Page 1 of 18

WTM/PS/55/WRO-ILO/SEPT/2015

SECURITIES AND EXCHANGE BOARD OF INDIA

ORDER

Under Sections 11(1), 11(4), 11A(1)(b) and 11B of the Securities and Exchange Board of India Act, 1992 read with Regulation 107 of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 In the matter of BNP Real Estate and Allied Limited

In respect of:

1. BNP Real Estate and Allied Limited [PAN: AADCB2189H], 2. Mr. Sanjeev Kumar Purwansi [PAN: AQQPP3214P], 3. Mr. Munendra Kumar [PAN: ATVPK1011B], 4. Mr. Mukesh Kumar Sharma [PAN: BCKPS7359M], 5. Mr. Mahesh Paliwal [PAN: BBIPP4520L], 6. Mr. Santosh Sharma [DIN: 02643085], 7. Mr. Raghvendra Singh Narwaria [PAN: ADPPN6255N], 8. Ms. Surekha Sharma [PAN: BNUPS4121C], 9. Mr. Umesh Narwaria[PAN: ACOPN4971B], 10. Mr. Ravindra Singh [PAN: BHAPS1632N], 11. Mr. Kunver Singh [PAN: BOUPS2175H], 12. Mr. Kishori Sharma [PAN: BDVPS3534A], 13. Mr. Padam Singh Narwaria [PAN: ACOPN4986E], 14. Mr. Gyanesh Rawat [DIN: 01498588], 15. Mr. Devendra Kumar Sharma [DIN: 03346208] and 16. Mr. Gyanesh Sharma [DIN: 02498403].

1. Securities and Exchange Board of India (hereinafter referred to as 'SEBI') had received

an e-mail dated December 06, 2014 from a complainant enclosing therewith a copy of

the certificate issued by one BNP Real Estate and Allied Limited (hereinafter referred

to as 'BNP' or 'the Company'). Having received the complaint, SEBI initiated a

preliminary examination and asked BNP vide letter dated December 30, 2014, to inter

alia furnish the following information/ documents:

a. Copies of the Memorandum and Articles of Association of the Company.

b. Details of the past and present directors of the Company.

c. Brochures pertaining to the schemes/ offers made available to the public.

d. Copies of the application forms required to be submitted by investors/ applicants to

participate in the schemes.

Page 2 of 18

e. Sample copies of the regulations letter and allotment letter issued to the investors who

had subscribed to the schemes.

f. Sample copies of the agreement letter/ contract required to be entered into by the

investor/ applicant under the schemes.

g. Details of the scheme wise amounts mobilised by the Company along with the number

of investors under the scheme.

h. Name and address of all investors who had put in their money with the Company.

i. List of all branches with their address.

j. Name and Address of agents and details of commission paid for each financial year

from start till date.

k. Certified copy of the audited financial statement for the Financial Year 2007-08 to

2013-14. Copy of detailed trial balance for 2013-14.

l. Copy of the Income Tax Return filed by the Company for the Financial Year 2007-08

to 2013-14.

m. Details of regulatory approvals obtained by the Company, etc.

n. Details of any other similar schemes floated by the Company or/ and group/associate

company(ies).

o. Details regarding the relation of the Company with BNP India Developers and

Infrastructure Limited.

BNP was advised to provide the above required information and the documents latest

by January 07, 2015.

2. The Company vide its letter dated January 15, 2015 replied through its director namely

Mr. Mukesh Kumar Sharma and submitted that for incorporation of the Company, he

along with Mr. Mahesh Paliwal, Mr. Gyanesh Sharma, Ms. Kishori Sharma, Mr. Sanjeev

Kumar Purvanshi, Mr. Munendra Kumar and Ms. Surekha Sharma had approached one

Mr. Vinay Choudhary for assistance. They said that Vinay Choudhary had advised these

that for forming a Company, twelve (12) persons are required and had also suggested the

names of rest of the five (5) names namely Mr. Raghvendra Singh Narwariya, Mr. Umesh

Narwariya, Mr. Ravindra Singh, Mr. Padam Singh Narwariya and Mr. Kunver Singh. Mr.

Mukesh Kumar Sharma vide his letter had also claimed that the said five (5) persons

namely Mr. Raghvendra Singh Narwariya, Mr. Umesh Narwariya, Mr. Ravindra Singh,

Mr. Padam Singh Narwariya and Mr. Kunver Singh had started collecting money and

Page 3 of 18

issued forged certificates bearing the name of the Company and the pre-printed

signatures of Ms. Surekha Sharma. Further, it was said that Vinay Choudhary had later

got two more companies, which had similar names namely BNP India Developers and

Infrastructure Limited and BNP Insurance and Investment Service India Limited and

had collected monies from the gullible investors.

