paying dues payable by the Judgment debtors and defendants companies being No. 5, 7 to 14 and 20 to 23 to the investors as per Securities and Exchange Board of India order bearing No. WTM/SR/WRO/RLO/ 102/05/2015 dated 12.05.2015.
21. Mr. Md. Salim on behalf of the aforesaid Noticees reiterated his submissions vide letter dated September 18, 2017 and September 16, 2017. He submitted that they had not impaired the personal hearing opportunity scheduled on June 20, 2017, rather they had availed the opportunity to provide some documentary evidence and reiterated that a CBI Order in the matter of Gulshan Nirman India Limited investigation is pending against them on the same issue and thus requested for further time.
22. Shri Deep Ghosh and Shri Rajat Shuvro De vide letter dated October 25, 2017 stated:
a) It appears from documents disclosed by SEBI that debentures were issued by the Company during 2011-2013 and the business of the Company was stopped from August 2013 when Mr. Md. Salim, Mr. Syed Akhtar and Mr. Nurul Islam were the directors.
b) A complete list of depositors is available with the Software Developer Company, Web Infotech Solutions. The Company till November 29, 2013 was being managed and run by Mr. Md. Salim and his associates who sold the Company by an agreement dated November 29, 2013 to Mr. Bijoy Kumar Agarwal.
c) Thereafter, Mr. Bijoy Agarwal by agreement dated February 5, 2014 assigned all his rights in favour of Mr. Partha Sarathy and Mr. Partha Sarathy was entrusted to repay the money raised by Mr. Md. Salim by allotment of Debentures during his tenure.
d) Shri Deep Ghosh and Shri Rajat Shuvro De were appointed by Mr. Partha Sarathy Dey in February 2014 and both of them resigned in 2015.
e) They were in no way connected with the activities of the Company.
23. I have considered the allegations and materials available on record. On perusal of the same, the following issues arise for consideration. Each question is dealt with separately under different headings. (1) Whether the company came out with the Offer of NCDs as stated in the interim order. (2) If so, whether the said issues are in violation of Section 56, Section 60 read with section 2(36), Section 73 and section 117C of the Companies Act, 1956 read with the ILDS Regulations. (3) Whether appointment of Gulshan Debenture Trust (represented by its trustee, viz. Smt. Aisha Begum) as the Debenture Trustee by GNIL is in violation of Section 117B of the Companies Act, 1956 and whether Gulshan Debenture Trust andSmt. Aisha Begumviolated Section 12(1) of SEBI Act and regulation 7 of the Debenture Order in the matter of Gulshan Nirman India Limited Trustees Regulations (4) If the findings on Issue No.2 and 3 are found in the affirmative, who are liable for the violation committed? ISSUE No. 1- Whether the company came out with the Offer of NCDs as stated in the interim order.
24. I have perused the interim order dated May 12, 2015 for the allegation of Offer of NCDs. I note that neither the company nor the directors have disputed the same.
25. I have also perused the documents/ information obtained from the 'MCA 21 Portal' and other documents available on records. It is noted, from the investors' complaints received by SEBI in the matter that GNIL has issued and allotted NCDs to at least 75 investors during the financial years 2011-2012 and 2012-2013and raised at least an amount of Rs. 39,53,000. I also note that the number of allottees and funds mobilized has been collated from the documents submitted with the complaints received by SEBI. Therefore, it is possible that the actual number of allottees and amount mobilized could be more than 75 allottees and Rs.39,53,000 respectively.
26. However, I also note that as per Form 10 filed with MCA, the Board of the Company had authorised issuance of debentures vide resolution dated May 9, 2011 and as per the Balance Sheet filed with MCA for the year ending 31.3.2012, long term liabilities are shown as Rs. 2,69,05,000. Further, it is mentioned in the auditors report for FY 2011-12 available on MCA portal that details of allottees of debentures of Rs.1, 60, 37,000 not maintained. Therefore, I find that the amount mobilized and number of allottees is expected to be more than Rs.1, 60, 37,000 and 75.
27. I therefore conclude that GNIL came out with an offer of NCDs as outlined above. ISSUE No. 2- If so, whether the said issues are in violation of Section 56, Section 60 read with section 2(36), Section 73 and section117C of the Companies Act, 1956 read with the ILDS Regulations.
28. The provisions alleged to have been violated and mentioned in Issue No.2 are applicable Order in the matter of Gulshan Nirman India Limited to the Offer of NCDs made to the public. Therefore the primary question that arises for consideration is whether the issue of NCDs is public issue. At this juncture, reference may be made to sections 67(1) and67(3) of the Companies Act, 1956: "67. (1) Any reference in this Act or in the articles of a company to offering shares or debentures to the public shall, subject to any provision to the contrary contained in this Act and subject also to the provisions of sub-sections (3) and (4), be construed as including a reference to offering them to any section of the public, whether selected as members or debenture holders of the company concerned or as clients of the person issuing the prospectus or in any other manner. (2)any reference in this Act or in the articles of a company to invitations to the public to subscribe for shares or debentures shall, subject 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. (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, 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 Provided that nothing contained in this sub-section shall apply in a case where the offer or invitation to subscribe for shares or debentures is made to fifty persons or more: Order in the matter of Gulshan Nirman India Limited 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).
29. The following observations of the Hon'ble Supreme Court of India in Sahara India Real Estate Corporation Limited & Ors. v. SEBI (Civil Appeal no. 9813 and 9833 of 2011)(hereinafter referred to as the Sahara Case), while examining the scope of Section 67 of the Companies Act, 1956, are worth consideration:- 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 those expressions are to be understood, when reference is made to the Act or in the articles of a company. The emphasis in Section 67(1) and (2) is on the section of the public. Section 67(3) states that no offer or invitation shall be treated as made to the public, by virtue of subsections (1) and (2), 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. Section 67(3) is, therefore, an exception to Sections 67(1) and (2). If the circumstances mentioned in clauses (1) and (b) of Section 67(3) are satisfied, then the offer/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, 2000 w.e.f. 13.12.2000, which clearly indicates, nothing contained in Sub- section (3) of Section 67 shall apply in a case where the offer or invitation to subscribe for shares or debentures is made to fifty persons or more. Resultantly, 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 proved that the shares or debentures are not Order in the matter of Gulshan Nirman India Limited available for subscription or purchase by persons other than those receiving the offer or invitation.
30. Section 67(3) of Companies Act, 1956 provides for situations when an offer is not considered as offer to public. As per the said sub section, if the offer is one which is not 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, if the offer is the domestic concern of the persons making and receiving the offer, the same are not considered as public offer. Under such circumstances, they are considered as private placement of shares and debentures. It is noted that as per the first proviso to Section 67(3) Companies Act, 1956, the public offer and listing requirements contained in that Act would become automatically applicable to a company making the offer to fifty or more persons. However, the second proviso to Section 67(3) of Companies Act, 1956 exempts NBFCs and Public Financial Institutions from the applicability of the first proviso.
