. There is no material on record to say that the
Company has complied with the provisions of Section 73(3).
19.
The Company was also mandated to comply with the provisions of DIP Guidelines,
while issuing RPS. The interim order has stated that the Company failed to comply with
the following provisions of the DIP Guidelines as regards its Offer of RPSs during
the financial years 2007-08, 2008-09 and 2009-10:
“4.7 … a)
Clause 2.1.1. – (Filing of offer document)b) Clause 2.1.4 – (Application for listing)c)
Clause 2.1.5 – (Issue of securities in dematerialized form),d)
Clause 2.8 – (Means of finance),e)
Clause 4.1 – (Promoters contribution in a public issue by unlisted companies), f)
Clause 4.11 – (Lock-in of minimum specified promoters contribution in public issues), g)
Clause 4.14 – (Lock-In of pre-issue share capital of an unlisted company)h)
Clause 5.3.1 – (Memorandum of understanding),i)
Clause 5.3.3 – (Due Diligence Certificate)
j)
Clause 5.3.5 – (Undertaking),k) Clause 5.3.6 – (List Of Promoters Group And Other Details),l) Clause 5.4 – (Appointment of intermediaries)m) Clause 5.6 – (Offer document to be made public)n) Clause 5.6A – (Pre-issue Advertisement)o)
Clause 5.7 – (Despatch of issue material)
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p) Clause 5.8 – (No complaints certificate)q) Clause 5.9 – (Mandatory collection centers including Clause 5.9.1 (Minimum number of
collection centres)r) Clause 5.10 – (Authorised Collection Agents)s) Clause 5.12.1 – (Appointment of compliance officer)
t)
Clause 5.13 – (Abridged prospectus)u)
Clause 6.0 – (Contents of offer documents)v) Clause 8.3 – (Rule 19(2)(b) of SC(R) Rules, 1957)w) Clause 8.8.1 – (Opening & closing date of subscription of securities)x) Clause 9 – (Guidelines on advertisements by Issuer Company) y) Clause 10.1 – (Requirement of credit rating)z)
Clause 10.5 – (Redemption)
4.8 As per Regulation 111(1) of the ICDR Regulations, the DIP Guidelines, “ shall standrescinded ” . However, Regulation 111(2) of the ICDR Regulations, provides that:
“(2) Notwithstanding the repeal under sub-section (1) of the repealed enactments, —
(a) anything done or any action taken or purported to have been done or taken including observationmade in respect of any draft offer document, any enquiry or investigation commenced or show causenotice issued in respect of the said Guidelines shall be deemed to have been done or taken under thecorresponding provisions of these regulations;(b) any offer document, whether draft or otherwise, filed or application made to the Board under thesaid Guidelines and pending before it shall be deemed to have been filed or made under thecorresponding provisions of these regulations.” …”
20. Section 117B of the Companies Act, 1956, prescribes that no company shall issue a
prospectus or a letter of offer to the public for subscription of its debentures, unless
it has, before such issue, appointed one or more debenture trustees for such
debentures and the company has, on the face of the prospectus or the letter of offer,
stated that the ‘debenture trustee’ or trustees have given their consent to the company
to be so appointed. The Company has admittedly not filed any prospectus. Therefore,
the said provision has not been fully complied with. Further, appointment of
‘debenture trustee’ shall be in terms of all applicable law. Further, Section 117C of the
Companies Act, 1956, stipulates that, where a company issues debentures, it shall
create a debenture redemption reserve for the redemption of such debentures, to
which adequate amounts shall be credited, from out of its profits every year until such
debentures are redeemed. There is no record to suggest that the said provision was
complied with by the Company.
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21. As the NCDs are ‘debt securities’ in terms of the ILDS Regulations, the Company was
also mandated to comply with the provisions of the ILDS Regulations in respect of its
public issue of NCDs. However, the Company has failed to comply with the following
provisions of the ILDS Regulations.
i. Regulation 4(2)(a) – Application for listing of debt securities
ii. Regulation 4(2)(b) – In-principle approval for listing of debt securities
iii. Regulation 4(2)(c) – Credit rating has been obtained
iv. Regulation 4(2)(d) – Dematerialization of debt securities
v. Regulation 4(4) – Appointment of Debenture Trustee
vi. Regulation 5(2)(b) – Disclosure requirements in the Offer Document
vii. Regulation 6 – Filing of draft Offer Document
viii.
