sebi:WTM/PS/32/IMD/NRO/AUG/2015

SEBI · SEBI · 2014-12-08 · Prashant Saran, Whole Time Member

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Facts / Headnote

Company and its directors found liable for making a public issue of Redeemable Preference Shares in contravention of Companies Act, 1956 and DIP/ICDR norms; directed to jointly and severally refund money collected, issue public notice for refunds, file completion certificate from peer-reviewed Chartered Accountants, and restrained from accessing capital market; proceedings against Smt. Harpreet Kaur revoked.

Provisions invoked

• s. 11B
• s. 11A
• s. 11
• s. 11(4)
• s. 19
• s. 11(1)
• s. 55A
• s. 73
• s. 28A
• s. 141
• s. 4A
• s. 45
• s. 67(3)
• s. 67
• s. 73(2)
• s. 465
• s. 67(1)
• s. 67(2)
• s. 45I
• s. 73(1)

Regulations

• Reg. 111
• Reg. 111(2)

Parties

• Alchemist Capital Limited
• Mr. Mansoor Ahmed
• Mr. Hariharan Veeraraghavan
• Mr. Subramanian Ayyappakutty Nambi
• Mr. Harjit Singh
• Mr. Sandeep Sethi
• Mr. Brij Mohan Mahajan
• Mr. Sunil Kanti Kar
• Mr. Virendra Singh
• Mr. Kanwar Deep Singh
• Mr. Ravinder Singh
• Mr. R.P. Chhabra
• Smt. Harpreet Kaur

Holding

The Company made a public issue of Redeemable Preference Shares in contravention of sections 56, 60 read with 2(36) and 73 of the Companies Act, 1956 and the DIP Guidelines read with ICDR Regulations, and the directors on the Board during the offer and allotment periods are liable for such violations; the Company and its directors are directed to refund the money collected from investors.

Full text

Page 2 of 61 2. On the basis of such reference, SEBI conducted an examination into the affairs of the Company related to the alleged mobilization of public funds through issue of securities. On completion of the examination, SEBI, vide an Order dated December 08, 2014 ("the interim order") alleged that the Company had made an offer and allotted Redeemable Preference Shares (“RPS”) during the financial years 2003-2004, 2004-2005, 2005-2006 and 2006-2007 in contravention of the provisions of the Companies Act, 1956 (sections 56, 60 read with section 2(36) and 73) and the SEBI (Disclosure and Investor Protection) Guidelines, 2000 ("the DIP Guidelines") read with regulation 111 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 ("the ICDR Regulations"). In view of the violations, to ensure that only legitimate fund raising activities are carried on by ACL and no investors are defrauded, SEBI issued the following directions against the Company, its directors and former directors. "..............

Page 3 of 61 vi. ACL and its abovementioned present Directors shall not dispose of any of the properties or alienate or encumber any of the assets owned/acquired by that company through the Offer of Redeemable Preference Shares, without prior permission from SEBI; vii. ACL and its abovementioned present Directors shall not divert any funds raised from public at large through the Offer of Redeemable Preference Shares, which are kept in bank account(s) and/or in the custody of ACL; viii. ACL and its abovementioned present Directors shall furnish complete and relevant information in respect of the Offer of Redeemable Preference Shares (as sought by SEBI letters dated October 1, 2013; February 20, 2014 and March 27, 2014), within 21 days from the date of receipt of this Order.

Page 4 of 61 of Registration pursuant to the name change was issued to the Company on August 11, 2008. RBI governs the conduct of the Company under the RBI Act. e) On January 03, 2013, the Company received two SCNs dated December 28, 2012 from the RoC Chandigarh alleging inter alia that the Company was in violation of sections 60, 67 and 73 of the Companies Act. The allegation was that the Company issued shares to more than 50 persons violating the provisions relating to issuance of prospectus and listing contained in section 60, 67 and 73 of the Companies Act. The Company had challenged the said SCNs before the Hon'ble High Court of Punjab and Haryana on the ground that the provisions of section 60, 67 and 73 are inapplicable to the Company being an NBFC registered with RBI. The Hon'ble High Court had stayed the SCNs on noting its contention. The RoC had filed a detailed counter affidavit taking a stand that as the Company was an NBFC registered with RBI, no action has been taken for alleged violations of sections 60, 67 and 73. In view of the stand taken by the RoC, the Hon'ble High Court passed a final judgment dated October 31, 2014 with the following order: "9. Although the prayer in the petition pertains to a challenge to the show cause notice issued under section 60 and 67(3) read with section 73 of the Companies Act, no orders are necessary in the light of the reply of the State that they are not taking any action pursuant to the notice since the petitioner is a Non-B

Source: SecMarx — sebi:WTM/PS/32/IMD/NRO/AUG/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.