sebi:WTM/PS/107/ERO/BLO/DEC/2015

SEBI · SEBI · 2015-03-19 · Prashant Saran, 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

Directions issued requiring refund of monies with 15% p.a. interest compounded half-yearly, public notice, asset inventory, market access ban for 4 years post-refund, and association ban with listed/public companies and SEBI-registered intermediaries for 4 years post-refund.

Provisions invoked

• s. 11
• s. 19
• s. 62
• s. 55A
• s. 73
• s. 28A
• s. 4A
• s. 67(3)
• s. 67
• s. 73(2)
• s. 73(1)
• s. 2(36)
• s. 60
• s. 67(1)
• s. 27(2)
• s. 56(1)
• s. 56(3)
• s. 56(4)
• s. 73(3)

Regulations

• Reg. 107

Parties

• Adarsh Wealth Ventures Limited
• Shri Bijaya Kumar Rout
• Shri Gangadhar Nayak
• Shri Ganeswar Mahanta
• Shri Dipak Kumar Mohanty
• Shri Ramakanta Mahakul
• Shri Anil Singh
• Shri Choudhury Niranjan Pradhan
• Shri Bibhuti Bhusan Nanda

Holding

AWVL's offer and allotment of Cumulative Redeemable Preference Shares to 4,268 investors constituted a deemed public issue under the first proviso to Section 67(3) of the Companies Act, 1956, and the company and its directors/promoters contravened Sections 56, 60 and 73 of that Act. AWVL and its directors/promoters were directed to refund the monies collected with 15% p.a. interest compounded half-yearly, and were restrained from accessing the securities market for 4 years from completion of refunds.

Full text

Page 2 of 22 1.3 On enquiry by SEBI, it was observed that AWVL had made an offer and issued 14,28,906Cumulative Redeemable Preference Shares ("offer of RPSs") with face value of Rs.100/- and with a coupon rate of 27% p.a. to 4,268 investors during the financial years 2010-11 to 2012-13. 2.1 AstheabovesaidofferofRPSwerefoundprimafacieinviolationofrespectiveprovisions oftheSEBIAct,1992("SEBIAct"),theCompaniesAct,1956,SEBIpassedaninterimord erdatedMarch 19,2015andissueddirectionsmentionedthereinagainstAWVLanditsDirectors,viz.,Sh ri Bijaya Kumar Rout , Shri GangadharNayak, Shri GaneswarMahanta, Shri Dipak Kumar Mohanty , Shri RamakantaMahakul, Shri Anil Singh , Shri Choudhury Niranjan Pradhan and Shri BibhutiBhusan Nanda. 2.2 Primafaciefindings/allegations:Inthesaidinterimorder,thefollowingprimafaciefindi ngs/allegationwererecorded.AWVLhadmadeanofferandissuedRedeemablePreferen ceSharesduring the financial years 2010-11 to 2012-13 andallottedRedeemablePreferenceSharestoa total of 4,268 individuals/investors andmobilizedfundsamountingtoapproximatelyRs.14,28,90,600 asshownbelow:- Table1

Page 3 of 22 Sr. No. Date of Allotment No. of Preference Shares Total Nominal Value (`) No. ofAllottees 12 30/09/2011 71,280 71,28,000.00 195 13 15/10/2011 18,320 18,32,000.00 39 14 17/10/2011 20,180 20,18,000.00 49 15 24/10/2011 17,560 17,56,000.00 49 16 27/10/2011 10,305 10,30,500.00 49 17 31/10/2011 6,590 6,59,000.00 28 18 14/11/2011 13,920 13,92,000.00 42 19 15/11/2011 5,100 5,10,000.00 12 20 21/11/2011 11,410 11,41,000.00 49 21 23/11/2011 14,990 14,99,000.00 49 22 25/11/2011 47,310 47,31,000.00 49 23 28/11/2011 17,350 17,35,000.00 49 24 29/11/2011 14,710 14,71,000.00 49 25 30/11/2011 8,510 8,51,000.00 29 26 14/12/2011 10,670 10,67,000.00 49 27 19/12/2011 6,160 6,16,000.00 19 28 20/12/2011 16,730 16,73,000.00 49 29 27/12/2011 21,770 21,77,000.00 49 30 28/12/2011 31,480 31,48,000.00 46 31 30/12/2011 16,320 16,32,000.00 49 32 31/12/2011 17,820 17,82,000.00 49 33 12/01/2012 22,980 22,98,000.00 48 34 18/01/2012 16,810 16,81,000.00 49 35 25/01/2012 16,210 16,21,000.00 51 36 30/01/2012 7,180 7,18,000.00 31 37 31/01/2012 14,980 14,98,000.00 47 38 14/02/2012 22,010 22,01,000.00 45 39 20/02/2012 14,950 14,95,000.00 45 40 20/02/2012 16,180 16,18,000.00 49 41 24/02/2012 21,700 21,70,000.00 45 42 28/02/2012 21,990 21,99,000.00 29 43 29/02/2012 15,870 15,87,000.00 49 44 12/03/2012 23,250 23,25,000.00 49 45 26/03/2012 18,680 18,68,000.00 49 46 29/03/2012 29,570 29,57,000.00 49 47 30/03/2012 15,550 15,55,000.00 49 48 31/03/2012 18,750 18,75,000.00 49

Page 4 of 22 Sr. No. Date of Allotment No. of Preference Shares Total Nominal Value (`) No. ofAllottees 49 09/04/2012 17,000 17,00,000.00 49 50 14/04/2012 18,830 18,83,000.00 49 51 16/04/2012 24,200 24,20,000.00 49 52 20/04/2012 17,010 17,01,000.00 49 53 29/04/2012 23,380 23,38,000.00 49 54 30/04/2012 17,960 17,96,000.00 28 55 15/05/2012 17,740 17,74,000.00 49 56 31/05/2012 32,515 32,51,500.00 49 57 15/06/2012 18,130 18,13,000.00 49 58 29/06/2012 16,300 16,30,000.00 49 59 30/06/2012 7,870 7,87,000.00 19 60 15/07/2012 19,490 19,49,000.00 49 61 31/07/2012 9,695 9,69,500.00 41 Total

Source: SecMarx — sebi:WTM/PS/107/ERO/BLO/DEC/2015. 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.