Ananta Barua, Whole Time Member:— Securities and Exchange Board of India (hereinafter referred to as “SEBI”) received many investor complaints through the Registrar of Companies, Punjab and Chandigarh (hereinafter referred to as “RoC”) against Unique Multi Foods Industries Limited (hereinafter referred to as “UMFIL”/“the company”) (formerly known as Amrit Ganga Agricultural Products Industries Limited) regarding non-receipt of interest/redemption amount on debentures issued by the company. SEBI also received complaints from some investors enclosing debenture certificates issued by the company to certain allottees.
2. Based on the same, a preliminary examination was carried out by SEBI and it was observed that UMFIL had mobilized funds through issue of Secured Redeemable Non Convertible Debentures (hereinafter referred to as “SRNCDs”). Accordingly, a further examination was conducted to ascertain if UMFIL had issued SRNCDs to the public in violation of the public issue requirements. Based on the said examination an ad interim ex parte order cum show cause notice was passed on May 22, 2019 (hereinafter referred to as “interim order”) which prima facie observed that the company allotted SRNCDs to more than 200 persons in the year 2015-16 and therefore, in terms of Section 42 of the Companies Act, 2013 read with Rule 14(2) of the Companies (Prospectus and Allotment of Securities) Rules, 2014 (Section 67 of the erstwhile Companies Act, 1956), the said issue of SRNCDs by UMFIL was a deemed public issue. The interim order found the prima facie violations of Sections 23(1) and 26(4) read with Section 2(70) of the Companies Act, 2013 and Section 40(1), 40(3) and 71(4) of the Companies Act, 2013 and provisions of SEBI (Issue and Listing of Debt Securities) Regulations, 2008 committed by the company and its following directors:
Noticee no. Name of the Director 2. Mr. Subash Chander Sharma 3. Mr. Rajinder Singh 4. Mr. Malkinder Singh 5. Mr. Mohammad Mukhtar Atif 6. Mr. Deepak Kumar Sah 7. Mr. Vidya Bhushan Ambastha 8. Mr. MD Sarfraz Ansari 9. Mr. Vinod Yadav 10. Mr. Sanjay Paramanik 11. Mr. Kamal Kishor Sagar 12 Mr. Sachin Kumar Thakur 13 Mr. Pramod Kumar 14 Mr. Rakesh Ranjan 15 Mr. Harjinder Singh 16 Mr. Saurabh Kumar Gupta, Debenture Trustee (M/s Hamrahi Debenture Trust)
3. In the interim order, following directions were issued against the company and its said directors:
“Directions
38. In view of the foregoing, I, in exercise of the powers conferred upon me under Sections 11
(1), 11(4) and 11B of the SEBI Act hereby issue, with immediate effect, the following directions, which shall remain in force until further orders:—
(a) Noticee no. 1, UMFIL shall forthwith cease to mobilize any fresh funds from investors through the offer of SRNCDs or through the issuance of equity shares or any other securities, to the public and/or invite subscription, in any manner whatsoever, either directly or indirectly till further directions;
(b) Noticee no. 1, UMFIL and its present directors, Noticees nos. 2 to 4 namely, Mr. Subash Chander Sharma, Mr. Rajinder Singh and Mr. Malkinder Singh are hereby are prohibited from issuing 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, till further orders;
(c) Noticee no. 1, UMFIL and its present directors, Noticees nos. 2 to 4 namely, Mr. Subash Chander Sharma, Mr. Rajinder Singh and Mr. Malkinder Singh are hereby restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in securities (including units of mutual funds), directly or indirectly, or being associated with the securities market in any manner, whatsoever. During the period of restraint, the existing holding (including units of mutual funds) of the aforesaid Noticees shall remain frozen;
(d) Noticee no. 1, UMFIL and its present directors, Noticees nos. 2 to 4 namely, Mr. Subash Chander Sharma, Mr. Rajinder Singh and Mr. Malkinder Singh shall not dispose of any of the properties or alienate or encumber any of the assets owned/acquired by the company through the offer of SRNCDs, without prior permission from SEBI;
(e) Noticee no. 1, UMFIL and its present directors, Noticees nos. 2 to 4 namely, Mr. Subash Chander Sharma, Mr. Rajinder Singh and Mr. Malkinder Singh shall not divert any funds raised from public through the offer and allotment of SRNCDs;
(f) Noticee no. 1, UMFIL and its present directors, Noticees nos. 2 to 4 namely, Mr. Subash Chander Sharma, Mr. Rajinder Singh and Mr. Malkinder Singh are directed to provide a full inventory of all their assets and properties and details of all their bank accounts, demat accounts and holdings of mutual funds/shares/securities, if held in physical form and demat form, within 21 days from the date of receipt of this order. It is clarified that the present directors of UMFIL shall ensure and facilitate the compliance of this direction by UMFIL;
(g) Noticee nos. 1 to 15 namely, UMFIL, Mr. Subash Chander Sharma, Mr. Rajinder Singh, Mr. Malkinder Singh, Mr. Mohammad Mukhtar Atif, Mr. Deepak Kumar Sah, Mr. Vidya Bhushan Ambastha, Mr. MD Sarfraz Ansari, Mr. Vinod Yadav, Mr. Sanjay Paramanik, Mr. Kamal Kishor Sagar, Mr. Sachin Kumar Thakur, Mr. Pramod Kumar, Mr. Rakesh Ranjan and Mr. Harjinder Singh shall provide to SEBI all information regarding amount mobilized including names of the debenture holders and their addresses, number of SRNCDs issued, promised maturity amount with date of maturity, amount refunded and date thereof during the financial years 2012 - 2016;
(h) The Debenture Trustee, Mr. Saurabh Kumar Gupta (M/s Hamrahi Debenture Trust), is prohibited from continuing with its present assignment as a debenture trustee in respect of the Offer of SRNCDs of UMFIL and also from taking up any new assignment or involvement in any new issue of debentures, etc. in a similar capacity, from the date of this Order till further directions.