31. In the instant matter, I find that NCDs were issued by GNIL to at least 75 investors in the financial years 2011-2012 and 2012-2013. However, this number is not conclusive as it is based on the documents received by SEBI along with complaints and the actual number of investors could be more than 75. I find that GNIL has mobilized at least an amount of Rs. 39,53,000 over the financial years 2011-2012 and 2012-2013 which is not a conclusive value as it is based on the complaints received by SEBI. Further, I find that GNIL has created a charge of Rs. 10 Crores on May 09, 2011. I also note that as per Form 10 filed with MCA, the Board of the Company had authorised issuance of debentures vide resolution dated May 9, 2011 and as per the Balance Sheet filed with MCA for the year ending 31.3.2012, long term liabilities are shown as Rs. 2,69,05,000. Further, it is mentioned in the auditors report for FY 2011-12 available on MCA portal that details of allottees of debentures of Rs. 1, 60, 37,000 not maintained. Therefore, the amount mobilized and number of allottees can be much more than Rs. 1, 60, 37,000 and 75. The above findings lead to a reasonable conclusion that the Offer of NCDs by GNIL was a public issue within the meaning of the first proviso to section 67(3) of the Order in the matter of Gulshan Nirman India Limited Companies Act, 1956.
32. Neither GNIL nor its directors have contended that the Offer of NCDs does not fall within the ambit of first proviso of Section 67(3) of Companies Act, 1956. Herein, I note that the Interim order refers to the brochures cum application form and letters of allotment issued by GNIL, wherein it has been mentioned that the NCDs were being issued on private placement. I note that no evidence has been brought on record to show that the NCD issue was made to known persons or was a domestic concern Further, considering that GNIL has issued and allotted NCDs to at least 75 investors during the financial years 2011-2012 and 2012-2013 and raised at least an amount of Rs.1,60, 37,000, I do not find that the NCD issue by the Company was a private placement.
33. I find that GNIL has not claimed it to be a Nonbanking financial company or public financial institution within the meaning of section 4A of the Companies Act, 1956. In view of the aforesaid, I, therefore, find that there is no case that GNIL is covered under the second proviso to Section 67(3) of the Companies Act, 1956.
34. Even in cases where the allotments are considered separately, reference may be made to Sahara Case, wherein it was held that under Section 67(3) of the Companies Act, 1956, the "Burden of proof is entirely on Saharas to show that the investors are/were their employees/workers or associated with them in any other capacity which they have not discharged." In respect of those issuances, the directors have not placed any material that the allotment was in satisfaction of section 67(3)(a) or 67(3)(b) of Companies Act, 1956
i.e., it was made to the known associated persons or domestic concern. Therefore, I find that the said issuance cannot be considered as private placement. Moreover, reference may be made to the order dated April 28, 2017 of Honble Securities Appellate Tribunal in Neesa Technologies Limited vs. SEBI (Appeal No. 311 of 2016) which lays down that In terms of Section 67(3) of the Companies Act any issue to 50 persons or more is a public issue and all public issues have to comply with the provisions of Section 56 of Companies Act and ILDS Regulations. Accordingly, in the instant matter the appellant have violated these provisions and their argument that they have issued the NCDs in multiple tranches and no tranche has exceeded 49 people has no meaning. Order in the matter of Gulshan Nirman India Limited
35. Therefore, in view of the material available on record, I find that the Offer of NCDs by GNIL falls within the first proviso of Section 67(3) of Companies Act, 1956. Hence, the Offer of NCDs are deemed to be public issues and GNIL was mandated to comply with the 'public issue' norms as prescribed under the Companies Act, 1956.
36. Further, since the offer of NCDs is a public issue of securities, such securities shall also have to be listed on a recognized stock exchange, as mandated under section 73 of the Companies Act, 1956. As per section 73(1) and (2) 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 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.
37. The allegations of non-compliance of the above provisions were not denied by GNILor its directors. I also find that no records have been submitted to indicate that it has made an application seeking listing permission from stock exchange or refunded the amounts on account of such failure. Therefore, I find that GNIL has contravened the said provisions. GNIL has not provided any records to show that the amount collected by it is kept in a separate bank account. Therefore, I find that GNIL has also not complied with the provisions of section 73(3) which mandates that the amounts received from investors shall be kept in a separate bank account. Therefore, I find, that section 73(2) of the Companies Act, 1956 has not been complied with.
38. 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'. As per the aforesaid Section 2(36), 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, or debentures of, a body corporate. As the offer of NCDs was a deemed public issue of securities, GNIL was required to register a prospectus with the RoC under Section 60 of the Companies Act, 1956. I find that GNIL has not submitted any record to indicate that it has registered a prospectus with the RoC, Order in the matter of Gulshan Nirman India Limited in respect of the offer of NCDs. I, therefore, find that GNIL has not complied with the provisions of Section 60 of the Companies Act, 1956.
39. 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, containing disclosures as specified. Neither GNIL nor its directors produced any record to show that it has issued Prospectus containing the disclosures mentioned in section 56(1) of the Companies Act, 1956, or issued application forms accompanying the abridged prospectus. Therefore, I find that, GNIL has not complied with sections 56(1) and 56(3) of the Companies Act, 1956.
40. As regards the allegation of section 117C of the Companies Act, 1956, it may be seen that the said provision mandates the company to create a debenture redemption reserve for the redemption of such debentures, to which every year, adequate amounts should be credited out of its profits, until such debentures are redeemed. None of the Noticees denied this allegation. There is no material on record to show that such debenture reserve was created. Therefore, I hold that the company has violated section 117C of the Companies Act, 1956.
41. ILDS Regulations are applicable to the public issue and listing of debt securities. Regulation 2(e) of the ILDS Regulations defines debt securities to mean non-convertible debt securities which create or acknowledge indebtedness, and include debentures. In view of the finding that GNIL has made a public issue of debt securities, the ILDS Regulations is also applicable to the instant offer of NCDs. Therefore, I find that the Company has violated the following provisions of the aforesaid ILDS Regulations, which contain inter alia conditions for public issue and listing of debt securities, viz.
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 Order in the matter of Gulshan Nirman India Limited
v. Regulation 4(4) Appointment of Debenture Trustees
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 17 Creation of security
xv. Regulation 19 Mandatory Listing
xvi. Regulation 26 Obligations of the Issuer, etc.
