sebi:WTM/MPB/EFD-1-DRA-IV/163/2018
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Facts / Headnote
Directions issued: Smt. Sohini Mistry directed to refund money collected during her directorship with 15% interest; Shri Avinash Chandra Verma and Shri Samir Das restrained from accessing securities market for 4 years; Smt. Sohini Mistry restrained from accessing securities market for 4 years from completion of refunds.
Provisions invoked
- s. 19
- s. 27
- s. 73
- s. 28A
- s. 67(3)
- s. 56
- s. 73(2)
- s. 2(36)
- s. 60
- s. 27(2)
- s. 56(1)
- s. 56(4)
Parties
- Shri Avinash Chandra Verma
- Shri Samir Das
- Smt. Sohini Mistry
Holding
The Noticees were held liable in respect of PCL's deemed public issue of RPS in violation of Companies Act, 1956 provisions. Smt. Sohini Mistry, being a director during the fund mobilization period, was held jointly and severally liable to refund investors with 15% interest, while Shri Avinash Chandra Verma and Shri Samir Das, who became directors after the fund mobilization period, were held not liable for refund but liable for ensuring refunds and were restrained from accessing the securities market.
Full text
Order in the matter of M/s Progress Cultivation Limited Page 2 of 17 years 2009-2010, 2010-2011, 2011-2012 and 2012-2013 (hereinafter referred to as “Offer of RPS”) and raised at least an amount of Rs. 9,32,12,400 from at least 1,915 allottees. The number of allottees and funds mobilized has been collated from the Form 2 and Balance Sheets filed by the Company.
Order in the matter of M/s Progress Cultivation Limited Page 3 of 17 6. The amount mobilized as shown in the above table was obtained from Form 2 filed by the Company with ROC. It was noted from the Balance Sheets for the year ended March 31, 2011 and March 31, 2012, that the preference share capital was Rs. 2.01 crores and Rs. 2.22 crores respectively. However, as per Form 2 filed by PCL with ROC, it was observed that an amount of Rs. 1.86 crores and Rs. 2.07 crores has been indicated as preference share capital for the Financial Years 2010-11 and 2011-12, respectively. Further, as per the Balance Sheet as on March 31, 2013, the Company has a preference share capital of Rs. 2,22,64,100/- (i.e. 2,22,641 preference shares of Rs. 100/- each). This indicates that the figures as per Form-2 and the Balance Sheet have not been reconciled. Accordingly, the figure from the Balance Sheet was considered. Further, the following table indicates the preference share capital of the Company along with preference share application money pending allotment collected by it:
Order in the matter of M/s Progress Cultivation Limited Page 4 of 17 Offer of RPS. 8. Shri Avinash Chandra Verma joined as director of the Company with effect from 05/07/2014. From the MCA records, it was observed that he was continuing as a director. Shri Samir Das was director of the Company from 24/05/2013 to 05/08/2013. Although he joined the Company after the fund mobilization had taken place, he had not taken any steps for remedying the violations by reporting the same to the regulatory authority during his tenure as director in the Company. Smt. Sohini Mistry was director of the Company from 25/03/2009 to 26/04/2013 and the Company mobilized funds through issuance of RPS during the period from 2009-2012, hence she was a director during the relevant period when fund mobilization by the Company had taken place. 9. Smt. Sohini Mistry, being a director during the relevant period when fund mobilization by the Company took place, failed to comply with sections 56(1) and 56(3), 56(4) and 60 and 73(1) and 73(3) of the Companies Act, 1956. In view of her failure to refund the investors, she has also violated section 73(2) of the Companies Act, 1956. Further, Shri Avinash Chandra Verma and Shri Samir Das have not made the refunds to the investors. Therefore, they have violated section 73(2) of the Companies Act, 1956 read with section 27 of the SEBI Act.
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Source: SecMarx — sebi:WTM/MPB/EFD-1-DRA-IV/163/2018. 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.