Confirmatory Order in the matter of Jai Mata Glass Limited

WTM/MPB/ISD/ 61 /2018 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: MADHABI PURI BUCH, WHOLE TIME MEMBER ORDER UNDER SECTIONS 11, 11(4), 11A AND 11B OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 IN THE MATTER OF Sl. No. NAME PAN 1. Jai Mata Glass Limited AAACJ3873F

In Re: SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015

Background: 1. Securities and Exchange Board of India (hereinafter referred to as “SEBI”), in the interest of investors, vide its letter dated August 7, 2017 took the pre-emptive interim measures under section 11(1) of SEBI Act, 1992, in respect of certain listed companies identified as “shell companies” by the Ministry of Corporate Affairs (hereinafter referred to as “MCA”) including Jai Mata Glass Limited (hereinafter referred to as “JMGL” / “Company” / “Noticee”). SEBI placed trading restrictions, on the promoters/directors so that they do not exit the company at the cost of innocent shareholders. In view of the said objective, SEBI vide the said letter dated August 7, 2017 also placed the scrip of JMGL in the trade to trade category with limitation on the frequency of trade and imposed a limitation on the buyer by way of 200% deposit on the trade value, so as to alert them trading in the scrip. The said measures were initiated by SEBI pending final determination after verification of credentials and fundamentals by the exchanges, including by way of audit and forensic audit if necessary.

The measures also envisaged, on the final determination, delisting of the company from the stock exchange, if warranted. By virtue of these measure, trading in scrip was not suspended but allowed under Order in the matter of Jai Mata Glass Limited strict monitoring so that investors could take informed investment decisions, till SEBI and Exchanges complete their detailed examination of such companies. 2. Aggrieved by the aforesaid letter dated August 7, 2017 issued by SEBI and consequent actions of Stock Exchanges, JMGL filed an appeal No. 209 of 2017 before the Hon’ble Securities Appellate Tribunal (hereinafter referred to as “SAT”). The Hon’ble SAT vide order dated August 29, 2017 had noted that JMGL had made representation to BSE, with a copy to SEBI and directed SEBI to dispose of the representation made by JMGL as expeditiously as possible within a period of four weeks from the date of order. Hon’ble SAT also held that passing of any order on the representation made by JMGL would not preclude SEBI to further investigate the case of JMGL and initiate proceedings if deemed fit. 3. Pursuant to the decision of Hon’ble SAT that the communication of SEBI dated August 7, 2017 is in the nature of quasi-judicial order, in the interest of natural justice, an opportunity of personal hearing was granted to JMGL on September 14, 2017. The authorized representatives of JMGL had appeared for hearing and made submissions.

Interim Order: 4. Thereafter, SEBI vide Interim Order dated September 26, 2017 (hereinafter referred to as “Interim Order”), had modified the actions envisaged in SEBI’s letter dated August 07, 2017 and the consequential actions taken by Stock Exchanges, against JMGL as under: i. “The trading in securities of JMGL shall be reverted to the status as it stood prior to issuance of letter dated August 7, 2017 by SEB. ii. Stock Exchange shall appoint an independent auditor to conduct forensic audit of JMGL for verification, including the credentials/financials of JMGL and to trace the end-use of proceeds of sale of land by JMGL. iii. The limitation on the transfer of shares held by the promoters and directors of JMGL as mentioned in para 1(b) of SEBI’s letter dated August 07, 2017 is removed. iv. The other actions envisaged in SEBI’s letter dated August 07, 2017 in para 1 (d) as may be applicable, and the consequential action taken by Stock Exchanges shall continue to have effect against JMGL.”

Order in the matter of Jai Mata Glass Limited

5. The prima facie observations in the Interim Order were as under: i. “The company entered into an Agreement for sale of land at Himachal Pradesh on 21/11/2014 with Micro Seamless and the sale deed was executed on 01/07/2016. However, copy of Sale deed has not been provided and further no clarification was provided with respect to delay in execution of the sale deed. On analysis of Bank statement provided by the company, it is observed that Rs. 2.5 crore was credited on 05/05/2016 from Micro Seamless, whereas an amount of Rs. 7.63 crore was credited on 04/07/2016 but the descriptions in the bank statement do not provide any input for source of transfer. ii. The company has not provided any details and documentary proof for the Advance for capital goods of Rs. 15 lakhs and the reasons for amount paid back on 16/05/2016. However, on analysis of SBI bank statement provided by the company it is observed that the amount of Rs. 15 lakhs has been paid to Integrated master securities. The question with respect to what capital goods were intended to be sold and why the same was not executed has not been answered clearly. iii. The company has provided a list of items for utilization of sale proceeds of land without giving full break up and documents for the repayment of outstanding loans, challaan for repayment of taxes, details of expenses paid by the company, details of advance payment for property, directors’ name for repayment of directors’ loan, details of creditors for payment, etc. In absence of all the basic details/documents, it is not possible to form an opinion on the genuineness of the use of the sale proceeds of the land of Rs. 12.25 crore. iv. As per annual report 2016-17 submitted by the company, it is observed that the company has not paid undisputed dues amounting to Rs. 19 lakhs outstanding for more than six months as on March 31, 2017.