42. Further, I note that the jurisdiction of SEBI over various provisions of the Companies Act, 1956 including the above mentioned, in the case of public companies, whether listed or unlisted, when they issue and transfer securities, flows from the provisions of Section 55A of the Companies Act, 1956. 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 securities and non-payment of dividend is concerned, SEBI has the power to administer in the case of listed public companies and in the case of those public companies which intend to get their securities listed on a recognized stock exchange in India." "SEBI can exercise its jurisdiction under Sections 11(1), 11(4), 11A(1)(b) and 11B of SEBI Act and Regulation 107 of ICDR 2009 over public companies who have issued shares 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" Order in the matter of Gulshan Nirman India Limited
43. In this regard, it is pertinent to note that by virtue of Section 55A of the Companies Act, 1956, SEBI has to administer section 67 of that act, so far as it relates to issue and transfer of securities, in the case of companies who intend to get their securities listed. While interpreting the phrase intend to get listed in the context of deemed public issue the Honble Supreme Court in Sahara Case observed- But then, there is also one simple fundamental of law, i.e. that no-one can be presumed or deemed to be intending something, which is contrary to law. Obviously therefore, intent has its limitations also, confining it within the confines of lawfulness Listing of securities depends not upon ones volition, but on statutory mandate The appellant-companies must be deemed to have intended to get their securities listed on a recognized stock exchange, because they could only then be considered to have proceeded legally. That being the mandate of law, it cannot be presumed that the appellant companies could have intended, what was contrary to the mandatory requirement of law
44. In view of the above findings, I am of the view that GNIL engaged in fund mobilizing activity from the public, through the offer of NCDs and has contravened the provisions of section 56(1), 56(3), 2(36) read with 60, 73(1), 73(2), 73(3), and 117C of the Companies Act, 1956, and above mentioned provisions pertaining to the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008. ISSUE No. 3-Whether appointment of Gulshan Debenture Trust (represented by its trustee, viz. Smt. Aisha Begum), as the Debenture Trustee by GNILis in violation of Section 117B of the Companies Act, 1956 and whether Gulshan Debenture Trust and Smt. Aisha Begum have violated Section 12(1) of SEBI Act and regulation 7 of the Debenture Trustees Regulations?
45. I find that GNIL had created a charge of Rs. 10 Crores for the Offer of NCDs by the Order in the matter of Gulshan Nirman India Limited Company. I further find that GNIL had appointed Gulshan Debenture Trust (represented by its trustee, viz. Smt. Aisha Begum ) as the debenture trustee.
46. section 12(1) of the SEBI Act states that: "No trustee of trust deed shall buy, sell or deal in securities except under, and in accordance with, the conditions of a certificate of registration obtained from the Board in accordance with the regulations made under this Act". Regulation 7 of the SEBI (Debenture Trustees) Regulations, 1993, states 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 alone are eligible to get a certificate of registration as Debenture Trustee.
47. Gulshan Debenture Trust(represented by its trustee, viz. Smt. Aisha Begum) are not eligible to obtain a certificate of registration since it does not satisfy the eligibility criteria mentioned in Regulation 7 of the SEBI (Debenture Trustees) Regulations, 1993. None of the Noticees claimed that Gulshan Debenture Trust (represented by its trustee, viz. Smt. Aisha Begum) had received certificate of registration as per section 12(1) of the SEBI Act. In view of the above, I find that Gulshan Debenture Trust and Smt. Aisha Begum have dealt in the impugned Offer of NCDs as debenture trustees, without having a certificate of registration as Debenture Trustee in violation of section 12(1) of the SEBI Act, 1992. Herein, I note Shri Md. Salims submissions that Smt. Aisha Begum has resigned much earlier and she was functus officio and never was directly or indirectly involved and discharged any functions or duties in the capacity of trustee or otherwise at any point of time. On perusal of Form 10 as well as Debenture Trust Deed, I find that GNIL had created a charge of Rs. 10 Crores for the Offer of NCDs by the Company and Smt. Aisha Begum is shown as the Debenture Trustee of the Company in both the documents. The concerned violations herein are for dealing in the impugned Offer of NCDs as debenture trustees, without having a certificate of registration as Debenture Trustee. Further, the Debenture Trust Deed has also been executed between the Company and Smt. Aisha Begum as the Debenture Trustee. Therefore, I find the violations against her are established since there is evidence that she agreed to be appointed as debenture trustee as evidenced by the debenture trust deed. There is no Order in the matter of Gulshan Nirman India Limited further requirement that she ought to have discharged the functions as debenture trustee in order to attract the violation. Therefore, I find that the aforesaid submissions that she was functus officio and never was directly or indirectly involved and discharged any function or duty in the capacity of trustee or otherwise at any point of time was not tenable.
48. Under Section 117B of the Companies Act, 1956 no company shall issue a prospectus or a letter of offer to the public for subscription of its debentures, unless the company 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. I find that GNIL has appointed Gulshan Debenture Trust (represented by its trustee, viz., Smt. Aisha Begum) who do not have a certificate of registration. Therefore, the appointment of the same is in violation of Section 117B of the Companies Act, 1956. Further, since GNIL has not issued a prospectus with the relevant information and therefore, the requirement of stating the consent of the debenture trustee to be so appointed on the face of the prospectus has not been complied with. ISSUE No. 4- If the findings on Issue No.2 and 3 are found in the affirmative, who are liable for the violation committed?
49. Shri Sudhir Sharma in his reply stated that he was in the Company only for a period from May 3, 2011 to October 24, 2011 (5 months) and during his tenure, no allotment of debentures have been made and that he had no connection with the said issuance of debentures and for the last 4 years or more after resignation, he has not been in touch with the Company and/ or its management. In this regard, I find that as per MCA records as well as his submission, Shri Sudhir Sharma was director of the Company from May 3, 2011 to October 24, 2011. However, I also find that the NCDs have been allotted by the Company during 2011-2012 and 2012-2013and from the material available on record for instance, three NCDs dated October 20, 2011 issued by the Company which falls within the period of Shri Sudhir Sharmas directorship, hence his submissions that during his Order in the matter of Gulshan Nirman India Limited tenure, no allotment of debentures have been made are untenable. In regard to his submissions that he had no connection with the said issuance of debentures, I note Honble Securities Appellate Tribunal (SAT) order dated July 14, 2017 in the matter of Manoj Agarwal vs. SEBI, wherein Honble SAT has considered similar contentions like merely lending name to be a director and non-involvement in the day to day affairs of the Company and has held that this would not absolve the directors from their obligation to refund the amount to investors in view of specific provisions of the Companies Act.
