sebi:WTM/MPB/EFD-1-DRA-IV/156/2018

SEBI · SEBI · 2015-12-03 · Madhabi Puri Buch, Whole Time Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

GRAPL and four directors (Raju Ghosh, Munmun Ghosh, Avijit Chowdhury, Bibekananda Jana) directed to refund money collected through RPS with 15% per annum interest; all directors restrained from securities market access for 4 years; directions subject to Calcutta High Court order dated January 15, 2016 in certain paragraphs.

Provisions invoked

• s. 19
• s. 55A
• s. 73
• s. 28A
• s. 4A
• s. 67(3)
• s. 67
• s. 56
• s. 73(2)
• s. 73(1)
• s. 2(36)
• s. 60
• s. 67(1)
• s. 27(2)
• s. 56(1)
• s. 56(3)
• s. 67(2)
• s. 168
• s. 56(4)
• s. 73(3)

Regulations

• Reg. 107

Holding

GRAPL's offer of Redeemable Preference Shares to 302 investors was a deemed public issue under the first proviso to Section 67(3) of the Companies Act, 1956, and GRAPL violated Sections 56(1), 56(3), 60, 73(1), 73(2) and 73(3) of the Companies Act, 1956. Directors who served during the issuance period (Raju Ghosh, Munmun Ghosh, Avijit Chowdhury, Bibekananda Jana) are jointly and severally liable to refund with 15% interest, while directors appointed after issuance are barred from the securities market for 4 years but not liable for refund.

Full text

Order in the matter of M/s G R Agro Project Limited Page 2 of 26 Kolkata - 700094, West Bengal, India. 2. Securities and Exchange Board of India (hereinafter referred to as “SEBI”) in respect of issue of Redeemable Preference Shares (“RPS”) undertook an enquiry to ascertain whether GRAPL had made any public issue of securities without complying with the provisions of the Companies Act, 1956; Securities and Exchange Board of India Act, 1992 (hereinafter referred to as “SEBI Act”) and the Rules and Regulations framed thereunder

Order in the matter of M/s G R Agro Project Limited Page 3 of 26 7. In view of the prima facie findings on the violations, the following directions were issued in the said interim order dated December 03, 2015 with immediate effect. i. “GRAPL shall not mobilize any fresh funds from investors through the Offer of Redeemable Preference Shares or through the issuance of equity shares or any other securities, to the public and/or invite subscription, in any manner whatsoever, either directly or indirectly till further directions; ii. GRAPL and its Directors, viz. Shri Sachin Kumar Thakur (DIN: 06560350), Shri Mrinal Barman (DIN: 06983811), Shri Tapash Kumar Raha (DIN: 06983825) and Shri Ram Kumar Sinha (DIN: 02460975), are prohibited from issuing prospectus or any offer document or issue advertisement for soliciting money from the public for the issue of securities, in any manner whatsoever, either directly or indirectly, till further orders; iii. GRAPL and its abovementioned Directors, are restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in the securities market, either directly or indirectly, till further directions; iv. GRAPL shall provide a full inventory of all its assets and properties; v. GRAPL's abovementioned Directors shall provide a full inventory of all their assets and properties; vi. GRAPL and its abovementioned Directors shall not dispose of any of the properties or alienate or encumber any of the asse

Order in the matter of M/s G R Agro Project Limited Page 4 of 26 8. The interim order also directed the GRAPL and its Directors viz. Shri Sachin Kumar Thakur, Shri Mrinal Barman, Shri Tapash Kumar Raha and Shri Ram Kumar Sinha to show cause as to why suitable directions/prohibitions under sections 11(1), 11(4), 11A and 11B of the SEBI Act, and section 73(2) of the Companies Act, 1956 read with section 27(2) of the SEBI Act should not be passed against them: i. “Directing them jointly and severally to refund money collected through the Offer of RPS along with interest, if any, promised to investors therein; ii. Directing them not to issue prospectus or any offer document or issue advertisement for soliciting money from the public for the issue of securities, in any manner whatsoever, either directly or indirectly, for an appropriate period; iii. Directing them to refrain from accessing the securities market and prohibiting them from buying, selling or otherwise dealing in securities for an appropriate period.”

Source: SecMarx — sebi:WTM/MPB/EFD-1-DRA-IV/156/2018. 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.