Vide this letter, the Company also submitted the details like the copies of the

Memorandum and Articles of Association of the Company, list of the past and present

directors of the Company, copy of scheme chart (brochure) for offering redeemable

preference shares, copy of the application form for investment in preference share,

details of scheme wise amount mobilized with total number of shareholder/ applicant,

certified copy of the audited financial statement for the Financial Year 2007-08 to

2013-14 and trial balance up to January 02, 2015, copies of the Income Tax Return

filed by the Company for the Financial Year 2007-08 to 2013-14, details of the other

associate company, etc.

3. In the meantime, SEBI received certain other investor complaints against the Company.

SEBI vide its letter dated January 30, 2015, while forwarding the copy of the complaints

to the Company had also sought certain explanation on its issue of preference shares and

equity shares. The Company was also asked to submit the letter of offers made to the

allottees of the equity shares, date-wise receipt of money towards equity shares along with

mode of payment, evidence of payments, source of the funds invested by allottees, etc.

BNP was advised to provide the above said details and the documents latest by

February 10, 2015.

4. The Company vide its letter dated February 10, 2015, sought an extension of seven (7)

days for submitting the reply and the documents. Later the Company vide its letter dated

February 18, 2015, submitted the reply to the SEBI letter and provided the explanation

to the queries of SEBI. It was said that the main business of the Company is dealing in

real estate by purchasing and selling of properties. For the said purpose, it had collected

money from small investors and it shared the profit among the shareholder. The

Company also submitted that the certificates attached with the investor complaints prima

facie do not belong to it as the certificates were issued during the year 2007, when the

management of the Company was controlled by Raghvendra Singh Narwaria, Kunver

Page 4 of 18

Singh Narwaria, Padam Singh Narwaria, Umesh Singh Narwaria and Ravindra Singh

Narwaria. Further, it was said that these five persons had issued forged joint venture

certificate to various investors and had collected money.

5. SEBI vide its letter dated April 15, 2015, had forwarded the details of the fresh investor

complaints to the Company for explanation and sought the complete investor details to

be furnished by April 24, 2015 and also ‘filled in application’ of 10 investors of each

scheme offered by the Company on sample basis. The Company vide its letter dated April

24, 2015 sought five (5) days’ time to submit the details as asked by SEBI. Vide another

letter dated April 29, 2015, the Company denied receiving funds from the complainants

and submitted that it had not propagated any investment scheme to deceive any person

or public and it had issued only equity and preference shares to the genuine investors

after following the rules and regulation as formed by the State Government and the

Government of India.

6. On perusal and examination of the documents as submitted by BNP, the information

obtained from the ‘MCA-21’ portal maintained by Ministry of Corporate Affairs

(MCA), the complaints received, etc., the following are the prima facie observations

made by SEBI in its examination with respect to the money mobilization activities by

the Company through the issue of ‘Redeemable Preference Share’ with an option

to convert into equity shares (hereinafter referred to as ‘convertible RPS’) and ‘equity

shares’:

a. Background: BNP was incorporated on May 17, 2007. The CIN of BNP is

U45200MP2007PLC019536 and its registered office is at: M-7, Trishul Apartment, 5-

Sanghi Colony, A.B. Road, Indore- 452001.

b. Objects as per the Memorandum of Association of the Company:

“A. Main objects … 1. To carry on the business of sale and purchase of property, acquisition of land, building, civil and electric contract, construction contracts for infrastructure development …. … B. Ancillary to the attainment of the main objects of the Company are: … 14A. To borrow or raise money with or without security or to receive money on deposit at interest or otherwise, in such a manner as the Company may think fit and in particular by the issue of debentures or debenture stock perpetual or otherwise including debenture or debenture stock convertible into shares of this or any other company and in security of any such moneys to be borrowed, ...”

Page 5 of 18

c. Details of Promoters and Directors: From the documents submitted by the

Company, it is noted that the subscribers to its Memorandum of Association were Mr.

Raghvendra Singh, Ms. Surekha Sharma, Mr. Umesh Narwaria, Mr. Ravindra Singh,

Mr. Munendra Kumar, Mr. Sanjeev Kumar Purwansi, Mr. Mukesh Kumar Sharma,

Mr. Kunwar Singh, Mr. Kishori Sharma, Mr. Padam Singh Narwaria, Mr. Gyanesh

Rawat and Mr. Mahesh Paliwal.

As per the details available on MCA-21 portal, the present directors of the Company

are Mr. Sanjeev Kumar Purwansi, Mr. Munendra Kumar, Mr. Mukesh Kumar Sharma,

Mr. Santosh Sharma and Mr. Mahesh Paliwal.

As per the details submitted by the Company, its past directors were Mr. Raghvendra

Singh Narwaria, Ms. Surekha Sharma, Mr. Umesh Narwariya, Mr. Ravindra Singh, Mr.

Kunver Singh, Ms. Kishori Sharma, Mr. Padam Singh Narwariya, Mr. Devendra

Kumar Sharma, Mr. Gyanesh Rawat and Mr. Gyanesh Sharma.

d. Fund raising by the Company through the issue of RPS and equity shares.

i. The document/ details submitted by the Company shows that it had issued RPS

with an option to convert the same as well as the accrued interest into equity

shares of ₹10/- and equity shares, on various dates. Both these securities are

being discussed below in seriatim.