50. Shri Md. Salim in his reply has stated that since resignation he alongwith erstwhile directors and trustee are not custodian of the documents of the Company and hence unable to ascertain the liabilities and that Ms. Aisha Begum has resigned much earlier and she was functus officio and never was directly or indirectly involved and discharged any functions or duties in the capacity of trustee or otherwise at any point of time. He also requested to absolve him, erstwhile directors and erstwhile trustee from all allegations and release from all liabilities of the Company. Shri Mohammad Attaullah Khan, Shri Srinibash Ghosh, Smt. Aisha Begum, Shri Kaustabh Roy, Shri Debashish Bhattacharyya, Shri Sudhir Sharma and Shri Syed Akhtar vide letters, each dated September 5, 2016 authorized Shri Md. Salim to file reply to Interim Order and Shri Md. Salim, inter-alia, stated that Mohammad Attaullah Khan, Srinibash Ghosh and Debashish Bhattacharyya were appointed in the company on 01.09.2012, 12.09.2012 and 01.09.2012 respectively, and thereafter, Md. Salim, Syed Akhtar and Kaustabh Roy resigned from the companies on 24.09.2012, 24.09.2012 and 19.11.2012 respectively. It was also submitted that Manoj Singh, Prakash Kumar Kori and Pradip Naskar were appointed in the Board of Directors of the Company on 12.12.2013 and Debashish Bhattacharya, Mohammad Attaullah Khan and Srinibash Ghosh resigned from the company on 23.12.2013. I find that the said submissions regarding appointment and resignation of the directors are as per the available MCA records. Further, it was submitted that they transferred the management and control of GNIL together with a large plot of land to Mr. Bijay Kumar Agarwal in November 2013 on the understanding and arrangement between them that Mr. Agarwal shall be solely responsible to discharge all liabilities of the Company including the repayment to subscribers of NCDs, issued by Order in the matter of Gulshan Nirman India Limited the Company and Mr. Bijay Kumar Agarwal assigned all his right, title and interest in the Agreement dated February 05, 2014 to Mr. Dey to discharge all the liabilities of the Company. In regards the agreement between Mr. Md. Salim and Mr. Bijay Kumar Agarwal assigning the liabilities including repayment to the allottees of NCDs and the subsequent assignment of liabilities by Mr. Bijay Agarwal to Mr. Partha Sarathy Dey, I find that the legal/statutory obligations imposed under the Companies Act, 1956 can not be divested in favour of others. The statutory liability to repay the investors continues to vest on the persons liable to repay as per section 73(2) of the Companies Act,1956. An agreement can apportion the joint and several liabilities among the persons liable to repay as per section 73(2) of the Companies Act, 1956. However, the statutory liability continues to remain with all who are jointly and severally liable to repay. Therefore, I find that these submissions are untenable. Therefore, Shri Md. Salims susbmissions on behalf of himself, Shri Mohammad Attaullah Khan, Shri Srinibash Ghosh, Smt. Aisha Begum, Shri Kaustabh Roy, Shri Debashish Bhattacharyya, Shri Sudhir Sharma and Shri Syed Akhtar that the directions against them imposed by Interim Order be vacated and they be declared as not liable for the alleged violations of the Company cannot be accepted. Further, I find that as per MCA records, Shri Md. Salim was director of the Company from May 3, 2011 to September 24, 2012, Shri Kaustabh Roy was director of the Company from October 17, 2011 to November 19, 2012, Shri Sudhir Sharma was director of the Company from May 3, 2011 to October 24, 2011, Shri Syed Akhtar was director of the Company from May 3, 2011 to September 24, 2012, Shri Mohammad Attaullah Khan was director of the Company from September 1, 2012 to December 23 2013, Shri Debashish Bhattacharyya was director of the Company from September 1, 2012 to December 23 2013, Shri Srinibash Ghosh was director of the Company from September 12, 2012 to December 23 2013 and as the NCDs were allotted during 2011- 2012, and 2012-2013,they are liable to refund.
51. However, I also find that Shri Md. Salim has submitted that one Title Suit No. 166/2015 was preferred before the Ld.Judge, Vth Bench, City Civil Court at Calcutta by Md. Salim, Kaustabh Roy, Syed Akhtar, Debashish Bhattacharyya, Mohammad Attaullah Khan, Srinibash Ghosh, Aisha Begum and others against Partha Sarathi Dey, Deep Order in the matter of Gulshan Nirman India Limited Ghosh, Sukanta Manjhi, Rajat Shuvro De and others which has been heard, considered, Ordered and Decreed on 11.05.2015 vide order no. 11 of the said date by the Ld. Judge, Vth Bench, City Civil Court at Calcutta and the Ld. Judge, Vth Bench, City Civil Court at Calcutta was pleased to pass an order that all the liabilities of the companies are to be borne and redeemed by the present Management namely Partha Sarathi Dey, Deep Ghosh, Sukanta Manjhi, Rajat Shuvro De, Dimple Fouzder and others being Directors alongwith the persons - in - charge of the companies. Further, he submitted that the petitioners of the T.S. No.166/2015 also filed Title Execution Case No.141 of 2017 (Arising out of T.S. No. 166 of 2015) in the City Civil Court at Calcutta before the Ld. Registrar Bench for execution against the Judgment debtors/ defendants for compliance of decree dated 11.05.2015 by paying dues payable by the Judgment debtors and defendants companies being No. 5, 7 to 14 and 20 to 23 to the investors as per Securities and Exchange Board of India order bearing No. WTM/SR/WRO/RLO/ 102/05/2015 dated 12.05.2015. On perusal of the copy of judgment dated May 11, 2015 in the aforesaid suit, I find that the suit has been partly decreed by the Honble Judge on the basis of the prayer of the parties on consent that the plaintiffs were entitled to get a decree for declaration that after signing the agreement dated 29.11.2013, they have seized to control the defendant companies no. 20, 23 and they have no responsibility to repay any of the depositors, investors of the defendant no. 20, 21, 22 & 23 and that the defendants no. 5, 7 to 14 being the present directors of the company and/or persons in the present management of the company and defendants no. 20 to 23 as on date of passing of the award i.e. 23.7.2014, are liable to pay the claims of the creditors including depositors. I note that the plaintiffs in the case include Shri Md Salim, Smt. Aisha Begum, Shri Syed Akhtar, Shri Kaustabh Roy, Shri Debashish Bhattacharyya, Shri Mohammad Attaullah Khan, Shri Srinibash Ghosh and defendants no. 7 to 14 include Shri Rajat Shuvro De, Shri Deep Ghosh, Shri Sukanta Majhi and defendants no. 20 to 23 include GNIL. On perusal of the decree, it appears that the Honble Court has determined the liability of the plaintiffs and defendants in respect of depositors, creditors as well as others based on the agreement between these parties. However, SEBI is empowered to determine the liability of the past and present directors of GNIL under the Order in the matter of Gulshan Nirman India Limited section 73(2) of Companies Act, 1956 and Securities and Exchange Board of India Act, 1992. Attention also may be drawn to the provisions of section 20a of the sebi act which bars the jurisdiction of the civil court in the following words ..no civil court shall have jurisdiction in respect of any matter which the Board [or the Adjudicating Officer is empowered by, or under, this Act to pass any order and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any order passed by the Board or the Adjudicating Officer by, or under, this Act. It may be further noted, it is different proposition that the directors who are jointly and severally liable to refund the money along with the company, can determine their inter se liability among themselves through arrangements such as contractual. It is also different proposition that the parties to such agreement can seek enforcement of contract from court of law. The proceeding in hand determines the liability of directors and the company vis a vis the debenture holders as stipulated under section 73(2) of the Companies Act. The inter-se liability of directors is not determined in the present proceedings. Under the various agreements cited by the directors, if inter se liability of directors are sought to be agreed upon, the present proceedings does not interfere the same. However, as found earlier, the statutory liability which is joint and several continues to vest on the persons liable to repay as per section 73(2) of the Companies Act, 1956. In case of their failure to repay, the SEBI has powers to recover the same from those persons liable to repay as per section 73(2) of the Companies Act, 1956. Given the fact that Title Suit No. 166/2015 vide its consent decree dated 11.05.2015 has declared that defendants being No. 5, 7 to 14 and 20 to 23 to the investors (The defendant No.20 being GNIL is relevant to this proceedings of Defendants No,.20- 23) based on the agreement dated November 29,2013, it is observed that Plantiffs therein have, filed Title Suit No. 166/2015, though there is clear provision in section 20a of the sebi act and plaintiffs have prosecuted the suit and by consent lead the court to decree the suit. It is further noted, SEBI has not been arrayed as party in the suit by the plaintiffs. In view of this, SEBI shall take necessary steps including filing of an appropriate application (which may include an application for modification of decree passed in Title Suit No. 166/2015/or/declaration to the extent, that statutory liability of Order in the matter of Gulshan Nirman India Limited directors to repay the NCD holders as crystalized in this order shall be in addition to and independent of the liability of judgment debtors in Title Suit No. 166/2015) in the appropriate Court to bring to the notice of the court the present SEBI Order and the present SEBI Order shall be implemented subject to conclusion of determination of such application. On disposal of such application, SEBI can independently initiate recovery against the directors who are liable to repay, as determined in this order, in case of their failure to repay the investors as per the order when it takes effect.
52. Shri Prakash Kumar Kori in his reply stated that he received SEBI letter and also attended meeting with CBI when he got to know about the search regarding Gulshan Nirman India and that some years back his DIN was made through some brother and he had not signed on any papers of the Company. He also submitted that the actual owners of the Company are Rajesh Kumar Jain and Rakesh Kumar Jain who forged his signatures and his documents were also with them and that he is very poor and working as peon and cant even afford to come to meet with SEBI and enclosed the letter from CBI requiring his attendance. Though Shri Prakash Kumar Kori states that he had not signed on any papers of the Company and the actual owners of the Company are Rajesh Kumar Jain and Rakesh Kumar Jain who forged his signatures and his documents are also with them, he has not specifically denied being the director of the Company and also not submitted any documentary evidence in support of his submissions despite SEBI letter dated September 8, 2017 advising him to produce documentary evidence in support of his submissions, therefore, I do not find these submissions tenable as he was a director of the Company and after accepting the position of director, he cannot wriggle out of his responsibility as director. Honble Securities Appellate Tribunal (SAT) vide its order dated July 14, 2017 in the matter of Manoj Agarwal vs. SEBI, has considered similar contentions like merely lending name to be a director and non-involvement in the day to day affairs of the Company and has held that this would not absolve the directors from their obligation to refund the amount to investors in view of specific provisions of the Companies Act. However, I find that as per MCA records that Shri Prakash Kumar Kori was director of the Company from December 12, 2013 to February 6, 2014 which Order in the matter of Gulshan Nirman India Limited was subsequent to the issue/allotment of NCDs by the Company and thereby not liable for refund.
53. Shri Deep Ghosh and Shri Rajat Shuvro De in their common reply stated that debentures were issued by the Company during 2011-2013 and the business of the Company was stopped from August 2013 when Mr. Md. Salim, Mr. Syed Akhtar and Mr. Nurul Islam were the directors and the Company till November 29, 2013 was being managed and run by Mr. Md. Salim and his associates who sold the Company by an agreement dated November 29, 2013 to Mr. Bijoy Kumar Agarwal. They also submitted that thereafter, Mr. Bijoy Agarwal by agreement dated February 5, 2014 assigned all his rights in favour of Mr. Partha Sarathy and Mr. Partha Sarathy was entrusted to repay the money raised by Mr. Md. Salim by allotment of Debentures during his tenure and Shri Deep Ghosh and Shri Rajat Shuvro De were appointed by Mr. Partha Sarathy Dey in February 2014 and both of them resigned in 2015 and they were in no way connected with the activities of the Company. In regard to his submission that they were in no way connected with the activities of the Company, I find these submissions untenable as Shri Deep Ghosh and Shri Rajat Shuvro De were directors of the Company and after accepting the position of directors, they cannot wriggle out of their responsibility as directors. However, I find that as per MCA records, Shri Deep Ghosh was director of the Company from February 6, 2014 to July 27, 2015 and Shri Rajat Shuvro Dewas director of the Company from February 6, 2014 to September 19, 2015, both of which are subsequent to the issue/allotment of NCDs by the Company and thereby not liable to repay the amount mobilized by the Company. Further, I also note that the order to Shri Nityananda Sarkar was returned undelivered with remarks, deceased. However, I find that there is no further material available on record in support thereof, hence I am constrained to proceed against Shri Nityananda Sarkar with the material available on record. Further, I note that the liability to refund does not abate even if he is deceased.
54. From the documents available on record, I find that the present Directors in GNIL are Shri Sukanta Majhi, Shri Swapan Mitra and Shri Santu Bhattacharjee. I also note that Shri Rajat Shuvro De, Shri Deep Ghosh, Shri Md Salim, Shri Nityananda Sarkar, Shri Sudhir Sharma, Shri Syed Akhtar, Shri Kaustabh Roy, Shri Debashish Bhattacharyya, Order in the matter of Gulshan Nirman India Limited Shri Mohammad Attaullah Khan, Shri Srinibash Ghosh, Shri Prakash Kumar Kori, Shri Manoj Singh, Shri Pradip Naskar and Shri Partha Sarathi Dey, who were earlier Directors in GNIL, have since resigned. The details of the appointment and resignation of the directors are as following: Name of the directors Date of appointment Date of cessation Shri Sukanta Majhi February 06, 2014 Continuing Shri Rajat Shuvro De February 06, 2014 September 19, 2015 Shri Deep Ghosh February 06, 2014 July 27, 2015 Shri Md Salim May 03, 2011 September 24, 2012 Shri Nityananda Sarkar May 03, 2011 October 24, 2011 Shri Sudhir Sharma May 03, 2011 October 24, 2011 Shri Syed Akhtar May 03, 2011 September 24, 2012 Shri Kaustabh Roy October 17, 2011 November 19, 2012 Shri Debashish Bhattacharyya September 01, 2012 December 23, 2013 Shri Mohammad Attaullah Khan September 01, 2012 December 23, 2013 Shri Srinibash Ghosh September 12, 2012 December 23, 2013 Shri Prakash Kumar Kori December 12, 2013 February 06, 2014 Shri Manoj Singh December 12, 2013 February 06, 2014 Shri Pradip Naskar December 12, 2013 February 06, 2014 Shri Partha Sarathi Dey February 06, 2014 August 13, 2014 Shri Swapan Mitra September 19, 2015 Continuing Shri Santu Bhattacharjee July 27, 2015 Continuing Order in the matter of Gulshan Nirman India Limited
55. Section 56(1) and 56(3) read with section 56(4) of the Companies Act, 1956 imposes the liability on the company, every director, and other persons responsible for the prospectus for the compliance of the said provisions. The liability for non-compliance of Section 60 of the Companies Act, 1956 is on the company, and every person who is a party to the non-compliance of issuing the prospectus as per the said provision. Therefore, GNILand its directors are held liable for the violation of sections 56(1), 56(3) and 60 of the Companies Act, 1956.
56. As far as the liability for non-compliance of section 73 of Companies Act, 1956 is concerned, as stipulated in section 73(2) of the said Act, the company and every director of the company who is an officer in default shall, from the eighth day when the company becomes liable to repay, 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 if the money is not repaid forthwith.With regard to liability to pay interest, I note that as per section 73 (2) of the Companies Act, 1956, the company and every director of the company who is an officer in default is jointly and severally liable, to repay all the money with interest at prescribed rate. In this regard, I note that in terms of rule 4D of the Companies (Central Governments) General Rules and Forms, 1956, the rate of interest prescribed in this regard is 15%.
57. From the material available on record and the details of the appointment and resignation of the directors of GNIL as reproduced in paragraph 54 of this Order, it is noted that Shri Md Salim, Shri Nityananda Sarkar, Shri Sudhir Sharma, Shri Syed Akhtar, Shri Kaustabh Roy, Shri Debashish Bhattacharyya, Shri Mohammad Attaullah Khan, Shri Srinibash Ghoshwere directors at the time of the issuance of NCDs. Since these persons were acting as directors during the period of issuance of NCDs, they are officers in default as per Section 5(g) of Companies Act, 1956. Further, in the present case, no material is brought on record to show that any of the officers set out in clauses (a) to (c) of Section 5 of Companies Act, 1956 or any specified director of GNIL was entrusted to discharge the obligation contained in section 73 of the Companies Act, 1956. Therefore, as per Section 5(g) of the Companies Act, 1956 all the past and present directors of GNIL, as officers in default, are liable to make refund, jointly and severally, along with Order in the matter of Gulshan Nirman India Limited interest at the rate of 15 % per annum, under section 73(2) of the Companies Act, 1956 for the non-compliance of the above mentioned provisions. Since, the liability of the company to repay under section 73(2) is continuing and such liability continues till all the repayments are made, the above said directors are co-extensively responsible along with the Company for making refunds along with interest under section 73(2) of the Companies Act, 1956 read with rule 4D of the Companies (Central Government's) General Rules and Forms, 1956, and section 27(2) of the SEBI Act. Therefore, I find that GNIL and its Directors, viz., Shri Md Salim, Shri Nityananda Sarkar, Shri Sudhir Sharma, Shri Syed Akhtar, Shri Kaustabh Roy, Shri Debashish Bhattacharyya, Shri Mohammad Attaullah Khan, Shri Srinibash Ghosh are jointly and severally liable to refund the amounts collected from the investors with interest at the rate of 15 % per annum, for the non-compliance of the above mentioned provisions.
58. I note that during the financial years 2011-2012 and 2012-2013,GNIL through Offer of NCDs, had collected at least an amount of Rs.1, 60, 37,000 from various allottees I note that Shri Md Salimwas director of GNIL during financial years 2011-2012, 2012-2013. I note that Shri Nityananda Sarkarwas director of GNIL during financial year2011-2012. I note that Shri Sudhir Sharmawas director of GNIL during financial year2011-2012. I note that Shri Syed Akhtar was director of GNIL during financial years 2011-2012, 2012-2013. I note that Shri Kaustabh Roywas director of GNIL during financial years 2011-2012 and 2012-2013. I note that Shri Mohammad Attaullah Khan was director of GNIL during financial year 2012-2013. I note that Shri Debashish Bhattacharyya was director of GNIL during financial year 2012-2013. I note thatShri Srinibash Ghosh was director of GNIL during financial year 2012-2013. Therefore, in view of Honble Securities Appellate Tribunal (SAT) Order dated July 14, 2017 in the matter of Manoj Agarwal vs. SEBI, I am of the view that the obligation of the director to refund the amount with interest jointly and severally with GNIL and other directors are limited to the extent of amount collected during his/her tenure as director of GNIL.
59. As far as the liability under sections 117B and 117C of the Companies Act, 1956, is concerned, the liability is on the company to comply with the said provisions. Therefore, GNIL is liable for the violation of sections 117b and 117c of the sebi act. In respect Order in the matter of Gulshan Nirman India Limited of the liability under section 12(1) of the SEBI Act, the liability is on the Trustee who act as the debenture trustee without the Certificate of Registration from SEBI as debenture trustee. In view of the above, I find that both Gulshan Debenture Trust and Smt. Aisha Begumare liable for the violation of section 12(1) of the SEBI Act read with regulation 7 of the Debenture Trustee Regulations.
60. With respect to the provisions of the respective regulations of the ILDS Regulations enumerated on paragraph 41 of this order, the liability is on the Company to comply with the requirements therein.
