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WTM/SR/ERO/67/09/2014

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

ORDER

U!"#$ S#%&'(!) 11, 11*4+, 11A ,!" 11B (- &.# S#%/$'&'#) ,!" E0%.,!1# B(,$" (- I!"', A%&,
1992, '! &.# 2,&&#$ (- W#'$" I!"/)&$'#) '2'&#" ,!" '&) D'$#%&($), 3'4. S.$' C.,!" M(.,!
G.(). *DIN: 020156766 7AN: A8F7G90917+, S.$' R,2:$()," M(!",; *DIN: 091198986
7AN: AS77M5588N+, S.$' G(:,; D,;,:,&' *DIN: 017427686 7AN: AEF7D9926H+, S.$'
S,.,<,.,! =.,! *DIN: 020156996 7AN: AGR7=0129D+, S.$' S,!<,> =/2,$ D,) *DIN:
020169756 7AN: AGU7D5964E+, S.$' 8,"/!,&. 8#!, *DIN: 051699616 7AN:
ANU788469D+, S.$' M(.,22#" A$'-- B';;, *DIN: 027587726 7AN: ADR7B89988+ ,!"
S.$' B.,?,1$,.' B#.#$, *DIN: 091151116 7AN: ASW7B5847N+6 '&) D#?#!&/$# T$/)&##,
3'4. S.$'. H,$' 7,", S#&..


1. Securities and Exchange Board of India ("SEBI") received a reference dated May 25,
212, a!!eging "o#i!i$ation of funds through the issue of redee"a#!e %reference
shares&de#entures #y 'eird Industries (i"ited ("WI").

2.1 SEBI vide !etter dated )ove"#er 2, 212, advised 'I( to furnish inter alia the fo!!o*ing
infor"ation *ithin 15 days fro" the date of recei%t of the aforesaid !etter, vi$. +

i. ,o%y of -ros%ectus&.ed /erring -ros%ectus&State"ent in !ieu of
-ros%ectus&Infor"ation Me"orandu" fi!ed *ith .0, for issuance of
shares&de#entures.
ii. ,o%y of the Me"orandu" and 1rtic!es of 1ssociation of the co"%any2
iii. 1udited Ba!ance Sheet and -rofit 3 (oss 1ccount of the co"%any for the !ast 4 years2
iv. )a"e, addresses and occu%ation of a!! the %ro"oters&directors of the co"%any2
v. )a"es and detai!s of the 5ey Manageria! -ersonne! of the co"%any2
vi. 0ther infor"ation in res%ect of every series of shares&de#entures issued #y the
co"%any, vi$. +
a. 6ate of o%ening and c!osing of the su#scri%tion !ist2
#. 6etai!s regarding the nu"#er of a%%!ication for"s circu!ated inviting
su#scri%tion2
c. 6etai!s regarding the nu"#er of a%%!ications received2
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d. 6etai!s regarding the nu"#er of a!!ottees and !ist of such a!!ottees2
e. )u"#er of shares&de#entures a!!otted and va!ue of such a!!ot"ent against each
a!!ottee7s na"e.
f. 6etai!s regarding su#scri%tion a"ount raised2
g. 6ate of a!!ot"ent of share&de#enture certificates2
h. ,o%ies of the "inutes of Board&,o""ittee "eeting in *hich the reso!ution has
#een %assed for a!!ot"ent2
i. 6ate of dis%atch of shares&de#entures2
8. 6etai!s of the tota! nu"#er of a%%!icants for each of 'I(7s sche"e #esides the
!ist of fina! a!!ottees2
9. ,o%ies of a%%!ication for"s, %a"%h!ets, advertise"ents and other %ro"otiona!
"ateria! circu!ated for issuance of shares&de#entures.
!. :er"s and conditions of the issue of shares&de#entures.

2.2 :hereafter, vide !etter dated ;u!y <, 214 (addressed to 'I() and !etters each dated
=e#ruary >, 21? (addressed to the 6irectors of 'I(), SEBI once again sought the
infor"ation sought vide its ear!ier !etter dated )ove"#er 2, 212.

2.4 /o*ever, as on date, neither 'I( nor its 6irectors have su#"itted the infor"ation
sought vide the a#ove"entioned !etters, to SEBI.

4. SEBI *as a!so in recei%t of certain co"%!aints dated ;anuary ?, 21? and March 41,
21?, #y investors a!!eging i!!ega! "o#i!i$ation of funds #y 'I(.

?. :he "ateria! avai!a#!e on record i.e. infor"ation o#tained fro" the Ministry of
,or%orate 1ffairs7 *e#site i.e. 'MCA 21 Portal' a!ong*ith docu"ents annexed *ith the
a#ove"entioned co"%!aints, have #een %erused. 0n an exa"ination of the sa"e, it is
o#served that +

i. 'I( *as incor%orated on March >, 2@, *ith the .0,, 5o!9ata, *ith ,I) )o. as
A>?12'B2@-(,124><. 'I( has its 0ffice at Bhagya!ax"i Bui!ding, /o*rah
1"ta .oad, -ost 0ffice+6asnagar, 5o!9ata+>1115, 'est Benga!, India.

ii. :he 6irectors in 'I( are Shri ,hand Mohan Bhosh and Shri Bo%a! 6a!a%ati.