Regulation 7 – Mode of disclosure of Offer Document ix. Regulation 8 – Advertisements for Public Issues
x. Regulation 9 – Abridged Prospectus and application forms
xi. Regulation 12 – Minimum subscription
xii. Regulation 14 – Prohibition of mis-statements in the Offer Document
xiii. Regulation 15 – Trust Deed
xiv. Regulation 16 – Debenture Redemption Reserve
xv. Regulation 17 – Creation of security
xvi.
Regulation 19 – Mandatory Listing xvii. Regulation 26 – Obligations of the Issuer, etc.
22. From the foregoing, it is concluded that the Company has failed to comply with the
provisions of Sections 56, 60, 2(36), 73, 117B and 117C of the Companies Act, 1956
and the respective provisions of the DIP Guidelines read with ICDR Regulations and
the ILDS Regulations, in respect of its offer and issuance of RPSs and NCDs and is
liable for suitable action under the Companies Act, 1956, the SEBI Act and the ILDS
Regulations. The Company shall therefore be liable to make refunds as per the
mandate under Section 73(2) of the Companies Act, 1956 and also for regulatory
action for committing the above violations.
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23. The interim order has noted that the Company had created a charge and had appointed
Tribhuvan Agro Debenture Trust (represented by its Trustees, viz. Mr. Sukumar
Mondal, Mr. Sanjay Nayak, Mr. Sujit Kumar Goswami, Mr. Rajib Das and Mr.
Mohammed Sunwas Ali) as Debenture Trustee for its offer of NCDs. I note that
Tribhuvan Agro Debenture Trust had acted without registration from SEBI as
required under Section 12(1) of the SEBI Act. In this regard, I note that the said trust
is not registered with SEBI to perform the functions of a ‘debenture trustee’ in the
capital market. Further, the following conditions under Regulation 7 of the DT
Regulations are also not satisfied by the said trust:
"no person should act as a debenture trustee unless he is either –
i. a scheduled bank carrying on commercial activity; or
ii.
a public financial institution within the meaning of section 4A of the Companies Act,1956; oriii. an insurance company; oriv. body corporate."
From the above, it is seen that Tribhuvan Agro Debenture Trust does not satisfy the
eligibility conditions stipulated under Regulation 7 of the DT Regulations. The
debenture trustee has not disputed the allegations.
I note that a person who accepts a position which carries certain responsibilities,
compliances and eligibility criteria under law, then the same ought to have been
satisfied under full compliance of applicable law. In the present case, Tribhuvan Agro
Debenture Trust is not registered as ‘debenture trustees’ with SEBI as required under
Section 12(1) of the SEBI Act. Further, it does not satisfy the conditions under
Regulation 7 of the DT Regulations, which prescribes that only a scheduled bank
carrying on commercial activity or a public financial institution within the meaning of
Section 4A of the Companies Act, 1956 or an insurance company or a body corporate
should act as a debenture trustee. In view of the same, I find Tribhuvan Agro
Debenture Trust (represented by its Trustees, viz. Mr. Sukumar Mondal, Mr. Sanjay
Nayak, Mr. Sujit Kumar Goswami, Mr. Rajib Das and Mr. Mohammed Sunwas Ali)
guilty of violating the provisions of Section 12(1) of the SEBI Act and Regulation 7 of
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the DT Regulations. In view of these observations, it can be said that the provisions
of Section 117B of the Companies Act, 1956, have not been completely complied with.
