Assetz Premium Holdings Private Limited

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February 28, 2023 passed by the Adjudicating Officer ('AO' for short) of the Securities and Exchange Board of India ('SEBI' for short) imposing a monetary penalty of Rs. 1 lakh on the Company for failing to comply with Clause 3.2 of Annexure - A of SEBI Circular No. SEBI/HO/DDHS/CIR/P/103/2020 dated June 23, 2020.

2. Clause 3.2 of Annexure - A of SEBI Circular dated June 23, 2020 reads as follows:-

"At the time of executing Debenture Trust Deed, Issuer shall provide its bank details (from which it proposes to pay the redemption amount) and preauthorise Debenture Trustee(s) to seek debt redemption payment related information from the Issuer's bank. Issuer shall also inform the Debenture Trustee(s) of any change in bank details within 1 working day of such change. For existing debt securities, Issuer shall provide such pre- authorisation to Debenture Trustee(s), within 60 days from the date of this circular."

3. In compliance of the Circular, the Company was mandated to provide the details of its Bank account from which it had to pay the redemption amount and pre-authorise the Debenture Trustee(s) to seek debt redemption payment related information from its Bank. The Circular also mentioned that for the existing debt securities, the issuer (the Company) should provide the above within 60 days of the issue of the Circular. The Company

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had issued Non-Convertible Debentures (NCDs) in 2016 which were listed on Bombay Stock Exchange (BSE). Therefore, in terms of SEBI Circular dated June 23, 2020, the Company was required to comply with the conditions within 60 days which it failed to do.

4. We have heard Shri Sachin Vora, Authorized Representative for the Appellant and Shri Mr. Akash Rebello, the learned counsel assisted by Shri Akash Jain and Ms. Veena Hari, the learned counsel for the respondent.

5. The appellant has pleaded that the Circular was issued during the first wave of Covid-19 and though despite the tough circumstances Company approached its Bank, the Company could not obtain the pre-authorisation letter as the bank was operating with minimal manpower. The terms and conditions governing the issuance of NCDs were such that there was no obligation on the part of the Appellant to make periodical payments to the Debenture holders unless and until there was availability of free cash flow. Thus, getting the pre-authorisation letter from the Bank would have not served any purpose. Further, vide its Circular SEBI/HO/DDHS/P/CIR/2021/613 dated August 10, 2021; SEBI had superseded the Circular dated June 23, 2020. In the later Circular, the requirements of the

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Issuer to provide pre-authorisation within 60 days from the date of this Circular has been omitted. The appellant was under the impression that the requirement of pre-submission of authorization was no longer required. Further, the second spell of Covid-19 had begun and continued till August 2021. However, these factors were not considered by the Respondent and a penalty of Rs. 1 lakh was imposed under Section 15HB of SEBI Act, 1992.

6. We find that the Appellant admittedly failed to provide details of its Bank account and pre-authorise the Debenture Trustee(s) to seek debt redemption payment related information from its Bank. As per the Circular dated June 23, 2020 it was the responsibility of the Issuer, i.e. the Appellant to provide the information and pre-authorisation to the Debenture Trustee(s) and we note that the Appellant failed to do so for more than two and half years. The Appellant cannot take shelter of the hardships caused by Covid-19 as they did not submit the requisite information even after the pandemic had abated. We note that BSE issued at least three reminders and SEBI issued an advisory letter to the Appellant to comply within the direction of June 23, 2020 Circular. Further, there is nothing in the Circular dated August 10, 2021 to indicate that the

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Appellant had no longer to send the Bank details and pre- authorisation letter to the Debenture Trustee(s). Clause 4.1 of the Chapter XI of the operational Circular dated August 10, 2021 carries the provision that the issuer has to provide its Bank details and pre-authorisation to the Debenture Trustee(s). As the Circular dated June 23, 2020 had a clause regarding these conditions to be satisfied within 60 days for existing debt securities and it was expected that the pre-existing debt securities issues would have completed, there was no requirement of repeating such a clause. Therefore, in our view the Appellant's contention that it was no longer required to submit the Bank details and pre-authorisation to Debenture Trustee(s) is misplaced.

7. Accordingly, the appeal lacks merit and is dismissed with no order as to costs. The miscellaneous application is disposed of.

Justice Tarun Agarwala

Presiding Officer

Ms. Meera Swarup

Technical Member

29.09.2023

msb