61. In this regard, I note that Shri Sukanta Majhi, Shri Rajat Shuvro De and Shri Deep Ghosh were appointed as directors of GNIL only on February 06, 2014, i.e. after the period of issuance of NCDs. Further, I note that Shri Manoj Singh, Shri Prakash Kumar Kori and Shri Pradip Naskar were appointed as directors of GNIL only on December 12, 2013, i.e. after the period of issuance of NCDs. I also note that Shri Partha Sarathi Dey was appointed as a director of GNIL only on February 06, 2014, i.e. after the period of issuance of NCDs. I also note that Shri Swapan Mitra and Shri Santu Bhattacharjee were appointed as directors of GNIL on September 19, 2015 and July 27, 2015, i.e. after the period of issuance of NCDs..Therefore, following the reasoning as provided in the matter of Manoj Agarwal vs. SEBI, I am of the view that Shri Sukanta Majhi, Shri Rajat Shuvro De, Shri Deep Ghosh, Shri Manoj Singh, Shri Prakash Kumar Kori, Shri Pradip Naskar, Shri Partha Sarathi Dey,Shri Swapan Mitra and Shri Santu Bhattacharjee are not liable for refund of money as they were not directors during the relevant time of fund mobilization. However, the said Noticees had the responsibility of ensuring that refund of money was made to the investors as prescribed in law. With respect to the breach of law and duty by a director of a company, I refer to and rely on the following observations made by the Hon'ble High Court of Madras in Madhavan Nambiar vs. Registrar of Companies (2002 108 Cas 1 Mad): " 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. Order in the matter of Gulshan Nirman India Limited
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 acts or commission or omission is equal. So also the treatment for such violations as stipulated in the Companies Act, 1956. "
62. A person cannot assume the role of a director in a company in a casual manner.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 noticee cannot therefore wriggle out from liability. A director who is part of a companys board shall be responsible and liable for all acts carried out by a company. Accordingly, Shri Sukanta Majhi, Shri Rajat Shuvro De, Shri Deep Ghosh, Shri Manoj Singh, Shri Prakash Kumar Kori, Shri Pradip Naskar, Shri Partha Sarathi Dey,Shri Swapan Mitra and Shri Santu Bhattacharjee were also responsible for all the deeds/acts of the Company during the period of their directorship and was obligated to ensure refund of the money collected by the company to the investors as per the provisions of section 73 of Companies Act, 1956. In view of the failure to discharge the said liability of ensuring refund, Shri Sukanta Majhi, Shri Rajat Shuvro De, Shri Deep Ghosh, Shri Manoj Singh, Shri Prakash Kumar Kori, Shri Pradip Naskar, Shri Partha Sarathi Dey,Shri Swapan Mitra and Shri Santu Bhattacharjeeare liable to be debarred for an appropriate period of time.
63. In view of the foregoing, the natural consequence of not adhering to the norms governing the issue of securities to the public and making repayments as directed under section 73(2) of the Companies Act, 1956, is to direct GNIL and its Directors, viz., Shri Md Salim, Shri Nityananda Sarkar, Shri Sudhir Sharma, Shri Syed Akhtar, Shri Kaustabh Roy, Shri Debashish Bhattacharyya, Shri Mohammad Attaullah Khan, Shri Srinibash Ghosh, to refund the monies collected, with interest to such investors. Further, Order in the matter of Gulshan Nirman India Limited in view of the violations committed by the Company and its Directors , to safeguard the interest of the investors who had subscribed to such NCDs issued by the Company, to safeguard their investments, and to further ensure orderly development of securities market, it also becomes necessary for SEBI to issue appropriate directions against the Company and the other Noticees.
64. I also note that, vide the interim order dated May 12, 2015, GNIL was directed to provide a full inventory of all the assets and properties belonging to the Company. Similarly, the Directors of GNIL were also directed to provide an inventory of assets and properties belonging to them. The above inventories were required to be filed within 21 days of the receipt of the order. However, I find that no such inventory has been provided either by GNIL or the other Noticees.
65. In view of the discussion above, appropriate action in accordance with law needs to be initiated against GNIL and its Directors and debenture trustees, viz. Shri Sukanta Majhi, Shri Rajat Shuvro De, Shri Deep Ghosh, Shri Md Salim, Shri Nityananda Sarkar, Shri Sudhir Sharma, Shri Syed Akhtar, Shri Kaustabh Roy, Shri Debashish Bhattacharyya, Shri Mohammad Attaullah Khan, Shri Srinibash Ghosh, Shri Prakash Kumar Kori, Shri Manoj Singh, Shri Pradip Naskar, Shri Partha Sarathi Dey, Shri Swapan Mitra, Shri Santu Bhattacharjee and Gulshan Debenture Trust (represented by its trustee, viz. Smt. Aisha Begum).
66. In view of the aforesaid observations and findings, I, in exercise of the powers conferred under section 19 of the Securities and Exchange Board of India Act, 1992 read with sections 11, 11(4), 11A and 11B of the SEBI Act, hereby issue the following directions: (a) GNIL, Shri Md Salim, Shri Nityananda Sarkar, Shri Sudhir Sharma, Shri Syed Akhtar, Shri Kaustabh Roy, Shri Debashish Bhattacharyya, Shri Mohammad Attaullah Khan, Shri Srinibash Ghosh, shall forthwith refund the money collected by the Company, during their respective period of directorship through the issuance of NCDs including the application money collected from investors during their respective period of directorship, till date, pending allotment of securities, if any, with an interest of 15% per annum, from the eighth day of collection Order in the matter of Gulshan Nirman India Limited of funds, to the investors till the date of actual payment. (b) The repayments and interest payments to investors shall be effected only through Bank Demand Draft or Pay Order both of which should be crossed as Non- Transferable. (c) Shri Md Salim, Shri Nityananda Sarkar, Shri Sudhir Sharma, Shri Syed Akhtar, Shri Kaustabh Roy, Shri Debashish Bhattacharyya, Shri Mohammad Attaullah Khan, Shri Srinibash Ghosh, are directed to provide a full inventory of all their assets and properties and details of all their bank accounts and holdings of mutual funds/shares/securities, if held in physical form and demat form. (d) GNIL and Shri Sukanta Majhi, Shri Swapan Mitra, Shri Santu Bhattacharjee (on behalf of the Company) are directed to provide a full inventory of all the assets and properties and details of all the bank accounts and holdings of mutual funds/shares/securities, if held in physical form and demat form, of the company. (e) GNIL and Shri Sukanta Majhi,Shri Swapan Mitra, Shri Santu Bhattacharjee(on behalf of the Company) are permitted to sell the assets of the Company for the sole purpose of making the refunds as directed above and deposit the proceeds in an Escrow Account opened with a nationalized Bank. Such proceeds shall be utilized for the sole purpose of making refund/repayment to the investors till the full refund/repayment as directed above is made. (f) Shri Md Salim, Shri Nityananda Sarkar, Shri Sudhir Sharma, Shri Syed Akhtar, Shri Kaustabh Roy, Shri Debashish Bhattacharyya, Shri Mohammad Attaullah Khan, Shri Srinibash Ghosh are prevented from selling their assets, properties and holding of mutual funds/shares/securities held by them in demat and physical form except for the sole purpose of making the refunds as directed above and deposit the proceeds in an Escrow Account opened with a nationalized Bank. Such proceeds shall be utilized for the sole purpose of making refund/repayment to the investors till the full refund/repayment as directed above is made. (g) GNIL,Shri Sukanta Majhi, Shri Swapan Mitra, Shri Santu Bhattacharjee(on behalf of the Company) and, Shri Md Salim, Shri Nityananda Sarkar, Shri Sudhir Sharma, Shri Order in the matter of Gulshan Nirman India Limited Syed Akhtar, Shri Kaustabh Roy, Shri Debashish Bhattacharyya, Shri Mohammad Attaullah Khan, Shri Srinibash Ghosh in their personal capacity to make refund, 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 the details of contact persons such as names, addresses and contact details, within 15 days of this Order coming into effect. (h) After completing the aforesaid repayments, GNIL, Shri Sukanta Majhi,Shri Swapan Mitra, Shri Santu Bhattacharjee(on behalf of the Company) and, Shri Md Salim, Shri Nityananda Sarkar, Shri Sudhir Sharma, Shri Syed Akhtar, Shri Kaustabh Roy,Shri Debashish Bhattacharyya, Shri Mohammad Attaullah Khan, Shri Srinibash Ghosh shall file a report of such completion with SEBI, within a period of three months from the date of this order, certified by 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") holding such certificate.
