sebi:WTM/PS/95/ERO-IMD/DEC/2015

SEBI · SEBI · 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: refund of Rs.55.95 crore to 20,549 investors with 15% p.a. interest, ban on capital market access for 4 years from completion of refunds, debenture trustee restrained, recovery/enforcement actions on default

Provisions invoked

• s. 11A
• s. 11
• s. 11(4)
• s. 19
• s. 12(1)
• s. 27
• s. 55A
• s. 28A
• s. 4A
• s. 67(3)
• s. 67
• s. 117B
• s. 56
• s. 73(2)
• s. 465
• s. 394
• s. 73(1)
• s. 2(36)
• s. 60
• s. 67(1)

Regulations

• Reg. 7
• Reg. 6
• 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. 16(1)
• Reg. 4(2)(b)
• Reg. 4(2)(d)
• Reg. 4(2)(c)
• Reg. 5(2)(b)

Parties

• Greentouch Projects Limited (GTPL)
• Shyam Sundar Dey (Director)
• Snehasish Sarkar (Director)
• Sujoy Sinha (ex-Director)
• Sumon Sarkar (Director)
• GreenTouch Projects Debenture Trust (represented by Trustee Swagata Kumar Maiti)

Holding

SEBI held that Greentouch Projects Limited made a public issue of NCDs by allotting to 20,549 persons (exceeding 49), thereby violating sections 56, 60, 73, 117B, 117C of the Companies Act, 1956 and the ILDS Regulations, and directed refund of Rs.55.95 crore with 15% interest. The debenture trustee was held to have acted as an unregistered debenture trustee in violation of section 12(1) of the SEBI Act and regulation 7 of the DT Regulations.

Full text

Page 2 of 35 observed that the company, Greentouch Projects Limited (hereinafter referred to as “Greentouch” or “the Company”) is prima facie engaged in fund mobilising activity from the public, by its offer and issue of Secured Non-Convertible Redeemable Debentures (hereinafter referred to as "NCDs") and had allegedly violated the provisions of sections 56, 60 read with section 2(36), 73, 117B and 117C of the Companies Act, 1956 read with Section 465 of the Companies Act, 2013 and the relevant provisions of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008 (“the ILDS Regulations”). The interim order also alleged that the debenture trustee, Greentouch Projects Debenture Trust (represented by its trustee, Swagata Kumar Maiti) had allegedly failed to meet the eligibility conditions specified under regulation 7 of the SEBI (Debenture Trustees) Regulations, 1993 ("DT Regulations") and acted as an unregistered debenture trustee in violation of section 12(1) of the Securities and Exchange Board of India Act, 1992 (“SEBI Act”).

Page 3 of 35 vi. GTPL 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 NCDs, without prior permission from SEBI; vii. GTPL and its abovementioned 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 GTPL; viii. GreenTouch Projects Debenture Trust (represented by its Trustee, viz. Swagata Kumar Maiti) is prohibited from continuing with its present assignment as a debenture trustee in respect of the Offer of NCDs of GTPL 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 35 (d) The Company was incorporated by the promoters with a noble intent to look at an opportunity for purchasing land and developing it by putting up world class residential projects. This was conceived to be not only profitable but also to have a social object whereby housing would be given to the people who can pay and a small portion of houses will be provided at subsidized cost to economically weaker sections of the society.

Source: SecMarx — sebi:WTM/PS/95/ERO-IMD/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.