WTM/GM/SEBI/ERO/IMD/14/FEB/2017. Case: In Re: Angel Agritech Limited and Ors. Vs. Securities and Exchange Board of India

Case NumberWTM/GM/SEBI/ERO/IMD/14/FEB/2017
JudgesG. Mahalingam, Whole Time Member
IssueSecurities And Exchange Board Of India Act, 1992 - Sections 11, 11 C (3), 11(4), 11B, 11C (5), 12(1)
Judgement DateFebruary 16, 2017
CourtSecurities and Exchange Board of India


G. Mahalingam, Whole Time Member

1. Securities and Exchange Board of India ("SEBI") was in receipt of complaints stating that Angel Agritech Limited (hereinafter referred to as "AAL") was collecting money illegally and the company was not refunding the money collected. There were also many complaints against AAL alleging that the company issued debentures and was not refunding the money.

2. SEBI sought information pertaining to the collection of money by AAL. Details of the correspondence and replies are as under:

"(i) Letter dated 08.03.2013 was sent to Angel Agritech Group at its registered office address. Since no information was received from the company, a reminder letter dated April 01, 2013 was sent to the company's registered address. Further, letter dated April 10, 2013 was sent to the group company's registered address. The company has furnished its reply vide letter dated April 08, 2013.

(ii) In addition, letter dated April 10, 2013 was sent to RoC Kolkata requesting them to furnish information regarding mobilization of funds from public by the Angel Agritech Group.

(iii) Company in its letter dated April 08, 2013 submitted the following:

(a) Incorporation Certificate, Business Commencement Certificate, Memorandum of Association and Articles of AAL;

(b) Balance Sheet of AAL for the years ending March 31, 2010 and March 31, 2011

(c) VAT acknowledge Return of AAL for December, 2012

(d) Annual ROC Return of AAL for March 31, 2011 and March 31, 2010

(e) Copy of Form 20B of AAL;

(f) Copy of Form 66 of AAL;

(g) Copy of Form 23AC and 23ACA of AAL;

(h) Copy of Form 23 of AAL;

(i) Copy of Form 2 of AAL;

(j) Copy of Form 1 of AAL;

(k) Copy of Form 22 of AAL; and

(l) Copy of Form 20 of AAL.

Further, the company vide its letter dated May 07, 2013, sought for extension of time for furnishing information and explanation sought by SEBI.

(iv) Since the company did not submit information in respect of securities issue, letters dated January 30, 2014 were sent to the directors of AAL namely Hasibul Haque, Sunirmal Goswami and Basudev Ghosh. The letters sent to Hasibul Haque and Sunirmal Goswami returned undelivered with the remarks - "Refused". Though the letter sent to Basudev Ghosh was delivered, no reply to the same was received."

3. As sufficient information was not forthcoming from the company and its directors, a letter dated March 05, 2014 was sent to RoC Kolkata requesting them to furnish information in respect of AAL. RoC in its letter dated March 11, 2014 provided Form 10 and Form 2 of AAL.

4. Thereafter attempts were made to obtain details from the MCA21 portal. Based on information obtained from MCA21 Portal, documents submitted by the company and the complaints received, it was observed that the registered office of the company is at 23/A, Royd Street 2nd Floor Kolkata WB 700016, India. The company was incorporated on February 05, 2010. The corporate identity number of the company is U01400WB2010PLC141816. However, when a site visit was made to the registered office address of the company on April 25, 2016, the company was not traceable. Further, the fact that AAL has not filed its Annual Accounts and Annual Returns for the F.Y. ended 2012-13, 2013-14 and 2014-15 till date with the RoC has been brought to its notice vide letter dated May 02, 2016.

Issue of Redeemable Preference Shares (RPS)

5. From the company's submission, MCA21 Portal and the information received from RoC, it was observed that the issued capital was Rs. 1,17,82,000/- of which Rs. 5,00,000/- through equity issued and Rs. 1,12,82,000/- through Redeemable preference share (hereinafter referred to as "RPS") issued. Further, the company filed Form 2 with RoC. On a scrutiny of the same, it was observed that the company has allotted preference shares listed as below:

6. As per company's submission, the issued capital through Redeemable preference shares was Rs. 1,12,82,000/-.

7. Though there were complaints against the company alleging that it had issued debentures, AAL in its reply had not mentioned the issue of debentures. On a scrutiny of Form 10 filed with RoC, it was observed that the company had created a charge of Rs. 10 crore against the immovable properties held by the company in connection with the issue of debentures. After examination, it was noted that the aggregate value of all such properties is Rs. 10 crore.

8. The non-cooperation of the company and its directors in submitting the requisite information to SEBI hindered the examination process. Moreover, the details with respect to number of debenture and preference shareholders were not available from the MCA21 Portal. Further, the company did not submit any details about the debentures issued. Having regard to the quantum of funds mobilized by the company, media reports regarding AAL with regard to illegality/irregularity in raising of funds and complaints received from investors based in multiple states, an Investigating Authority (hereinafter referred to as "the IA") was appointed for the investigation of the case.

9. Pursuant to appointment of the IA, summons dated January 09, 2015 was issued to the company and its directors (both past and present) for production of documents and to appear in person before the IA under Section 11 C (3) & 11C (5) of the SEBI Act, 1992 on January 21, 2015. The summons were issued to AAL at its last known address and also at its new registered office address. The details with regard to past and present directors were taken from the 'Register of directors, managing directors, manager and secretary, etc' obtained from the RoC, Kolkata. The company and the directors were summoned to provide copy of Audited Annual Accounts and Annual Returns for the last five years along with the details in respect of issue of shares/debentures. However, none of the entities appeared before SEBI. The names of those entities to whom the summons were issued but the service was incomplete (i.e. either returned as undelivered or where no receipt of acknowledgement after service, was received) are shown below:

"(i) Angel Agritech Limited

(ii) Basudev Ghosh

(iii) Md. Sekh Nazibulla

(iv) Md. Sekh Abdul Robial

(v) Sunirmal Goswami

(vi) Sumantra Sinha

(vii) Devid Haslaf

(viii) Arindam Pal

(ix) Firoj Hossain

(x) Hasibul Haque

(xi) Imran Ali

(xii) Rohit Das"

10. SEBI received many investor complaints in respect of preference shares issued by AAL. The complainants have furnished copies of RPS certificates issued by the company. When physically counted, it is noted that the details of such shares are as follows:

11. Further, it was noted that the names of the allottees as per Form 2 were different from the names of the complainant who allegedly were allotted RPS. Thus, prima facie it appears from the available information that the number of persons to whom RPS were issued by AAL are as follows:

Therefore, based on the available information (and subject to the fact that more complaints are being received by way of alleged allotments), it may be inferred that the company has issued RPS to at least 116 persons during the years 2010 to 2012 (hereinafter collectively referred to as "offer and allotment of preference shares").

Issue of Debentures

12. SEBI had also received many investor complaints where the investors have enclosed copies of money receipts and secured non-convertible redeemable debentures ("NCD") certificates issued by the company. However, the company did not submit any information regarding the debenture issue. The details of the physical counting of the certificates attached to the complaints is given below:

Therefore, based on the available information(and subject to the fact that more complaints are being received by way of alleged allotments), it may be inferred that AAL has issued NCDs to at least 756 persons during the years 2009 to 2014 (hereinafter collectively...

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