Order in the matter of Jai Mata Glass Limited v. The company has provided the list of 17 parties for trade receivables without any documentary proof to substantiate their genuineness, existence, due date of payment, contracts and efforts made by the company to recover the amount. vi. The company was asked to provide the audited financials however, it has provided the unsigned and unaudited financials for the F.Y. 2016-17. vii. The bank statements provided by the company are also unsigned and unstamped”.

6. Vide said interim order, SEBI had advised JMGL to file its reply/objections to the said interim order within 30 days from the date of receipt of the said interim order and also indicate in its reply whether it desires to avail an opportunity of personal hearing on a date and time to be fixed on a specific request made in that regard, if any. The said interim order also mentioned that if JMGL had failed to file the reply or request for an opportunity of personal hearing within the said 30 days, the preliminary findings of the said interim order and ad-interim directions shall stand confirmed against JMGL automatically, without any further orders. Service of Interim Order: 7. Vide letter dated September 27, 2017, the copy of interim order was sent to JMGL at “MPF Systems Limited, 108, Prime Plaza, J.V. Patel Compound, B.M.Road, Elphinstone (W), Mumbai, Maharashtra – 400 013.” through Speed Post and the same was delivered. Vide email dated October 12, 2017 the copy of interim order was also forwarded to JMGL. Reply: 8. In response, JMGL vide letter dated October 26, 2017 submitted its reply to the interim order which are inter alia as under: “… i. The securities of the Company listed on the Bombay Stock Exchange (BSE), for decades now, had never been suspended from trading by the BSE for any kind of non-compliance or default and no penalty/ fine has ever been imposed on the Company for the same.

Order in the matter of Jai Mata Glass Limited ii. The Company has been meeting all requirements of the Listing Agreement and Corporate Governance and, as on date, there is no investor or other grievance that is pending to be redressed. iii. The Company, after having perused the captioned Interim Order of the Ld. Whole Time Member makes the following submissions/ provides the following document's/ information as have been mentioned in the said Interim Order: 1. Filing of annual report for the year ended 2014: The annual report of the Company for the financial year 2013-2014 was erroneously not uploaded on the website of BSE. However, the same was filed with the Registrar of Companies and has been available in the public domain for viewing for any interested person/ entity. The annual report was sent to all shareholders of the Company at time of convening the annual general meeting which meeting was properly conducted and there is no grievance from any shareholder regarding non receipt of the annual report. The said annual accounts have also been filed with the income tax return of the Company for the relevant financial year.

The same has now been uploaded by the Company on the website of the BSE and it is requested that the act may be considered as compliance of the applicable provision in the said regard. Additionally, the annual results as at for the year ended March 31, 2014 were published in newspapers, as per then applicable clauses of the Listing Agreement, upon the same being approved by the Board of Directors of the Company. Further, the balance sheet was also filed with the income tax return filed by the Company for the relevant financial year. 2. Filing of financial results for the quarter ended June 2017: The financial results for the quarter ended June 2017, are generally due to be filed and published within 45 days of close of the relevant quarter. However, as the provisions of Ind-AS became applicable to the Company with effect from April 1, 2017, and in terms of the circular no. CIR/ CFO/ FAC/ 62/ 2016 dated July 05, 2016, the time for filing and publishing of quarterly results for the quarter ended June 30, 2017, for such reason was Order in the matter of Jai Mata Glass Limited extended for a month.

Hence, the Company was required to file and publish the same on or before September 15, 2017. Accordingly, the board of directors of the Company approved the quarterly results Company for the quarter ended June 30, 2017, on September 14, 2017 and the same were filed online on the website of the BSE and published in newspapers on September 15, 2017. (A copy of the published results is provided). 3. Information with respect to number of employees and Provident Fund filings: The SSE had inquired from the Company about the number of employees and Provident Fund filings vide its e-mail dated August 23, 2017, and the Company had filed a certificate of the auditors dated September 22, 2017, providing the required information. (A copy of the aforesaid certificate of the auditor is provided) 4. Details of appeals filed with the income tax department: The details regarding the appeals filed in respect of matters connected with the Income tax Act, 1961, were included in the Auditors Report dated August 14, 2017, in reply to communication of the BSE dated August 10, 2017. The same is being reproduced hereunder for your ready reference: (i) The Company had filed an appeal before the Learned Commissioner of Income tax against the order of assessment for the assessment year 2013-14.

The matter is being heard by the jurisdictional Learned Commissioner of Income tax. There is however, no tax effect on account of the said appeal fried by the Company. (ii) The Company had filed an appeal against the Order of the Learned Commissioner of Income tax dated 30.11.2005, before the Hon'ble Income tax Tribunal, New Delhi, which appeal was allowed by the Hon'ble Tribunal. The Income tax Department has filed an appeal against the order of the Hon'ble Income tax Tribunal, New Delhi, before the Hon'ble High Court of Delhi, which is yet to be disposed. 5. Clarification on the number of directors

Order in the matter of Jai Mata Glass Limited

Para 12(d) of the Interim Order erroneously states that the Company had 2 directors and 2 employees. It is submitted that the Company has 5 (five) directors, including one woman director, and 2 (two) employees. 6. Copy of Sale Deed The query posed by the BSE to the Company vide its letter dated August 10, 2017 was information and documents regarding the Agreement to Sell that had been executed by the Company and a copy of the same was provided to the BSE. However, as mentioned, BSE had only sought a copy of the Agreement to Sell (and not the Sale Deed) and hence copy of Sale Deed had not been provided. A copy of the Sale Deed of the land and building of the Company, as sought now, duly registered before the Sub Registrar of Assurances, Baddi, Himachal Pradesh, and copy of the Agreement to Sell were provided by the Company. 7. Details of payment received of Rs. 7.63 Crores The Company, as shown in the Company's bank statement submitted along with it's letter dated August 17, 2017, had received a payment of Rs. 7,62,75,000.00 vide Demand Draft No.056019 dated July 1, 2016 from Micro Seamless, the purchaser of the land and building of the Company. The said payment had been received by the Company towards part sale consideration against sale of land and building made by the Company and is reflected in the bank statement on July 4, 2016. The mention of the said payment of Rs. 7,62,75,000. 00 being made by Micro Seamless to the Company has also been made in the preamble on page number 3 of the Sale Deed. The Company provided the same and copy of the aforesaid Demand Draft received by the Company. 8. Advance for capital goods of Rs. 15 Lacs and reason for payback on 16.05.2016 The Company's land and building at Village Barotiwala, District Solan, Himchal Pradesh, whereat the manufacturing plant of the Company had operated for over 26 years, was lying unused after the manufacturing operations had closed.

Order in the matter of Jai Mata Glass Limited

In order to raise funds to meet its liabilities, the Company had entered into an understanding with one Integrated Capital Services Limited for sale of part of the land. As the formalities required prior to completion of sale required the Company to obtain, amongst others (i) permission from the Baddi Barotiwala Nalagarh Development Authority (BBNDA}, (ii) No Objection Certificate (NOC) from Himachal Electricity Board, (iii) NOC from the Sales Tax Department, were taking time, the parties cancelled the understanding. The amount of Rs. 15 lacs represent the advance refunded to Integrated Capital Services Limited (not to Integrated Master Securities as mentioned in the Interim Order). The Company thereafter, in November 2014 entered into an Agreement to Sell with Micro Seamless for sale of the entire land and building, and Micro Seamless extended the time required by the Company to complete the formalities, and the sale did consummate in July, 2016. 9. The details of loans repaid, payment of taxes, details of expenses paid and details of uitilisation of the sale consideration received from sale of land and building were also provided by the Company. 10. Trade receivables of 17 parties The Company, till August 2012, was engaged in the business of manufacture of glass, and had turnover of Rs. 2059.01 lacs and Rs. 5817.00 lacs during the years ended March 31,2013 and March 31,2012. The level of debtors as at the said dates were Rs. 135.90 lacs and Rs. 565.85 lacs, respectively. The glass manufacturing plants, due to the same having become highly uneconomical to operate the facilities, which was principally due to increase in fuel prices, technological obsolescence, and impost of taxes by the State of Himachal Pradesh, were closed down in August 2012. The Company has kept pursuing its outstanding debtors for recoveries and had been successful in reducing its debtors from Rs.108.26 lacs to Rs. 31.81 Lacs, Rs. 30.10 Lacs as at March 31, 2014, March 31, 2015 and March 31,2016 respectively.

Order in the matter of Jai Mata Glass Limited

The 17 parties named in Annexure 6, along with the amounts recoverable from them aggregating to Rs. 30.10 lacs, and their copies of account, were the only debtors remaining to be realised by the Company as at March 31, 2016 and the Company had kept pursuing the same. During the financial year 2016-17 an amount of Rs.17.16 Lacs recoverable from some parties has been written off as the management feels that there is no possibility of recovery from such parties. As the Company has restarted business in the same industry, it is regularly meeting the parties from whom amounts remain recoverable. The management is hopeful that with regular interaction with such parties and with transaction of new business, the pending receivables of the Company will be realised. 11. As per 2016-17 Auditors Report undisputed dues of an amount of Rs. 19 lacs is outstanding to be paid for more than 6 months. The dues remaining to be paid, as per the Auditors Report on the Balance Sheet of the Company as at March 31, 2017, aggregates to Rs. 19.51 lacs the break up whereof is as under: (a) Barrier Tax- Rs. 10.36 Lacs (b) Sales Tax- Rs. 7.28 Lacs (c) Mandi Tax- Rs. 1.87 Lacs The Company had filed Writ Petitions in the Hon'ble High Court of Himachal Pradesh against the aforesaid dues on account of Barrier Tax and Mandi Tax. The said writ petitions were dismissed in the financial year 2016-17 whereafter the Company has approached the relevant departments for settling the respective dues. An appeal in the matter of the aforesaid Sales Tax dues is pending. 12. Bank statements were unsigned and unstamped The bank statements were downloaded and printed by the Company by availing the web-based viewing facility and as the same were downloaded from the authentic records of the bank the Company had not got the same signed and/ or stamped from the bank.However,

Order in the matter of Jai Mata Glass Limited taking note of the observation of SEBI in the said regard, bank statements duly certified by the director of the Company are provided. It may kindly be informed in case bank authenticated statements are required to be filed by the Company, and the same will be obtained from the bank and furnished. iv. It may kindly be noted that the Company did not have any borrowings from any bank or financial institution after 2009 and it was carrying on operations out of its own funds and those arranged by the promoters/ directors of the Company. As mentioned hereinbefore, the liabilities of workmen, statutory dues and other liabilities were settled out of realisation from fixed and current assets.”

Opportunity of hearing: 9. In the interest of natural justice, SEBI, vide communication dated November 06, 2017, granted JMGL an opportunity of personal hearing on December 13, 2017 at Head Office, Mumbai. The authorized representatives of the company appeared before me and requested that they may be allowed to make fresh submissions especially regarding the sale of land for an amount of Rs. 12 Crores, the end use of funds, etc., by January 31, 2018.The same was allowed. Further, an extension of time upto six weeks sought by the Company to reply to the prima facie observations stated in the interim order was also granted to the Company. 10. However, JMGL vide email dated January 31, 2018 informed that in the last week of December, 2017, the company received communication from BSE with respect to the appointment of a Chartered Accountants’ firm to conduct their forensic audit. The company also submitted that since the forensic audit of its accounts is in process, the information and explanation as agreed by the Company during the personal hearing on December 13, 2017 shall be submitted once the internal audit process is over. The Company further requested that another opportunity of personal hearing be provided to the Company before any final order is passed and have also sought suitable time to submit the desired information/ provide clarification till the time the forensic audit process is over. 11. BSE vide email dated February 02, 2018 informed that the forensic audit in the matter of Jai Mata Glass Limited commenced from January 24, 2018. Order in the matter of Jai Mata Glass Limited

12. SEBI vide email dated February 22, 2018 advised the Company to submit additional information/ documents in the matter. Additional Written Submissions: 13. In response, JMGL vide letter dated March 07, 2018 submitted that they allocated considerable time to the forensic auditor, which led to delay in gathering the desired information. Vide the said letter, JMGL submitted additional documents and following additional submissions with respect to the observations in the interim order:  “…On 2nd May, 2016, the buyer of the land M/s Micro Seamless applied to the Deputy Commissioner, Solan, Himachal Pradesh for grant of permission for registration of land on actual consideration amount and not on the basis of circle rate. As per the buyer the then prevailing circle rates were unreasonable and were fixed when the industrial packages having income tax and excise duty exemptions were in force. As no new projects were coming up in the area but the revenue rates were increased upwards whereas there was a 40% reduction of rates in land and properties in the area. On receipt of such application, the Deputy Commissioner, Solan wrote to the office of Commissioner seeking clarification on the application of the Buyer. On 7th May, 2016 the Buyer again wrote to the Deputy Commissioner, Solan, to calculate the stamp duty as per the Revenue Department Notification dated 12th January, 2016, and not as per the old notification dated 13th January, 2012. Copy of the new notification was also provided by the Buyer to the Deputy Commissioner. As no response was received by the Buyer from the State Government departments the Buyer again wrote to the Tehsildar, Baddi, District Solan, Himachal Pradesh on 30th June, 2016. The relevant extract of the letter dated 30th June, 2016 is as under: "Although we had contracted to purchase aforesaid land for Rs. 12.25 Crores, which is a fair market value and the rules of circle rates applicable are not clear, and to cut short delay in our project we have moved an application before the DC Solan, to get our land registered on circle rate value which comes to INR