24. Liability of Directors: The interim order was issued against the directors of the
Company namely Mr. Mohammed Sunwas Ali, Mr. Shaikh Mokhlesur Rahaman, Mr. Amal Sen, Mr. Aloke Das, Mr. Sidhartha Sardar, Mr. Pradip Sardar, Mr. Ranjit Gope
and Mr. Mihir Baisnob.
a. The details of their appointment and resignations are as under:
Name Date of Appointment Date of Cessation
Mr. Mohammed Sunwas Ali 21/11/2006 Continuing as directorMr. Shaikh Mokhlesur Rahaman 21/11/2006 Continuing as directorMr. Amal Sen 29/09/2008 Continuing as director
Mr. Aloke Das 04/01/2010 Continuing as directorMr. Sidhartha Sardar 24/02/2011 Continuing as directorMr. Pradip Sardar 24/02/2011 20/02/2013Mr. Ranjit Gope 24/02/2011 18/03/2013Mr. Mihir Baisnob 24/02/2011 05/10/2012
b.
As per Section 291 of the Companies Act, 1956, the board of directors of a company
shall be entitled to exercise all such powers and do all such acts and things as the
company is authorized to exercise and do. Therefore, the board of directors being
responsible for the conduct of the business of a company will be held liable for anynon-compliance of law and such liability is also on the individual directors. In this
regard, refer to the order of Hon’ble High Court of Madras in the matter of Madhavan
Nambiar Vs. Registrar of Companies [2002 108 Comp Cas 1 Mad] wherein it was observed
that “13. … A director either full time or part time, either elected or appointed or nominated is
bound to discharge the functions of a director and should have taken all the diligent steps and taken
care in the affairs of the company.
14. In the matter of proceedings for negligence, default, breach of duty, misfeasance or breach of trust
or violation of the statutory provisions of the Act and the rules, there is no difference or distinction
between the whole-time or part time director or nominated or co-opted director and the liability for such
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acts or commission or omission is equal. So also the treatment for such violations as stipulated in the
Companies Act, 1956.”.
I note that the position of a ‘director’ in a public company/ listed company comes
along with responsibilities and compliances under law, which have to be fulfilled by
such director or face the consequences for any violation or default thereof.
c. I note that the Company had offered and issued RPSs during the financial years 2007-
08, 2008-09, 2009-10 and 2010-11. Further, it had also offered and issued NCDs
during the financial years 2007-08 and 2008-09. Section 56 of the Companies Act, 1956
imposes the liability for the compliance, on the company, every director, and persons
responsible for the issuance of the prospectus. The liability of the Company to repay
under Section 73(2) of the Companies Act, 1956 read with Section 27 of the SEBI Act,
is continuing and the same continues till all the repayments are made to the investors/
public. Therefore, the directors who were present during the period when the
Company had made the offer and allotted RPSs and NCDs shall be liable for violation
of Sections 56, 60 and 73 of the Companies Act, 1956 including the default in making
refunds as mandated therein. As the liability to make repayments under Section 73(2)
of the Companies Act read with Section 27 of the SEBI Act is a continuing liability,
the persons who joined the Company’s Board pursuant to the offer and allotment of
RPS and NCD shall also be liable if the Company and the concerned directors have
failed to make refunds, as mandated under the discussed provisions of law.
d. From the table above, it is noted that Mr. Mohammed Sunwas Ali, Mr. Shaikh
Mokhlesur Rahaman, Mr. Amal Sen and Mr. Aloke Das were the directors of the
Company at the time of impugned issues and allotment of RPSs and NCDs and were
responsible for the affairs of the Company at the relevant point of time. Mr.
Mohammed Sunwas Ali, Mr. Shaikh Mokhlesur Rahaman, Mr. Amal Sen and Mr. Aloke Das continue to be the directors of the Company.
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None of these has replied to the interim order. Taking note of the reasons and
observations above, it can be concluded that Mr. Mohammed Sunwas Ali, Mr.
Shaikh Mokhlesur Rahaman, Mr. Amal Sen and Mr. Aloke Das are responsible
for the violations committed by the Company and liable, jointly and severally, for
making refunds along with interest to the investors as mandated under Section 73(2)
of the Companies Act, 1956 read with Section 27 of the SEBI Act.
e.
Mr. Sidhartha Sardar, Mr. Pradip Sardar, Mr. Ranjit Gope and Mr. Mihir
Baisnob were appointed as directors of the Company on February 24, 2011 i.e. after
the available dates of allotment of RPSs and NCDs. It is observed that these persons
have not exercised necessary diligence after becoming the director in the Company.