39. The preliminary findings contained in paragraphs 8 to 35 of this Order are made on the basis of the information obtained from RoC and complaints received from the investors. Noticee no. 1, UMFIL and the present and past directors of UMFIL namely Noticee nos. 2 to 15, Mr. Subash Chander Sharma, Mr. Rajinder Singh, Mr. Malkinder Singh, Mr. Mohammad Mukhtar Atif, Mr. Deepak Kumar Sah, Mr. Vidya Bhushan Ambastha, Mr. MD Sarfraz Ansari, Mr. Vinod Yadav, Mr. Sanjay Paramanik, Mr. Kamal Kishor Sagar, Mr. Sachin Kumar Thakur, Mr. Pramod Kumar, Mr. Rakesh Ranjan and Mr. Harjinder Singh are hereby called upon to show cause as to why suitable directions/prohibitions under Sections 11, 11(4), and 11B of the SEBI Act should not be issued/imposed against them, including the following directions, viz.—
(a) Directing UMFIL and its past and present directors to jointly and severally refund money collected from investors through the issue of SRNCDs that are impugned in this Order, along with interest of 15% per annum;
(b) Directing UMFIL, its past and present directors 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) Restraining UMFIL, its past and present directors and debenture trustee, viz. Mr. Saurabh Kumar Gupta from accessing the securities market and prohibiting them from buying, selling or otherwise dealing in securities for an appropriate period;
40. The Noticees, may, within 21 days from the date of receipt of this interim order - cum-show cause notice, file their respective replies. The Noticees are directed to furnish an inventory of their assets in their reply. In the event the Noticees intend to avail an opportunity of personal hearing, they may do so by seeking a confirmation in writing from SEBI for the same within 45 days from the date of receipt of this Order. In the event of the Noticees failing to file replies within 21 days or requesting for an opportunity of personal hearing within the said 45 days, the preliminary findings at paras 8 to 35 of this Order and directions at para 38 (a) to (d) above shall become final and absolute against the Noticees automatically, without any further orders. The Noticees shall comply with the directions at para 38 above within a period of 90 days from the date of this Order becoming final. Upon the expiry of a period of 90 days from the date of this Order becoming final, SEBI may initiate appropriate enforcement action under SEBI Act, 1992 including, Adjudication, Prosecution and/or Recovery in addition to making a suitable reference to State Government/Local Police. However, as regards, the amount to be refunded will depend upon the actual amount raised from the public which may not be limited to the amount filed by the company or as observed in para 10 above. To that extent the order will be subject to the aforesaid.”
4. None of the Noticees except Shri Sanjay Pramanik (hereinafter referred to as “Noticee no. 10”), and Shri Kamal Kishore Sagar hereinafter referred to as “Noticee no. 11”) filed any reply within 21 days or sought personal hearing within 45 days, as directed in the interim order. Noticee no. 10 and 11 submitted letters referring to the interim order but did not make any submission regarding the allegations in the interim order.
5. An opportunity of personal hearing was granted to Noticee nos. 10 and 11 on October 15, 2020. On the said date, the Noticee nos. 10 and 11 appeared via video conference and made submissions. Both the Noticees have submitted that they were offered jobs in the company and at that time they had given their documents to the company. These documents seem to have been misused to make them directors in the company. Both Noticees have submitted that they were only employees of the company and they are not aware as to when they were made directors in the company. Noticees have also submitted that they were not aware of any fund raising by the company during the period of their employment.
Consideration of submissions and findings:
6. I note that interim order was passed against the company and its directors, as the company was found to be prima facie in violation of the provisions of public issue norms in respect of its public issue of SRNCDs. The interim order also issued various directions to the company and its directors and also called upon them to show cause as to why appropriate directions, as mentioned in the said order be not issued against them. The interim order also provided that in case the company or its directors do not file any reply in 21 days or do not seek opportunity of hearing within 45 days, the prima facie findings recorded and directions issued, in the interim order shall become final and absolute against the Noticees therein automatically, without any further orders.
7. The company and its directors except Noticee nos. 10 and 11 have neither filed any reply to the interim order nor have sought any hearing, therefore, the prima facie findings recorded and directions issued, in the interim order has become final and absolute against the company and its directors other than Noticee no. 10 and 11. Therefore, the limited scope of the present proceedings is to determine the liability of Noticee no. 10 and 11, if any, for the violations, as alleged in the interim order.
8. In this regard, I note that as per interim order, the company had raised money through issue of SRNCDs, the details of which are as under:
Year No. of debenture certificates No. of allottees No. of debentures Issue Value 2015-16 290 204 4,45,330 4,45,33,000 Total 290 204 4,45,330 4,45,33,000
9. I note that the company allotted SRNCDs to more than 200 persons in the year 2015-16. Therefore, in terms of Section 42 of the Companies Act, 2013 read with Rule 14(2) of the Companies (Prospectus and Allotment of Securities) Rules, 2014 (Section 67 of the erstwhile Companies Act, 1956), I find that the said issue of SRNCD by the company was a deemed public issue.
10. As per interim order, the details of the present and past directors of the company are as under:
Sl. No. Name Designation DIN Date of appointment Date of Cessation Details of Present Directors 1 Mr. Subash Chander Sharma Director 03446903 February 05, 2016 - 2 Mr. Rajinder Singh Director 03634397 February 19, 2015 - 3 Mr. Malkinder Singh Director 07407549 January 19, 2016 - Details of Past Directors 1 Mr. Mohammad Mukhtar Atif Director 05301406 June 15, 2012 May 03, 2013 2 Mr. Deepak Kumar Sah Director 03499812 June 15, 2012 September 20, 2012 3 Mr. Vidya Bhushan Ambastha Director 05303687 June 15, 2012 May 03, 2013 4 Mr. MD Sarfraz Ansari Managing Director 03486568 June 15, 2012 February 21, 2015 5 Mr. Vinod Yadav Director 06560333 May 03, 2013 February 19, 2015 6 Mr. Sanjay Paramanik Director 06560339 May 03, 2013 February 19, 2015 7 Mr. Kamal Kishor Sagar Director 06560318 May 03, 2013 February 19, 2015 8 Mr. Sachin Kumar Thakur Director 06560350 May 03, 2013 February 19, 2015 9 Mr. Pramod Kumar Managing Director 05137757 May 03, 2013 February 19, 2015 10 Mr. Rakesh Ranjan Director 06448600 February 19, 2015 January 19, 2016 11 Mr. Harjinder Singh Director 03634395 February 19, 2015 February 05, 2016
11. After considering the submissions made by the Noticee no. 10 and 11 during the hearing and the material available on record, I find that SRNCDs were issued by the company during the financial year 2015-16 whereas Noticee no. 10 and 11 were the directors in the company from May 03, 2013 to February 19, 2015. Therefore, Noticee no. 10 and 11 were not the directors of the company when the company issued SRNCDs to the public in violation of the public issue norms. I also note that Noticees have submitted that they were merely the employees of the company and they are not aware of any fund raising by the company during their employment. Findings recorded in the interim order though expresses a possibility of issuance of SRNCDs by the company prior to coming into force of Companies Act, 2013 on the basis of an application form received, which was issued by the company under Companies Act, 1956, however, there is no further material to indicate that SRNCDs were actually issued under such application forms before financial year 2015-16. I find that the findings in the interim order pertained to fund raising by the company through the issue of SRNCDs during the financial year 2015-16 only, as mentioned in para 8 above. In view of this, I find that Noticee no. 10 and 11 are not liable for issue of SRNCDs by the company during the financial year 2015-16 when they were not directors in the company.
Directions:
12. In view of the above, I, in exercise of the powers conferred upon me under Sections 11(1), 11(4) and 11B of the SEBI Act, 1992 read with Section 19 of the SEBI Act, 1992, hereby dispose of the proceedings qua Shri Mr. Sanjay Pramanik (Noticee no. 10) and Mr. Kamal Kishor Sagar (Noticee no. 11) initiated vide interim order dated May 22, 2019.
13. This Order comes into force with immediate effect.
14. A copy of this Order shall be forwarded to the Noticee No. 10 and 11, recognized stock exchanges, depositories and Registrars and Transfer Agents (RTA) of mutual funds for information and necessary action.
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