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iii. Shri .a"%rosad Monda!, Shri Saha8ahan 5han, Shri San8ay 5u"ar 6as, Shri
;adunath ;ena, Shri Moha""ed 1riff Bi!!a and Shri Bha#agrahi Behera, *ho *ere
ear!ier 6irectors in 'I(, have since resigned.

iv. =or" 2 (=or" for .eturn of 1!!ot"ent + fi!ed #y 'I( *ith the .0, in accordance
*ith the %rovisions of the ,o"%anies 1ct, 1<5C, for the =inancia! Dears 2<+1
and 21+11), revea!ed that the co"%any issued and a!!otted Preference Shares ("O--#$
(- 7$#-#$#!%# S.,$#)"), detai!s of *hich are %rovided #e!o* @


v. =ro" the Ba!ance Sheet for the =inancia! Dear 2<+1, it is o#served that 'I(
co!!ected 2.5 (a9hs to*ards redeemable Preference Shares share a%%!ication "oney in
that =inancia! Dear.

vi. =ro" the Ba!ance Sheet for the =inancia! Dear 21+11 a!ong*ith =or" 1 (=or"
for .egistration of ,harge in res%ect of 6e#entures + fi!ed #y 'I( *ith the .0, in
accordance *ith the %rovisions of the ,o"%anies 1ct, 1<5C, for the =inancia! Dears
2<+1 and 21+11), revea!ed that the co"%any issued NonConvertible Debentures
"O--#$ (- NCD)"), detai!s of *hich are %rovided #e!o* @






A#,$ T>:# (-
S#%/$'&>
D,&# (-
A;;(&2#!&
N(. (-
)#%/$'&'#)
N(. (- :#$)(!) &(
B.(2 :$#-#$#!%#
).,$#) B#$# ,;;(&&#"
T(&,; A2(/!&
*` `` ` '! C$($#)+
2@ + <




.edee"a#!e
-reference
Shares


2@[email protected]@

?2@<5 45@ .?4
2< + 1


41.>.2<

421?5 1C<5 4.2
TOTA 5490400 2095 5.49
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vii. =ro" the "ateria! avai!a#!e on record, it is o#served that 'I( issued NCD) in
accordance *ith the fo!!o*ing ter"s and conditions contained in the #rochureE

a. "!he offer is being made on a "rivate "lacement basis and cannot be acce"ted b# an# "erson
other than to $hom it has been offered% &urther' the offer cannot be transferred or renounce in
an#one's favour%
#. !he a""lication can be made for a minimum amount of `1((( and in multi"les of `1(((
thereafter%
c. As the issue for NCDs is on "rivate "lacement basis' no "rior a""roval)rating is re*uired from
+overnment)S,-. and other statutor# authorities%
d. !he debentures are being issued "ursuant to the resolution "assed at a meeting of -oard of
Directors of the Com"an# at its meeting held on Ma# 2/' 2((0%
e. Si1e of the .ssue2 ` / Crore' $ith an o"tion to retain oversubscri"tion to be decided b# -oard of
Directors%
f. Allotment of NCDs $ill be made $ithin 3( da#s from the date of recei"t of a""lication%
g. Securit#2 !he NCDs $ill be secured b# mortgage of assets' $ater "lant to register of the
com"an#%
h. 4ho Can .nvest2 .ndividuals' !rusts' Cor"orate -odies' Minors through +uardians5'
.nstitutions' Mutual &unds' 67&s and Co8o"erative -odies%"





A#,$ T>:# (- S#%/$'&> D,&# (- A;;(&2#!& T(&,; A2(/!&
*` `` ` '! C$($#)+
2< + 1



)on+,onverti#!e
6e#entures of ` `` `1

25.5.2<
1nd
41.1.2<

C.<
21 + 11


6etai!s )ot 1vai!a#!e >.1
TOTA 1?.
CC =or" 1 revea!ed that 'I( created ,harge for an a"ount of `5 ,rores to*ards issuance of
NCDs%
CC :he issue of NCDs of u%to `5 ,rores *as a%%roved #y 'I( in its Board Meeting dated
25.5.2<.
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MUTI7IER SECURED DEBENTURE
7AN A B C D E
.ede"%tion -eriod 2 Dears 11
Months
? Dears 11
Months
> Dears 11
Months
1 Dears 12 Dears
1"ount -aya#!e %er 6e#enture 1 1 1 1 1
Mini"u" )o. of 6e#enture 1 1 1 1 1
.ede"%tion Fa!ue 15 2 ? C 1
1nnua!ised Die!d on Invest"ents (G) 15 1C 1>.2 [email protected] 1<.CC

REGUAR INCOME SECURED DEBENTURE
7AN MINIMUM R#"#2:&'(!
7#$'("
A!!/,;')#" A'#;"
(! I!3#)&2#!&
7,>,?;#
.1 D#?#!&/$# A2(/!& *` `` `+ 4 Dears
11 Months
15.5G Month!y
25 25

5.1 :he issue for deter"ination in the instant "atter is *hether the "o#i!i$ation of funds #y
'I( through the 9ffer of Preference Shares and 9ffer of NCDs' is in accordance *ith +

i. in res%ect of the 9ffer of Preference Shares and 9ffer of NCDs, the %rovisions of the SEBI
1ct, 1<<2 ("SEBI A%&")2 the ,o"%anies 1ct, 1<5C read *ith the ,o"%anies 1ct,
2142
ii. in res%ect of 9ffer of Preference Shares' the SEBI (6isc!osure and Investor -rotection)
Buide!ines, 2 ("DI7 G/'"#;'!#)") read *ith the SEBI (Issue of ,a%ita! and
6isc!osure .eHuire"ents) .egu!ations, 2< ("ICDR R#1/;,&'(!)"), and
iii. in res%ect of 9ffer of NCDs' the SEBI (Issue and (isting of 6e#t Securities),
.egu!ations, 2@ ("D#?& S#%/$'&'#) R#1/;,&'(!)").

5.2 I note that the 8urisdiction of SEBI over various %rovisions of the ,o"%anies 1ct in the
case of %u#!ic co"%anies, *hether !isted or un!isted, *hen they issue and transfer
securities, f!o*s fro" the %rovisions of Section 551 of the ,o"%anies 1ct. 'hi!e
exa"ining the sco%e of Section 551 of the ,o"%anies 1ct, 1<5C, the /on7#!e Su%re"e
,ourt of India in S,.,$, I!"', R#,; E)&,&# C($:($,&'(! '2'&#" D O$). 3). SEBI
*C'3'; A::#,; !(. 9815 (- 2011+ *8/"12#!& ",&#" A/1/)& 51, 2012+ (hereinafter
referred to as the "S,.,$, C,)#")' had o#served thatE

"4e' therefore' hold that' so far as the "rovisions enumerated in the o"ening "ortion of Section //A of
the Com"anies Act' so far as the# relate to issue and transfer of securities and non8"a#ment of dividend is
concerned' S,-. has the "o$er to administer in the case of listed "ublic com"anies and in the case of
those "ublic com"anies $hich intend to get their securities listed on a recogni1ed stoc: e;change in .ndia%"
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5.4 In this regard +

i. .eference is a!so "ade to Sections C>(1) and C>(4) of the ,o"%anies 1ct, 1<5C,
*hich are re%roduced as underE

"3<% 15 An# reference in this Act or in the articles of a com"an# to offering shares or debentures to
the "ublic shall' sub=ect to an# "rovision to the contrar# contained in this Act and sub=ect also to the
"rovisions of sub8sections >5 and ?5' be construed as including a reference to offering them to an#
section of the "ublic' $hether selected as members or debenture holders of the com"an# concerned or
as clients of the "erson issuing the "ros"ectus or in an# other manner%
25 %%%
>5 No offer or invitation shall be treated as made to the "ublic b# virtue of sub8 section 15 or sub8
section 25' as the case ma# be' if the offer or invitation can "ro"erl# be regarded' in all the
circumstances8
a5 as not being calculated to result' directl# or indirectl#' in the shares or debentures becoming
available for subscri"tion or "urchase b# "ersons other than those receiving the offer or invitation@ or
b5 other$ise as being a domestic concern of the "ersons ma:ing and receiving the offer or invitation
A
7$(3'"#" that nothing contained in this sub8section shall a""l# in a case $here the offer or
invitation to subscribe for shares or debentures is made to fift# "ersons or more2
7$(3'"#" -/$&.#$ that nothing contained in the first "roviso shall a""l# to non8ban:ing financial
com"anies or "ublic financial institutions s"ecified in section ?A of the Com"anies Act' 10/3 1 of
10/35%B

ii. 'hi!e exa"ining the sco%e of Section C> of the ,o"%anies 1ct, 1<5C, the /on7#!e
Su%re"e ,ourt of India in the Sahara Case o#served thatE

"Section 3<15 deals $ith the offer of shares and debentures to the "ublic and Section 3<25 deals
$ith invitation to the "ublic to subscribe for shares and debentures and ho$ those e;"ressions are to
be understood' $hen reference is made to the Act or in the articles of a com"an#% !he em"hasis in
Section 3<15 and 25 is on the Csection of the "ublicB% Section 3<>5 states that no offer or
invitation shall be treated as made to the "ublic' b# virtue of subsections 15 and 25' that is to an#
section of the "ublic' if the offer or invitation is not being calculated to result' directl# or indirectl#' in
the shares or debentures becoming available for subscri"tion or "urchase b# "ersons other than those
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receiving the offer or invitation or other$ise as being a domestic concern of the "ersons ma:ing and
receiving the offer or invitations% Section 3<>5 is' therefore' an e;ce"tion to Sections 3<15 and 25%
.f the circumstances mentioned in clauses 15 and b5 of Section 3<>5 are satisfied' then the
offer)invitation $ould not be treated as being made to the "ublic%
!he first "roviso to Section 3<>5 $as inserted b# the Com"anies Amendment5 Act' 2((( $%e%f%
1>%12%2(((' $hich clearl# indicates' nothing contained in Sub8section >5 of Section 3< shall a""l#
in a case $here the offer or invitation to subscribe for shares or debentures is made to fift# "ersons or
more% A
Desultantl#' if an offer of securities is made to fift# or more "ersons' it $ould be deemed to be a
"ublic issue' even if it is of domestic concern or "roved that the shares or debentures are not available
for subscri"tion or "urchase b# "ersons other than those received the offer or invitation% A
. ma#' therefore' indicate' sub=ect to $hat has been stated above' in .ndia that an# share or
debenture issue be#ond fort# nine "ersons' $ould be a "ublic issue attracting all the relevant
"rovisions of the S,-. Act' regulations framed thereunder' the Com"anies Act' "ertaining to the
"ublic issue% A"

i. In the instant "atter, for ascertaining *hether the 9ffer of Preference Shares and 9ffer of
NCDs are %u#!ic issues or issues on %rivate %!ace"ent #asis in accordance *ith
Section C> of the ,o"%anies 1ct, 1<5C, the nu"#er of su#scri#ers is of ut"ost
i"%ortance.

A. O--#$ (- 7$#-#$#!%# S.,$#)

Ander the 9ffer of Preference Shares' it is o#served that 'I( issued and a!!otted
%reference shares to a tota! of 254 individua!s&investors and "o#i!i$ed an
a"ount of a%%roxi"ate!y ` 4.C5 ,rores I>%?/ Crores amount mobili1ed under the
9ffer of Preference Shares5 "lus (%2( Crores share a""lication mone#5J during the
=inancia! Dears 2@+< and 2<+1. :hese facts "rima facie indicate that the
9ffer of Preference Shares *as a %u#!ic issue of securities under the first %roviso to
Section C>(4) of the ,o"%anies 1ct, 1<5C, *hich has #een e!ucidated #y the
/on7#!e Su%re"e ,ourt of India in the Sahara Case.



