sebi:WTM/PS/160/IMD/ERO/FEB/2016

SEBI · SEBI · 2013-12-06 · Prashant Saran, Whole Time Member

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Facts / Headnote

Company and its three directors held to have made unlawful public issue of NCDs and directed jointly and severally to forthwith refund Rs.59.37 crore with 15% p.a. interest compounded half-yearly, barred from capital market for 4 years from completion of refunds; three individual debenture trustees restrained from securities market/intermediary activity for 4 years for acting without registration/eligibility.

Provisions invoked

• s. 11A
• s. 19
• s. 12(1)
• s. 27
• s. 55A
• s. 73
• s. 28A
• s. 4A
• s. 67(3)
• s. 67
• s. 117B
• s. 73(2)
• s. 73(1)
• s. 2(36)
• s. 60
• s. 56(1)
• s. 56
• s. 56(3)
• s. 56(4)
• s. 117C

Regulations

• Reg. 7
• Reg. 6
• Reg. 16
• Reg. 9
• Reg. 17
• Reg. 12
• Reg. 28
• Reg. 8
• Reg. 15
• Reg. 14
• Reg. 4(4)
• 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

• Prism Infracon Limited (PIL)
• Mr. Rajesh Kumar Agarwal
• Mr. Koushik Ghosh (Kaushik Ghosh)
• Mr. Navin Pratap Singh
• Mr. Tapas Kumar Dey
• Mr. Hemanta Banerjee
• Mr. Abhishek Loharuka

Holding

Prism Infracon Limited made a deemed public issue of Non-Convertible Redeemable Debentures to 19,919 investors via Prism Society in violation of Sections 56, 60, 73, 117B, 117C and the ILDS Regulations, and the Company with directors Rajesh Kumar Agarwal, Koushik Ghosh and Navin Pratap Singh must jointly and severally refund all collections with 15% p.a. interest while the three individual debenture trustees violated Section 12(1) SEBI Act and Regulation 7 DT Regulations.

Full text

Page 2 of 25 Limited (“the Company” or “PIL”) is engaged in fund mobilization activity from the public through the offer of Non-Convertible Redeemable Debentures (“NCDs”) in violation of sections 56, 60, 73, 117B and 117C of the Companies Act, 1956 read with the Companies Act, 2013 and the provisions of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008 (“the ILDS Regulations”). The

Page 3 of 25 vii. PIL and its abovementioned present Directors shall not divert any funds raised from public at large through the Offer of NCDs, which are kept in bank account(s) and/or in the custody of PIL; viii. PIL shall furnish complete and relevant information (as sought by SEBI letters dated December 06, 2013 and March 21, 2014), within 21 days from the date of receipt of this Order. ix. The Debenture Trustees, viz. Shri Tapas Kumar Dey, Shri Hemanta Banerjee and Shri Abhishek Loharuka, are prohibited from continuing with their present assignment as debenture trustees in respect of the Offer of NCDs of PIL and also from taking up any new assignment or involvement in any new issue of debentures, etc. in a similar capacity, from the date of this order till further directions”.

Page 4 of 25 (a) SEBI does not have jurisdiction over the Company as it does not fall within the criteria prescribed by the Hon’ble Supreme Court in the matter of Sahara case. (b) The offer of debentures was made to less than 49 persons. (c) The offer was made to 4 existing members of the Company and the allotment was made only to one member – Prism Society, registered under the Societies Registration Act with the Registrar of Societies, Kolkata. Prism Society is a domestic concern i.e. a member of PIL. (d) The debentures were not available for subscription other than the members of the Prism Society. (e) SEBI cannot assume suo moto jurisdiction in all cases and take coercive action without any power conferred by the statute. The facts of this case are completely different from that of the

Source: SecMarx — sebi:WTM/PS/160/IMD/ERO/FEB/2016. 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.