Order in the matter of Tribhuvan Agro Project Limited

8/17/2019 Order in the matter of Tribhuvan Agro Project Limited

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WTM/PS/13/ERO/APR/2016

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA

CORAM: PRASHANT SARAN, WHOLE TIME MEMBER

ORDER

Under Sections 11, 11(4), 11A and 11B of the Securities and Exchange Board of India Act, 1992

In the matter of Tribhuvan Agro Project Limited

In respect of:

1. Tribhuvan Agro Project Limited [PAN: AACCT6018N],2. Mr. Mohammed Sunwas Ali [PAN: AEOPA2984D],

3.

Mr. Shaikh Mokhlesur Rahaman [PAN: AXVPS8485R],4. Mr. Amal Sen [PAN: BNGPS8347N],5. Mr. Aloke Das [PAN: AINPD1762F],6. Mr. Sidhartha Sardar [PAN: BNOPS7521Q],7. Mr. Pradip Sardar [PAN: BGBPS1226C],8. Mr. Ranjit Gope [PAN: AILPG0108L],9. Mr. Mihir Baisnob [PAN: ANRPB4794Q] and10. Tribhuvan Agro Debenture Trust (represented by its Trustees, viz. Mr.

Sukumar Mondal, Mr. Sanjay Nayak, Mr. Sujit Kumar Goswami, Mr. Rajib Dasand Mr. Mohammed Sunwas Ali).

________________________________________________________________________

Date of Hearing: September 03, 2015

Appearances: Mr. Sidhartha Sardar appeared in person

For SEBI: Mr. Prashanta Mahapatra, General Manager, Mr. T. Vinay Rajneesh, Assistant General Manager, Mr. N. Murugan, Assistant GeneralManager and Ms. Nikki Agarwal, Assistant Manager.

Date of Hearing: November 23, 2015

Appearances: None appeared

_______________________________________________________________________

1. Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’ ), vide an ex-

parte interim Order dated February 24, 2015 (hereinafter referred to as ‘the interim order’ )

had observed that the company, Tribhuvan Agro Project Limited (hereinafter


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referred to as ‘ Tribhuvan’ or ‘the Company ’ ) is prima facie engaged in fund mobilising

activity from the public, through the Offer of Redeemable Preference Shares

(hereinafter referred to as ‘RPS’ ) and Secured Redeemable Non-Convertible

Debentures ( ‘NCD’ ) had allegedly violated the provisions of Sections 56, 60 (read with

Section 2(36)), 67, 73 117B and 117C of the Companies Act, 1956; the SEBI

(Disclosure and Investor Protection) Guidelines 2003 (hereinafter referred to as 'DIP

Guidelines') read with the SEBI (Issue of Capital & Disclosure Requirements)

Regulations, 2009 (hereinafter referred to as 'ICDR Regulations') and the relevant

provisions of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008

(hereinafter referred to as ‘the ILDS Regulations’ ).

The interim order also alleged that the debenture trustee, Tribhuvan Agro Debenture

Trust (represented by its Trustees, viz. Mr. Sukumar Mondal, Mr. Sanjay Nayak, Mr.

Sujit Kumar Goswami, Mr. Rajib Das and Mr. Mohammed Sunwas Ali) had acted as

an unregistered debenture trustee in violation of the provisions of Section 12(1) of the

SEBI Act, 1992 (hereinafter referred to as ‘SEBI Act’ ) and the SEBI (Debenture

Trustees) Regulations, 1993 (hereinafter referred to as ‘DT Regulations’).

2. In order to protect the interest of investors and to ensure that only legitimate fund

raising activities are carried on by the Company and its directors, SEBI had issued the

following directions:

“… … 8. In view of the foregoing, I, in exercise of the powers conferred upon me under Sections 11,11(4), 11A and 11B of the SEBI Act, hereby issue the following directions –

i. TAPL (PAN: AACCT6018N) shall not mobilize funds from investors through the Offerof Redeemable Preference Shares and Offer of NCDs or through the issuance of equity sharesor any other securities, to the public and/or invite subscription, in any manner whatsoever,either directly or indirectly till further directions;

ii. TAPL and its present Directors, viz. Shri Mohammed Sunwas Ali (PAN: AEOPA2984D; DIN: 00539576), Shri Shaikh Mokhlesur Rahaman (DIN:

00539589), Shri Amal Sen (PAN: BNGPS8347N; DIN: 02126612), Shri AlokeDas (PAN: AINPD1762F; DIN: 02875515), Shri Sidhartha Sardar (PAN:BNOPS7521Q; DIN: 03396975), and its past Directors, viz. Shri Pradip Sardar(PAN: BGBPS1226C; DIN: 03431576), Shri Ranjit Gope (PAN: AILPG0108L;DIN: 03397859) and Shri Mihir Baisnob (PAN: ANRPB4794Q; DIN:


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03382493), are prohibited from issuing prospectus or any offer document or issueadvertisement for soliciting money from the public for the issue of securities, in any mannerwhatsoever, either directly or indirectly, till further orders;

iii. TAPL and its abovementioned past and present Directors, are restrained from accessing the

securities market and further prohibited from buying, selling or otherwise dealing in the

securities market, either directly or indirectly, till further directions;iv.

TAPL shall provide a full inventory of all its assets and properties;v. TAPL's abovementioned past and present Directors shall provide a full inventory of all their

assets and properties;vi. TAPL and its abovementioned present Directors shall not dispose of any of the properties or

alienate or encumber any of the assets owned/acquired by that company through the Offer ofRedeemable Preference Shares and Offer of NCDs, without prior permission from SEBI;

vii. TAPL and its abovementioned present Directors shall not divert any funds raised from public at large through the Offer of Redeemable Preference Shares and Offer of NCDs, whichare kept in bank account(s) and/or in the custody of TAPL;

viii. The Debenture Trustee, viz. Tribhuvan Agro Debenture Trust (represented by its Trustees,viz. Shri Sukumar Mondal, Shri Sanjay Nayak, Shri Sujit Kumar Goswami, Shri Rajib

Das and Shri Mohammed Sunwas Ali), is prohibited from continuing with its assignmentas debenture trustee in respect of the Offer of NCDs of TAPL and also from taking up anynew assignment or involvement in any new issue of debentures, etc. in a similar capacity, fromthe date of this order till further directions.

9. The above directions shall take effect immediately and shall be in force until further orders.10. … 11.

This Order is without prejudice to the right of SEBI to take any other action that maybe initiated against TAPL and its abovementioned Directors and Promoters; itsDebenture Trustee, viz. Tribhuvan Agro Debenture Trust (represented by its Trustees,viz. Shri Sukumar Mondal, Shri Sanjay Nayak, Shri Sujit Kumar Goswami, Shri

Rajib Das and Shri Mohammed Sunwas Ali), in accordance with law.”

3. The interim order observed that the prima facie observations made therein were on the

basis of the correspondences exchanged between SEBI and the Company, complaint

received by SEBI and the information/ documents obtained from the ‘MCA-21’

portal. The interim order advised the Company, its directors and the debenture trustee

to file their replies within 21 days from the date of its receipt and also seek an

opportunity of personal hearing.

4.

The interim order was forwarded to the Company and its directors namely Mr.

Mohammed Sunwas Ali, Mr. Shaikh Mokhlesur Rahaman, Mr. Amal Sen, Mr. Aloke

Das, Mr. Sidhartha Sardar, Mr. Pradip Sardar, Mr. Ranjit Gope, Mr. Mihir Baisnob and


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the debenture trustee namely Tribhuvan Agro Debenture Trust vide letters dated

February 25, 2015. The letters issued to Mr. Shaikh Mokhlesur Rahaman, Mr. Amal

Sen and Mr. Aloke Das had returned undelivered. The letter of Mr. Aloke Das had

returned undelivered with the remark ‘deceased’, however, no supporting document

was provided. Mr. Ranjit Gope and the Company vide letters dated March 12, 2015

and March 16, 2015 respectively, replied to the interim order.

5. Thereafter, SEBI proceeded further and granted an opportunity of personal hearing

to the Company, its directors and the debenture trustee on September 03, 2015. The

scheduled date was communicated vide SEBI letter dated August 07, 2015. The date

of hearing was also communicated vide the public notice in the newspapers namely

‘ Ananda Bazar Patrika ’ and ‘Times of India ’ both dated September 03, 2015. The

Company and its directors were advised that in case they fail to appear for the personal

hearing before SEBI on the aforesaid date, then the matter would be proceeded ex-

parte on the basis of the material available on record.

6. On the date fixed for personal hearing i.e. September 03, 2015, Mr. Sidhartha Sardar

appeared and made submissions. He also requested liberty for filing written

submissions. Considering the request, he was granted 15 days’ time was granted to him

for making written submissions. The other directors of the Company and thedebenture trustee remained absent.

In the meantime, Mr. Mohammed Sunwas Ali, Mr. Shaikh Mokhlesur Rahaman and

the Company vide fax dated August 25, 2015, requested for one month time. Similarly,

the Company also vide letter dated September 03, 2015, requested for one month time.

Considering the request, another opportunity of personal hearing was granted on

November 23, 2015.

Mr. Ranjit Gope vide his letter dated September 16, 2015, submitted that as he is

currently not stationed in Kolkata (due to his job) and he saw the hearing letter only


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on September 16, 2015. Vide the said letter, he also requested that his submissions be

taken on record.

On November 23, 2015, again no one had turned up for the personal hearing

Considering the reasonable opportunities already afforded for making submissions in

the matter, I am inclined to proceed further with the matter.

7. The submissions in brief are as under:

a.

The Company vide its letter dated March 16, 2015, submitted as under:

- The provisions of Section 67(1) and 67(3) of the Companies Act, 1956 have not

been violated as, it had never offered RPSs and NCDs to more than 50 persons in

a single day.

-

The RPSs were issued on private placement basis after complying with the

provisions of Section 81(1A) of the Companies Act, 1956.

- The Company had before receipt of the interim order had initiated sale of its land

located at Ganeshpur, Suri and Jaynagar, 24 Pgs in West Bengal from which the

Company expects to get an amount of ₹20 lacs to ₹25 lacs, which is at a final stage.

- The Company is repaying its investors and has already refunded maximum part of

the funds so mobilized.

b.

Mr. Ranjit Gope vide his letter dated March 12, 2015 and September 16, 2015,

submitted as under:

- He was inducted as additional director of the Company on February 24, 2011 and

had resigned from the post on October 10, 2012 without attending any meeting of

the Board of Directors. He was not involved in day to day affairs of the Company,

in any manner.

- The Company had started issuing RPSs in the year 2007-08 and had stopped such

issuance in the year 2010-11. The Company had also issued NCDs in the year2007-08 and 2008-09. Such issuances are prior to h is appointment as ‘additional

director’.


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- He was not authorised to sign any instrument including cheques on behalf of the

Company at any time as such he is not responsible for any such mobilization of

funds of the Company during his tenure as director.

8.

I have considered the interim order and the material available on record. The following

are the observations from the interim order:

“… i. TAPL was incorporated on July 29, 2006, with the ROC, Kolkata with CIN No. as

U02005WB2006PLC110897. Its Registered Office is at Room No. 3, Ground Floor,

Dudhnai, P.O. – Piyali Town, 24 PGS (S), Baruipur, West Bengal – 743387, India.

ii.

The present Directors in TAPL are Shri Mohammed Sunwas Ali, Shri Shaikh Mokhlesur

Rahaman, Shri Amal Sen, Shri Aloke Das and Shri Sidhartha Sardar.

iii. Shri Pradip Sardar, Shri Ranjit Gope and Shri Mihir Baisnob, who were earlier Directors

in TAPL, have since resigned.

iv. Form 2 (Form for Return of Allotment – filed by TAPL with the ROC in accordance with

the provisions of the Companies Act, 1956) for the Financial Years 2007 – 08, 2008 – 09,

2009 – 10 and 2010 – 11, reveals that TAPL issued "Redeemable Preference Shares"

(" Offer of Redeemable Preference Shares ") to investors, details of which are

provided below –

Type ofSecurity

Year No. of persons to whom preference shares were allotted

Total Amount

( ₹ in Crores)

RedeemablePreference

Shares

2007 – 08 807 0.702008 – 09 2474 2.29

2009 – 10 4553 2.65

2010 – 11 3048 3.61TOTAL 10882 9.25

v. From the material available on record, it is noted that TAPL also issued Secured

Redeemable Non – Convertible Debentures (" Offer of NCDs "), details of which are

provided below –

Year Type of Security Amount Raised

( ₹ in Crores)

Number of Allottees

2007 – 08 Secured Redeemable

Debentures

0.25 20

2008 – 09 0.24 50Total 0.50 70

…”


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9. Having considered the above, it is now necessary to determine whether the Company

had made a public issue as alleged in the interim order and if so, whether the Company

had complied with the public issue norms. The liability of the directors of the

Company also needs to be determined as they have also been alleged in the interim

order.

10. In order to ascertain whether an issue of securities is a ‘public issue’ or done on ‘private

placement’, it is necessary to make a reference to Section 67(3) of the Companies Act,

1956, which reads as under:

“67. (1) Any reference in this Act or in the articles of a company to offering shares ordebentures to the public shall, subject to any provision to the contrary contained in this Actand subject also to the provisions of sub-sections (3) and (4), be construed as including areference to offering them to any section of the public, whether selected as members or debenture

holders of the company concerned or as clients of the person issuing the prospectus or in anyother manner.(2) ...(3) No offer or invitation shall be treated as made to the public by virtue of sub- section (1)or sub- section (2), as the case may be, if the offer or invitation can properly be regarded, inall the circumstances-(a) as not being calculated to result, directly or indirectly, in the shares or debentures becomingavailable for subscription or purchase by persons other than those receiving the offer orinvitation; or(b) otherwise as being a domestic concern of the persons making and receiving the offer orinvitation …

Provided that nothing contained in this sub-section shall apply in a case where the offer orinvitation to subscribe for shares or debentures is made to fifty persons or more:Provided further that nothing contained in the first proviso shall apply to non-banking financial companies or public financial institutions specified in section 4A of the Companies Act, 1956 (1 of 1956).”

11. In terms of Section 67(3), as amended by the Companies (Amendment) Act, 2000, with

effect from December 13, 2000, no offer or invitation shall be treated as made to the public

by virtue of sub-sections (1) or (2), as the case may be, if the offer or invitation can

properly be regarded, in all circumstances - (a) as not being calculated to result, directly

or indirectly, in the shares or debentures becoming available for subscription or

purchase by persons other than those receiving the offer or invitation; or (b) otherwise

as being a domestic concern of the persons making and receiving the offer or


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invitation. In terms of the first proviso to the aforesaid section, the provisions of Section

67(3) shall not apply in a case where the offer or invitation to subscribe for shares

or debentures is made to fifty persons or more. Therefore, the number of

subscribers becomes relevant to conclude whether an issue of shares are for public or

on a private placement basis. In view of the same, if an offer of securities are made to

fifty or more persons, it would be deemed to be a public issue.

12. I now place my reliance on the order of Hon'ble Supreme Court of India in the matter

of Sahara India Real Estate Corporation Limited & Others Vs. SEBI and another (Civil

Appeal Nos. 9813 and 9833 of 2011; decided on August 31, 2012) ( ‘the Sahara case’ )

had inter alia held that -

“ Section 67(1) deals with the offer of shares and debentures to the public and Section 67(2)deals with invitation to the public to subscribe for shares and debentures and how thoseexpressions are to be understood, when reference is made to the Act or in the articles of acompany. The emphasis in Section 67(1) and (2) is on the “section of the public”. Section67(3) states that no offer or invitation shall be treated as made to the public, by virtue ofsubsections (1) and (2), that is to any section of the public, if the offer or invitation is notbeing calculated to result, directly or indirectly, in the shares or debentures becoming available for subscription or purchase by persons other than those receiving the offer or invitation orotherwise as being a domestic concern of the persons making and receiving the offer orinvitations. Section 67(3) is, therefore, an exception to Sections 67(1) and (2). If thecircumstances mentioned in clauses (1) and (b) of Section 67(3) are satisfied, then theoffer/invitation would not be treated as being made to the public.The first proviso to Section 67(3) was inserted by the Companies (Amendment) Act, 2000w.e.f. 13.12.2000, which clearly indicates, nothing contained in Sub-section (3) of Section67 shall apply in a case where the offer or invitation to subscribe for shares or debentures ismade to fifty persons or more. … Resultantly, if an offer of securities is made to fifty or more persons, it would be deemed to bea public issue, even if it is of domestic concern or proved that the shares or debentures are notavailable for subscription or purchase by persons other than those received the offer orinvitation. … I may, therefore, indicate, subject to what has been stated above, in India that any share ordebenture issue beyond forty nine persons, would be a public issue attracting all the relevant provisions of the SEBI Act, regulations framed thereunder, the Companies Act, pertaining

to the public issue. …”

13. In the present case, I note that the Company had offered and allotted RPSs to 10,882

persons during the financial years 2007-08, 2008-09, 2009-10 and 2010-11 and had


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raised ₹9.25 crore. The Company had also issued NCDs during the financial years

2007-08 and 2008-09 and had raised ₹50 lakh from 70 investors.

I have perused the relevant ‘Form 2’ (return of allotment) for the respective allotments

of RPS and note that the list of allottees have not been submitted by the Company.

The details of the allotment as per ‘Form 2’ are as under:

Year Date of allotment No. of personsto whom issued

Total Amount

raised (₹)

2007-08 04/03/2008 807 70,00,000.00 Total 807 70,00,000.00

2008-09 30/06/2008 712 70,00,000.0029/09/2008 681 79,50,000.00

07/02/2009 1,081 80,00,450.00

Total 2,474 2,29,50,450.00

2009-10 10/06/2009 1,296 82,71,850.00

30/08/2009 802 43,08,070.0030/09/2009 979 64,29,820.00

31/10/2009 1,476 75,86,450.00 Total 4,553 2,65,96,190.00

2010-11 30/04/2010 1,692 1,57,87,780.0030/06/2010 1,356 2,02,65,500.00

Total 3,048 3,60,53,280.00

Grand Total 10,882 9,25,99,920.00

The Company in its submissions dated March 16, 2015, has stated that it had never

offered RPSs and NCDs to more than 50 persons in a single day and the RPSs were

issued on private placement basis. In this regard, I note that the total number of

persons to whom RPSs were issued by the Company are 10,882, i.e. clearly more than

49 persons. I note that the Company has not submitted the details to show that all the

allotments were out of different offers. In the absence of the same, it can be presumed

that all these tranches of allotment of RPSs were out of a single offer to more than 49

persons. Further, the Company has failed to adduce any evidence to show that the

issue was a domestic concern of the members of the Company. Thus on the face of it,the issue made by the Company cannot be considered as a private placement.


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Likewise, from the list of NCD holders as submitted by the Company, it is noted that

NCDs were issued to 50 persons in the financial year 2008-09 and to a total of 70

investors during the financial years 2007-08 and 2008-09. .

From the discussion above, it can be said that the Company had clearly allotted RPSs

and NCDs to more than 49 persons, thereby making a public issue of RPSs and NCDs

(in terms of the first proviso to Section 67(3) of the Companies Act, 1956) during the

period alleged in the interim order.

14. By making a public issue of RPSs and NCDs, as discussed above, the Company was

mandated to comply with all the legal provisions that govern and regulate public issue

of such securities, including the Companies Act, 1956 and the SEBI Act and

regulations. In this context, I refer and rely on the below mentioned observation made

by the Hon'ble Supreme Court of India in the matter of Sahara case :

“ ... ... that any share or debenture issue beyond forty nine persons, would be a public issueattracting all the relevant provisions of the SEBI Act, regulations framed thereunder, theCompanies Act, pertaining to the public issue . …”

15.

In view of the above observations, by virtue of Section 55A(a) and (b), SEBI has

jurisdiction and would govern the issue of RPS and NCD as the same was clearly made

to more than 49 persons. In terms of Section 55A of the Companies Act, 1956, SEBI

shall administer various provisions (as mentioned therein) of the said Act with respect

to issue and transfer of securities by listed companies, companies that intend to list

and also those companies that are required to list its securities while making offer and

issue of securities to the public. While examining the scope of Section 55A of the

Companies Act, 1956, the Hon'ble Supreme Court of India in Sahara Case, had

observed that:

"We, therefore, hold that, so far as the provisions enumerated in the opening portion of

Section 55A of the Companies Act, so far as they relate to issue and transfer of securitiesand non-payment of dividend is concerned, SEBI has the power to administer in the caseof listed public companies and in the case of those public companies which intend to gettheir securities listed on a recognized stock exchange in India ."


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" SEBI can exercise its jurisdiction under Sections 11(1), 11(4), 11A(1)(b) and 11Bof SEBI Act and Regulation 107 of ICDR 2009 over public companies who have issuedshares or debentures to fifty or more, but not complied with the provisions of Section 73(1)by not listing its securities on a recognized stock exchange ".

Under Section 11A of the SEBI Act, SEBI is also empowered to regulate, byregulations/ general or special orders, the matters pertaining to issue of capital, transfer

of securities and matters related thereto. Accordingly, the Company, having made a

public offer and issue of securities, as observed above, is under the jurisdiction of

SEBI.

16. As alleged in the interim order, the Company was mandated to comply with the

provisions of Sections 56, 60, 73, 117B and 117C of the Companies Act, 1956 and the

provisions of the ILDS Regulations is required to be complied by the Company in

respect of its offer and issue of RPSs and NCDs. In terms of Section 56(1) of the

Companies Act, 1956, every prospectus issued by or on behalf of a company, shall

state the matters specified in Part I and set out the reports specified in Part II of

Schedule II of that Act. Further, as per Section 56(3) of the Companies Act, 1956, no

one shall issue any form of application for shares in a company, unless the form is

accompanied by abridged prospectus, contain disclosures as specified. Section 2(36)

of the Companies Act read with Section 60 thereof, mandates a company to register

its ‘prospectus’ with the RoC, before making a public offer/ issuing the ‘prospectus’.

17. The interim order further alleged that the Company had failed to comply with Section

73 of the Companies Act, 1956, in respect of its issuance of RPSs and NCDs. By

issuing RPSs and NCDs to more than 49 persons, the Company had to compulsorily

list such securities in compliance with Section 73(1) of the Companies Act, 1956. As

per Section 73(1) of the Companies Act, 1956, a company is required to make an

application to one or more recognized stock exchanges for permission for the shares

or debentures to be offered to be dealt with in the stock exchange. There is no material

on record to say that the Company has filed an application with a recognised stock

exchange to enable the RPSs and NCDs to be dealt with in such exchange. Therefore,

the Company has failed to comply with this requirement.


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18. Section 73(2) of the Companies Act, 1956 states that "Where the permission has not been

applied under subsection (1) or such permission having been applied for, has not been granted as

aforesaid, the company shall forthwith repay without interest all moneys received from applicants in

pursuance of the prospectus, and, if any such money is not repaid within eight days after the company

becomes liable to repay it, the company and every director of the company who is an officer in default

shall, on and from the expiry of the eighth day, be jointly and severally liable to repay that money with

interest at such rate, not less than four per cent and not more than fifteen per cent, as may be prescribed,

having regard to the length of the period of delay in making the repayment of such money" . As the

Company failed to make an application for listing such RPSs and NCDs, the Company

had to forthwith repay such money collected from investors. If such repayments are

not made within 8 days after the Company becomes liable to repay, the Company and

every director of the Company, who is an officer in default, is jointly and severally

liable to repay with interest at such rate. There is no material on record to say that the

Company has complied with the provisions of Section 73(3).

19.

The Company was also mandated to comply with the provisions of DIP Guidelines,

while issuing RPS. The interim order has stated that the Company failed to comply with

the following provisions of the DIP Guidelines as regards its Offer of RPSs during

the financial years 2007-08, 2008-09 and 2009-10:

“4.7 … a)

Clause 2.1.1. – (Filing of offer document)b) Clause 2.1.4 – (Application for listing)c)

Clause 2.1.5 – (Issue of securities in dematerialized form),d)

Clause 2.8 – (Means of finance),e)

Clause 4.1 – (Promoters contribution in a public issue by unlisted companies), f)

Clause 4.11 – (Lock-in of minimum specified promoters contribution in public issues), g)

Clause 4.14 – (Lock-In of pre-issue share capital of an unlisted company)h)

Clause 5.3.1 – (Memorandum of understanding),i)

Clause 5.3.3 – (Due Diligence Certificate)

j)

Clause 5.3.5 – (Undertaking),k) Clause 5.3.6 – (List Of Promoters Group And Other Details),l) Clause 5.4 – (Appointment of intermediaries)m) Clause 5.6 – (Offer document to be made public)n) Clause 5.6A – (Pre-issue Advertisement)o)

Clause 5.7 – (Despatch of issue material)


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p) Clause 5.8 – (No complaints certificate)q) Clause 5.9 – (Mandatory collection centers including Clause 5.9.1 (Minimum number of

collection centres)r) Clause 5.10 – (Authorised Collection Agents)s) Clause 5.12.1 – (Appointment of compliance officer)

t)

Clause 5.13 – (Abridged prospectus)u)

Clause 6.0 – (Contents of offer documents)v) Clause 8.3 – (Rule 19(2)(b) of SC(R) Rules, 1957)w) Clause 8.8.1 – (Opening & closing date of subscription of securities)x) Clause 9 – (Guidelines on advertisements by Issuer Company) y) Clause 10.1 – (Requirement of credit rating)z)

Clause 10.5 – (Redemption)

4.8 As per Regulation 111(1) of the ICDR Regulations, the DIP Guidelines, “ shall standrescinded ” . However, Regulation 111(2) of the ICDR Regulations, provides that:

“(2) Notwithstanding the repeal under sub-section (1) of the repealed enactments, —

(a) anything done or any action taken or purported to have been done or taken including observationmade in respect of any draft offer document, any enquiry or investigation commenced or show causenotice issued in respect of the said Guidelines shall be deemed to have been done or taken under thecorresponding provisions of these regulations;(b) any offer document, whether draft or otherwise, filed or application made to the Board under thesaid Guidelines and pending before it shall be deemed to have been filed or made under thecorresponding provisions of these regulations.” …”

20. Section 117B of the Companies Act, 1956, prescribes that no company shall issue a

prospectus or a letter of offer to the public for subscription of its debentures, unless

it has, before such issue, appointed one or more debenture trustees for such

debentures and the company has, on the face of the prospectus or the letter of offer,

stated that the ‘debenture trustee’ or trustees have given their consent to the company

to be so appointed. The Company has admittedly not filed any prospectus. Therefore,

the said provision has not been fully complied with. Further, appointment of

‘debenture trustee’ shall be in terms of all applicable law. Further, Section 117C of the

Companies Act, 1956, stipulates that, where a company issues debentures, it shall

create a debenture redemption reserve for the redemption of such debentures, to

which adequate amounts shall be credited, from out of its profits every year until such

debentures are redeemed. There is no record to suggest that the said provision was

complied with by the Company.


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21. As the NCDs are ‘debt securities’ in terms of the ILDS Regulations, the Company was

also mandated to comply with the provisions of the ILDS Regulations in respect of its

public issue of NCDs. However, the Company has failed to comply with the following

provisions of the ILDS Regulations.

i. Regulation 4(2)(a) – Application for listing of debt securities

ii. Regulation 4(2)(b) – In-principle approval for listing of debt securities

iii. Regulation 4(2)(c) – Credit rating has been obtained

iv. Regulation 4(2)(d) – Dematerialization of debt securities

v. Regulation 4(4) – Appointment of Debenture Trustee

vi. Regulation 5(2)(b) – Disclosure requirements in the Offer Document

vii. Regulation 6 – Filing of draft Offer Document

viii.

Regulation 7 – Mode of disclosure of Offer Document ix. Regulation 8 – Advertisements for Public Issues

x. Regulation 9 – Abridged Prospectus and application forms

xi. Regulation 12 – Minimum subscription

xii. Regulation 14 – Prohibition of mis-statements in the Offer Document

xiii. Regulation 15 – Trust Deed

xiv. Regulation 16 – Debenture Redemption Reserve

xv. Regulation 17 – Creation of security

xvi.

Regulation 19 – Mandatory Listing xvii. Regulation 26 – Obligations of the Issuer, etc.

22. From the foregoing, it is concluded that the Company has failed to comply with the

provisions of Sections 56, 60, 2(36), 73, 117B and 117C of the Companies Act, 1956

and the respective provisions of the DIP Guidelines read with ICDR Regulations and

the ILDS Regulations, in respect of its offer and issuance of RPSs and NCDs and is

liable for suitable action under the Companies Act, 1956, the SEBI Act and the ILDS

Regulations. The Company shall therefore be liable to make refunds as per the

mandate under Section 73(2) of the Companies Act, 1956 and also for regulatory

action for committing the above violations.


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23. The interim order has noted that the Company had created a charge and had appointed

Tribhuvan Agro Debenture Trust (represented by its Trustees, viz. Mr. Sukumar

Mondal, Mr. Sanjay Nayak, Mr. Sujit Kumar Goswami, Mr. Rajib Das and Mr.

Mohammed Sunwas Ali) as Debenture Trustee for its offer of NCDs. I note that

Tribhuvan Agro Debenture Trust had acted without registration from SEBI as

required under Section 12(1) of the SEBI Act. In this regard, I note that the said trust

is not registered with SEBI to perform the functions of a ‘debenture trustee’ in the

capital market. Further, the following conditions under Regulation 7 of the DT

Regulations are also not satisfied by the said trust:

"no person should act as a debenture trustee unless he is either –

i. a scheduled bank carrying on commercial activity; or

ii.

a public financial institution within the meaning of section 4A of the Companies Act,1956; oriii. an insurance company; oriv. body corporate."

From the above, it is seen that Tribhuvan Agro Debenture Trust does not satisfy the

eligibility conditions stipulated under Regulation 7 of the DT Regulations. The

debenture trustee has not disputed the allegations.

I note that a person who accepts a position which carries certain responsibilities,

compliances and eligibility criteria under law, then the same ought to have been

satisfied under full compliance of applicable law. In the present case, Tribhuvan Agro

Debenture Trust is not registered as ‘debenture trustees’ with SEBI as required under

Section 12(1) of the SEBI Act. Further, it does not satisfy the conditions under

Regulation 7 of the DT Regulations, which prescribes that only a scheduled bank

carrying on commercial activity or a public financial institution within the meaning of

Section 4A of the Companies Act, 1956 or an insurance company or a body corporate

should act as a debenture trustee. In view of the same, I find Tribhuvan Agro

Debenture Trust (represented by its Trustees, viz. Mr. Sukumar Mondal, Mr. Sanjay

Nayak, Mr. Sujit Kumar Goswami, Mr. Rajib Das and Mr. Mohammed Sunwas Ali)

guilty of violating the provisions of Section 12(1) of the SEBI Act and Regulation 7 of


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the DT Regulations. In view of these observations, it can be said that the provisions

of Section 117B of the Companies Act, 1956, have not been completely complied with.

24. Liability of Directors: The interim order was issued against the directors of the

Company namely Mr. Mohammed Sunwas Ali, Mr. Shaikh Mokhlesur Rahaman, Mr. Amal Sen, Mr. Aloke Das, Mr. Sidhartha Sardar, Mr. Pradip Sardar, Mr. Ranjit Gope

and Mr. Mihir Baisnob.

a. The details of their appointment and resignations are as under:

Name Date of Appointment Date of Cessation

Mr. Mohammed Sunwas Ali 21/11/2006 Continuing as directorMr. Shaikh Mokhlesur Rahaman 21/11/2006 Continuing as directorMr. Amal Sen 29/09/2008 Continuing as director

Mr. Aloke Das 04/01/2010 Continuing as directorMr. Sidhartha Sardar 24/02/2011 Continuing as directorMr. Pradip Sardar 24/02/2011 20/02/2013Mr. Ranjit Gope 24/02/2011 18/03/2013Mr. Mihir Baisnob 24/02/2011 05/10/2012

b.

As per Section 291 of the Companies Act, 1956, the board of directors of a company

shall be entitled to exercise all such powers and do all such acts and things as the

company is authorized to exercise and do. Therefore, the board of directors being

responsible for the conduct of the business of a company will be held liable for anynon-compliance of law and such liability is also on the individual directors. In this

regard, refer to the order of Hon’ble High Court of Madras in the matter of Madhavan

Nambiar Vs. Registrar of Companies [2002 108 Comp Cas 1 Mad] wherein it was observed

that “13. … A director either full time or part time, either elected or appointed or nominated is

bound to discharge the functions of a director and should have taken all the diligent steps and taken

care in the affairs of the company.

14. In the matter of proceedings for negligence, default, breach of duty, misfeasance or breach of trust

or violation of the statutory provisions of the Act and the rules, there is no difference or distinction

between the whole-time or part time director or nominated or co-opted director and the liability for such


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acts or commission or omission is equal. So also the treatment for such violations as stipulated in the

Companies Act, 1956.”.

I note that the position of a ‘director’ in a public company/ listed company comes

along with responsibilities and compliances under law, which have to be fulfilled by

such director or face the consequences for any violation or default thereof.

c. I note that the Company had offered and issued RPSs during the financial years 2007-

08, 2008-09, 2009-10 and 2010-11. Further, it had also offered and issued NCDs

during the financial years 2007-08 and 2008-09. Section 56 of the Companies Act, 1956

imposes the liability for the compliance, on the company, every director, and persons

responsible for the issuance of the prospectus. The liability of the Company to repay

under Section 73(2) of the Companies Act, 1956 read with Section 27 of the SEBI Act,

is continuing and the same continues till all the repayments are made to the investors/

public. Therefore, the directors who were present during the period when the

Company had made the offer and allotted RPSs and NCDs shall be liable for violation

of Sections 56, 60 and 73 of the Companies Act, 1956 including the default in making

refunds as mandated therein. As the liability to make repayments under Section 73(2)

of the Companies Act read with Section 27 of the SEBI Act is a continuing liability,

the persons who joined the Company’s Board pursuant to the offer and allotment of

RPS and NCD shall also be liable if the Company and the concerned directors have

failed to make refunds, as mandated under the discussed provisions of law.

d. From the table above, it is noted that Mr. Mohammed Sunwas Ali, Mr. Shaikh

Mokhlesur Rahaman, Mr. Amal Sen and Mr. Aloke Das were the directors of the

Company at the time of impugned issues and allotment of RPSs and NCDs and were

responsible for the affairs of the Company at the relevant point of time. Mr.

Mohammed Sunwas Ali, Mr. Shaikh Mokhlesur Rahaman, Mr. Amal Sen and Mr. Aloke Das continue to be the directors of the Company.


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None of these has replied to the interim order. Taking note of the reasons and

observations above, it can be concluded that Mr. Mohammed Sunwas Ali, Mr.

Shaikh Mokhlesur Rahaman, Mr. Amal Sen and Mr. Aloke Das are responsible

for the violations committed by the Company and liable, jointly and severally, for

making refunds along with interest to the investors as mandated under Section 73(2)

of the Companies Act, 1956 read with Section 27 of the SEBI Act.

e.

Mr. Sidhartha Sardar, Mr. Pradip Sardar, Mr. Ranjit Gope and Mr. Mihir

Baisnob were appointed as directors of the Company on February 24, 2011 i.e. after

the available dates of allotment of RPSs and NCDs. It is observed that these persons

have not exercised necessary diligence after becoming the director in the Company.

The inaction by these against the management (for violating the public issue norms as

stipulated under the Companies Act, 1956 while making the offer and issuing the RPSs

and NCDs), leads one to conclude on a possible collusion with the Company and its

management.

Mr. Sidhartha Sardar is continuing as director of the Company. Others namely Mr.

Pradip Sardar, Mr. Ranjit Gope and Mr. Mihir Baisnob had resigned from the

Company on February 20, 2013, March 18, 2013 and October 05, 2012, respectively.

Mr. Ranjit Gope in his submissions dated March 12, 2015 and September 16, 2015,

has submitted that he was inducted in the Company as an additional director on

February 24, 2011 and had resigned on October 10, 2012. It has also been stated by

him that he was not involved in day to day affairs of the Company and was not

authorised to sign any instrument including cheques on behalf of the Company. He

further submitted that he is not responsible for any mobilisation of funds by the

Company, during his tenure as director.

With regard to the above, I note that the position of a ‘director’ in a public company/listed company comes along with responsibilities and compliances under law

associated with such position, which have to be fulfilled by such director or face the

consequences for any violation or default thereof. The submissions made by Mr. Ranjit


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Gope vide his written submissions are of no help in the light of the discussed order of

Hon’ble High Court of Madras in the matter of Madhavan Nambiar Vs. Registrar of

Companies ( supra ).

In view of the same, it can be concluded that Mr. Sidhartha Sardar, Mr. Pradip

Sardar, Mr. Ranjit Gope and Mr. Mihir Baisnob have not taken any steps to

remedy the violations committed. Accordingly, I hold them responsible for the same.

25.

At this stage, I note that the Company and its directors namely Mr. Mohammed

Sunwas Ali, Mr. Shaikh Mokhlesur Rahaman, Mr. Amal Sen, Mr. Aloke Das,

Mr. Sidhartha Sardar, Mr. Pradip Sardar, Mr. Ranjit Gope and Mr. Mihir

Baisnob were required to provide full inventory of the assets and properties within

21 days from the date of receipt of the interim order. However, no such details have

been filed till date.

26. In view of the discussion above, appropriate action in accordance with law needs to

be initiated against the Company and the directors/ promoters in charge of the affairs

of the Company, during the relevant period.

27. Therefore, I, in exercise of the powers conferred upon me under section 19 of the

Securities and Exchange Board of India Act, 1992 read with sections 11 and 11B

thereof hereby issue the following directions:

a. The Company, Tribhuvan Agro Project Limited [PAN: AACCT6018N], Mr.

Mohammed Sunwas Ali [PAN: AEOPA2984D], Mr. Shaikh Mokhlesur

Rahaman [PAN: AXVPS8485R], Mr. Amal Sen [PAN: BNGPS8347N], Mr.

Aloke Das [PAN: AINPD1762F], Mr. Sidhartha Sardar [PAN: BNOPS7521Q],

Mr. Pradip Sardar [PAN: BGBPS1226C], Mr. Ranjit Gope [PAN: AILPG0108L]

and Mr. Mihir Baisnob [PAN: ANRPB4794Q] jointly and severally, shall forthwith

refund the money collected by the Company through the issuance of Redeemable

Preference Shares and Non-Convertible Debentures ( which have been found to be issued in


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contravention of the public issue norms stipulated under the Companies Act, 1956 ), to the

investors including the money collected from investors, till date, pending allotment of

RPS and NCD, if any, with an interest of 15% per annum compounded at half yearly

intervals, from the date when the repayments became due (in terms of Section 73(2)

of the Companies Act, 1956) to the investors till the date of actual payment.

b. The repayments to investors shall be effected only in cash through Bank Demand

Draft or Pay Order.

c. The Company and/or its present management are permitted to sell the assets of the

Company only for the sole purpose of making the refunds as directed above and

deposit the proceeds in an Escrow Account opened with a nationalised Bank.

d.

The Company and its present management shall issue public notice, in all editions of

two National Dailies (one English and one Hindi) and in one local daily with wide

circulation, detailing the modalities for refund, including details on contact persons

including names, addresses and contact details, within fifteen days of this Order

coming into effect.

e. After completing the aforesaid repayments, the Company shall file a certificate of such

completion with SEBI, within a period of three months from the date of this Order,

from two independent peer reviewed Chartered Accountants who are in the panel of

any public authority or public institution. For the purpose of this Order, a peer

reviewed Chartered Accountant shall mean a Chartered Accountant, who has been

categorized so by the Institute of Chartered Accountants of India (‘ICAI’).

f. Tribhuvan Agro Project Limited, Mr. Mohammed Sunwas Ali, Mr. Shaikh

Mokhlesur Rahaman, Mr. Amal Sen, Mr. Aloke Das, Mr. Sidhartha Sardar, Mr.

Pradip Sardar, Mr. Ranjit Gope and Mr. Mihir Baisnob are also directed to provide

a full inventory of all their assets and properties and details of all their bank accounts,

demat accounts and holdings of shares/ securities, if held in physical form.


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g. In case of failure of the Company, Tribhuvan Agro Project Limited, its directors

including Mr. Mohammed Sunwas Ali, Mr. Shaikh Mokhlesur Rahaman, Mr. Amal

Sen, Mr. Aloke Das, Mr. Sidhartha Sardar, Mr. Pradip Sardar, Mr. Ranjit Gope and

Mr. Mihir Baisnob in complying with the aforesaid directions, SEBI, on expiry of three

months from the date of this Order,-

i. shall recover such amounts in accordance with section 28A of the SEBI Act

including such other provisions contained in securities laws.

ii. may initiate appropriate action against the Company, its promoters/ directors and

the persons/ officers who are in default, including adjudication proceedings

against them, in accordance with law.

iii. would make a reference to the State Government/ Local Police to register a civil/

criminal case against the Company, its promoters, directors and its managers/persons in-charge of the business and its schemes, for offences of fraud, cheating,

criminal breach of trust and misappropriation of public funds; and

iv. would also make a reference to the Ministry of Corporate Affairs, to initiate

appropriate action as deemed fit.

h. The Company namely Tribhuvan Agro Project Limited is directed not to, directly

or indirectly, access the capital market by issuing prospectus, offer document or

advertisement soliciting money from the public and is further restrained andprohibited from buying, selling or otherwise dealing in the securities market, directly

or indirectly in whatsoever manner, from the date of this Order till the expiry of four

(4) years from the date of completion of refunds to investors, made to the satisfaction

of SEBI, as directed above.

i. The directors of the Company namely Mr. Mohammed Sunwas Ali, Mr. Shaikh

Mokhlesur Rahaman, Mr. Amal Sen, Mr. Aloke Das, Mr. Sidhartha Sardar, Mr. Pradip

Sardar, Mr. Ranjit Gope and Mr. Mihir Baisnob are restrained from accessing the

securities market and are further prohibited from buying, selling or otherwise dealing

in securities, directly or indirectly, with immediate effect. They are also restrained from

associating themselves with any listed public company and any public company which


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intends to raise money from the public, with immediate effect. This restraint shall

continue to be in force for a further period of four (4) years on completion of the

repayments, as directed above.

j.

Tribhuvan Agro Debenture Trust, Mr. Sukumar Mondal, Mr. Sanjay Nayak,

Mr. Sujit Kumar Goswami, Mr. Rajib Das and Mr. Mohammed Sunwas Ali shall

not offer themselves to be engaged as debenture trustees or in any capacity as an

intermediary in the securities market, without obtaining a certificate of registration to

undertake that assignment as required under law. Further, they are restrained from

accessing the securities market and are further restrained from buying, selling or

dealing in securities, in any manner whatsoever, for a period of four (4) years.

k.

The above directions shall come into force with immediate effect.

28. This Order is without prejudice to any action, including adjudication and prosecution

proceedings, that might be taken by SEBI in respect of the above violations committed

by the Company, its promoters, directors and other key persons.

29. Copy of this Order shall be forwarded to the recognised stock exchanges and

depositories for information and necessary action.

30. A copy of this Order shall also be forwarded to the Ministry of Corporate Affairs/

concerned Registrar of Companies, for their information and necessary action with

respect to the directions/ restraint imposed above against the Company and the

individuals.

DATE : April 28, 2016 PRASHANT SARANPLACE : Mumbai WHOLE TIME MEMBER

SECURITIES AND EXCHANGE BOARD OF INDIA

Documents

Order in the matter of Tribhuvan Agro Project Limited