(i) In case of failure of GNIL, Shri Md Salim, Shri Nityananda Sarkar, Shri Sudhir Sharma, Shri Syed Akhtar, Shri Kaustabh Roy, Shri Debashish Bhattacharyya, Shri Mohammad Attaullah Khan, Shri Srinibash Ghosh to comply with the aforesaid applicable directions, SEBI, on the expiry of three months period from the date of this Order may recover such amounts, from the company and the directors liable to refund as specified in paragraph 66(a) of this Order, in accordance with section 28a of the sebi act including such other provisions contained in securities laws. (j) GNIL, Shri Md Salim, Shri Nityananda Sarkar, Shri Sudhir Sharma, Shri Syed Akhtar, Shri Kaustabh Roy, Shri Debashish Bhattacharyya, Shri Mohammad Attaullah Khan, Shri Srinibash Ghosh are directed not to, directly or indirectly, access the securities market, by issuing prospectus, offer document or advertisement soliciting money from the public and are further restrained and prohibited 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 4 (four) years from Order in the matter of Gulshan Nirman India Limited the date of completion of refunds to investors as directed above. The above said directors are also restrained from associating themselves with any listed public company and any public company which intends to raise money from the public, or any intermediary registered with SEBI from the date of this Order till the expiry of 4 (four) years from the date of completion of refunds to investors. (k) Shri Sukanta Majhi, Shri Rajat Shuvro De, Shri Deep Ghosh, Shri Manoj Singh, Shri Prakash Kumar Kori, Shri Pradip Naskar, Shri Partha Sarathi Dey, Shri Swapan Mitra, Shri Santu Bhattacharjee are directed not to, directly or indirectly, access the securities market, by issuing prospectus, offer document or advertisement soliciting money from the public and are further restrained and prohibited from buying, selling or otherwise dealing in the securities market, directly or indirectly in whatsoever manner for a period of 4 (four) years from the date of this Order. The above said persons are also restrained from associating themselves with any listed public company and any public company which intends to raise money from the public, or any intermediary registered with SEBI for a period of 4 (four) years from the date of this order.
(l) Gulshan Debenture Trust and Smt. Aisha Begum 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 4 (four) years from the date of this order.
67. I find that Interim order dated May 12, 2015 has not provided for the directions listed herein in respect of Gulshan Debenture Trust and Smt. Aisha Begum. Further, I find that Interim Order has not been passed in respect of the other two present directors of GNIL, Shri Swapan Mitra and Shri Santu Bhattacharjee. In view of this, this order will take effect as final order against Gulshan Debenture Trust, Smt. Aisha Begum, Shri Swapan Mitra and Shri Santu Bhattacharjee on the expiry of 30 days from the date of service of this order against the respective Noticees, unless any of the said Noticees, within such period of 30 days from the date of service of this order file their objections. If no objections are filed, the interim directions vide Interim order dated May 12, 2015 shall continue against the said Noticees till the time of said thirty days period, after which this Order in the matter of Gulshan Nirman India Limited order will come into effect. If objections are filed by any of the said Noticees, the interim directions vide Interim order dated May 12, 2015 shall continue qua that Noticee till disposal of the said objections qua that Noticee and the directions passed herein against that Noticee shall be made applicable subject to the determination on the objections.
68. The directions mentioned in 66 (c), (d), (j) and (k) shall come into force with immediate effect. The directions at paragraph 66(l) takes effect as per paragraph 67.
69. Honble Calcutta High Court has passed order dated November 3, 2016 in W.P. 3408(W) of 2015- Biman Das & Ors. v. Union of India & Ors. in respect of Gulshan Nirman India Limited and its directors. Therefore, the effect and implementation of the aforesaid directions stated in paragraph 66 excluding 66 (c), (d), (j) (k) and (l) shall be subject to:-
a) the directions passed by the Honble High Court in its Order dated November 3, 2016 or any further orders passed therein, and
b) The order to be passed in the application referred to para 51 of this order.
70. As stated in para 51, SEBI shall take necessary steps including filing of an appropriate application (which may include an application for modification of decree passed in Title Suit No. 166/2015/or/declaration to the extent, that statutory liability of directors to repay the NCD holders as crystalized in this order shall be in addition to and independent of the liability of judgment debtors in Title Suit No. 166/2015) in the appropriate Court to bring to the notice of the court the present SEBI Order. On disposal of such application, SEBI can independently initiate recovery against the directors who are liable to repay, as determined in this order, in case of their failure to repay the investors as per the order when it takes effect.
71. Since the present proceedings only render findings, inter alia, on the basis of the 75 compliants mentioned in the interim order, if any further material is availabe that funds were collected by company during the tenure of Shri Sukanta Majhi, Shri Rajat Shuvro De, Shri Deep Ghosh, Shri Manoj Singh, Shri Prakash Kumar Kori, Shri Pradip Naskar, Shri Partha Sarathi Dey,Shri Swapan Mitra and Shri Santu Bhattacharjee, SEBI shall Order in the matter of Gulshan Nirman India Limited proceed against them as directors liable to pay to the investors.
72. Copy of this Order shall be forwarded to the recognised stock exchanges and depositories and registrar and transfer agents for information and necessary action.
73. 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.
74. A copy of this Order shall also be forwarded to the Local Police/State Government for information. -Sd- DATE: January 24, 2018 MADHABI PURI BUCH PLACE: Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA