Page 1 of 16

WTM/SR/ERO/61/09/2014

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA, MUMBAI
CORAM: S. RAMAN, WHOLE TIME MEMBER

ORDER

Un!" S!#$%&n' 11, 11(4), 11A *n 11B &+ $,! S!#-"%$%!' *n E.#,*n/! B&*" &+ In%* A#$,
1992, %n $,! 0*$$!" &+ A0"%$ 1"&2!#$' L$. *n %$' D%"!#$&"', 3%4. S,"% 5*%6*', C,*n
D-2*"% (DIN: 006278429 1AN: AC:1D0419R), S,"% S*'*n;* R&< S*";*" (DIN: 0==4>0649
1AN: B?51S61871), S,"% B*"-n 5-0*" D! (DIN: 0>19>2409 1AN: ACN1D1287L), S,"%
R*n2*n 5-0*" C,&@,-"< (DIN: 06>1928>9 1AN: ACO1C0>0=E) *n S,"% 5*6% 5%',&"!
B*/#,% (DIN: 006017899 1AN: ACU1B92>=E).


1. Securities and Exchange Board of India ("SEBI") was in receipt of complaint alleging
illegal mobilization of funds b !mrit "ro#ects $td. ("A1L")% through the issue of
debentures&preference shares.

'.1 SEBI (ide letter dated )o(ember '% '*1'% ad(ised !"$ to furnish the following
information within 1+ das from the date of receipt of the aforesaid letter% (iz. ,

i. -op of "rospectus&.ed /erring "rospectus&Statement in lieu of
"rospectus&Information 0emorandum filed with .egistrar of -ompanies ("ROC")
for issuance of debentures&preference shares1
ii. -op of the 0emorandum and !rticles of !ssociation of the compan1
iii. -op of Balance Sheet and "rofit 2 $oss !ccount of the compan for the last 3
ears1
i(. )ame% addresses and occupation of all the promoters&directors of the compan1
(. )ames and details of the 4e 0anagerial "ersonnel of the compan1
(i. 5ther information in respect of e(er series of debentures&preference shares issued
b the compan% (iz. ,
a. 6ate of opening and closing of the subscription list1
b. 6etails regarding the number of application forms circulated in(iting
subscription1
c. 6etails regarding the number of applications recei(ed1
d. 6etails regarding the number of allottees and list of such allottees1
Brought to you by http://StockViz.biz
Page 2 of 16

e. )umber of debentures&preference shares allotted and (alue of such allotment
against each allottee7s name.
f. 6etails regarding subscription amount raised1
g. 6ate of allotment of debentures&preference shares1
h. -opies of the minutes of Board&-ommittee meeting in which the resolution has
been passed for allotment1
i. 6ate of dispatch of debenture&preference share -ertificates1
#. 6etails of the total number of applicants for each of !"$7s scheme besides the
list of final allottee1
8. -opies of application forms% pamphlets% ad(ertisements and other promotional
material circulated for issuance of debenture&preference shares1
l. 9erms and conditions of the issue of debenture&preference shares.

'.' !"$ replied (ide letter dated )o(ember 1'% '*1'% inter alia submitting: "The company has
never offered its shares to the public for subscription vide any sort of Prospectus or Red Herring
Prospectus and whatever money has been raised are strictly on private placement basis to meet the demand
of long term capital requirement of the Company. The Company has issued Preference hares to its
selected investors whenever the need for raising fund arises for its various provisions of the Companies
!ct" #$%& and accordingly" all the forms and returns as required to be filed within the provisions of the
said !ct have been filed with the concerned authority i.e. 'ffice of the R'C" (est )engal. * hares of
our company are not listed in any toc+ ,-change. * The Preference hares issued by us are strictly on
Private Placement basis and they are not listed on any toc+ ,-change and we do not have any intention
to get these privately issued Preference hares listed on any toc+ ,-change*" !"$ also pro(ided
the following documents (ide its aforesaid repl% (iz. ,

a. -op of the 0emorandum and !rticles of !ssociation of the compan1
b. -op of Balance Sheet and "rofit 2 $oss !ccount of the compan for the last 3
ears1
c. )ame% addresses and occupation of all the promoters&directors of the compan1
d. Statement of mobilization and deploment of funds dul certified b the Statutor
!uditors of the -ompan1
e. !pplication form% details in respect of issue of preference shares.

'.3 6uring the inter(ening period% SEBI recei(ed a complaint dated ;ebruar 11% '*13 <as
forwarded b the .eser(e Ban8 of India7s ("RBI") letter dated =ul 1'% '*13>% wherein it
Brought to you by http://StockViz.biz
Page = of 16

was alleged that !"$ was illegall mobilizing funds from the public. ?ide the aforesaid
letter dated =ul 1'% '*13% it was also stated that !"$ was not registered with .BI.

'.@ 9hereafter% (ide letter dated !pril 3*% '*13% SEBI sought inter alia the following
information from !"$ (to be submitted to SEBI latest b 0a A% '*13) ,

a. 6etails of e(er series of debentures&preference shares issued (ear , wise '**B to
'*13)1
b. -op of ban8 statement highlighting the entries for receipt of proceeds for the issue.
c. -ertificate from the -ompan Secretar or a practicing -ompan Secretar certifing
that the issue of debentures&preference shares was not in (iolation of Section CA(3)
of the -ompanies !ct.

'.+ !"$ replied to SEBI (ide letter dated 0a @% '*13% see8ing a wee8s7 extension of time to
submit the abo(ementioned information. 9hereafter% (ide letter dated 0a 1@% '*13%
!"$ while pro(iding cop of !udited Balance Sheet and "rofit 2 $oss !ccount for the
last 3 ears% inter alia submitted:

a. "(e humbly submit that the Company is an unlisted public company and does not have any
e-ternal source of funds and has not accepted any +ind of deposits or issued any debentures till date.
(e state that our Company being an unlisted company is outside the purview or .urisdiction of
,)/.
b. The offer to issue preference shares was made to particular addresses and was meant to be accepted
only by the said addressees. Thus" there were as many number of applications received as there were
number of allottees.
c. /t is humbly submitted that the offer of preference shares were the domestic concern of the Company
and was meant only for those people to whom it was intended. /n other words" it was made to a
particular addressee and was meant to be accepted only by the said addressee. Thus" the offer was a
private offer within the meaning of ection &0123 of the 1Companies3 !ct. /t is humbly submitted
that the shares of the Company were offered and allotments were made on private placement basis in
due compliance with the provisions of the Companies !ct" #$%& and the provisions as contained in
ection 02 of the 1Companies3 !ct" was not applicable to the Company."

'.C SEBI% (ide letter dated ;ebruar '% '*1@% once again sought the information (sought (ide
its letter dated !pril 3*% '*13) from !"$. In this regard% !"$ replied (ide letter dated
Brought to you by http://StockViz.biz
Page 4 of 16

;ebruar '+% '*1@% wherein it inter alia submitted: "ince the 4ecurities and ,-change )oard of
/ndia 1/ssue and 5isting of 6on Convertible Redeemable Preference hares3 Regulations" 78#29 have
been notified and made effective from :une #7" 78#2" it clearly indicates that prior to :une #7" 78#2"
there was no such regulation in force. The issue of preference shares by the Company were thus" not
regulated by ,)/ in any manner."

'.A SEBI also recei(ed se(eral complaints against !"$% which were forwarded (ide
Do(ernment of Eest Bengal% ;inance 6epartment7s letter dated =anuar '*% '*1@1 .BI7s
letter dated 0arch 1*% '*1@ and the 5ffice of the 6irector% Economic 5ffences
In(estigation -ell% ;inance 6epartment% Do(t. of Eest Bengal ("EOW") letters dated
!pril A% '*1@ and !pril 1C% '*1@.

3. 9he material a(ailable on record i.e. correspondences exchanged between SEBI and !"$
alongwith the documents contained therein1 information obtained from the 0inistr of
-orporate !ffairs7 website i.e. ;<C! 7# Portal; alongwith complaints forwarded b the
.BI and E5E% etc. ha(e been perused. 5n an examination of the same% it is obser(ed
that ,

i. !"$ was incorporated on )o(ember '*% 1BB*% with the .5-% 4ol8ata% Eest Bengal
with -I) )o. as FC+B''EB1BB*"$-*+*1BA. !"$7s .egistered 5ffice is at B% Sed
!mir !li !(enue% @
th
;loor% 4ol8ata,A***1A% Eest Bengal% India.

ii. 9he 6irectors in !"$ are Shri 4ailash -hand 6u#ari% Shri Sasan8a .o Sar8ar% Shri
Barun 4umar 6e% Shri .an#an 4umar -howdhur and Shri 4ali 4ishore Bagchi.

iii. !"$ issued "Redeemable Preference hares" ("O++!" &+ R1S") in accordance with inter
alia the following terms and conditions ,

a. "The 'ffer is being made on a private placement basis and cannot be accepted by any person
other than to whom it has been offered. =urther" this 'ffer cannot be transferred or renounced in
anyone;s favour.
b. This application is not an offer to the public in general to subscribe and this document is must
for private circulation only for issue of instruments on private placement basis.
c. The payment of maturity amount and all the returns as mentioned in the documents are tentative
in nature."
Brought to you by http://StockViz.biz
Page > of 16


i(. 9he details of plan launched b !"$ in respect of the 'ffer of RP are as under ,

1LAN H2 A2 B2 C2 D2 E2 F2 G2
I''-! 1"%#!
A!" ',*"! ()
1** 1** 1** 1** 1** 1** 1** 1**
R!!0A$%&n
1!"%&
1 Gear 3 Gears
C 0onths
+ Gears
C 0onths
C Gears
3 0onths
A Gears
C 0onths
1* Gears
C 0onths
1' Gears
C 0onths
1+ Gears
B 0onths
R!!0A$%&n
:*6-!
1*B 13* 1A* '** '+* 3H* +** H**

(. It is obser(ed from the information submitted b !"$ that it passed the following
resolutions at its Extra 5rdinar Deneral 0eetings% for issuance of RP.

D*$! &+
R!'&6-$%&n
T<A! &+ M!!$%n/ N&. &+ R1S $&
B! %''-!
F*#!
:*6-! &+
S,*"! ()
A0&-n$
( %n C"&"!')
*+I*@I'**@ Extra 5rdinar Deneral
0eeting
'1**** 1** '.B*
H*** 1***
*HI*@I'**+ Extra 5rdinar Deneral
0eeting
H***** 1** 11.**
3**** 1***
*3I*@I'**C Extra 5rdinar Deneral
0eeting
1A***** 1** '*.+*
3+*** 1***
*'I*@I'**A Extra 5rdinar Deneral
0eeting
+C**** 1** H.3*
'A*** 1***

(i. !"$ issued RP during the ;inancial Gears '**C,*A% '**A,*H% '**H,*B% '**B,1*
and '*1*,11% details of which are pro(ided below I

Brought to you by http://StockViz.biz
Page 6 of 16


@.1 In the context of the abo(ementioned details of the 'ffer of RP% the issue for
determination in the instant matter is whether the mobilization of funds b !"$ through
the aforesaid% is in accordance with the pro(isions of the SEBI !ct% 1BB' ("SEBI A#$")1
the -ompanies !ct% 1B+C read with the -ompanies !ct% '*131 the SEBI (6isclosure and
In(estor "rotection) Duidelines% '*** ("DI1 G-%!6%n!'") read with the SEBI (Issue of
-apital and 6isclosure .eJuirements) .egulations% '**B ("ICDR R!/-6*$%&n'").
C!*" D*$! &+
A66&$0!n$
N&. &+
S!#-"%$%!'
A0&-n$ 1!"
S,*"! ()
N&. &+
A!"'&n' $&
@,&0 %''-!
(AAA"&..)
T&$*6 A0&-n$
R*%'!
( %n C"&"!')




'**CI*A
31.*+.'**C HAB'1 1** '3A1 *.HH
31.*A.'**C +'3* 1*** AA *.+'
133H+1 1** 11+B 1.33
31.*H.'**C 1+1BA@ 1** +AH 1.+'
3*.*B.'**C HAC+ 1*** 1'H *.HH

'H.*'.'**A

AABC 1*** BA

*.AH
1+1C31 1** 3HC1 1.+'
T&$*6 >48167 1000/100 7281 8.4=


'**AI*H

2

'**HI*B
6etails )ot
!(ailable
AA@3@ 1***

B3C

A.A@
1@1H+'3 1** 6etails )ot
!(ailable
1@.1H
T&$*6 149>9>8 1000/100 9=6
(AAA"&..)
21.92




'**BI1*
6etails )ot
!(ailable
+**** 1*** 6etails )ot
!(ailable
+.**
1++*** 1** 1.++
T&$*6 20>000 1000/100 6.>>


'*1*I11


6etails )ot
!(ailable

@+****

1**

6etails )ot
!(ailable


@.+*

T&$*6

269712>

100

DD
9208

40.40

DD
>etails in respect of the total number of allottees under the 'ffer of RP for the =inancial ?ears 788&80"
78808@" 788@8$" 788$#8 and 78#8##" is not available. Therefore" the number of allottees has been
tentatively indicated as at least $780 on account of available information.

Brought to you by http://StockViz.biz
Page 8 of 16


@.' I note that the #urisdiction of SEBI o(er (arious pro(isions of the -ompanies !ct in the
case of public companies% whether listed or unlisted% when the issue and transfer
securities% flows from the pro(isions of Section ++! of the -ompanies !ct. Ehile
examining the scope of Section ++! of the -ompanies !ct% 1B+C% the /on7ble Supreme
-ourt of India in S*,*"* In%* R!*6 E'$*$! C&"A&"*$%&n L%0%$! E O"'. 3'. SEBI
(C%3%6 AAA!*6 n&. 971= &+ 2011) (?-/0!n$ *$! A-/-'$ =1, 2012) (hereinafter
referred to as the "S*,*"* C*'!")" had obser(ed that:

"(e" therefore" hold that" so far as the provisions enumerated in the opening portion of ection %%! of
the Companies !ct" so far as they relate to issue and transfer of securities and nonApayment of dividend is
concerned" ,)/ has the power to administer in the case of listed public companies and in the case of
those public companies which intend to get their securities listed on a recogniBed stoc+ e-change in /ndia."

@.3 In this regard ,

i. .eference is also made to Sections CA(1) and CA(3) of the -ompanies !ct% 1B+C%
which are reproduced as under:

"&0. 1#3 !ny reference in this !ct or in the articles of a company to offering shares or debentures to
the public shall" sub.ect to any provision to the contrary contained in this !ct and sub.ect also to the
provisions of subAsections 123 and 1C3" be construed as including a reference 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 any other manner.
173 ...
123 6o offer or invitation shall be treated as made to the public by virtue of subA section 1#3 or subA
section 173" as the case may be" if the offer or invitation can properly be regarded" in all the
circumstancesA
1a3 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 invitationD or
1b3 otherwise as being a domestic concern of the persons ma+ing and receiving the offer or invitation
*
1"&3%! that nothing contained in this subAsection shall apply in a case where the offer or
invitation to subscribe for shares or debentures is made to fifty persons or moreE
Brought to you by http://StockViz.biz
Page 7 of 16

1"&3%! +-"$,!" that nothing contained in the first proviso shall apply to nonAban+ing financial
companies or public financial institutions specified in section C! of the Companies !ct" #$%& 1# of
#$%&3.F

ii. Ehile examining the scope of Section CA of the -ompanies !ct% 1B+C% the /on7ble
Supreme -ourt of India in the ahara Case obser(ed that:

"ection &01#3 deals with the offer of shares and debentures to the public and ection &0173 deals
with invitation to the public to subscribe for shares and debentures and how those e-pressions are to
be understood" when reference is made to the !ct or in the articles of a company. The emphasis in
ection &01#3 and 173 is on the Gsection of the publicF. ection &0123 states that no offer or
invitation shall be treated as made to the public" by virtue of subsections 1#3 and 173" that is to any
section of the public" if the offer or invitation is 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 otherwise as being a domestic concern of the persons ma+ing and
receiving the offer or invitations. ection &0123 is" therefore" an e-ception to ections &01#3 and 173.
/f the circumstances mentioned in clauses 1#3 and 1b3 of ection &0123 are satisfied" then the
offerHinvitation would not be treated as being made to the public.
The first proviso to ection &0123 was inserted by the Companies 1!mendment3 !ct" 7888 w.e.f.
#2.#7.7888" which clearly indicates" nothing contained in ubAsection 123 of ection &0 shall apply
in a case where the offer or invitation to subscribe for shares or debentures is made to fifty persons or
more. *
Resultantly" if an offer of securities is made to fifty or more persons" it would be deemed to be a
public issue" even if it is of domestic concern or proved that the shares or debentures are not available
for subscription or purchase by persons other than those received the offer or invitation. *
/ may" therefore" indicate" sub.ect to what has been stated above" in /ndia that any share or
debenture issue beyond forty nine persons" would be a public issue attracting all the relevant
provisions of the ,)/ !ct" regulations framed thereunder" the Companies !ct" pertaining to the
public issue. *"

iii. In the instant matter% for ascertaining whether the 'ffer of RP is a public issue or an
issue on pri(ate placement basis in accordance with Section CA of the -ompanies
!ct% 1B+C% the number of subscribers is of utmost importance.

Brought to you by http://StockViz.biz
Page 9 of 16

a. Fnder the 'ffer of RP" it is obser(ed that during the ;inancial Gear '**C,*A%
!"$ allotted RP of #88 each to ABCB indi(iduals&in(estors and RP of #888
each to 3*' indi(iduals&in(estors. ;or the aforesaid allotments% !"$ mobilized
funds amounting to approximatel A.@3 -rores. 9hese facts prima facie indicate
that the 'ffer of RP was a public issue of securities since the number of persons
to whom such 'ffer was made% was abo(e the limit of fort,nine persons as
prescribed under Section CA(3) of the -ompanies !ct% 1B+C.

b. It is also obser(ed that during the ;inancial Gears '**A,*H% '**H,*B% '**B,1*
and '*1*,11% !"$ mobilized funds under the 'ffer of RP amounting to
approximatel 3'.BA -rores. /owe(er% details in respect of the number of
allotments made during the aforesaid ;inancial Gears (except in respect of
allotment of RP of #888 each to B3C indi(iduals&in(estors during the ;inancial
Gears '**A,*H and '**H,*B)% were not made a(ailable to SEBI% b !"$. In
(iew of how the 'ffer of RP has been handled b !"$ (i.e. during the =inancial
?ear 788&80 itself" the no. of allotments of RP of #88H#888 each were made to @70#
individualsHinvestors3% I feel it is an eminentl reasonable conclusion to draw from
the facts in the instant matter that such 'ffer during the aforementioned
;inancial Gears% would ha(e also been subscribed se(eral times o(er the
threshold for a pri(ate placement.

c. !"$ is not registered with the .BI as a nonIban8ing financial compan nor is it
stated to be a public financial institution within the meaning of Section @! of
the -ompanies !ct% 1B+C and therefore% is not co(ered under the second proviso to
Section CA(3) of the -ompanies !ct% 1B+C.

d. In (iew of the abo(e% the 'ffer of RP b !"$% would prima facie Jualif as a
public issue under the first pro(iso to Section CA(3) of the -ompanies !ct%
1B+C. In this regard% it is pertinent to note that b (irtue of Section ++! of the
-ompanies !ct% Section CA of that !ct% so far as it relates to issue and transfer
of securities% shall also be administered b SEBI.

@.@ I note that ,

Brought to you by http://StockViz.biz
Page 10 of 16

i. ;rom the abo(ementioned% it will follow that since the 'ffer of RP is a public issue
of securities% such securities shall also ha(e to be listed on a recognized stoc8
exchange% as mandated under Section A3 of the -ompanies !ct% 1B+C. In this regard%
reference is made to Sections A3 of the -ompanies !ct% 1B+C% of which subISections
(1)% (') and (3) are rele(ant for the instant case% which is reproduced as under:

"02. 1#3 ,very company intending to offer shares or debentures to the public for subscription by the
issue of a prospectus shall" before such issue" ma+e an application to one or more recognised stoc+
e-changes for permission for the shares or debentures intending to be so offered to be dealt with in the
stoc+ e-change or each such stoc+ e-change.
1#!3 *
173 (here the permission has not been applied under subsection 1#3 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 e-piry of the eighth day" be .ointly 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
ma+ing the repayment of such money.
123 !ll moneys received as aforesaid shall be +ept in a separate ban+ account maintained with a
cheduled )an+ # 4until the permission has been granted" or where an appeal has been preferred
against the refusal to grant such. permission" until the disposal of the appeal" and the money
standing in such separate account shall" where the permission has not been applied for as aforesaid
or has not been granted" be repaid within the time and in the manner specified in subA section 1739D
and if default is made in complying with this subA section" the company" and every officer of the
company who is in default" shall be punishable with fine which may e-tend to five thousand rupees.F

ii. In the ahara Case% the /on7ble Supreme -ourt of India also examined Section A3 of
the -ompanies !ct% 1B+C% wherein it obser(ed that ,

"ection 021#3 of the !ct casts an obligation on every company intending to offer shares or
debentures to the public to apply on a stoc+ e-change for listing of its securities. uch companies
have no option or choice but to list their securities on a recogniBed stoc+ e-change" once they invite
subscription from over forty nine investors from the public. /f an unlisted company e-presses its
intention" by conduct or otherwise" to offer its securities to the public by the issue of a prospectus" the
Brought to you by http://StockViz.biz
Page 11 of 16

legal obligation to ma+e an application on a recogniBed stoc+ e-change for listing starts. ubAsection
1#!3 of ection 02 gives indication of what are the particulars to be stated in such a prospectus.
The consequences of not applying for the permission under subAsection 1#3 of ection 02 or not
granting of permission is clearly stipulated in subAsection 123 of ection 02. 'bligation to refund the
amount collected from the public with interest is also mandatory as per ection 02173 of the !ct.
5isting is" therefore" a legal responsibility of the company which offers securities to the public"
provided offers are made to more than %8 persons."

iii. In the facts of the instant case% since the 'ffer of RP was made to fift persons or
more b !"$% the same will attract the reJuirement of compulsor listing before a
recognized stoc8 exchange in terms of Section A3(1) of the -ompanies !ct% 1B+C. It
therefore prima facie appears that !"$ has (iolated the pro(isions of Section A3(1) of
the -ompanies !ct% 1B+C% since it has failed to ensure listing with a recognised stoc8
exchange of the securities issued under the 'ffer of RP.

i(. !s per Section A3(') of the -ompanies !ct% 1B+C% the obligation to refund the
amount with interest that was collected from in(estors under the 'ffer of RP is
mandator on !"$. In this regard% there is no e(idence on record to indicate
whether or not !"$ has paid interest to the in(estors where such RP are not
allotted within H das" as per the aforesaid Section. In (iew of the same% I find that
!"$ has prima facie not complied with the pro(isions of Section A3(') of the
-ompanies !ct% 1B+C.

(. Section A3(3) of -ompanies !ct% 1B+C% sas that all mones recei(ed shall be 8ept in
a separate ban8 account maintained with a Scheduled Ban8 and if default is made in
compling with this subISection% the compan% and e(er officer of the compan
who is in default% shall be punishable with fine which ma extend to fi(e thousand
rupees. In the instant case% there is no e(idence on record to indicate whether or not
funds recei(ed from the in(estors under the 'ffer of RP has been 8ept in separate
ban8 account b !"$. In (iew of the same% I find that !"$ has prima facie not
complied with the pro(isions of Section A3(3) of -ompanies !ct% 1B+C.

@.+ Fnder Section '(3C) read with Section C* of the -ompanies !ct% 1B+C% a compan needs
to register its prospectus with the .5-% before ma8ing a public offer or issuing the
prospectus. !s per the aforesaid Section '(3C)% GprospectusF means an document
Brought to you by http://StockViz.biz
Page 12 of 16

described or issued as a prospectus and includes an notice% circular% ad(ertisement or
other document in(iting deposits from the public or in(iting offers from the public for
the subscription or purchase of an shares in% or debentures of% a bod corporate. !s
mentioned abo(e% since the 'ffer of RP was made to fift persons or more% it has to be
construed as a public offer. /a(ing made a public offer% !"$ was reJuired to register a
prospectus with the .5- under Section C* of the -ompanies !ct% 1B+C. Based on the
material a(ailable on record% I find that !"$ has not complied with the pro(isions of
Section C* of -ompanies !ct% 1B+C.

@.C Fnder Section +C(1) of the -ompanies !ct% 1B+C% e(er prospectus issued b or on
behalf of a compan% shall state the matters specified in "art I and set out the reports
specified in "art II of Schedule II of that !ct. ;urther% as per Section +C(3) of the
-ompanies !ct% 1B+C% no one shall issue an form of application for shares in or
debentures of a compan% unless the form is accompanied b abridged prospectus%
contain disclosures as specified. Based on the material a(ailable on record% I find that
!"$ has not complied with the pro(isions of Section +C(1) and +C(3) of the -ompanies
!ct% 1B+C and therefore% has prima facie (iolated the aforesaid pro(isions.

@.A !s per Section @C+(1) of the -ompanies !ct% '*13% the -ompanies !ct% 1B+C% "shall stand
repealed". /owe(er% Section @C+(')(i) of the -ompanies !ct% '*13% pro(ides that:

"1736otwithstanding the repeal under subAsection 1#3 of the repealed enactments"I
1a3 anything done or any action ta+en or purported to have been done or ta+en" including any rule"
notification" inspection" order or notice made or issued or any appointment or declaration made or any
operation underta+en or any direction given or any proceeding ta+en or any penalty" punishment"
forfeiture or fine imposed under the repealed enactments shall" insofar as it is not inconsistent with the
provisions of this !ct" be deemed to have been done or ta+en under the corresponding provisions of this
!ctD"

@.H I also note that SEBI framed the 6I" Duidelines% in exercise of the powers conferred
under the SEBI !ct. In the words of the /on7ble Supreme -ourt in the ahara Case"
">/P Juidelines had statutory force since they were framed by ,)/ in e-ercise of its powers conferred
on it under ections ## and ##! of the ,)/ !ct. Powers have been conferred on ,)/ to protect the
interests of the investors in securities and regulate the issue of prospectus" offer documents or advertisement
soliciting money through the issue of prospectus. ection ## of the !ct" it may be noted has been
Brought to you by http://StockViz.biz
Page 1= of 16

incorporated" evidently to protect the interests of investors whose securities are legally required to be listed.
>/P Juidelines were implemented by ,)/ with regard to the listed and unlisted companies" which
made public offer" until it was replaced by /C>R 788$". In this regard% I obser(e prima facie that
the -ompan has not complied with the pro(isions of the 6I" Duidelines including the
following clauses:

a. -lause '.1.1. , (=iling of offer document)
b. -lause '.1.@ , (!pplication for listing)
c. -lause '.1.+ , (/ssue of securities in dematerialiBed form)%
d. -lause '.H , (<eans of finance)%
e. -lause @.1 , (Promoters contribution in a public issue by unlisted companies)%
f. -lause @.11 , (5oc+Ain of minimum specified promoters contribution in public issues)%
g. -lause @.1@ , (5oc+A/n of preAissue share capital of an unlisted company)
h. -lause +.3.1 , (<emorandum of understanding)%
i. -lause +.3.3 , (>ue >iligence Certificate)
#. -lause +.3.+ , (Knderta+ing)%
8. -lause +.3.C , (5ist 'f Promoters Jroup !nd 'ther >etails)%
l. -lause +.@ , 1!ppointment of intermediaries3
m. -lause +.C , ('ffer document to be made public)
n. -lause +.C! , (PreAissue !dvertisement)
o. -lause +.A , 1>espatch of issue material3
p. -lause +.H , 16o complaints certificate3
J. -lause +.B , 1<andatory collection centres including Clause %.$.# (<inimum number of
collection centres)
r. -lause +.1* , 1!uthorised Collection !gents3
s. -lause +.1'.1 , (!ppointment of compliance officer)
t. -lause +.13 , 1!bridged prospectus3
u. -lause C.* , 1Contents of offer documents3
(. -lause H.3 , (Rule #$1731b3 of C1R3 Rules" #$%0)
w. -lause H.H.1 , ('pening L closing date of subscription of securities)
x. -lause B , 1Juidelines on advertisements by /ssuer Company3
Brought to you by http://StockViz.biz
Page 14 of 16

. -lause 1*.1 , (Requirement of credit rating3
z. -lause 1*.+ , (Redemption)

@.B !s per .egulation 111(1) of the I-6. .egulations% the 6I" Duidelines% "shall stand
rescinded". /owe(er% .egulation 111(') of the I-6. .egulations% pro(ides that:

"1736otwithstanding the repeal under subAsection 1#3 of the repealed enactments"I
1a3 anything done or any action ta+en or purported to have been done or ta+en including observation
made in respect of any draft offer document" any enquiry or investigation commenced or show cause notice
issued in respect of the said Juidelines shall be deemed to have been done or ta+en under the
corresponding provisions of these regulationsD
1b3 any offer document" whether draft or otherwise" filed or application made to the )oard under the said
Juidelines and pending before it shall be deemed to have been filed or made under the corresponding
provisions of these regulations."

@.1* In addition to the abo(e% the following ma also be noted ,

i. ;rom the information a(ailable on the ;<C! 7# Portal;" it is obser(ed that !"$ has
not filed the .eturn on !llotments (;orm ') for the ;inancial Gears '**A,*H% '**H,
*B% '**B,1* and '*1*,11. ;urther% it is obser(ed that !"$ has not filed its Balance
Sheet for the ;inancial Gears '**C,*A% '**A,*H and '**H,*B.

@.11 Fpon a consideration of the aforementioned paragraphs% I am of the (iew that !"$ is
prima facie engaged in fund mobilising acti(it from the public% through the 'ffer of RP
and as a result of the aforesaid acti(it has (iolated the aforementioned pro(isions of the
-ompanies !ct% 1B+C (Section +C% Section C* read with Section '(3C)% Section A3%) read
with Section @C+ of the -ompanies !ct% '*131 the 6I" Duidelines read with I-6.
.egulations.

+. SEBI has a statutor dut to protect the interests of in(estors in securities and promote
the de(elopment of% and to regulate% the securities mar8et. Section 11 of the SEBI !ct
has empowered it to ta8e such measures as it thin8s fit for fulfilling its legislati(e
mandate. ;urther% as per the pro(isions of Section ++! of the -ompanies !ct% 1B+C read
with Section @C+ of the -ompanies !ct% '*13% administrati(e authorit on the sub#ects
relating to public issue of securities is exclusi(el with SEBI. ;or this purpose% SEBI can
Brought to you by http://StockViz.biz
Page 1> of 16

exercise its #urisdiction under Sections 11(1)% 11!% 11B and 11(@) of the SEBI !ct read
with Section ++! of the -ompanies !ct% 1B+C and Section @C+ of the -ompanies !ct%
'*13% o(er companies who issue preference shares to fift persons or more% but do not
compl with the applicable pro(isions of the aforesaid -ompanies !cts1 the 6I"
Duidelines read with I-6. .egulations (as mentioned in paragraphs @.1,@.11 abo(e).
Steps% therefore% ha(e to be ta8en in the instant matter to ensure onl legitimate fund
raising acti(ities are carried on b !"$ and no in(estors are defrauded. In light of the
same% I find there is no other alternati(e but to ta8e recourse through an interim action
against !"$ and its 6irectors% for pre(enting that compan from further carring on
with its fund mobilising acti(it under the 'ffer of RP.

C. In (iew of the foregoing% I% in exercise of the powers conferred upon me under Sections
11% 11(@)% 11! and 11B of the SEBI !ct and -lause 1A of the 6I" Duidelines read with
.egulation 111 of the I-6. .egulations% hereb issue the following directions ,

i. !"$ shall not mobilize funds from in(estors through the 'ffer of RP or through the
issuance of eJuit shares or an other securities% to the public and&or in(ite
subscription% in an manner whatsoe(er% either directl or indirectl% till further
directions1
ii. !"$ and its 6irectors% (iz. Shri 4ailash -hand 6u#ari (6I): **C'HA@'1 "!):
!-?"6*@1B.)% Shri Sasan8a .o Sar8ar (6I): *33@+*C@1 "!): B=4"SC1AH")%
Shri Barun 4umar 6e (6I): *+1B+'@*1 "!): !-)"61'AH$)% Shri .an#an 4umar
-howdhur (6I): *C+1B'A+1 "!): !-5"-*+*3E) and Shri 4ali 4ishore Bagchi
(6I): **C*1HAB1 "!): !-F"BB'+3E)% are prohibited from issuing prospectus or
an offer document or issue ad(ertisement for soliciting mone from the public for
the issue of securities% in an manner whatsoe(er% either directl or indirectl% till
further orders1
iii. !"$ and the abo(ementioned 6irectors% are restrained from accessing the securities
mar8et and further prohibited from buing% selling or otherwise dealing in the
securities mar8et% either directl or indirectl% till further directions1
i(. !"$ shall pro(ide a full in(entor of all its assets and properties1
(. 9he abo(ementioned 6irectors of !"$ shall pro(ide a full in(entor of all their
assets and properties1
Brought to you by http://StockViz.biz
Page 16 of 16

(i. !"$ and its abo(ementioned 6irectors shall not dispose of an of the properties or
alienate or encumber an of the assets owned&acJuired b that compan through the
'ffer of RP% without prior permission from SEBI1
(ii. !"$ and its abo(ementioned 6irectors shall not di(ert an funds raised from public
at large through the 'ffer of RP% which are 8ept in ban8 account(s) and&or in the
custod of !"$.
(iii. !"$ and its abo(ementioned 6irectors shall% within '1 das from the date of receipt
of this 5rder% pro(ide SEBI with all rele(ant and necessar information% as sought
(ide SEBI letter dated ;ebruar '% '*1@.

A. 9he abo(e directions shall ta8e effect immediatel and shall be in force until further
orders.

H. 9he prima facie obser(ations contained in this 5rder are made on the basis of the material
a(ailable on record i.e. correspondences exchanged between SEBI and !"$ alongwith
the documents contained therein1 information obtained from the 0inistr of -orporate
!ffairs7 website i.e. ;<C! 7# Portal; alongwith complaints forwarded b the .BI and
E5E% etc. In this context% !"$ and its abo(ementioned 6irectors ma% within '1 das
from the date of receipt of this 5rder% file their repl% if an% to this 5rder and ma also
indicate whether the desire to a(ail themsel(es an opportunit of personal hearing on a
date and time to be fixed on a specific reJuest made in that regard.

B. 9his 5rder is without pre#udice to the right of SEBI to ta8e an other action that ma be
initiated against !"$ and its abo(ementioned 6irectors in accordance with law.



16*#!: M-0B*% S. RAMAN
D*$!: S!A$!0B!" 9, 2014 WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA


Brought to you by http://StockViz.biz