The inaction by these against the management (for violating the public issue norms as
stipulated under the Companies Act, 1956 while making the offer and issuing the RPSs
and NCDs), leads one to conclude on a possible collusion with the Company and its
management.
Mr. Sidhartha Sardar is continuing as director of the Company. Others namely Mr.
Pradip Sardar, Mr. Ranjit Gope and Mr. Mihir Baisnob had resigned from the
Company on February 20, 2013, March 18, 2013 and October 05, 2012, respectively.
Mr. Ranjit Gope in his submissions dated March 12, 2015 and September 16, 2015,
has submitted that he was inducted in the Company as an additional director on
February 24, 2011 and had resigned on October 10, 2012. It has also been stated by
him that he was not involved in day to day affairs of the Company and was not
authorised to sign any instrument including cheques on behalf of the Company. He
further submitted that he is not responsible for any mobilisation of funds by the
Company, during his tenure as director.
With regard to the above, I note that the position of a ‘director’ in a public company/listed company comes along with responsibilities and compliances under law
associated with such position, which have to be fulfilled by such director or face the
consequences for any violation or default thereof. The submissions made by Mr. Ranjit
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Gope vide his written submissions are of no help in the light of the discussed order of
Hon’ble High Court of Madras in the matter of Madhavan Nambiar Vs. Registrar of
Companies ( supra ).
In view of the same, it can be concluded that Mr. Sidhartha Sardar, Mr. Pradip
Sardar, Mr. Ranjit Gope and Mr. Mihir Baisnob have not taken any steps to
remedy the violations committed. Accordingly, I hold them responsible for the same.
25.
At this stage, I note that the Company and its directors namely Mr. Mohammed
Sunwas Ali, Mr. Shaikh Mokhlesur Rahaman, Mr. Amal Sen, Mr. Aloke Das,
Mr. Sidhartha Sardar, Mr. Pradip Sardar, Mr. Ranjit Gope and Mr. Mihir
Baisnob were required to provide full inventory of the assets and properties within
21 days from the date of receipt of the interim order. However, no such details have
been filed till date.
26. In view of the discussion above, appropriate action in accordance with law needs to
be initiated against the Company and the directors/ promoters in charge of the affairs
of the Company, during the relevant period.
27. Therefore, I, in exercise of the powers conferred upon me under section 19 of the
Securities and Exchange Board of India Act, 1992 read with sections 11 and 11B
thereof hereby issue the following directions:
a. The Company, Tribhuvan Agro Project Limited [PAN: AACCT6018N], Mr.
Mohammed Sunwas Ali [PAN: AEOPA2984D], Mr. Shaikh Mokhlesur
Rahaman [PAN: AXVPS8485R], Mr. Amal Sen [PAN: BNGPS8347N], Mr.
Aloke Das [PAN: AINPD1762F], Mr. Sidhartha Sardar [PAN: BNOPS7521Q],
Mr. Pradip Sardar [PAN: BGBPS1226C], Mr. Ranjit Gope [PAN: AILPG0108L]
and Mr. Mihir Baisnob [PAN: ANRPB4794Q] jointly and severally, shall forthwith
refund the money collected by the Company through the issuance of Redeemable
Preference Shares and Non-Convertible Debentures ( which have been found to be issued in
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contravention of the public issue norms stipulated under the Companies Act, 1956 ), to the
investors including the money collected from investors, till date, pending allotment of
RPS and NCD, if any, with an interest of 15% per annum compounded at half yearly
intervals, from the date when the repayments became due (in terms of Section 73(2)
of the Companies Act, 1956) to the investors till the date of actual payment.
b. The repayments to investors shall be effected only in cash through Bank Demand
Draft or Pay Order.
c. The Company and/or its present management are permitted to sell the assets of the
Company only for the sole purpose of making the refunds as directed above and
deposit the proceeds in an Escrow Account opened with a nationalised Bank.
d.
The Company and its present management shall issue public notice, in all editions of
two National Dailies (one English and one Hindi) and in one local daily with wide
circulation, detailing the modalities for refund, including details on contact persons
including names, addresses and contact details, within fifteen days of this Order
coming into effect.
e. After completing the aforesaid repayments, the Company shall file a certificate of such
completion with SEBI, within a period of three months from the date of this Order,
from two independent peer reviewed Chartered Accountants who are in the panel of
any public authority or public institution. For the purpose of this Order, a peer
reviewed Chartered Accountant shall mean a Chartered Accountant, who has been
categorized so by the Institute of Chartered Accountants of India (‘ICAI’).
f. Tribhuvan Agro Project Limited, Mr. Mohammed Sunwas Ali, Mr. Shaikh
Mokhlesur Rahaman, Mr. Amal Sen, Mr. Aloke Das, Mr. Sidhartha Sardar, Mr.
Pradip Sardar, Mr. Ranjit Gope and Mr. Mihir Baisnob are also directed to provide
a full inventory of all their assets and properties and details of all their bank accounts,
demat accounts and holdings of shares/ securities, if held in physical form.
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g. In case of failure of the Company, Tribhuvan Agro Project Limited, its directors
including Mr. Mohammed Sunwas Ali, Mr. Shaikh Mokhlesur Rahaman, Mr. Amal
Sen, Mr. Aloke Das, Mr. Sidhartha Sardar, Mr. Pradip Sardar, Mr. Ranjit Gope and
Mr. Mihir Baisnob in complying with the aforesaid directions, SEBI, on expiry of three
months from the date of this Order,-
i. shall recover such amounts in accordance with section 28A of the SEBI Act
including such other provisions contained in securities laws.
ii. may initiate appropriate action against the Company, its promoters/ directors and
the persons/ officers who are in default, including adjudication proceedings
against them, in accordance with law.
iii. would make a reference to the State Government/ Local Police to register a civil/
criminal case against the Company, its promoters, directors and its managers/persons in-charge of the business and its schemes, for offences of fraud, cheating,
criminal breach of trust and misappropriation of public funds; and
iv. would also make a reference to the Ministry of Corporate Affairs, to initiate
appropriate action as deemed fit.
h. The Company namely Tribhuvan Agro Project Limited is directed not to, directly
or indirectly, access the capital market by issuing prospectus, offer document or
advertisement soliciting money from the public and is further restrained andprohibited from buying, selling or otherwise dealing in the securities market, directly
or indirectly in whatsoever manner, from the date of this Order till the expiry of four
(4) years from the date of completion of refunds to investors, made to the satisfaction
of SEBI, as directed above.
i. The directors of the Company namely Mr. Mohammed Sunwas Ali, Mr. Shaikh
Mokhlesur Rahaman, Mr. Amal Sen, Mr. Aloke Das, Mr. Sidhartha Sardar, Mr. Pradip
Sardar, Mr. Ranjit Gope and Mr. Mihir Baisnob are restrained from accessing the
securities market and are further prohibited from buying, selling or otherwise dealing
in securities, directly or indirectly, with immediate effect. They are also restrained from
associating themselves with any listed public company and any public company which
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intends to raise money from the public, with immediate effect. This restraint shall
continue to be in force for a further period of four (4) years on completion of the
repayments, as directed above.
j.
Tribhuvan Agro Debenture Trust, Mr. Sukumar Mondal, Mr. Sanjay Nayak,
Mr. Sujit Kumar Goswami, Mr. Rajib Das and Mr. Mohammed Sunwas Ali shall
not offer themselves to be engaged as debenture trustees or in any capacity as an
intermediary in the securities market, without obtaining a certificate of registration to
undertake that assignment as required under law. Further, they are restrained from
accessing the securities market and are further restrained from buying, selling or
dealing in securities, in any manner whatsoever, for a period of four (4) years.
k.
The above directions shall come into force with immediate effect.
28. This Order is without prejudice to any action, including adjudication and prosecution
proceedings, that might be taken by SEBI in respect of the above violations committed
by the Company, its promoters, directors and other key persons.
29. Copy of this Order shall be forwarded to the recognised stock exchanges and
depositories for information and necessary action.
30. A copy of this Order shall also be forwarded to the Ministry of Corporate Affairs/
concerned Registrar of Companies, for their information and necessary action with
respect to the directions/ restraint imposed above against the Company and the
individuals.
DATE : April 28, 2016 PRASHANT SARANPLACE : Mumbai WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA