sebi:WTM/MPB/EFD-1-DRA-IV/115/2018
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Facts / Headnote
ARDIL and its directors directed to refund Rs. 1,35,50,000 with 15% interest to investors; directors restrained from securities market for 4 years from completion of refunds; debenture trustees restrained for 4 years from date of order.
Provisions invoked
- s. 19
- s. 12(1)
- s. 55A
- s. 73
- s. 28A
- s. 4A
- s. 67(3)
- s. 67
- s. 117B
- s. 56
- s. 73(2)
- s. 73(1)
- s. 2(36)
- s. 60
- s. 67(1)
- s. 27(2)
- s. 56(1)
- s. 117C
- s. 56(3)
- s. 67(2)
Regulations
- Reg. 7
- Reg. 6
- Reg. 9
- Reg. 17
- Reg. 12
- Reg. 8
- Reg. 15
- Reg. 14
- Reg. 4(4)
- Reg. 2(e)
- Reg. 4(2)(a)
- Reg. 19
- Reg. 26
- Reg. 107
- Reg. 4(2)(b)
- Reg. 4(2)(d)
- Reg. 4(2)(c)
- Reg. 5(2)(b)
Parties
- Active Rural Development India Limited (ARDIL)
- Shri Dilip Kumar Diwakar
- Shri Polaki Umashankar Rao
- Shri Ganesh Kumar Singh
- Ms Vandana Saha
- Active Debenture Trust
- Shri Abhinash Kumar Jha
- Shri Jagdish Kumar Singh
Holding
ARDIL's offer of NCDs to 1524 investors was a deemed public issue under the first proviso to Section 67(3) of the Companies Act, 1956, and the company violated Sections 56, 60, 73, 117B, 117C of the Companies Act, 1956 and multiple provisions of the ILDS Regulations; the debenture trustees violated Section 12(1) of the SEBI Act read with Regulation 7 of the Debenture Trustees Regulations.
Full text
Order in the matter of M/s Active Rural Development India Limited Page 2 of 31 Madhya Pradesh – 482002. 2. Securities and Exchange Board of India (hereinafter referred to as “SEBI”) received a letter from the Department of Finance (Institutional Finance), Government of Bihar requesting SEBI to examine whether the activities of Active group of companies, of which ARDIL is a part, are legal or not. The Government of Bihar also forwarded a copy of letter written by Shri D.K. Diwakar, Chairman and Managing Director of Active Group of companies addressed to District Magistrate of Purnia, Bihar, which stated, inter alia, i. that secured debentures were issued to public to raise capital to achieve the objectives of rural development which are registered and approved by RoC. ii. On account of registration with RoC, ARDIL could issue debentures upto Rs. 10 crores secured by creating a charge on the movable/immovable assets of ARDIL and the debentures were issued to people known to Active group. iii. No approval from SEBI was required as funds were being raised up to Rs. 10 crores, and permission was required only for funds being raised beyond Rs. 100 crores.
Order in the matter of M/s Active Rural Development India Limited Page 3 of 31 Kumar Jha and Shri Jagdish Kumar Singh) as Debenture Trustee for the Offer of NCDs.
Order in the matter of M/s Active Rural Development India Limited Page 4 of 31 borrow from time to time at its discretion by issue of secured redeemable non- convertible debentures of Rs.100/- each up to a limit of Rupees Ten Crores.” Further, the copy of Minutes of the Meeting of the Board of Directors of ARDIL held on September 05, 2011 inter alia states that “in terms of the Board Meeting held on 20.08.2011 and in terms of approval obtained from the shareholders in the Extra Ordinary General Meeting held on 05.09.2011 at 10.00 am, the Board is hereby issuing Secured Redeemable Non-convertible Debentures with the terms and condition laid down before the meeting…”.
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Source: SecMarx — sebi:WTM/MPB/EFD-1-DRA-IV/115/2018. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.