sebi:WTM/PS/79/ERO/OCT/2015
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Facts / Headnote
Directions issued for refund of monies collected through RPS issuance with 15% per annum interest compounded half-yearly, market access restrictions for 4 years post-refund, and various compliance directions against FIIL and its directors.
Provisions invoked
- s. 11
- s. 55A
- s. 73
- s. 28A
- s. 4A
- s. 67(3)
- s. 67
- s. 73(2)
- s. 67(1)
- s. 73(1)
- s. 2(36)
- s. 60
- s. 27(2)
- s. 56(1)
- s. 56(3)
- s. 67(2)
- s. 56(4)
- s. 73(3)
Regulations
- Reg. 107
Parties
- Falkon Industries India Limited
- Shri Manirul Islam
- Shri Indraj Singh Jat
- Shri Afzal Miah
- Shri Biswajit Bhattacharya
- Shri Dilwar Hossain
- Shri Taslim Ansary
- Shri Laxmanbhai Sitarambhai Bhoya
- Shri Manglubhai Chilyabhai Dhum
- Shri Budhan Chandra Kundu
Holding
FIIL's issuance of RPS to 714 investors constituted a deemed public issue under the first proviso to Section 67(3) of the Companies Act, 1956, and FIIL and its directors violated Sections 56, 60, and 73 of that Act. FIIL and all its directors (including those who joined after the impugned issue) are jointly and severally liable to refund the collected monies with interest under Section 73(2) of the Companies Act, 1956 read with Section 27(2) of the SEBI Act.
Full text
Page 2 of 16 provisions of the SEBI Act, 1992 ("SEBI Act"); the Companies Act, 1956, SEBI passed an interim order dated August 8, 2014 and issued directions mentioned therein against FIIL and its Directors, Shri Manirul Islam, Shri Indraj Singh Jat, Shri Afzal Miah. 2.1 Prima facie findings/allegations: In the said interim order the following prima facie
Page 3 of 16 vi. FIIL and its abovementioned 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 RPS, without prior permission from SEBI; vii. FIIL and its abovementioned Directors shall not divert any funds raised from public at large through the Offer of RPS, which are kept in bank account(s) and/or in the custody of FIIL; viii. FIIL and its abovementioned Directors shall, within 21 days from the date of receipt of this Order, provide SEBI with all relevant and necessary information including details of debentures issued by it, as sought vide SEBI letters dated July 9, 2013, September 30, 2013 and October 31, 2013. 3.1 Vide the said interim order FIIL and its abovementioned Directors were given the opportunity file their reply, within 21 days from the date of receipt of the said
Page 4 of 16 by the Company or by the directors. 6.1 I have considered the allegations. Though interim order makes reference to creation of charge in respect of SRDs and Form 10 filed in respect of SRDs, no allegation of any violation regarding the SRDs is recorded in the interim order. On perusal of the allegations and other material on record, the following issues arise for consideration. Each question is dealt with separately under different headings.
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Source: SecMarx — sebi:WTM/PS/79/ERO/OCT/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.