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B. O--#$ (- NCD) ,!" $#-/),; &( )/?2'& %(2:;#&# ,!" $#;#3,!& '!-($2,&'(! &(
SEBI.

1s regards the 9ffer of NCDs' it is o#served that 'I( "o#i!i$ed an a"ount of
` 1? ,rores through the issuance of NCDs during the =inancia! Dears 2<+1
and 21+11.

I note that 'I( *as advised to %rovide infor"ation (sought vide SEBI !etters
dated )ove"#er 2, 2122 ;u!y <, 214 and =e#ruary >, 21?) to*ards the
%re!i"inary exa"ination conducted #y SEBI in res%ect of the 9ffer of Preference
Shares and 9ffer of NCDs% I note that 'I( fai!ed to %rovide infor"ation to
SEBI. I a!so find an a#sence of re!evant infor"ation on the MCA21 Portal
%ertaining to the 9ffer of NCDs such as detai!s of NCDs a!!otted, na"es of
a!!ottees, etc. ('I( *as reHuired to fi!e aforesaid detai!s *ith the .0,), *hich
c!ear!y indicates nonKadherence to the !ega! reHuire"ents as a!so a !ac9 of
trans%arency on its %art.

In vie* of ho* the 9ffer of Preference Shares has #een hand!ed #y 'I( (i.e.
a!!ot"ent of %reference shares to 254 individua!s&investors and "o#i!i$ation
of an a"ount of ` 4.?5 ,rores5 and a!so considering the fact that ),6s *ere
a!so offered in si"i!ar fashion, I fee! it is an e"inent!y reasona#!e conc!usion
to dra* fro" the facts in the instant "atter that the 9ffer of NCDs *ou!d have
a!so #een su#scri#ed severa! ti"es over the thresho!d i.e. ?< %ersons, for a
%rivate %!ace"ent for attaining the "o#i!i$ation of 1? ,rores. I therefore,
find that the 9ffer of NCDs *as nothing #ut a %u#!ic issue of securities under
the first %roviso to Section C>(4) of the ,o"%anies 1ct, 1<5C.

C. In this regard, it is %ertinent to note that #y virtue of Section 551 of the
,o"%anies 1ct, Section C> of that 1ct, so far as it re!ates to issue and transfer of
securities, sha!! #e ad"inistered #y SEBI.

5.? I note that +

i. =ro" the a#ove"entioned, it *i!! fo!!o* that since the 9ffer of Preference Shares and
9ffer of NCDs *ere %u#!ic issues of securities, such securities sha!! a!so have to #e
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!isted on a recogni$ed stoc9 exchange, as "andated under Section >4 of the
,o"%anies 1ct, 1<5C. In this regard, reference is "ade to Sections >4 of the
,o"%anies 1ct, 1<5C, of *hich su#KSections (1), (2) and (4) are re!evant for the
instant case, *hich is re%roduced as underE

"<>% 15 ,ver# com"an# intending to offer shares or debentures to the "ublic for subscri"tion b# the
issue of a "ros"ectus shall' before such issue' ma:e an a""lication to one or more recognised stoc:
e;changes for "ermission for the shares or debentures intending to be so offered to be dealt $ith in the
stoc: e;change or each such stoc: e;change%
1A5 A
25 4here the "ermission has not been a""lied under subsection 15 or such "ermission having been
a""lied for' has not been granted as aforesaid' the com"an# shall forth$ith re"a# $ithout interest all
mone#s received from a""licants in "ursuance of the "ros"ectus' and' if an# such mone# is not re"aid
$ithin eight da#s after the com"an# becomes liable to re"a# it' the com"an# and ever# director of the
com"an# $ho is an officer in default shall' on and from the e;"ir# of the eighth da#' be =ointl# and
severall# liable to re"a# that mone# $ith interest at such rate' not less than four "er cent and not
more than fifteen "er cent' as ma# be "rescribed' having regard to the length of the "eriod of dela# in
ma:ing the re"a#ment of such mone#%
>5 All mone#s received as aforesaid shall be :e"t in a se"arate ban: account maintained $ith a
Scheduled -an: 1 Euntil the "ermission has been granted' or $here an a""eal has been "referred
against the refusal to grant such% "ermission' until the dis"osal of the a""eal' and the mone#
standing in such se"arate account shall' $here the "ermission has not been a""lied for as aforesaid
or has not been granted' be re"aid $ithin the time and in the manner s"ecified in sub8 section 25F@
and if default is made in com"l#ing $ith this sub8 section' the com"an#' and ever# officer of the
com"an# $ho is in default' shall be "unishable $ith fine $hich ma# e;tend to five thousand ru"ees%B

ii. In the Sahara Case, the /on7#!e Su%re"e ,ourt of India a!so exa"ined Section >4 of
the ,o"%anies 1ct, 1<5C, *herein it o#served that +

"Section <>15 of the Act casts an obligation on ever# com"an# intending to offer shares or
debentures to the "ublic to a""l# on a stoc: e;change for listing of its securities% Such com"anies
have no o"tion or choice but to list their securities on a recogni1ed stoc: e;change' once the# invite
subscri"tion from over fort# nine investors from the "ublic% .f an unlisted com"an# e;"resses its
intention' b# conduct or other$ise' to offer its securities to the "ublic b# the issue of a "ros"ectus' the
legal obligation to ma:e an a""lication on a recogni1ed stoc: e;change for listing starts% Sub8section
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1A5 of Section <> gives indication of $hat are the "articulars to be stated in such a "ros"ectus%
!he conse*uences of not a""l#ing for the "ermission under sub8section 15 of Section <> or not
granting of "ermission is clearl# sti"ulated in sub8section >5 of Section <>% 9bligation to refund the
amount collected from the "ublic $ith interest is also mandator# as "er Section <>25 of the Act%
Gisting is' therefore' a legal res"onsibilit# of the com"an# $hich offers securities to the "ublic'
"rovided offers are made to more than /( "ersons%"

iii. In the facts of the instant case, since the 9ffer of Preference Shares and 9ffer of NCDs
*ere "ade to fifty %ersons or "ore #y 'I(, the sa"e *i!! attract the reHuire"ent of
co"%u!sory !isting #efore a recogni$ed stoc9 exchange in ter"s of Section >4(1) of
the ,o"%anies 1ct, 1<5C. It therefore "rima facie a%%ears that 'I( has vio!ated the
%rovisions of Section >4(1) of the ,o"%anies 1ct, 1<5C, since it has fai!ed to ensure
!isting *ith a recognised stoc9 exchange of the securities issued under the 9ffer of
Preference Shares and 9ffer of NCDs *ere %u#!ic issues of securities.

iv. 1s %er Section >4(2) of the ,o"%anies 1ct, 1<5C, the o#!igation to refund the
a"ount *ith interest that *as co!!ected fro" investors under the 9ffer of Preference
Shares and 9ffer of NCDs' is "andatory on 'I(. =ro" the Ba!ance Sheet for the
=inancia! Dear 2<+1, it is o#served that 'I( co!!ected 2.5 (a9hs to*ards
redeemable share a%%!ication "oney in that =inancia! Dear. In this regard, there is no
evidence on record to indicate *hether or not 'I( has refunded the a"ount *ith
interest to the investors under the 9ffer of Preference Shares and 9ffer of NCDs' as %er
the aforesaid Section. In vie* of the sa"e, I find that "rima facie' 'I( has not
co"%!ied *ith the %rovisions of Section >4(2) of the ,o"%anies 1ct, 1<5C.

v. Section >4(4) of ,o"%anies 1ct, 1<5C, says that a!! "oneys received sha!! #e 9e%t in
a se%arate #an9 account "aintained *ith a Schedu!ed Ban9 and if defau!t is "ade in
co"%!ying *ith this su#KSection, the co"%any, and every officer of the co"%any
*ho is in defau!t, sha!! #e %unisha#!e *ith fine *hich "ay extend to five thousand
ru%ees. In the instant case, there is no evidence on record to indicate *hether or not
funds received fro" the investors under the 9ffer of Preference Shares and 9ffer of NCDs
*ere 9e%t in se%arate #an9 account #y 'I(. In vie* of the sa"e, I find that "rima
facie' 'I( has not co"%!ied *ith the %rovisions of Section >4(4) of ,o"%anies 1ct,
1<5C.

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5.5 Ander Section 2(4C) read *ith Section C of the ,o"%anies 1ct, 1<5C, a co"%any needs
to register its %ros%ectus *ith the .0,, #efore "a9ing a %u#!ic offer or issuing the
%ros%ectus. 1s %er the aforesaid Section 2(4C), C"ros"ectusB "eans any docu"ent
descri#ed or issued as a %ros%ectus and inc!udes any notice, circu!ar, advertise"ent or
other docu"ent inviting de%osits fro" the %u#!ic or inviting offers fro" the %u#!ic for
the su#scri%tion or %urchase of any shares in, or de#entures of, a #ody cor%orate. 1s
"entioned a#ove, since the 9ffer of Preference Shares and 9ffer of NCDs *ere "ade to fifty
%ersons or "ore, it has to #e construed as a %u#!ic offer. /aving "ade a %u#!ic offer,
'I( *as reHuired to register a %ros%ectus *ith the .0, under Section C of the
,o"%anies 1ct, 1<5C. Based on the "ateria! avai!a#!e on record, I find that "rima facie'
'I( has not co"%!ied *ith the %rovisions of Section C of ,o"%anies 1ct, 1<5C.

5.C Ander Section 5C(1) of the ,o"%anies 1ct, 1<5C, every %ros%ectus issued #y or on
#eha!f of a co"%any, sha!! state the "atters s%ecified in -art I and set out the re%orts
s%ecified in -art II of Schedu!e II of that 1ct. =urther, as %er Section 5C(4) of the
,o"%anies 1ct, 1<5C, no one sha!! issue any for" of a%%!ication for shares in or
de#entures of a co"%any, un!ess the for" is acco"%anied #y a#ridged %ros%ectus,
contain disc!osures as s%ecified. Based on the "ateria! avai!a#!e on record, I find that
'I( has not co"%!ied *ith the %rovisions of Section 5C(1) and 5C(4) of the ,o"%anies
1ct, 1<5C and therefore, has "rima facie vio!ated the aforesaid %rovisions.

5.> Ander Section 11>B of the ,o"%anies 1ct, 1<5C, no co"%any sha!! issue a %ros%ectus or
a !etter of offer to the %u#!ic for su#scri%tion of its de#entures, un!ess it has, #efore such
issue, a%%ointed one or "ore de#enture trustees for such de#entures and the co"%any
has, on the face of the %ros%ectus or the !etter of offer, stated that the de#enture trustee
or trustees have given their consent to the co"%any to #e so a%%ointed.

5.@ =urther, under Section 11>, of the aforesaid 1ct, *here a co"%any issues de#entures, it
sha!! create a 6e#enture .ede"%tion .eserve ("DRR") for the rede"%tion of such
de#entures, to *hich adeHuate a"ounts sha!! #e credited, fro" out of its %rofits every
year unti! such de#entures are redee"ed. In this regard, u%on a %erusa! of the Ba!ance
Sheet of 'I( for the =inancia! Dear ended March 41, 21, it is o#served that co"%any
has not created any 6...

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5.< 1ccording!y, #ased on the "ateria! avai!a#!e on record, I find that "rima facie' 'I( has
not co"%!ied *ith the %rovisions of Sections 11>B+, of the ,o"%anies 1ct, 1<5C and
therefore, has "rima facie vio!ated the aforesaid %rovisions.

5.1 1s %er Section ?C5(1) of the ,o"%anies 1ct, 214, the ,o"%anies 1ct, 1<5C, "shall stand
re"ealed". /o*ever, Section ?C5(2)(i) of the ,o"%anies 1ct, 214, %rovides thatE

"25Not$ithstanding the re"eal under sub8section 15 of the re"ealed enactments'H
a5 an#thing done or an# action ta:en or "ur"orted to have been done or ta:en' including an# rule'
notification' ins"ection' order or notice made or issued or an# a""ointment or declaration made or an#
o"eration underta:en or an# direction given or an# "roceeding ta:en or an# "enalt#' "unishment'
forfeiture or fine im"osed under the re"ealed enactments shall' insofar as it is not inconsistent $ith the
"rovisions of this Act' be deemed to have been done or ta:en under the corres"onding "rovisions of this
Act@"

5.11 I a!so note that SEBI fra"ed the 6I- Buide!ines, in exercise of the %o*ers conferred
under the SEBI 1ct. In the *ords of the /on7#!e Su%re"e ,ourt in the Sahara Case'
"D.P +uidelines had statutor# force since the# $ere framed b# S,-. in e;ercise of its "o$ers conferred
on it under Sections 11 and 11A of the S,-. Act% Po$ers have been conferred on S,-. to "rotect the
interests of the investors in securities and regulate the issue of "ros"ectus' offer documents or advertisement
soliciting mone# through the issue of "ros"ectus% Section 11 of the Act' it ma# be noted has been
incor"orated' evidentl# to "rotect the interests of investors $hose securities are legall# re*uired to be listed%
D.P +uidelines $ere im"lemented b# S,-. $ith regard to the listed and unlisted com"anies' $hich
made "ublic offer' until it $as re"laced b# .CDD 2((0"% In this regard, I o#serve "rima facie that
the ,o"%any has not co"%!ied *ith the fo!!o*ing c!auses of the 6I- Buide!ines for the
9ffer of Preference SharesE

a. ,!ause 2.1.1. + (&iling of offer document)
#. ,!ause 2.1.? + (A""lication for listing)
c. ,!ause 2.1.5 + (.ssue of securities in demateriali1ed form),
d. ,!ause 2.@ + (Means of finance),
e. ,!ause ?.1 + (Promoters contribution in a "ublic issue b# unlisted com"anies),
f. ,!ause ?.11 + (Goc:8in of minimum s"ecified "romoters contribution in "ublic issues),
g. ,!ause ?.1? + (Goc:8.n of "re8issue share ca"ital of an unlisted com"an#)
h. ,!ause 5.4.1 + (Memorandum of understanding),
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i. ,!ause 5.4.4 + (Due Diligence Certificate)
8. ,!ause 5.4.5 + (7nderta:ing),
9. ,!ause 5.4.C + (Gist 9f Promoters +rou" And 9ther Details),
!. ,!ause 5.? + A""ointment of intermediaries5
". ,!ause 5.C + (9ffer document to be made "ublic)
n. ,!ause 5.C1 + (Pre8issue Advertisement)
o. ,!ause 5.> + Des"atch of issue material5
%. ,!ause 5.@ + No com"laints certificate5
H. ,!ause 5.< + Mandator# collection centres inc!uding Clause /%0%1 (Minimum number of
collection centres)
r% ,!ause 5.1 + Authorised Collection Agents5
s. ,!ause 5.12.1 + (A""ointment of com"liance officer)
t. ,!ause 5.14 + Abridged "ros"ectus5
u. ,!ause C. + Contents of offer documents5
v. ,!ause @.4 + (Dule 1025b5 of SCD5 Dules' 10/<)
*. ,!ause @[email protected] + (9"ening I closing date of subscri"tion of securities)
x. ,!ause < + +uidelines on advertisements b# .ssuer Com"an#5
y. ,!ause 1.1 + (De*uirement of credit rating5
$. ,!ause 1.5 + (Dedem"tion)

5.12 1s %er .egu!ation 111(1) of the I,6. .egu!ations, the 6I- Buide!ines, "shall stand
rescinded". /o*ever, .egu!ation 111(2) of the I,6. .egu!ations, %rovides thatE

"25Not$ithstanding the re"eal under sub8section 15 of the re"ealed enactments'H
a5 an#thing done or an# action ta:en or "ur"orted to have been done or ta:en including observation
made in res"ect of an# draft offer document' an# en*uir# or investigation commenced or sho$ cause notice
issued in res"ect of the said +uidelines shall be deemed to have been done or ta:en under the
corres"onding "rovisions of these regulations@
b5 an# offer document' $hether draft or other$ise' filed or a""lication made to the -oard under the said
+uidelines and "ending before it shall be deemed to have been filed or made under the corres"onding
"rovisions of these regulations%"

5.14 In addition to the a#ove, reference "ay #e "ade to the 6e#t Securities .egu!ations,
*hich *ere fra"ed #y SEBI in exercise of its %o*ers under Section 4 of the SEBI 1ct
and are a%%!ica#!e to the %u#!ic issue and !isting of de#t securities. It "ay #e re!evant to
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note that under the aforesaid .egu!ations, 'debt securities' have #een defined as 'non8
convertible debt securities $hich create or ac:no$ledge indebtedness' and include debentureA' In this
context, I find that "rima facie' 'I(, through the 9ffer of NCDs' *hich is a %u#!ic issue of
de#t securities, has vio!ated the fo!!o*ing %rovisions of the aforesaid .egu!ations, *hich
contain inter alia conditions for %u#!ic issue and !isting of de#t securities, vi$.

i. .egu!ation ?(2)(a) + A""lication for listing of debt securities
ii. .egu!ation ?(2)(#) + .n8"rinci"le a""roval for listing of debt securities
iii. .egu!ation ?(2)(c) + Credit rating has been obtained
iv. .egu!ation ?(2)(d) + Demateriali1ation of debt securities
v. .egu!ation ?(?) + A""ointment of Debenture !rustee
vi. .egu!ation 5(2)(#) + Disclosure re*uirements in the 9ffer Document
vii. .egu!ation C + &iling of draft 9ffer Document
viii. .egu!ation > + Mode of disclosure of 9ffer Document
ix. .egu!ation @ + Advertisements for Public .ssues
x. .egu!ation < + Abridged Pros"ectus and a""lication forms
xi. .egu!ation 12 + Minimum subscri"tion
xii. .egu!ation 1? + Prohibition of mis8statements in the 9ffer Document
xiii. .egu!ation 15 + !rust Deed
xiv. .egu!ation 1C(1) Debenture Dedem"tion Deserve
xv. .egu!ation 1> + Creation of Securit#
xvi. .egu!ation 1< + Mandator# Gisting
xvii. .egu!ation 2C + 9bligations of the .ssuer' etc%

5.1? :he fo!!o*ing fact "ay a!so #e noted +

i. =ro" the infor"ation avai!a#!e on the 'MCA 21 Portal'' it is o#served that 'I( has
not fi!ed its Ba!ance Sheet for the =inancia! Dears 211+12 and 212+14.

5.15 A%on a consideration of the afore"entioned %aragra%hs, I a" of the vie* that "rima facie'
'I( is engaged in fund "o#i!ising activity fro" the %u#!ic, through the 9ffer of Preference
Shares and 9ffer of NCDs and as a resu!t of the aforesaid activity has vio!ated the
afore"entioned %rovisions of the ,o"%anies 1ct, 1<5C (Section 5C, Section C read *ith
Section 2(4C), Section >4) read *ith Section ?C5 of the ,o"%anies 1ct, 2142 and in
res%ect of the 9ffer of NCDs on!y, Sections 11>B+, of the ,o"%anies 1ct, 1<5C read
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Page 19 of 18

*ith Section ?C5 of the ,o"%anies 1ct, 2142 the 6I- Buide!ines read *ith I,6.
.egu!ations and the 6e#t Securities .egu!ations.

C.1 =ro" infor"ation o#tained #y SEBI fro" the MCA 21 Portal' it is o#served that 'I(
a%%ointed Shri% 6ari Pada Seth as 6e#enture :rustee for the 9ffer of NCDs #y that
co"%any.

C.2 Section 12(1) of the SEBI 1ct states thatE "NoA trustee of trust deed A shall bu#' sell or deal
in securities e;ce"t under' and in accordance $ith' the conditions of a certificate of registration obtained
from the -oard in accordance $ith the regulations made under this Act". =urther, .egu!ation > of
SEBI (6e#enture :rustees) .egu!ations, 1<<4 ("D#?#!&/$# T$/)&##) R#1/;,&'(!)"),
%rovides thatE "no "erson should act as a debenture trustee unless he is either +

i% a scheduled ban: carr#ing on commercial activit#@ or
ii% a "ublic financial institution $ithin the meaning of section ?A of the Com"anies Act' 10/3@ or
iii% an insurance com"an#@ or
iv. bod# cor"orate%"

C.4 Based on the "ateria! avai!a#!e on record, it is noted that "rima facie' Shri% 6ari Pada Seth
has fai!ed to "eet the e!igi#i!ity criteria s%ecified under the %rovisions of the 6e#enture
:rustees .egu!ations and therefore, acted as a 6e#enture :rustee in vio!ation of the
a#ove"entioned %rovisions of the SEBI 1ct read *ith the 6e#enture :rustee
.egu!ations.

>. SEBI has a statutory duty to %rotect the interests of investors in securities and %ro"ote
the deve!o%"ent of, and to regu!ate, the securities "ar9et. Section 11 of the SEBI 1ct
has e"%o*ered it to ta9e such "easures as it thin9s fit for fu!fi!!ing its !egis!ative
"andate. =urther, as %er the %rovisions of Section 551 of the ,o"%anies 1ct, 1<5C read
*ith Section ?C5 of the ,o"%anies 1ct, 214, ad"inistrative authority on the su#8ects
re!ating to %u#!ic issue of securities is *ith SEBI. =or this %ur%ose, SEBI can exercise its
8urisdiction under Sections 11(1), 111, 11B and 11(?) of the SEBI 1ct read *ith Section
551 of the ,o"%anies 1ct, 1<5C and Section ?C5 of the ,o"%anies 1ct, 214, over
co"%anies *ho issue securities such as NonConvertible Dedeemable Debentures and Preference
Shares to fifty %ersons or "ore, #ut do not co"%!y *ith the a%%!ica#!e %rovisions of the
aforesaid ,o"%anies 1cts, the 6I- Buide!ines read *ith I,6. .egu!ations and the
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6e#t Securities .egu!ations (as "entioned in %aragra%hs ?.1+?.15 a#ove). Ste%s
therefore, have to #e ta9en in the instant "atter to ensure on!y !egiti"ate fund raising
activities are carried on #y 'I( and no investors are defrauded. In !ight of the sa"e and
a!so considering the fai!ure on the %art of 'I( to su#"it re!evant infor"ation to SEBI, I
find there is no other a!ternative #ut to ta9e recourse through an interi" action against
'I( and its 6irectors a!ong*ith its 6e#enture :rustee, vi$. Shri% 6ari Pada Seth' for
%reventing that co"%any fro" further carrying on *ith its fund "o#i!ising activity under
the 9ffer of Preference Shares and 9ffer of NCDs.