- From the information furnished by BNP in its replies (including the reply dated

February 18, 2015) and the return of allotment (Form 2), the following table has

been compiled regarding the allotment of RPS with an option to convert into

equity shares (convertible RPS) and amount mobilised:

Table 1

Year of allotment

Number of allottees Number of preference shares

Amount (₹) As per Company

As per Form 2

2008-09 29 29 3,52,600 35,26,000

2009-10 252 252 4,55,946 45,59,460

2011-12 1,806* 1,806 45,46,000 4,54,60,000

2012-13 12 12 25,00,000 2,50,00,000

2013-14 896 894 20,00,000 2,00,00,000

2,995 2993 98,54,546 9,85,45,460

Page 6 of 18

* The money appears to be collected during the financial years 2010-11 and 2011-12. However, the

preference shares were allotted in 2011-12.

- I have seen the details of allotment and I note that BNP had made continuous

allotment of RPS, as detailed hereunder:

Table 2

Date of allotment No. of preference shares allotted

Amount

mobilized (₹)

No. of allottees

As per Company

As per Form 2

2009-10

25/3/2010 24,649* 2,46,490 16 16

26/3/2010 90,800 9,08,000 49 49

27/3/2010 71,003 7,10,030 49 49

28/3/2010 93,483 9,34,830 49 49

30/3/2010 77,011 7,70,110 49 49

31/3/2010 99,000 9,90,000 40 40

2011-12

23/11/2011 74,000 7,40,000 48 48

24/11/2011 1,34,000 13,40,000 44 44

25/11/2011 79,500 7,95,000 20 20

26/11/2011 61,500 6,15,000 45 45

27/11/2011 72,000 7,20,000 46 46

28/11/2011 63,500 6,35,000 45 45

29/11/2011 71,900 7,19,000 41 41

30/11/2011 79,000 7,90,000 45 45

01/12/2011 75,050 7,50,500 39 39

02/12/2011 99,350 9,93,500 38 38

03/12/2011 1,01,500 10,15,000 39 39

04/12/2011 59,650 5,96,500 47 47

05/12/2011 58,050 5,80,500 40 40

06/12/2011 87,500 8,75,000 49 49

07/12/2011 73,000 7,30,000 34 34

08/12/2011 91,200 9,12,000 49 49

09/12/2011 64,200 6,42,000 49 49

10/12/2011 70,500 7,05,000 45 45

11/12/2011 70,500 7,05,000 46 46

12/12/2011 66,000 6,60,000 45 45

13/12/2011 63,750 6,37,500 44 44

14/12/2011 69,250 6,92,500 47 47

15/12/2011 61,450 6,14,500 44 44

16/12/2011 56,350 5,63,500 27 27

17/12/2011 70,400 7,04,000 46 46

21/12/2011 1,27,500 12,75,000 49 49

22/12/2011 1,46,300 14,63,000 49 49

23/12/2011 1,42,300 14,23,000 49 49

24/12/2011 1,07,500 10,75,000 49 49

25/12/2011 1,39,000 13,90,000 48 48

26/12/2011 1,50,000 15,00,000 48 48

27/12/2011 1,28,000 12,80,000 49 49

28/12/2011 1,38,000 13,80,000 49 49

29/12/2011 1,33,500 13,35,000 49 49

02/1/2012 1,16,350 11,63,500 49 49

03/1/2012 1,51,000 15,10,000 49 49

04/1/2012 1,40,200 14,02,000 49 49

Page 7 of 18

05/1/2012 57,250 5,72,500 25 25

06/1/2012 6,93,000 69,30,000 44 44

07/1/2012 1,59,000 15,90,000 48 48

08/1/2012 1,44,000 14,40,000 41 41

2013-14

10/2/2014 1,26,425 12,64,250 49 49

11/2/2014 74,555 7,45,550 47 47

12/2/2014 98,875 9,88,750 47 47

13/2/2014 1,17,750 11,77,500 50 48

14/2/2014 84,400 8,44,000 49 49

15/2/2014 1,12,605 11,26,050 48 48

17/2/2014 1,00,325 10,03,250 48 48

18/2/2014 94,175 9,41,750 48 48

19/2/2014 98,675 9,86,750 47 47

20/2/2014 79,160 7,91,600 46 46

21/2/2014 85,755 8,57,550 48 48

22/2/2014 1,14,115 1,141150 47 47

24/2/2014 79,555 7,95,550 46 46

25/2/2014 1,30,715 13,07,150 47 47

26/2/2014 97,535 9,75,350 47 47

27/2/2014 99,445 9,94,450 47 47

28/2/2014 1,43,450 14,34,500 48 48

01/3/2014 1,17,150 11,71,500 45 45

03/3/2014 1,45,335 14,53,350 42 42

- From the above, it is noted that BNP had made a continuous allotment of RPS

to 17, 49, 49, 49, 49 and 40 investors on March 25, 2010, March 26, 2010, March

27, 2010, March 28, 2010, March 30, 2010 and March 31, 2010 respectively,

aggregating to 252 investors and an amount of ₹45,59,460 had been collected.

Similarly, the Company had made another continuous allotment from

November 23, 2011 to January 08, 2012 and an amount of ₹4,54,60,000 had

been collected.

In view of the above, it can be said that the Company had made continuous

allotments of RPS, in various tranches and had attempted to retain the number

of investors to below 50, in order to circumvent the provisions of the Companies

Act, 1956.

- From the sample application form for allotment of RPS as submitted by the

Company, it is noted that the Company had offered various schemes for issuing

RPS, the same have been reproduced below:

Table 3

a. Option-1 3 Years @ 9.26% (p.a)

b. Option-2 5 Years @ 8.13% ( p.a)

Page 8 of 18

c. Option-3 6 Years @ 9.20% (p.a)

d. Option-5 8 Years @ 5.46% (p.a)

e. Option-6 1 Year @ 5.83 %

f. Option-7 4 Years @ 11.85% (p. a)

g. Option-A 3 Years @ 9.14%

h. Option-B 6 Years @ 12.25%

i. Option-C 8.5 Years @ 11.38%

j. Option-D 11 years @ 13.43%

- From the terms and conditions attached with the application form for RPS, the

following is noted:

An applicant can apply for minimum of 4 RPS (₹10/- per RPS). For any

additional RPS, the applicant can procure the same after paying ₹100/- per

additional RPS per month for a period of 60 months. Payment option for the

same were weekly, monthly, quarterly, half yearly.

The period of the RPS will be minimum for 12 months and maximum for 132

months.

The payments could be made by cash.

The RPS holder can enjoy the facility of converting to fully paid up equity

share of ₹10/- against the RPS value and its accrued interest, on completion

of term.

If an RPS holder makes the payment for a minimum period of 36 months, he

can avail a secured loan equivalent to 50% of the total amount deposited.

- From the material available and as per the details collated in the ‘table 1’ above,

it can be seen that the Company was issuing convertible RPS, thereby mobilizing

funds, in a regular and sustained manner. The Company along with its

submissions had also provided the scheme wise details of the amount mobilised

by the issuance of such RPS. The same have been reproduced below:

Table 4

Scheme

Name

2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Total

Amount

(₹)

Allotte

es

Amount (₹) Allotte

es

Amou

nt (₹)

Allott

ees

Amount (₹) Allotte

es

Amount (₹) Allott

ees

Amount (₹) Allott

ees

Amount (₹) Allott

ees

Plan D Year 11 0 0 12,27,000 76 0 0 2,86,69,500 1,061 1,36,54,500

12

49,21,500 200 4,84,72,500 1,349

Plan A

Year 03 0 0 10,000 1 0 0 4,75,000 4 40,22,600 0 0 45,07,600 5

Plan 2 Year 05 35,13,100 28 1,220,540 75 0 0 50,000 1 6,25,600 38,70,000 253 92,79,240 357

Plan 3 12,900 2 11,94,480 77 0 0 1,55,19,000 710 66,72,300 1,11,57,000 476 3,45,55,680 1,265

Page 9 of 18

Year 06

Plan 4

Year 6.25 0 0 1,66,840 17 0 0 0 0 0 0 0 1,66,840 17

Plan 5 Year 8 0 0 7,00,600 17 0 0 0 0 0 11,500 1 7,12,100 18

Plan C

Year 8.25 0 0 40,000 2 0 0 7,46,500 30 25,000 40,000 2 8,51,500 34

The figures in the table above are prima facie inconsistent with the RPS details as

submitted by the Company.

- From the records available, it appears that the Company had paid commission

at the rate of about 10% to its agents, on the collection of amounts from the

investors. However, the Company in its replies has mentioned that commission

paid were only 1.5% to 2% and the said 10% commission is paid on the sale of

product. It is seen that the Company in its reply has not mentioned about the

‘product’ in which it deals.

ii. In addition to the above, the Company had also issued equity shares. The

Company vide the special resolution dated March 20, 2010 had inter alia

approved the allotment of 1,09,151 equity shares to 178 persons. As per the

‘Form 2’, the allotment of equity shares was as under:

Table 5

S.No. Date of allotment No. of shares No. of allottees

1. 22/03/2010 27,330 49

2. 23/03/2010 30,224 49

3. 24/03/2010 26,928 49

4. 25/03/2010 24,669* 32

Total 1,09,151 179

As the persons to whom equity shares allotted were shown as 179, which prima

facie was not as per the resolution, SEBI had sought an explanation from the

Company. The Company in its reply had explained the discrepancy and

submitted that one entry was wrongly repeated and there were 179 allottees. The

details in ‘table 5’ above shows that the Company had made continuous

allotment of equity shares to 49, 49, 49 and 32 investors on March 22, 2010,

March 23, 2010, March 24, 2010 and March 25, 2010 respectively, aggregating

to 179 investors. It can be said that the Company had always retained the number

of investors below 50, in order to circumvent the provisions of the Companies

Act, 1956.

