sebi:WTM/RKA/EFD/125/2016

SEBI · SEBI · 2014-03-17 · Rajeev Kumar Agarwal, Whole Time Member

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Facts / Headnote

Interim order cum show cause notice dated June 23, 2015 disposed; directions issued including refund of subscription money with 15% p.a. interest, market access bans, and prohibition on association with public companies

Provisions invoked

• s. 19
• s. 12(1)
• s. 73
• s. 28A
• s. 67(3)
• s. 56
• s. 73(2)
• s. 291
• s. 2(36)
• s. 60
• s. 56(1)
• s. 56(4)

Regulations

• Reg. 7
• Reg. 28
• Reg. 2
• Reg. 4(2)(a)

Parties

• Waris Finance and Investment Limited
• Aziz Ahmed
• Imtiaz Khan Warsi
• Mohammad Shadab Ali
• Shane Ahmed Warsi
• Iftekhar Ahmed
• Quraisha Khatoon
• Ruhi Ghazala Warsi
• Kallol Saha

Holding

The company's offer of NCDs was held to be a public issue of securities, and the company, its directors, and the debenture trustee were found liable for contraventions of the Companies Act, 1956, ILDS Regulations, and SEBI Act, with directions for refund of subscription money with 15% interest and market access restrictions.

Full text

Order in respect of Waris Finance and Investment Limited and others Page 2 of 10 to draw from the aforesaid facts that the Offer of NCDs would have been subscribed several times beyond the threshold for a private placement. In light of the same, I find that the Offer of NCDs was nothing but a public issue of securities…….”.

Order in respect of Waris Finance and Investment Limited and others Page 3 of 10 viii. WFIL 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 WFIL; ix. WFIL and its abovementioned present Directors shall furnish complete and relevant information (as sought by SEBI letters dated March 17, 2014 and March 28, 2014), within 14 days from the date of receipt of this Order; x. The Debenture Trustee, viz. Shri Kallol Saha, is prohibited from continuing with its assignment as debenture trustee in respect of the Offer of NCDs of WFIL 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”.

Order in respect of Waris Finance and Investment Limited and others Page 4 of 10 mortgaged property nor taken possession thereof. The aforesaid document inter alia provided that a Debenture Trust Deed would be executed on the properties and/or assets mortgaged in his favour at a future date. Prior to the issuance of NCDs, no such Debenture Trust Deed was executed. Therefore, he did not partake the character of a debenture trustee as defined in regulation 2(bb) of the SEBI (Debenture Trustees) Regulations, 1993 (“Debenture Trustees Regulations”). He was never informed of any issuance of NCDs. (b) The eligibility criteria for a ‘debenture trustee’ as provided for in regulation 7 of the Debenture Trustees Regulations cannot govern him as by the document dated November 25, 2011, only certain properties of the company were mortgaged in his favour. The said mortgage independently did not create any fiduciary relationship between himself and the debenture holders. It was categorically provided that securing the debentures would be done by way of a separate debenture trust to be executed and registered to secure certain assets of the company by way of a mortgage for subsequent execution of debenture trust deed based on which the NCDs were to be issued. He is not aware as to who was appointed as a debenture trustee. Admittedly, no such Trust Deed was executed in his favour. He always proceeded that the aforesaid mortgage was limited to the mortgage of properties without any loan and n

Source: SecMarx — sebi:WTM/RKA/EFD/125/2016. 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.