Order in the matter of Jai Mata Glass Limited

15,08,71,000. In terms of notification no. REV(F)6-1/ 2009 dated 12th January, 2016. Now the decision of the same is pending with Inspector General of Registration, Shimla. As the project is getting delayed and we are incurring very heavy losses in terms of bank interest, and on depreciation of the purchased machinery, our management has taken a decision to get the land registered as per stamp duty calculations suggested by your good office which comes to around IN R 22, 00, 27,240 (Rupees Twenty Two Crore Twenty Seven Thousand Two Hundred Forty only). We are getting this land registered by paying the stamp duty as per your calculations under protest and subject to our rights to claim back the excess stamp duty amount together with interest and damages."  On 8th August, 2016 the, Buyer again made an application to Deputy Commissioner, Solan, requesting for refund of excess stamp duty registration fee paid. The relevant extract of the said letter is as under: "That we entered into agreement to purchase this land for Rs. 12.25 crores, but were forced to pay stamp duty and registration fees considering value of transaction at Rs. 22.0027 Crores. Thus we have paid excess amount of Rs. 29,25,810/- (Twenty Nine lac twenty five thousand ten only) towards stamp duty and Rs.19,50,540 (Rupees Nineteen thousand fifty lac and five hundred forty only) excess amount towards registration fees. Now therefore, we request you to please order refund of excess amount towards stamp duty and registration fee charged from us.”  On 29th April, 2017 the buyer M/s Micro Seamless further made an application to Deputy Commissioner, Solan, requesting for refund of excess charged stamp duty and registration fees.

Order in the matter of Jai Mata Glass Limited

 Since then, the buyer has been regularly following up with the concerned authorities for refund of excess duty. As per the information received the State Government is actively considering the request of the buyer M/s Micro Seamless to refund.  All the above records, communications and the likely action of the State Government clearly reflect that the transactions of the land was purely on the then prevailing market rates and any suspicion on such transaction is unfounded.  Regarding deployment of land proceeds of Rs.12,25,00,000, it is submitted that an amount of Rs.2,00,00,000 was received by the Company from the Buyer on 25.11.2014, Rs. 2,50,00,000 was received by the Company on 05.05.2016 and the remaining Rs. 7,62,75,000 (net of TDS) was received on 04.07.2016. The TDS amount of Rs. 12.25 lacs was deposited by the Buyer on 01.07.2016. Though the statement of the deployment of funds along with the details has already been submitted to SEBI, however, the detailed ledger account statements, bank account statement, invoices, challans along with the proofs of such payments are also submitted. The details are as under:  Copies of bank instruments and Challans evidencing payment of Sales tax amount of Rs. 96 lacs. The said payment was made from Axis Bank on various dates and can be verified from the bank statement.  Copy of Ledger account evidencing refund of inter corporate borrowing of Rs. 35 lacs to Kalakar Exports Pvt. Ltd.  Copy of ledger account evidencing the refund of inter corporate borrowings of Rs. 366.80 lacs to J.P. Overseas Pvt. Ltd. The above borrowings were received by the Company over a long period of time in the ordinary course of business to keep the Company as a going concern. All these borrowings were interest free.  Copies of ledger accounts of various customers evidencing the refund of advances to the tune of Rs. 70 lacs received from those customers.

Order in the matter of Jai Mata Glass Limited

 Copies of ledger accounts and invoices evidencing the payment of Rs. 9 lacs as Professional Charges.  Copy of ledger account of refund of capital goods advance of Rs. 15 lacs.  Copies of challans for payment of Service Tax and Excise Duty of an amount of Rs. 14 Lacs.  Copies of ledger accounts for payment of Rs. 105 Lacs as claims, compensation, interest and litigation settlement expenses on the advances received. Challans of deposit of TDS of Rs. 9.60 lacs also provided.  Copy of bank challan dated 23.08.2016 evidencing the payment of Rs. 15 lacs towards ESI dues.  Copy of chaIlan evidencing payment of Rs. 12.25 lacs as TDS on sale consideration of land.  Copies of Buyer Seller Agreement and Agreement to Sell for purchase of flats. An amount of Rs. 105 lacs have been paid.as advance for purchase of these flats.  Copy of glass dealership Agreement and ledger statement. An amount of Rs. 300 lacs has been paid as dealership deposit to M/s Sumangal Glass Private Limited. The company has regularly been receiving the commission on account of sale of glass.  Copies of ledger statement evidencing refund of directors' loan of Rs. 26 lacs.  Copies of ledger statements evidencing payment of Rs. 14 lacs to sundry creditors  Besides this an amount of Rs. 40 lacs (approximately) has been spent under miscellaneous heads…” It is hereby submitted that the details of all the payments can be verified from the books of account and the bank account statements. Copies of the Bank statements of AXIS Bank and State Bank of India though already submitted, are hereby submitted again. The above information is also provided to the forensic auditor appointed by Bombay Stock Exchange.

Order in the matter of Jai Mata Glass Limited

14. Vide email dated June 29, 2018, BSE informed that the draft Audit Report has been received by the exchange and the forensic auditor has been advised to incorporate certain changes and to provide all supporting evidences. Issue for consideration and Findings: 15. Whether the directions issued against JMGL vide the interim order need to be confirmed, vacated or modified in any manner, during the pendency of investigation in the matter?

16. Based on the replies given by the Company in response to the interim order dated September 26, 2017, my observations and finding are as under: a) Observation with respect to sale of land: It is observed in the interim order at paragraph 17(1) that the company entered into an Agreement for sale of land at Himachal Pradesh on 21/11/2014 with Micro Seamless and the sale deed was executed on 01/07/2016. However, copy of Sale deed has not been provided and further no clarification was provided with respect to delay in execution of the sale deed. On analysis of Bank statement provided by the company, it is observed that Rs. 2.5 crore was credited on 05/05/2016 from Micro Seamless, whereas an amount of Rs. 7.63 crore was credited on 04/07/2016 but the descriptions in the bank statement do not provide any input for source of transfer. In response, JMGL submitted that the company was asked to provide the Agreement to sell and not the Sale Deed and hence the copy of Sale Deed had not been provided. A copy of Sale Deed duly registered and copy of Agreement to Sell was provided along with the reply dated October 26, 2017. Further, the company also stated that it had received a payment of Rs. 7,62,75,000 vide Demand Draft No. 056019 dated July 01, 2016 from Micro Seamless and the same has been reflected in the bank statement of the Company on July 04, 2016. I have perused the Sale Deed executed between the JMGL and Micro Seamless in July 2016. Upon perusal, I note that the aggregate circle rate of the total land sold by JMGL as mentioned in the Sale Deed is Rs. 21.80 crores (21.22 crores + 0.58 crores), whereas the consideration mentioned in the Sale Deed is Rs. 12.25 crores. I note the submission

Order in the matter of Jai Mata Glass Limited of the Company that the buyer M/s Micro Seamless on May 02, 2016 applied to the Deputy Commissioner, Solan, Himachal Pradesh for grant of permission for registration of land on actual consideration amount of Rs. 12.25 crores and not on the basis of circle rate 22 crores. The Company also submitted the details of various letters exchanged by Micro Seamless with respect to the circle rate of the land, the contents of the same are already detailed in paragraph 13 above which are not repeated herein for the sake of brevity. From the perusal of details submitted by the Company, I find it necessary to ascertain whether the land was sold at fair market value or at circle rate. The finding on this aspect of sale will have a bearing on the fact that whether the financials of the Company have rightly reflected the sale figures. b) Observation with respect to Advance for capital good: It is observed in the interim order at paragraph 17(2) that the Company has not provided any details and documentary proof for the Advance for capital goods of Rs. 15 lakhs and the reasons for amount paid back on 16/05/2016. However, on analysis of SBI bank statement provided by the company it is observed that the amount of Rs. 15 lakhs has been paid to Integrated Master Securities. The question with respect to what capital goods were intended to be sold and why the same was not executed has not been answered clearly. In response, JMGL submitted that the Company had entered into an understanding with one Integrated Capital Services Limited for sale of part of the land. The Company further submitted that as the formalities required prior to completion of sale to obtain permission from Baddi Barotiwala Nalagarh Development Authority, NOC from Himachal Electricity Board and NOC from Sales tax department were taking time Integrated Capital Services Limited cancelled the understanding. The Company claimed that the amount of Rs. 15 lacs represents the advance refunded to Integrated Capital Services Limited. JMGL further stated that in November 2014 they entered into an Agreement to sell with Micro Seamless for sale of entire land and building, and Micro Seamless extended the time required by the Company to complete the formalities, and the sale was consummated in July, 2016.

Order in the matter of Jai Mata Glass Limited

It is pertinent to note that JMGL failed to furnish the date of cancellation of understanding with Integrated Capital Services Limited. Since the company entered into an Agreement to Sell the land to Micro Seamless in November 2014, the date of cancellation of understanding with Integrated Capital Services Limited should have been prior to November 2014. However, I note that JMGL refunded Rs. 15 lacs Integrated Capital Services Limited after 1.5 years i.e. on May 16, 2016. I note that JMGL has not provided any explanation or justification for the same with sufficient documentary evidence. c) Observation with respect to utilization of sale proceeds: It is observed in the interim order at paragraph 17(3) that the Company has provided a list of items for utilization of sale proceeds of land without giving full break up and documents for the repayment of outstanding loans, challaan for repayment of taxes, details of expenses paid by the company, details of advance payment for property, directors’ name for repayment of directors’ loan, details of creditors for payment, etc. In absence of all the basic details/documents, it is not possible to form an opinion on the genuineness of the use of the sale proceeds of the land of Rs. 12.25 crore. In response, JMGL furnished certain details of loans repaid, payment of taxes, details of expenses paid and details of utilization of the sale consideration received from sale of land and building vide its reply dated October 26, 2017. I have perused the documents provided by the Company vide its reply dated October 26, 2017 and I note that JMGL submitted following details with respect to deployment of funds of Rs. 12.25 crores the details of the same are as under: i. Copy of Challans and bank instruments evidencing payment of Sales tax – Rs.96 Lacs ii. Copy of Ledger account refunding inter corporate borrowings to Kalakar Exports Pvt. Ltd.- Rs.35 Lacs iii. Copy of Ledger account refunding inter corporate borrowings to J.P. Overseas Pvt. Ltd.- Rs.366.80 Lacs

Order in the matter of Jai Mata Glass Limited iv. Copy of Ledger account of various customers evidencing the refund of advances - Rs.70 Lacs v. Copy of Ledger account and invoices for payment of Professional charges - Rs.9 Lacs (approx.) vi. Copy of Ledger account of refund of capital goods advance - Rs.15 Lacs vii. Copy of Challans for payment of Service tax and Excise duty- Rs.14 Lacs (approx.) viii. Copy of Ledger account for payment of Claims, compensation, Interest and Litigation settlement expenses on the advances received - Rs.105 Lacs (approx.) ix. Copy of Challans for deposit of TDS - Rs.9.60 Lacs x. Copy of Bank Challans for payment of ESI dues - Rs.15 Lacs xi. Copy of Challan evidencing payment of TDS on consideration of land - Rs.12.25 Lacs xii. Copy of Agreement for purchase of flats and amount paid as advance - Rs.105 Lacs xiii. Copy of Amount paid as dealership deposit to M/s Sumangal Glass Private Limited - Rs.300 Lacs xiv. Copy of Ledger Statement for refund of directors loan- Rs.26.00 Lacs xv. Copy of Ledger statement for payment to sundry creditors- Rs.14.00 Lacs xvi. Miscellaneous heads - Rs.40.00 Lacs (approx.) Further, JMGL submitted that they paid an amount of Rs. 105 lacs towards advance for purchase of flats, the details of the same is tabulated as under: S.No. Particulars Total Price as per Advance Paid as per Allotment Allotment letter/Agreement letter/Agreement 1 Agreement for purchase of 2 flat 46,88,000 40,00,000 on in the Camellia Garden at 26/07/2016 Bhiwadi Alwar, Rajasthan on 27/07/2016 * 2 Buyer-Seller Agreement for 25,54,000 25,00,000 on purchase of Flat in the Camelia 26/07/2016

Order in the matter of Jai Mata Glass Limited

Garden at Bhiwadi, Alwar, Rajasthan on 11/08/2017 # 3 Buyer-Seller Agreement for 55,52,100 40,00,000 on purchase of Flat in The Beach 11/08/2017 Village Goa on 11/08/2017. # *Purchased from Connoisseur Developers Private Limited. # Purchased from M-Tech Developers Private Limited. I note from the MCA records that Connoisseur Developers Private Limited and M Tech Developers Private Limited have common directors viz., Amit Kumar Jha (DIN- 00501946) and Mehinder Sharma (DIN- 00036252). I also note that though the advance payment for the purchase of flats were made in July 2016, the agreement for the same was made after more than a year i.e. on August, 2017. Further, JMGL has not submitted any registered documents for the above purchases made. Further, I do not find any justification/purpose for the purchase of these flats in a place other than its registered office address at Himachal Pradesh or head office at Delhi. Further, I note that in order to establish the genuineness of these transactions, the Company has submitted various documents. In this context, I find that third party verifiable documents such as Challans and bank instruments evidencing payment of statutory dues such as Sales tax, Service tax and Excise duty, payment of ESI dues, deposit of TDS, payment of TDS on consideration of land stand verified.

However, I note that as regards many of the payments made by the Company there are only copy of Ledger Account which is not a third party verifiable document. For instance, as regards refund of inter corporate borrowings to Kalakar Exports Pvt. Ltd, J.P. Overseas Pvt. Ltd, etc., the Company has provided only copy of Ledger Accounts which is not supported by any bank statements to verify when the borrowings were made and how much amount was borrowed and also when the same was repaid and how much they repaid etc. Since, the Company has failed to furnish any such third party verifiable document, I am not inclined to accept the documents such as ledger accounts. Therefore, I am of the view that the genuineness of the utilization of sale proceeds, which in turn will affect the Order in the matter of Jai Mata Glass Limited corresponding figures of assets/liabilities shown in the financials, can only be ascertained after the conclusion of Audit. d) Observations with respect to Annual Report 2016-2017: It is observed in the interim order at paragraph 17(4) that as per annual report 2016-17 submitted by the company, it is observed that the company has not paid undisputed dues amounting to Rs. 19 lakhs outstanding for more than six months as on March 31, 2017 In response, JMGL submitted that the Company had filed writ petition in the Hon’ble High Court of Himachal Pradesh against the aforesaid dues on account of Barries Tax and Mandi Tax amounting to Rs. 12.23 lacs.

The said writ petitions were dismissed in the F.Y. 2016-17 whereafter the Company has approached the relevant departments for settling the respective dues. An appeal in the matter of the Sales tax amounting to Rs. 7.28 lacs is pending. In this regard, I note that the Company has not submitted any documentary evidence to substantiate their claim that dues were pending on account of various litigations with the Tax Authorities. In view of this, I find that there is no evidence on this point to contradict the prima facie findings in the interim order.

e) Observation with respect to trade receivables: It is observed in the interim order at paragraph 17(5) that the Company has provided the list of 17 parties for trade receivables without any documentary proof to substantiate their genuineness, existence, due date of payment, contracts and efforts made by the company to recover the amount. In response, JMGL submitted that during the Financial year 2016-17 an amount of Rs. 17.16 lacs (out of Rs. 30.06 lacs shown as receivables as per Annual Report for F.Y. 2015-16) recoverable from some parties have been written off as the management feels that there is no possibility of recovery from such parties. For the balance, the company has started business in the same industry and it is regularly meeting the parties from whom accounts remain recoverable. The management is hopeful that with regular

Order in the matter of Jai Mata Glass Limited interaction with such parties and with transaction of new business, the pending receivables of the Company will be realized. However, I note that the company has still not provided sufficient documentary evidence to substantiate the genuineness of the receivables, their existence, due date of payment, contracts and efforts made by the company to recover the amount. In view thereof, I find that there is no evidence on this point to contradict the prima facie findings in the interim order.

f) Observation with respect to Audited financials: It is observed in the interim order at paragraph 17(6) that the Company was asked to provide the audited financials however, it has provided the unsigned and unaudited financials for the F.Y. 2016-17. In response, the Company vide reply dated September 18, 2017 submitted a copy of the audited balance sheet. Further, the printed annual report of the Company was also provided vide reply dated October 26, 2017. I have perused the same. Though the Company has submitted annual report of the Company for the F.Y. 2016-17, I note that the copy of financials signed by the auditors are not submitted by the Company.

g) Observation with respect to bank statements: It is observed in the interim order at paragraph 17(7) that the bank statements provided by the company are also unsigned and unstamped. In response, JMGL stated that the bank statements were downloaded and printed by the Company by availing the web based viewing facility as the same were downloaded from the authentic records of the bank the Company had not got signed and/or stamped from the bank. JMGL submitted bank statements duly certified by the director of the Company. The same has been perused and taken on record.

Order in the matter of Jai Mata Glass Limited

17. Considering the above analysis and observations based on the reply and documents submitted by the Company, I note that JMGL, at this juncture, has failed to submit sufficient third party documentary evidence in support of its claims with respect to many of the charges /allegations / prima facie findings as described in the interim order. I also note that further enquiry/audit in the matter is pending. 18. In view of the above, I find that the facts and circumstances of the case as brought out in the Interim Order have not changed sufficiently, justifying the dis-continuation/ modification/ revocation of the directions passed in the Interim Order.

19. Thus, I, in exercise of the power conferred upon me under sections 11, 11(4), 11A and 11B read with section 19 of the Securities and Exchange Board of India Act, 1992 and in the facts and circumstance of case, hereby confirm the directions contained in the Interim Order dated September 26, 2017 and the Audit shall continue.

20. Copy of this Order shall be forwarded to the recognized stock exchanges and depositories for information and necessary action. A copy of this Order shall also be forwarded to the Ministry of Corporate Affairs and Serious Fraud Investigation Office for their information.

DATE: NOVEMEBR 14, 2018 MADHABI PURI BUCH PLACE: MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA

Order in the matter of Jai Mata Glass Limited