WTM/SR/SEBI-ERO/193/12/2015. Case: In Re: Regal Hitech Agro Projects (India) Limited and Ors. Vs. Securities and Exchange Board of India
| Case Number | WTM/SR/SEBI-ERO/193/12/2015 |
| Judges | S. Raman, Whole Time Member |
| Issue | Securities And Exchange Board Of India Act, 1992 - Sections 11, 11(1), 11(4), 11A, 11B, 19, 27(2); Securities Contracts Regulation Act, 1956 - Section 22 |
| Judgement Date | December 03, 2015 |
| Court | Securities and Exchange Board of India |
Order:
S. Raman, Whole Time Member
1. Securities and Exchange Board of India ("SEBI") had conducted an examination into the fund-raising activity of Regal Hitech Agro Projects (India) Limited ("RHAPL") in respect of issue of Redeemable Preference Shares and to ascertain whether RHAPL had made any public issue of securities without complying with the provisions of the Companies Act, 1956 ("Companies Act"); SEBI Act, 1992 ("SEBI Act") and the Rules and Regulations framed thereunder.
2.1 Thereafter, vide letters dated October 9, 2015, SEBI sought inter alia the following information from RHAPL and its Directors, viz. Shri Subhas Sur, Shri Sougata Das, Shri Sandip Kodaly and Shri Pralayes Ghosh Mondal, -
"i. Copy of the Memorandum and Articles of Association of the company;
ii. Copy of Audited Annual Accounts and Annual Returns of the company for the last 3 years;
iii. Name, addresses and occupation of all the Promoters/Directors of the company;
iv. Names and details of the Key Managerial Personnel of the company;
v. Other information in respect of every series of shares/debentures issued by the company, viz. -
a. Copy of Prospectus/Red Herring Prospectus/Statement in lieu of Prospectus/Information Memorandum filed with Registrar of Companies ("ROC") for issuance of shares/debentures.
b. Date of opening and closing of the subscription list;
c. Details regarding the number of application forms circulated inviting subscription;
d. Details regarding the number of applications received;
e. Details regarding the number of allottees and list of such allottees;
f. Number of shares/debentures allotted and value of such allotment against each allottee's name.
g. Details regarding subscription amount raised;
h. Date of allotment of shares/debentures;
i. Copies of the minutes of Board/Committee meeting in which the resolution was passed for allotment;
j. Date of dispatch of shares/debentures certificates, etc.;
k. Details of the total number of applicants for each of RHAPL's scheme besides the list of final allottees;
l. Copies of application forms, pamphlets, advertisements and other promotional material circulated for issuance of shares/debentures;
m. Terms and conditions of the issue of shares/debentures;
n. Details of listing of shares/debentures;
o. Copy of Form 2 and Form 10 filed with the ROC;
p. Details of Debenture Trustee."
2.2 The letter addressed to RHAPL was returned undelivered.
2.3 However, the letters addressed to Shri Sougata Das, Shri Sandip Kodaly and Shri Pralayes Ghosh Mondal, were delivered. In his reply, Shri Sougata Das provided RHAPL's PAN number and copies of documents containing details of allottees of Redeemable Preference Shares in the Financial Year 2012-13. In his reply, Shri Pralayes Ghosh Mondal submitted that since he was not involved in day-to-day activity of the company, he had no documents to offer. Further, he claimed to have resigned from RHAPL w.e.f. December 2012. No information was received from Shri Sandip Kodaly.
2.4 Information regarding RHAPL was obtained from the Ministry of Corporate Affairs' website i.e. MCA 21 Portal.
3. The material available on record i.e. correspondences exchanged between SEBI and RHAPL alongwith the documents contained therein; information obtained from the MCA 21 Portal, have been perused. On an examination of the same, it is observed that -
"i. RHAPL was incorporated on September 30, 2011, with CIN as U01403WB2011PLC168319. Its Registered Office is at Jessore Road, Dak Bungalow, More Barasat, Kolkata-700124, West Bengal, India.
ii. The Directors of RHAPL are Shri Subhas Sur, Shri Sougata Das, Shri Sandip Kodaly and Shri Pralayes Ghosh Mondal.
iii. From the material on record, it is observed that RHAPL issued "Redeemable Preference Shares" ("Offer of Redeemable Preference Shares") to investors, details of which are provided below -
4.1 In the context of the abovementioned details of the Offer of Redeemable Preference Shares, the issue for determination in the instant matter is whether the mobilization of funds by RHAPL through the aforesaid, is in accordance with the provisions of the SEBI Act, 1992 ("SEBI Act") read with the Companies Act, 1956.
4.2 I note that the jurisdiction of SEBI over various provisions of the Companies Act, 1956, 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 India Real Estate Corporation Limited & Ors. v. SEBI (Civil Appeal No. 9813 of 2011) (Judgment dated August 31, 2012) (hereinafter referred to as the "Sahara Case"), had observed:
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.
4.3 In this regard -
"i. Reference is also made to Sections 67(1) and 67(3) of the Companies Act, 1956, which are reproduced as under:
67. Construction of reference to offering shares or debentures to the public, etc.
67. (1) Any reference in...
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