WTM/PS/12 /ERO/MAY/2015. Case: Amazan Capital Limited Vs Joydeb Gara and Ors.. Securities and Exchange Board of India

Case NumberWTM/PS/12 /ERO/MAY/2015
JudgesPrashant Saran, Member
IssueCompanies Act, 1956 - Sections 2(36), 209A, 299, 4A, 55A, 56, 56(1), 56(3), 60, 621, 67, 67(1), 67(2), 67(3), 67(3)(a), 67(3)(b), 67(3A), 73, 73(1), 73(2), 73(3); Reserve Bank Of India Act, 1934 - Section 45I(f); Securities And Exchange Board Of India Act, 1992 - Sections 11(1), 11(4), 11A, 11A(1)(b), 11B, 19, 24
Judgement DateMay 25, 2015
CourtSecurities and Exchange Board of India


Prashant Saran, Member

  1. Securities and Exchange Board of India (hereinafter referred to as "SEBI") received a reference through the Minutes of State Level Co-ordination Committee of Reserve Bank of India dated Jan 04, 2012 and July 25, 2012, regarding the collection of money by Amazan Capital Ltd. (hereinafter referred to as "the Company") from the public by way of issuance of equity shares and preference shares. The company had also issued an advertisement in the newspaper "The Telegraph" on September 14, 2011 for mobilization of money through issuance of debentures.

  2. In order to examine the issuance of Non-Convertible Debentures/preference shares, SEBI sought the following details by letter dated September 24, 2012 and September 21, 2012, from the company and Registrar of Companies, West Bengal respectively.

    1. A certified copy of the Memorandum and Articles of Association of the company.

    2. Audited Balance Sheet and Profit & Loss account of the company for last 3 years.

    3. Name, addresses and occupation of all the promoters/directors of the company

    4. Names and details of the Key Managerial Personnel of the company.

    5. Other information in respect of every series of debentures/Preference shares issued by the company, as given below:

    a. Copy of details regarding the filing of Prospectus/Red Herring Prospectus/Information memorandum with RoC for issuance of debentures/preference shares.

    b. Date of opening and closing of the subscription list for the said debentures/preference shares.

    c. Details regarding the number of application forms circulated inviting subscription for debentures/preference shares.

    d. Details regarding the number of applications received.

    e. Details regarding the number of allottees.

    f. List of such allottees.

    g. Number of debentures allotted and value of such allotment against each allottee' s name.

    h. Details regarding subscription amount raised.

    i. Date of allotment of the debenture/preference shares.

    j. Copies of the minutes of Board/committee meeting in which the resolution has been passed for allotment.

    k. Date of dispatch of debenture certificates etc.

    l. Copies of Statement in lieu of prospectus, if any, filed by the company with RoC for issue of said debentures/preference shares.

    m. Details of the total number of applicants for each of its scheme besides the list of final allottees.

    n. Copies of application forms, RHP, pamphlets, advertisements and other promotional material circulated for issuance of debentures/preference shares.

    o. Terms and conditions of the issue of debentures/preference shares.

  3. The company by its letter dated November 05, 2012 replied to the letter of SEBI dated September 24, 2012.

  4. SEBI also received a reference dated June 2, 2013 from the Ministry of Corporate Affairs indicating the findings of the Inspection conducted by it under section 209A of the Companies Act, 1956 in respect of the issuance of equity shares and preferential shares made by the Company during the period of 2010-11 and 2011-12. Subsequently, the Ministry of Corporate affairs vide its letter dated April 02, 2014 forwarded the extract of the Inspection Report to SEBI bringing out the findings of inspection on the violation of sections 73(3) and 299 of the Companies Act, 1956 while issuing equity shares by the company during the period of 2010-11 and 2011-12.

  5. The material available on record including those submitted by the company and the extract of the Inspection Report of the Ministry of Company Affairs and the details taken from MCA Portal 21, have been examined. On an examination of the same, it is observed that -

    i. Amazan Capital Ltd. was an unlisted Non Banking Financial Company (NBFC) having its registered office at Infinity Infotech Park, Tower-1, 2nd Floor, Plot No-A3, Block-GP, Sector V, Saltlake City, Kolkata-700091. The company was originally incorporated as Thirdwave Securities Pvt. Ltd. on 11/09/1995. The name of the company was changed to Amazan Capital Private Ltd. Subsequently, post conversion of the company from Private Limited to Public Limited, the name of the company was changed to Amazan Capital Limited with effect from 28/06/2010. The corporate identity number of the company is U67190WB1995PLC074186.

    ii. The company issued equity shares as shown in the following table.

    iii. As stated in the Table, the Company had allotted 2,21,490 equity shares of face value of Rs. 10/- for Rs. 2.21 Cr to 478 investors on December 31, 2010 and 55,07,620 shares for the face value of Rs. 10/- within 17 days from Feb 20, 2012 to March 07, 2012 to 393 investors as mentioned in the above said Table, for a total amount of Rs. 5.49 crore. Thus, in total, the Company issued 57,29,110 shares to 871 allottees for a value of 7.70 Cr during the financial years 2010-11 and 2011-12.

    iv. This offer and allotment of equity shares were allegedly done without filing Prospectus and other disclosure requirements. The Company has submitted copies of its Annual Returns for the year 2008-09, 2009-10 and 2010-11.

    v. Present directors of the company as on this date, are Shri Joydeb Garai (DIN -02626788), Shri Basudeb Garai (DIN - 02652917), Smt. Gargi Biswas (DIN -02626808).

    vi. Shri Parag Keshar Bhattacharjee (DIN - 00081899), Shri Manigrib Bag (DIN -03525192) and Shri Dillip Kumar Gangopadhyay (DIN - 03525194) are the other directors of the company who ceased to be directors on February 14, 2014.

  6. In view of the allegations against the Company in the reference sent by the Ministry of Corporate affairs, the question that arises for consideration is whether the offer and allotment of the aforesaid equity shares mentioned in the Table above, by the Company, were done in accordance with the provisions of the Companies Act, 1956, the SEBI Act, 1992 and the relevant regulations framed there-under.

  7. As noted above in the Table, the Company, in total, issued 57,29,110 shares...

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