Page 10 of 18

e. Capital structure of the Company w.r.t. preference shares: A perusal of the

balance sheets of the Company, revealed discrepancies/ mismatch in figures between

the amount collected from the issue of RPS and those reported in the balance sheets.

The details of the preference shares as reported in the respective balance sheets are as

under:

Table 6 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

Paid-up Preference share

capital (₹)

0 35,26,000 80,85,460 80,85,460 5,35,45,460 7,39,90,760 9,11,12,660

Number of preference shares

0 3,52,600 8,06,546 8,06,546 53,54,546 73,99,076 91,11,266

Redeemed or bought back (no. of preference shares)

2,87,810

Share application money

received (₹) pending allotment

1,97,99,000 73,25,600

7. Having considered the above, I proceed further with the matter. The issue for

determination in the instant matter is whether the offer and issuance of RPS and equity

shares made by the Company, as mentioned above, was on 'private placement' or a

'public issue'. In terms of Section 67(3), 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 invitation. In terms of the 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, 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 receiving the offer or invitation. The number of persons to whom the shares/

debentures have been allotted becomes relevant to judge whether an issue of shares is

made to public or made on a private placement basis.

8. Further, from the details of allotment of RPS and equity shares made by BNP over

the period, it is observed that BNP had made allotments to 49 or less than 49 persons

(as noted from the table 1 and 5 above) and that the same was done in order to

Page 11 of 18

circumvent the provisions of first proviso to Section 67(3) of the Companies Act,

1956. Further, the allotments were made on continuous dates or in short intervals and

that the aggregate number of investors to whom such offer and subsequent allotment

was made exceeds 49.

9. Considering the regular occurrence of the series of convertible RPS and equity

share allotments, it appears that the method adopted by BNP (i.e. of making allotment

through multiple allotments) is a device intended to give a picture that each allotment

was a separate offer and purportedly done on private placement basis. In view of the

same, the aforesaid offer of convertible RPS and equity shares made by BNP has

to be construed as a single offer. In view of the same, it is alleged that BNP had made

public issue of convertible RPS and equity shares between March 2009 and March

2014. During this period, the Company had issued 1,09,151 equity shares to 179

investors and 98,54,546 convertible RPS to 2,993 investors and had prima facie

mobilized around ₹9.85 crore from convertible RPS. I note that the company has

not claimed to be a non-banking financial company or a public financial institution

within the meaning of Section 4A of the Companies Act, 1956 and therefore, is not

covered under the second proviso to Section 67(3) of the Companies Act, 1956.

Considering the facts and circumstances of the case, it is alleged that the offers made

by the Company were public in nature, thereby making such offer and subsequent

issuance a 'public issue' of convertible RPS and equity share.

10. Having prima facie observed that the Company had made a public issue of convertible

RPS and equity shares between March 2009 and March 2014, the Company was

under an obligation to comply with the Companies Act, 1956 read with Companies

Act, 2013, SEBI Act, 1992 (hereinafter referred to as 'SEBI Act'), the SEBI

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

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

Regulations, 2009 (hereinafter referred to as 'ICDR Regulations') which regulate the

public issue of equity shares. The Hon'ble Supreme Court of India in the matter of

Sahara India Real Estate Corporation Limited & Ors. Vs. SEBI (Civil Appeal no. 9813 and

9833 of 2011) (hereinafter referred to as the 'Sahara Case'), had observed that:

"… after 13.12.2000, any offer of securities by a public company to fifty persons or more will be treated as a public issue under the Companies Act, even if it is of domestic concern or it is

Page 12 of 18

proved that the shares or debentures are not available for subscription or purchase by persons other than those receiving the offer or invitation. … 90. ... ... that any share or debenture 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. …"

[Emphasis supplied]

11. Having observed that the convertible RPS and equity shares issued by BNP are in

the nature of public issue, the Company was required to comply with provisions of

the Companies Act, 1956 and other relevant statutory provisions as applicable. I note

that in the case of any public issue of securities, the relevant provisions of the

Companies Act, 1956 inter alia Sections 60 read with Section 2(36) [corresponding provision

is section 2(70) of the Companies Act, 2013, notified on September 12, 2013], 56(1), 56(3)

[corresponding provision is section 33(1) of the Companies Act, 2013, notified on September 12,

2013] and Section 73 [corresponding provision is section 40 of the Companies Act, 2013] thereof

needs to be complied with. In terms of Section 60 read with the Section 2(36) of the

Companies Act, 1956, a company needs to file a prospectus with respect to its public

issue with the RoC. Further, in terms of Section 60B(2) of the Companies Act, 1956, a

Company inviting subscription by an information memorandum is bound to file a

prospectus prior to the opening of the subscription lists, at least three days before the

opening of the offer. While Section 60B(3) stipulates that the 'Information

Memorandum' shall carry the same obligations as are applicable in case of prospectus.

Section 60B(9) requires the Company to file a final prospectus with SEBI/ RoC. As per

Section 2(36) of the Companies Act, 1956, 'prospectus' means any document described

or issued as a prospectus and includes any notice, circular, advertisement or other

document inviting deposits from the public or inviting offers from the public for the

subscription or purchase of any shares in a body corporate. As per the information

available on record and also admitted by the Company, it did not file any prospectus/

information memorandum with respect to the said issues of convertible RPS and

equity shares and had also prima facie not complied with the above discussed

provisions of the Companies Act, 1956.

12. By issuing convertible RPS and equity shares to more than 49 persons, the Company

had to compulsorily list such securities in compliance with Section 73 of the Companies

Act, 1956, in order to ensure that the subscribers to the shares have a facility to approach

Page 13 of 18

a stock exchange for having their holdings converted into cash whenever they desire. The

same also provides liquidity and exit opportunity to the investors. As per Section 73(1)

and (2) of the Companies Act, 1956, a company is required to make an application to one

or more recognised stock exchanges for permission for the shares or debentures to be

offered to be dealt with in the stock exchange and if permission has not been applied for

or not granted, the company is required to forthwith repay with interest all moneys

received from the applicants. From the material available on record, the Company, does

not appear to have done so and thus, contravened the said provisions. It neither made an

application seeking listing permission nor refunded the amounts on account of such

failure. The Company had also not complied with the provisions of Section 73(3) of the

Companies Act, 1956 as it had not kept the amounts received from investors in a separate

bank account and failed to repay the same in accordance with Section 73(2) of the

Companies Act, 1956. In view of the above, it is alleged that the Company had

contravened the provisions of the Companies Act, 1956, which regulates the public issue

of securities, including Sections 2(36), 56(1), 56(3) and 73 of the Companies Act, 1956,

in respect of its collection of public funds towards the issue of equity shares.

13. I now discuss the regulatory powers and the jurisdiction of SEBI on the company that

raise funds, by issue of securities, from the public. In this regard, I refer to the Section

55A of the Companies Act, 1956. In terms of the relevant provisions of the said

section, the provisions contained in Sections 55 to 58, 59 to 81 (including Sections

68A, 77A and 80A), 108, 109, 110, 112, 113, 116, 117, 118, 119, 120, 121, 122, 206,

206A and 207 of the Companies Act, 1956, in so far as they relate to the issue and

transfer of securities shall be in the case of listed public companies and in the case of

those public companies which intend to get their securities listed on any recognised

stock exchange in India, be administered by SEBI. The terms 'securities' as per Section

2(h) of the Securities Contracts (Regulation) Act, 1956 includes 'shares'. I observe that

Sections 56, 60, 67 and 73 of the Companies Act, 1956 are included in the list of the

sections as mentioned in Section 55A of the Companies Act, 1956, and therefore, such

sections are to be administered by SEBI.

14. As per the provisions of Section 55A of the Companies Act, 1956, the administrative

authority on the subjects relating to public issue of securities is SEBI. For this purpose,

SEBI can exercise the jurisdiction under Sections 11(1), 11A, 11B and 11(4) of the

Page 14 of 18

SEBI Act read with Section 55A of the Companies Act, 1956, over companies who

issue equity shares to fifty persons or more, but fail to comply with the applicable

provisions of the aforesaid statutes. Therefore, in addition to the compliance with the

provisions of the Companies Act, 1956, the Company was mandated to comply with

the applicable provisions of the ICDR Regulations.

15. I note that SEBI had framed the DIP Guidelines in exercise of the powers conferred

upon itself under the SEBI Act. The Hon'ble Supreme Court in Sahara Case has

observed that:

"DIP Guidelines had statutory force since they were framed by SEBI in exercise of its powers conferred on it under Sections 11 and 11A of the SEBI Act. Powers have been conferred on SEBI to protect the interests of the investors in securities and regulate the issue of prospectus, offer documents or advertisement soliciting money through the issue of prospectus. Section 11 of the Act, it may be noted has been incorporated, evidently to protect the interests of investors whose securities are legally required to be listed. DIP Guidelines were implemented by SEBI with regard to the listed and unlisted companies, which made public offer, until it was replaced by ICDR 2009".

The DIP Guidelines were applicable to all public issues by listed and unlisted

companies. I note that the ICDR Regulations (which came into effect from August

26, 2009) had replaced the DIP Guidelines and all public issues are now required to

comply with the ICDR Regulations. The DIP Guidelines (as applicable at the relevant

time) operated as reasonable safeguards for the investors who subscribed or intended

to subscribe in the public issues of securities. In this regard, I observe that BNP has

not complied with the following clauses of DIP Guidelines:

- Clause 2.1.1 (filing of offer document) - Clause 2.1.4 (application for listing) - Clause 2.1.5(issue of securities in dematerialized form), - Clause 2.8. (means of finance), - Clause 4.1 (promoters contribution in a public issue by unlisted companies), - Clause 4.11 (lock-in of minimum specified promoters contribution in public issues), - Clause 4.14 (lock-in of pre-issue share capital of an unlisted company) - Clause 5.3.1 (memorandum of understanding), - Clause 5.3.3 (due diligence certificate) - Clause 5.3.5 (undertaking) - Clause 5.3.6 (list of promoters group and other details) - Clause 5.4 (appointment of intermediaries) - Clause 5.6 (offer document to be made public) - Clause 5.6A (Pre-issue Advertisement) - Clause 5.7 (despatch of issue material) - Clause 5.8 (no complaints certificate) - Clause 5.9 (mandatory collection centres and Clause 5.9.1.(minimum number of collection

centres)

Page 15 of 18

- Clause 5.10 (authorised collection agents) - Clause 5.12.1 (appointment of compliance officer), - Clause 6.0 (contents of offer documents) - Clause 6.1 to Clause 6.15 (contents of prospectus) - Clause 6.16 to Clause 6.34 (contents of abridged prospectus) including Clause 6.17.13 - Clause 8.3 (Rule 19(2)(b) of SC(R) Rules, 1957) - Clause 8.8.1 (Opening & closing date of subscription of securities) - Clause 9 (guidelines on advertisements by issuer company)

The ICDR Regulations operates as reasonable safeguards for the investors who

subscribe or intended to subscribe in the public issues of securities. In this regard, I

observe that BNP has not complied inter alia with the following clauses of the

provisions of ICDR Regulations:

- Application for listing of specified securities on one or more recognized stock exchange (Regulation 4(2)(d)),

- Appointment of merchant banker and other intermediaries (Regulation 5), - Filing of draft offer document with SEBI and the designated stock exchange and RoC

(Regulation 6), - Obtaining in-principle approval from the recognized stock exchanges in which the specified

securities are to be listed (Regulation 7), - Satisfy the conditions of initial public offer (Regulation 25 and 26), - Lock-in of specified securities held by promoters and persons other than promoters

(Regulation 36 and 37) - Keeping the public issue open for the specified period (Regulation 46), - Pre issue advertisement for public issue (Regulation 47) - Manner of disclosures in the offer documents (Regulation 57) - Refrain from offering any incentive to any person making application for allotment of

specified securities (Regulation 59). - Issuer to appoint compliance officer who would be responsible for monitoring the compliance

of securities laws and for redressal of investors' grievances. (Regulation 63) 16. I note that the Company had allegedly commenced allotment of convertible RPS and

equity shares to the public since March 2009. The promoters/ directors of the

Company are Mr. Raghvendra Singh, Ms. Surekha Sharma, Mr. Umesh Narwaria, Mr.

Ravindra Singh, Mr. Munendra Kumar, Mr. Sanjeev Kumar Purwansi, Mr. Mukesh

Kumar Sharma, Mr. Kunwar Singh, Mr. Kishori Sharma, Mr. Padam Singh Narwaria,

Mr. Ganesh Rawat, Mr. Santosh Sharma, Mr. Devendra Sharma and Mr. Mahesh

Paliwal. As per Regulation 2(1)(za) of the ICDR Regulations, the term 'promoter'

includes; 'the person or persons who are instrumental in the formulation of a plan or

program pursuant to which specified securities are offered'. In view of the same, it is

alleged that the above stated promoters/ directors of the Company being the persons

in-charge of and responsible to the Company for the conduct of the business, are

Page 16 of 18

responsible under Section 27(2) of the SEBI Act, for the contraventions committed

by the Company in its offer and issue of convertible RPS and equity shares.

17. In the light of the above, I find that there is no other alternative but to take recourse

through an ex-parte interim action against BNP and its directors, for preventing them

from further carrying on with its fund mobilizing activity under the ‘offer of

convertible RPS and equity shares’ or any other securities. Further, the interest of

the investors also need to be protected to ensure that public funds are not diverted

and misappropriated. In the absence of such preventive action, irreparable loss and

damage could be caused to shareholders and investors at large.

18. Accordingly, I, in exercise of the powers conferred under Sections 11(1), 11(4), 11A

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

19 thereof and Regulation 107 read with Regulation 111 of the SEBI (Issue of Capital

and Disclosure Requirements) Regulations, 2009, hereby issue the following

directions:

a. The Company, BNP Real Estate and Allied Limited [PAN: AADCB2189H], its

promoters and directors namely Mr. Sanjeev Kumar Purwansi [PAN:

AQQPP3214P], Mr. Munendra Kumar [PAN: ATVPK1011B], Mr. Mukesh

Kumar Sharma [PAN: BCKPS7359M], Mr. Mahesh Paliwal [PAN: BBIPP4520L],

Mr. Santosh Sharma [DIN: 02643085], Mr. Raghvendra Singh Narwaria [PAN:

ADPPN6255N], Ms. Surekha Sharma [PAN: BNUPS4121C], Mr. Umesh

Narwaria[PAN: ACOPN4971B], Mr. Ravindra Singh [PAN: BHAPS1632N], Mr.

Kunver Singh [PAN: BOUPS2175H], Mr. Kishori Sharma [PAN: BDVPS3534A],

Mr. Padam Singh Narwaria [PAN: ACOPN4986E], Mr. Gyanesh Rawat [DIN:

01498588], Mr. Devendra Kumar Sharma [DIN: 03346208] and Mr. Gyanesh

Sharma [DIN: 02498403] are restrained from mobilizing funds through the issue of

convertible RPS and equity shares or through any other form of securities, to the

public and/ or invite subscription, in any manner whatsoever, either directly or

indirectly till further directions.

b. The Company, its promoters and directors are prohibited from issuing prospectus or

any offer document or issue advertisement for soliciting money from the public for

Page 17 of 18

the issue of securities, in any manner whatsoever, either directly or indirectly, till

further orders.

c. The Company, its promoters and directors shall not dispose off any of the properties

or alienate the assets of the Company or dispose off any of their properties or alienate

their assets.

d. The Company, its promoters and directors shall not divert any funds raised from

public at large through the issuance of the impugned equity shares, kept in its bank

accounts and/ or in the custody of the Company without prior permission of SEBI

until further orders.

e. The Company, its promoters and directors are restrained from accessing the securities

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

securities in any manner whatsoever, either directly or indirectly, till further directions.

f. The Company, its promoters and directors shall co-operate with SEBI and shall

furnish all the documents.

g. The Company, its promoters and directors 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.

19. The above directions shall come into force with immediate effect and shall continue

to be in force till further directions.

20. BNP Real Estate and Allied Limited, its promoters and directors namely Mr. Sanjeev

Kumar Purwansi, Mr. Munendra Kumar, Mr. Mukesh Kumar Sharma, Mr. Mahesh

Paliwal, Mr. Santosh Sharma, Mr. Raghvendra Singh Narwaria, Ms. Surekha Sharma,

Mr. Umesh Narwaria, Mr. Ravindra Singh, Mr. Kunver Singh, Mr. Kishori Sharma,Mr.

Padam Singh Narwaria, Mr. Gyanesh Rawat, Mr. Devendra Kumar Sharma and Mr.

Gyanesh Sharma are advised to show cause as to why suitable directions/ prohibitions,

under the Sections 11(1), 11(4), 11A and 11B of the SEBI Act read with 73(2) of the

Companies Act, 1956 and the ICDR Regulations, including the following, should not

be taken/ imposed against them:

Page 18 of 18

a. directing them jointly and severally to refund the money collected through the issue of

equity shares that are impugned in this Order, along with interest at 15% per annum

from the date when the refunds became due to the investors till the date of repayment;

b. directing them not to issue prospectus or any offer document or issue advertisement

for soliciting money from the public for the issue of securities, in any manner

whatsoever, either directly or indirectly, for an appropriate period;

c. directions restraining them from accessing the securities market and prohibiting them

from buying, selling or otherwise dealing in securities for an appropriate period;

d. directing them and other companies in which their directors hold substantial or

controlling interest, to not access the capital market for an appropriate period.

21. BNP Real Estate and Allied Limited, its promoters and directors namely Mr. Sanjeev

Kumar Purwansi, Mr. Munendra Kumar, Mr. Mukesh Kumar Sharma, Mr. Mahesh

Paliwal, Mr. Santosh Sharma, Mr. Raghvendra Singh Narwaria, Ms. Surekha Sharma,

Mr. Umesh Narwaria, Mr. Ravindra Singh, Mr. Kunver Singh, Mr. Kishori Sharma,Mr.

Padam Singh Narwaria, Mr. Gyanesh Rawat, Mr. Devendra Kumar Sharma and Mr.

Gyanesh Sharma may file their replies/ submissions within a period of 21 days from

the date of receipt of this Order and may also indicate whether they desire to avail an

opportunity of personal hearing in the matter.

22. This Order is without prejudice to the right of SEBI to take any other action including

prosecution proceedings under Section 24 of the SEBI Act and Section 621 of the

Companies Act, 1956 read with the relevant provisions of the Companies Act, 2013

and adjudication proceedings under the SEBI Act, against BNP Real Estate and Allied

Limited, its promoters and directors namely Mr. Sanjeev Kumar Purwansi, Mr.

Munendra Kumar, Mr. Mukesh Kumar Sharma, Mr. Mahesh Paliwal, Mr. Santosh

Sharma, Mr. Raghvendra Singh Narwaria, Ms. Surekha Sharma, Mr. Umesh Narwaria,

Mr. Ravindra Singh, Mr. Kunver Singh, Mr. Kishori Sharma,Mr. Padam Singh

Narwaria, Mr. Gyanesh Rawat, Mr. Devendra Kumar Sharma and Mr. Gyanesh

Sharma, in accordance with law.

Date : September 29th, 2015 PRASHANT SARAN Place : Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA