sebi:WTM/RKA/EFD/142/2016

SEBI · SEBI · 2014-09-16 · Rajeev Kumar Agarwal, Whole Time Member

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Facts / Headnote

Directions issued: refund of money collected through NCDs with 15% p.a. interest within three months, market access and directorship restrictions for four years (or till refund, whichever is later), asset disclosure, escrow arrangements, public notice, and prohibition on unregistered debenture trustees from acting as such; interim order cum show cause notice disposed of.

Provisions invoked

Regulations

Parties

Holding

Gitanjali Udyog Limited's offer of NCDs during FY 2011-12 to 2014-15 was a public issue of securities under the first proviso to section 67(3) of the Companies Act, 1956, and the company and its directors failed to comply with the applicable Companies Act provisions and ILDS Regulations; the debenture trustees acted unregistered in violation of section 12(1) of the SEBI Act and regulation 7 of the Debenture Trustees Regulations. Directions were issued requiring refund with 15% interest, market and directorship restrictions, and prohibitions on the debenture trustees.

Full text

Order in respect of Gitanjali Udyog Limited and others Page 2 of 10 Paramasish Bhadury, Shri Anil Kumar Mishra, Shri Prabir Middey, Shri Surajeet Ray, Shri Sutanu Sarcar, Shri Sanjay Bahadur, Shri Nonigopal Mondal and the persons/ entity acting as the Debenture Trustees namely Shri Amit Samanta and Shri Jagdish Chandra Nag (collectively referred to as ‘the noticees’ and individually by their respective names), in view of the following reasons: “4.3 … iii. … a. … the number of allottees and amounts raised under the Offer of NCDs during the Financial Years 2011–12, 2012–13, 2013–14 and 2014–15, have only been taken from the documents submitted with the complaints received by SEBI, against GUL. No details have been provided by either GUL or its Directors despite being given several chances to do so. This non-cooperation on the part of the company has also been noted by the Hon'ble Calcutta High Court in its Order dated September 16, 2014 … … … c. … during the Financial Years 2011–12, 2012–13, 2013–14 and 2014–15, GUL allotted NCDs to at least 291 individuals/ investors and mobilized funds amounting to approximately `39.02 Lakhs, under the Offer of NCDs. However, as per the Writ Petition filed by GUL before the Hon'ble Calcutta High Court, the company admitted to having "raised a total sum of `51,78,60,850 on the basis of debentures which were redeemable on different dates." Therefore, it is most certainly that the actual number of allottees and amount mobilized by GUL under the

Order in respect of Gitanjali Udyog Limited and others Page 3 of 10 …… 5.4 … Shri Amit Samanta and Shri Jagdish Chandra Nag, have acted as unregistered Debenture Trustees, which amounts to violation of the abovementioned provisions of the SEBI Act read with the Debenture Trustees Regulations.”

Order in respect of Gitanjali Udyog Limited and others Page 4 of 10 raised from public at large through the Offer of NCDs, which are kept in bank account(s) and/or in the custody of GUL; ix. GUL and its abovementioned past and present Directors shall furnish complete and relevant information (as sought by SEBI letter dated April 17, 2013 and February 12, 2014), within 14 days from the date of receipt of this Order including full details of amount mobilized under the Offer of NCDs till date, list of debenture holders, names and addresses of such debenture holders, date(s) on which debentures were allotted under the Offer of NCDs, etc.; x. The Debenture Trustees, viz. Shri Amit Samanta and Shri Jagdish Chandra Nag, are prohibited from continuing with their assignment as debenture trustees in respect of the Offer of NCDs of GUL 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.”

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Source: SecMarx — sebi:WTM/RKA/EFD/142/2016. 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.