sebi:WTM/PS/24/ERO/IMD/MAY/2016

SEBI · SEBI · 2015-11-23 · Prashant Saran, Whole Time Member

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Facts / Headnote

Mr. Ameet Singh found liable for violations of sections 56, 60 and 73 of the Companies Act, 1956 and directed jointly and severally to refund money collected through offer of Redeemable Preference Shares with 15% p.a. compounded interest, to provide asset inventory, and restrained from securities market and from issuing prospectus/associating with public companies intending to raise money.

Provisions invoked

• s. 19
• s. 27
• s. 28A
• s. 73(2)
• s. 29
• s. 291
• s. 73(1)
• s. 2(36)
• s. 60
• s. 27(2)
• s. 56(1)
• s. 73
• s. 56(3)
• s. 56(4)

Parties

• Ameet Singh

Holding

Mr. Ameet Singh, director from January 15, 2011 to February 28, 2012, is liable for the Company's illegal public issue of RPSs/NCDs in violation of sections 56, 60 and 73 of the Companies Act, 1956 and is jointly and severally liable to refund with 15% p.a. interest. He is restrained from accessing the securities market and from issuing prospectus/offer documents till expiry of 4 years from completion of refunds and must provide full inventory of assets.

Full text

Page 2 of 9 i. The past Director of SFL, viz. Shri Ameet Singh (PAN: BWIPS3911H; DIN: 02885973), is 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; ii. The abovementioned past Director of SFL is 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; iii. The abovementioned past Director of SFL shall provide a full inventory of all his assets and properties”.

Page 3 of 9 the date of hearing, stated that he was not aware of the interim order passed against him. He further stated that he did not receive any notice earlier. According to him, he was appointed as an additional director in the Company on January 15, 2011 and resigned on February 28, 2012. He submitted that he was not involved in the day to day business activities of the Company. He also submitted that he did not take any share of the Company and did not also receive any remuneration from the Company. The noticee submitted that he stays in Patna and cannot afford to travel to Kolkata to attend the hearing due to his financial condition and requested SEBI to excuse his personal appearance in the hearing.

Page 4 of 9 to the culpability of a director for breach of law by a company, I refer to and rely on the following observations made by the Hon’ble High Court of Madras in MadhavanNambiar vs Registrar Of Companies (2002 108 Comp Cas 1 Mad): “13. It may be that the petitioner may not be a whole-time director, but that does not mean he is exonerated of the statutory obligations which are imposed under the Act and the rules and he cannot contend that he is an ex officio director and, therefore, he cannot be held responsible. There is substance in the contention advanced by Mr. Sridhar, learned counsel since the petitioner a member of the Indian Administrative Service and in the cadre of Secretary to Government when appointed as a director on the orders of the Government to a Government company or a joint venture company, he is expected not only to discharge his usual functions, but also take such diligent care as a director of the company as it is expected of him not only to take care of the interest of the Government, but also to see that the company complies with the provisions of the Companies Act and the rules framed thereunder. Therefore, the second contention that the petitioner cannot be proceeded against at all as he is only a nominee or appointed director by the State Government, cannot be sustained in law. A director either full time or part time, either elected or appointed or nominated is bound to discharge the functions of a director and should have taken all the dil

Source: SecMarx — sebi:WTM/PS/24/ERO/IMD/MAY/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.