Interim order in respect of Nirmal Infrahome Corporation Ltd

8/9/2019 Interim order in respect of Nirmal Infrahome Corporation Ltd

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WTM/SR/WRO/ILO/33 /02/2015

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

ORDER

Un!" S!#$%&n' 11 (1), 11(4), 11A *n 11B &+ $! S!#-"%$%!' *n E#*n! B&*" &+ In%*

A#$, 12, %n $! *$$!" &+ N%"* In+"*&! C&"&"*$%&n L%%$! (AN: AAECN1024A)

*n %$' D%"!#$&"', %6., S"% && S%n C&-*"7(AN: AI8TC9055F), S"% H*"%'

S*"*(AN: COUTS0;;H), S"% A

public by irmal group. he news report also referred to issuance of debentures by

irmal Infrahome *orporation +imited ( N%"*/C&*n7 ).

%. he case of I*+ India +imited was analy'ed separately by SEBI. It is noted that SEBI

,ide -rder dated January 1$ %1/ directed I*+ India +imited (02 3*!%#4)

and its 3irectors ,i'.$ Shri 0hool Singh *houdhary$ Shri 5arish Sharma and Shri

bhishe6 S. *hauhan "not to collect any more money from investors including under the existing

schemes; not to launch any new schemes; not to dispose of any of the properties or alienate any of the assets

of the schemes; not to divert any funds raised from public at large which are kept in bank account(s)

and/or in the custody of the company", for the ,iolation of SEBI ct$ 177% read with SEBI

(*ollecti,e In,estment Schemes) 8egulations 1777.

%.1

s a matter of preliminary in9uiry$ SEBI$ ,ide letter dated ugust !$ %1&$ sought the

information from irmal and its 3irectors regarding its fund mobili'ation from public.In

response thereto$ irmal ,ide letter dated ugust %:$ %1& submitted that they are

engaged in the business of real estate$ trading and allied ser,ices. his sub;ect matter

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comes under Entry 1# of list II of Se,enth Schedule of *onstitution of India. It was

stated that they are not engaged in *ollecti,e In,estment Scheme. It was also stated that

there is no complaint from any customer that he has been cheated by the company.

longwith the said letter$ irmal also pro,ided the following documents$ ,i'. <

a)

Incorporation certificate=

b) Business commencement certificate=

c)

>emorandum and rticles of ssociation=

d) ame and address of the 3irectors.

%.% Subse9uently$ SEBI ,ide letter dated o,ember !$ %1& sought details of debentures

issued to general public by irmal such as regulatory appro,als obtained for issuance of

debentures$ list of debenture holders$ funds mobili'ed$ copies of ad,ertisements$application forms$ allotment certificates etc. 5owe,er$ no reply was recei,ed from the

irmal. -n 3ecember &$ %1&$ a reminder was issued to irmal and its 3irectors

see6ing the details of fund mobili'ation.

%.& -n 3ecember 17$ %1&$ SEBI recei,ed some documents related to fund mobili'ation by

irmal from the office of newspaper ,i'<

a) Brochure issued by the company gi,ing details of ,arious schemes for its debenture

issue=

b) 3ebenture *ertificate dated January 1$ %1& issued by the company to an in,estor=

c) *omplaints from in,estors who had alleged that the company? its agents had

wrongly induced them for the in,estment in debentures=

d) Blan6 application form for becoming @ssociateA of the group.

%.

In reply to SEBIs letter dated 3ecember &$ %1&$ irmal ,ide letter dated January 1:$

%1$ reiterated its earlier submissions. irmal furnished documents such as copy of its0 card$ copy of debenture certificate$ sample allotment letter issued to in,estors of

debentures$ certified copies of ,arious schemes for its non


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%./ SEBI ,ide letter dated January %#$ %1 sought the following additional information

from irmal$ ,i'.$ 2

a) 3ate of opening and closing of debenture issue=

b)

ame and address of person(s) to whom debentures were allotted$ with details

including face ,alue of debenture$ number of debenture allotted$ date of allotment$

distincti,e number$ date of charge creation in 8o*$ charge identification number=

c) otal amount mobili'ed by issue of debentures till date=

d)

Chether the persons to whom debentures were allotted are still the holder of these

debentures. 3etails of debentures transferred by allottees=

e) ame " address of debenture trustees. lso$ whether these trustees are registered

with SEBI=f) 3etails as regards the management of irmal 3ebenture rust=

g) 3etails of charge of ` / crores created on the secured debenture issue.

h) 3etails of properties including ,aluation report=

i) 3etails of bro6erage paid in respect of money raised from each alllottee=

;) +ist of all the branches with their address=

6) +ist of all the properties ac9uired by irmal from the funds of in,estors=

l) *ertified copy of audited financial statement from date of incorporation till %1%arch %!$ %1 and are preparing to refund the money.

irmal also sought additional 1/ days to submit the information to SEBI.



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%.! >eanwhile$ SEBI recei,ed a letter from Balangir 0olice (-disha) dated 3ecember &$

%1&$ wherein it was stated @the company carrying on business of receiving cash from the public by

introducing different types of monthly, halfyearly, yearly plans and receiving money through installments

and also in lump sum! o far the company is operating in #alangir area since $%&$ and above referred

case was registered in $%&'! fter registration of the case the company was sealed and stopped its

operation at #alangir .A

%.#

Subse9uently$ irmal ,ide letter dated pril %#$ %1 pro,ided partial information to

SEBI$ as below2<

a) *ertificate of *ommencement of business of the company

b)

he copy of memorandum and articles of association of the company.c) Brochure? boo6let of the schemes.

d) Sample 3ebenture *ertificate.

e) 0lan


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in,estor$ number of debentures applied$ number of debentures allotted and

debenture certificate number allotted$ distincti,e number$ date of allotment$

redemption date ha,e not been pro,ided. 5ence$ irmal was as6ed to pro,ide these

details certified by the management.

(c)

irmal did not pro,ide information about in,estors from their existing branches

mentioned in its brochure of 8a;nandgaon$ Bhanupratappur$ Bolangir.

(d)

Bolangir 0olice informed SEBI that irmal was raising money from large number of

in,estors in Bolangir under the garb of debentures. It is noted that irmal did not

pro,ide details of any in,estors from its branch in Bolangir.

(e) Drom the internet search$ SEBI came across the address and photograph of irmalFs

branch located at *80D 8oad$ eemuch$ >adhya 0radesh (el. o. !%&


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(b) hat the nomenclature doesn+t meet with the scheme/plan mentioned in the brochure! he

nomenclature used in brochure is understandable by general public! e have submitted the printouts

directly from the software itself! hese printouts contain code word used in it and therefore it is not fully

matched with nomenclature used in brochure! -f re.uired we can submit the information again with

matching nomenclature within & month period of this letter .

(c) hat the information sought under paragraph $(b) (information of in,estors) re.uires tedious

work to be done to gather the re.uired information and therefore, we re.uire one month+s time to

furnish it!

(d)

hat the information sought as per paragraph $(c) the company has provided data upto 0 $%&$&'

only! 1ata of the subse.uent year will be submitted soon after the audit .

(e) hat the information sought as per paragraph $(d) the information submitted was for 0 $%&$&'

only and at that time company has limited 22 and therefore information submitted contains 22which were in operation at that time!

(f) #olangir 22 was sealed by local police and hence we are not able to provide its information earlier as

we have suspended its code! e have gathered its information now and we are submitting alongwith

this letter as nnexure -! (Incidentally$ no such information was attached with the letter

of the company.)

(g) hat the brochure of company had mentioned various upcoming branches but all of them were not

operational, they were in planning only! ome new 22 (including 3eemuch) were operational in

$%&'&4 and detailed information of them will be submitted after the audit of the company!

(h) hat the information sought under paragraph $(e)(i) the company has offered its debentures in private

placement basis only and therefore there is no issue was given for this and hence no issue open and end

date exist!

(i) -nformation sought under paragraph $(e) (ii), the persons to whom debentures were allotted are still the

customers of the company and no debentures were transferred by the allottees!

(;)

he rustee was not a registered trustee with 5#-! he debentures were permitted by 6o2 and they

have not mentioned/ suggested that the rustee has to be 5#- registered!(6)

hat the information sought under paragraph $(e) (v,vi,vii,viii, ix), (f) the details of all these points

will be submitted along with audit report after the audit of the company for 0 $%&'&4!



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(l) he company once again assures you that we have stopped collecting amount and we are in process of

paying back our customers the committed amount on the committed time without any delay or fail!!!"

%.1% Subse9uently$ SEBI ,ide letter dated June 17$ %1 informed irmal that their re9uest

for additional time to reply is not acceptable. irmal was also informed that nnexure I

was not found attached with its letter. irmal was gi,en final opportunity to pro,ide the

information? clarifications sought by SEBI ,ide letter dated June &$ %1 alongwith

necessary supporting documents by June &$ %1. 5owe,er$ no reply has been recei,ed

till date.

%.1& >eanwhile$ SEBI came across a receipt dated June &$ %1 issued by irmal to an

in,estor vi7!, >r. Jitendra Gumar towards installment. his is indeed a clear indicationthat irmal continued its fund mobili'ation from public$ contrary to the submissions

made by them in their letter of June 1:$ %1 (0ara %.11(l) abo,e).

& In ,iew of the abo,e$ it is clear that irmal and its 3irectors are not pro,iding complete

documents to SEBI as sought ,ide ,arious letters issued to them. In ,iew of the same$ I

am left with no option but to proceed on the basis of the documents a,ailable with us. I

ha,e carefully perused the material a,ailable on record such as correspondence

exchanged between SEBI and *I+ alongwith the documents contained therein$

submissions made by irmal$ media reports$ information obtained from internet= the

>inistry of *orporate ffairs website i.e. +82 $& Portal+, complaints recei,ed and the

documents furnished by them$ etc. -n an examination of the same$ it is prima facie

obser,ed as under2<

&.1 irmal (*I2 H!1%*%1%0+*&/%) was incorporated on >ay 1#$ %1% ha,ing its

8egistered -ffice at 1st Dloor$ Bhatiya *omplex$ ear Shyam 0etrol 0ump$ 8ing 8oad

o.1$ Gushalpur *haw6$ 8aipur$ *hhatisgarh


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&.% he present 3irectors of irmal are Shri 0hool Singh *houdhary(02 IG*#//D)$

Shri 5arish Sharma(02 *-HS:!!5)$ Shri bhishe6 S. *hauhan (02

-0*&!%0) and Shri 0rabal 0ratap Singh ada, (3I2 17!%/).

&.&

s per the >emorandum and rticles of ssociation of irmal$ the main ob;ect is Kto

carry on business of sale, purchase, ac.uire, deal for development or resale agricultural lands, houses,

shops, warehouse, cold storage, industrial sheds, building!!!"

&.

s per the brochures$ irmal offered in,estment in multiplier redeemable non<

con,ertible fully secured debentures. he in,estors can opt for installment payment

scheme or one


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7. ine year part payment scheme o. 03S7 offering debentures number 1#


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%1. Special doubling scheme$ as per which one time payment scheme for fi,e year o.

S3S1 offering debentures number 1


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&./ he sample of the Scheme / and Scheme &1 mentioned abo,e are tabulated as under for

reference2

S#!!: 5 M-$%%!" R!!!* *"$ *7!n$ S#!! N&. DS5 (&n "%*$! *#!!n$

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T&$* A&-n$

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R!+-n*

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1 1 1$. 1!.L 1$/&7.% % %$. 1!.L %1$!!.

& / /$. 1!.L /%$:7. 1 1$. 1!.L 1$/$!.

/ %/ %/$. 1!.L %$:&$:#.

: / /$. 1!.L /$%:$7&:.! 1 1$$. 1!.L 1$/&$#!%.

# / /$$. 1!.L /%$:7$&:1.7 1 1$$. 1!.L 1$/$$!%1.

1 % %/$$. 1!.L %$:&$:$#&.



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&.: s per the brochure$ irmal has branches in Bhopal$ Biaora (in >adhya 0radesh)$

*handrapur (in >aharastra)$ 8aipur$ 8a;nandgaon$ Baloda Ba'ar$ Bhanupratappur and

3hamtari (in *hhatisgarh)$ gra (in Httar 0radesh)$ Sambalpur and Balangir (-disha).

he 5ead -ffice of irmal is situated at 1%$ 1st floor$ rchana *omplex$ Mone II$ >0

agar$ Bhopal (>adhya 0radesh). he website of irmal is www.nirmalcorporate.com.

&.!

he sample 1ebenture 2ertificate issued by irmal states Kissue of 9%,%%,%%% ecured

6edeemable 3onconvertible 1ebentures of 6s &%%/ each at the aggregate nominal value of 6s

9%,%%,%%,%%%/(6upees fifty crores only) on private placement basis, carrying interest as mentioned

overleaf, under the authority of the resolution passed by the #oard of directors on &:/%9/$%&$,

pursuant to the powers vested in the company and the board of directors as per the provisions of the

2ompanies ct, &9* and the 8emorandum and rticles of ssociation of the 2ompany K. hedebentures are issued in terms of debenture trust deed dated >ay 17$ %1% entered

between irmal and irmal 3ebenture rust. -n re,erse side of sample debenture

certificate$ irmal has gi,en the certificate of registration of mortgage created on >ay 17$

%1% between irmal Infrahome *orporation +td. and irmal 3ebenture rust for ` /

crores.

&.# he plan


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- / %

-/ :& :/1

-: 1%% 1:7!

-! 7 /!-# 1& 1%%#7

-7 1 1

01 %/ ##7&

011 1 &/

01% % 1&&/

01/ 11 :#1&

0


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debenture of ` 1?< each. Dor this debenture trust created and deed has executed "

charge registered with >* ,ide S8. B&&&&. Interest as per deed will be paid half

yearly since next year.A

In the context of the abo,ementioned details of the K


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($) ny reference in this ct or in the articles of a company to invitations to the public to subscribe

for shares or debentures shall, sub>ect as aforesaid, be construed as including a reference to

invitations to subscribe for them extended 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!(') 3o offer or invitation shall be treated as made to the public by virtue of sub section (&) or sub

section ($), as the case may be, if the offer or invitation can properly be regarded, in all the

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 invitation

?

"&%! that nothing contained in this subsection shall apply in a case where the offer or

invitation to subscribe for shares or debentures is made to fifty persons or more@"&%! +-"$!" that nothing contained in the first proviso shall apply to nonbanking financial

companies or public financial institutions specified in section 4 of the 2ompanies ct, &9* (& of

&9*)!A

.%.% Chile examining the scope of Section :! of the *ompanies ct$ 17/:$ the 5onble

Supreme *ourt of India in the ahara 2ase obser,ed that2

"ection *=(&) deals with the offer of shares and debentures to the public and ection *=($) deals

with invitation to the public to subscribe for shares and debentures and how those expressions are to

be understood, when reference is made to the ct or in the articles of a company! he emphasis in

ection *=(&) and ($) is on the Bsection of the publicA! ection *=(') states that no offer or

invitation shall be treated as made to the public, by virtue of subsections (&) and ($), 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 making and

receiving the offer or invitations! ection *=(') is, therefore, an exception to ections *=(&) and ($)!

-f the circumstances mentioned in clauses (&) and (b) of ection *=(') are satisfied, then the

offer/invitation would not be treated as being made to the public!he first proviso to ection *=(') was inserted by the 2ompanies (mendment) ct, $%%% w!e!f!

&'!&$!$%%%, which clearly indicates, nothing contained in ubsection (') of ection *= shall apply

in a case where the offer or invitation to subscribe for shares or debentures is made to fifty persons or

more! ?



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6esultantly, 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 5#- ct, regulations framed thereunder, the 2ompanies ct, pertaining to the

public issue! ?"

.%.& In the instant matter$ for ascertaining whether


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.& I note that <

i. Drom the abo,ementioned$ it will follow that the 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 making the repayment of suchmoney!

(') ll moneys received as aforesaid shall be kept in a separate bank account maintained

with a cheduled #ank & Cuntil 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,



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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 sub section ($)D; and if default is made in complying with this sub section, the

company, and every officer of the company who is in default, shall be punishable with fine

which may extend to five thousand rupees!A

ii. In the ahara 2ase, the 5onble Supreme *ourt of India also examined Section!&

of the *ompanies ct$ 17/:$ wherein it obser,ed that N

"ection ='(&) of the ct casts an obligation on every company intending to offer shares or

debentures to the public to apply on a stock exchange for listing of its securities! uch

companies have no option or choice but to list their securities on a recogni7ed stock exchange,

once they invite subscription from over forty nine investors from the public! -f an unlisted

company expresses its intention, by conduct or otherwise, to offer its securities to the public by

the issue of a prospectus, the legal obligation to make an application on a recogni7ed stockexchange for listing starts! ubsection (&) of ection =' gives indication of what are the

particulars to be stated in such a prospectus! he conse.uences of not applying for the

permission under subsection (&) of ection =' or not granting of permission is clearly

stipulated in subsection (') of ection ='! 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! he scope of the

above mentioned provisions came up for consideration before this 2ourt in 6aymond ynthetics

Etd! F ustified in

directing refund of the amount with interest!"



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iii. 5a,ing regard to the abo,ementioned obser,ations of the 5onble Supreme

*ourt of India$ since the


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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 ha,e gi,en their consent to the company to be so appointed.

.!

Durther$ under Section 11!* of the *ompanies ct$ 17/:$ where a company issuesdebentures$ it shall create a debenture redemption reser,e for the redemption of such

debentures$ to which ade9uate amounts shall be credited$ from out of its profits e,ery

year until such debentures are redeemed.

.# Based on the material a,ailable on record$ I find that irmal has not complied with the

pro,isions of Sections 11!BN* of the *ompanies ct$ 17/: and therefore$ has prima facie

,iolated the aforesaid pro,isions.

.7

In addition to the abo,e$ reference may be made to the 3ebt Securities 8egulations$ which were framed by SEBI in exercise of its powers under Section & of the SEBI ct

and are applicable to the public issue and listing of debt securities. It may be rele,ant to

note that under the aforesaid 8egulations$ +debt securities+ ha,e been defined as +non

convertible debt securities which create or acknowledge indebtedness, and include debenture?+ In this

context$ I find that irmal$ through the


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x,. 8egulation 1! N 2reation of security

x,i. 8egulation 17 N 8andatory Eisting

x,ii. 8egulation %: N put as 3ebenture

rustee for the


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has empowered it to ta6e such measures as it thin6s fit for fulfilling its legislati,e

mandate. Durther$ as per the pro,isions of Section // of the *ompanies ct$ 17/:$

administrati,e authority on the sub;ects relating to public issue of securities is exclusi,ely

with SEBI. Dor this purpose$ SEBI can exercise its ;urisdiction under Sections 11(1)$

11$ 11B and 11() of the SEBI ct read with Section // of the *ompanies ct$ 17/:$

o,er companies who issue ecured 6edeemable 3on 2onvertible 1ebentures to fifty persons or

more$ but do not comply with the applicable pro,isions of the aforesaid *ompanies cts

and the 3ebt Securities 8egulations (as mentioned in paragraphs .1N.1 abo,e). Steps

therefore$ ha,e to be ta6en in the instant matter to ensure only legitimate fund raising

acti,ities are carried on by irmal and no in,estors are defrauded. In light of the same$ I

find there is no other alternati,e but to ta6e recourse through an interim action against

irmal and its 3irectors alongwith the 3ebenture rustee$ ,i'.$ hri Jeetendra 6a>put, forpre,enting that company from further carrying on with its fund mobilising acti,ity under

the


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iii. *+ and its abo,ementioned 3irectors are restrained from accessing the

securities mar6et and further prohibited from buying$ selling or otherwise dealing

in the securities mar6et$ either directly or indirectly$ till further directions=

i,.

irmal shall pro,ide a full in,entory of all its assets and properties=

,.

irmal and its 3irectors shall pro,ide full in,entory of all their assets and

properties=

,i. irmal and its 3irectors shall not dispose of any of the properties or alienate or

encumber any of the assets owned?ac9uired by that company through the


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7 he prima facie obser,ations contained in this -rder are made on the basis of the material

a,ailable on record. In this context$ irmal and its abo,ementioned 3irectors may$

within %1 days from the date of receipt of this -rder$ file their reply$ if any$ to this -rder

and may also indicate whether they desire to a,ail themsel,es an opportunity of personal

hearing on a date and time to be fixed on a specific re9uest made in that regard.

7.1

Similarly$ the 3ebenture rustee$ ,i'.$ hri Jeetendra 6a>put may$ within %1 days from the

date of receipt of this -rder$ file his reply$ if any$ to this -rder and may also indicate

whether he desires to a,ail himself an opportunity of personal hearing on a date and time

to be fixed on a specific re9uest made in that regard.

1

his -rder is without pre;udice to the right of SEBI to ta6e any other action that may beinitiated against irmal and its abo,ementioned 3irectors and its 3ebenture rustee

,i'.$ hri Jeetendra 6a>put $ in accordance with law.

*#!: M-

Documents

Interim order in respect of Nirmal Infrahome Corporation Ltd