@. In vie* of the foregoing, I, in exercise of the %o*ers conferred u%on "e under Sections
11, 11(?), 111 and 11B of the SEBI 1ct2 the 6I- Buide!ines read *ith the I,6.
.egu!ations and the 6e#t Securities .egu!ations2 the 6e#enture :rustee .egu!ations,
here#y issue the fo!!o*ing directions +

i. 'I( sha!! not "o#i!i$e funds fro" investors through the 9ffer of Preference Shares and
9ffer of NCDs or through the issuance of eHuity shares or any other securities, to the
%u#!ic and&or invite su#scri%tion, in any "anner *hatsoever, either direct!y or
indirect!y ti!! further directions2
ii. 'I( and its %resent 6irectors, vi$. Shri ,hand Mohan Bhosh (6I)E 214C>C2
-1)E 1;=-B551-) and Shri Bo%a! 6a!a%ati (6I)E 1>?2>C@2 -1)E
1E=-6<<2C/) inc!uding its %ast 6irectors, vi$. Shri .a"%rosad Monda! (6I)E
5115@5@2 -1)E 1S--M44@@)), Shri Saha8ahan 5han (6I)E 214C5<2 -1)E
1B.-51256), Shri San8ay 5u"ar 6as (6I)E 21C5>42 -1)E 1BA-64<C?E),
Shri ;adunath ;ena (6I)E 41C<<C12 -1)E 1)A-;@?C56), Shri Moha""ed 1riff
Bi!!a (6I)E 2>4@>>22 -1)E 16.-B@<5@;) and Shri Bha#agrahi Behera (6I)E
51141112 -1)E 1S'-B4@?>)), are %rohi#ited fro" issuing %ros%ectus or any
offer docu"ent or issue advertise"ent for so!iciting "oney fro" the %u#!ic for the
issue of securities, in any "anner *hatsoever, either direct!y or indirect!y, ti!! further
orders2
iii. 'I( and its a#ove"entioned 6irectors, are restrained fro" accessing the securities
"ar9et and further %rohi#ited fro" #uying, se!!ing or other*ise dea!ing in the
securities "ar9et, either direct!y or indirect!y, ti!! further directions2
iv. 'I( sha!! %rovide a fu!! inventory of a!! its assets and %ro%erties2
v. 'I(7s a#ove"entioned 6irectors sha!! %rovide a fu!! inventory of a!! their assets and
%ro%erties2
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vi. 'I( and its %resent 6irectors sha!! not dis%ose of any of the %ro%erties or a!ienate
or encu"#er any of the assets o*ned&acHuired #y that co"%any through the 9ffer of
Preference Shares and 9ffer of NCDs' *ithout %rior %er"ission fro" SEBI2
vii. 'I( and its %resent 6irectors sha!! not divert any funds raised fro" %u#!ic at !arge
through the 9ffer of Preference Shares and 9ffer of NCDs' *hich are 9e%t in #an9
account(s) and&or in the custody of 'I(2
viii. 'I( sha!! furnish co"%!ete and re!evant infor"ation in res%ect of #oth "reference
shares and NCDs (as sought #y SEBI !etters dated )ove"#er 2, 2122 ;u!y <, 214
and =e#ruary >, 21?), *ithin 21 days fro" the date of recei%t of this 0rder.
ix. Shri. /ari -ada Seth is %rohi#ited fro" continuing *ith his %resent assign"ent as a
de#enture trustee in res%ect of the 9ffer of NCDs of 'I( and a!so fro" ta9ing u%
any ne* assign"ent or invo!ve"ent in any ne* issue of de#entures, etc. in a si"i!ar
ca%acity, fro" the date of this order ti!! further directions.

<. :he a#ove directions sha!! ta9e effect i""ediate!y and sha!! #e in force unti! further
orders.

1.1 :he "rima facie o#servations contained in this 0rder are "ade on the #asis of the "ateria!
avai!a#!e on record i.e. infor"ation o#tained fro" the Ministry of ,or%orate 1ffairs7
*e#site i.e. 'MCA 21 Portal' a!ong*ith docu"ents annexed *ith the co"%!aint dated
)ove"#er 11, 214% In this context, 'I( and its a#ove"entioned 6irectors "ay, *ithin
21 days fro" the date of recei%t of this 0rder, fi!e their re%!y, if any, to this 0rder and
"ay a!so indicate *hether they desire to avai! the"se!ves an o%%ortunity of %ersona!
hearing on a date and ti"e to #e fixed on a s%ecific reHuest "ade in that regard.

1.2 Si"i!ar!y, the 6e#enture :rustee, vi$. Shri% 6ari Pada Seth, "ay, *ithin 21 days fro" the
date of recei%t of this 0rder, fi!e its re%!y, if any, to this 0rder and "ay a!so indicate
*hether it desires to avai! itse!f an o%%ortunity of %ersona! hearing on a date and ti"e to
#e fixed on a s%ecific reHuest "ade in that regard.




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Page 18 of 18

11. :his 0rder is *ithout %re8udice to the right of SEBI to ta9e any other action that "ay #e
initiated against 'I( and its a#ove"entioned 6irectors2 its 6e#enture :rustee, vi$. Shri%
6ari Pada Seth, in accordance *ith !a*.




7;,%#: M/2?,' S. RAMAN
D,&#: S#:&#2?#$ 19, 2014 WHOE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA



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