Disposal of representations of Astha Green Energy Ventures India Limited and others.

IN THE MATTER OF ISSUANCE OF EQUITY SHARES BY ASTHA GREEN ENERGY VENTURES INDIA LIMITED 1. Securities and Exchange Board of India (hereinafter referred to as “SEBI”) passed order dated January 1, 2016 against Astha Green Energy Ventures India Ltd. (“Astha”) and its promoters/directors namely Mr. Keshav Reddy Mereddy, Mr. Arjun Reddy Mereddy, Mr. Jayanth Reddy Mereddy, Mr. Kunduru Raghuveer, M r. K. Jayaveer, Mr. N. Ram Bhupal Reddy and Mr. N. Jayapal Reddy (hereinafter collectively referred to as “the entities” and individually by their respective names) for violations of public issue norms stipulated under the Companies Act, 1956 (read with the corresponding provisions of Companies Act, 2013) and SEBI (Disclosure and Investor Protection) Guidelines, 2000 (“DIP Guidelines”) and SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (“ICDR Regulations”). 2. By the order dated January 1, 2016, the following directions were issued against the entities: (i) “The Noticees i.e. Astha Green Energy Ventures India Limited [PAN: AABCJ6610P] and its promoters/directors namely, Mr. Keshav Reddy Mereddy [PAN: AFYPM4987M], Mr. Arjun Reddy Mereddy [PAN: AJSPM0907B], Mr. Jayanth Reddy Mereddy [PAN: AIOPM1580B], Mr. Kunduru Raghuveer [PAN: AHSPK6633J], Mr. K. Jayaveer [PAN: ANBPK6313Q], Mr. N. Ram Bhupal Reddy [PAN: AQUPR0042B] and Mr. N. Jayapal Reddy [PAN: ANBPN2644M] shall within a period of one year from the date of this order, jointly and severally refund ₹ 43,77,47,300 collected pursuant to the allotment of shares on December 10, 2007, March 31, 2009, March 04, 2010, March 05, 2010 and March 06, 2010 to allotees with interest at the rate of 15% per annum from the date of receipt of money till the date of such refund. However, the Noticees shall ensure that not less than 50% of the refund/repayment directed above is made to the allottees in six months starting from the date of Disposal of representations of Astha Green Energy Ventures India Limited and others.

this order. A quarterly status report shall be submitted by the Noticees in this regard at the end of each quarter. (ii) Such refund shall be made only in cash through a Demand Draft or Pay Order. (iii) The Noticees shall issue a public notice in all editions of one English national daily and one vernacular daily with wide circulation, detailing the modalities for refund, including details of contact persons including names, addresses and contact details, within fifteen days of this order. (iv) Within seven days of completion of refund as directed hereinabove, the Noticees shall file a certificate of such completion with SEBI from two independent peer reviewed Chartered Accountants who are in the panel of any public authority or public institution. Such certificate shall be issued by the Chartered Accountants after verifying the relevant documents including bank accounts of the Noticees and satisfying themselves that the refund has actually been made. For the purpose of this order, a peer reviewed Chartered Accountant shall mean a Chartered Accountant, who has been categorized so by the Institute of Chartered Accountants of India.

(v) The Noticees are restrained from, directly or indirectly, accessing the capital market by issuing prospectus, any offer document or advertisement soliciting money from the public and are further prohibited from buying, selling or otherwise dealing in the securities market, directly or indirectly, in whatsoever manner till the date of refund of money to the allottees, except for the purpose of compliance of this order. (vi) Mr. Keshav Reddy Mereddy, Mr. Arjun Reddy Mereddy, Mr. Jayanth Reddy Mereddy, Mr. Kunduru Raghuveer, Mr. K. Jayaveer, Mr. N. Ram Bhupal Reddy and Mr. N. Jayapal Reddy are also restrained from associating themselves, with any listed public company and any public company which intends to raise money from the public till the date of refund of money to the allotees.” 3. Vide letters dated January 9, 2016 and January 11, 2016, Astha requested SEBI to issue a clarification as to whether the procedure mentioned in the SEBI circular dated December 31, 2015 is applicable to it for complying with the directions given in the order dated January 1, 2016. Further, vide another letter dated March 10, 2016, Astha submitted the details with regard to the allotments made by it to 214 allottees on December 10, 2007. The tabular details submitted by Astha are as under:

Particulars No. of Allottees Total no. of allottees in the financial year 2007-2008 214 including promoters

Less: Promoters in the Allotment 7 Less: Promoter & promoter’s group as per definition 7 u/r 2(1)(za), 2(1)(zb) of SEBI (ICDR) Regulations, 2009 Less: Repetition of allottees 6 Less: Employees as allottees as per definition u/r 7 2(1)(m) of SEBI (ICDR) Regulations, 2009 Balance 187

4. Based on the computation as noted above, Astha submitted that the number of actual allottees in the allotment made on December 10, 2007 fell within the limit of 200 persons in a financial year as stipulated in the SEBI circular dated December 31, 2015. Astha further submitted that all the allotments made by it were within the limit of 200 which is as per the Circular dated December 31, 2015. In view of the above, Astha requested SEBI to issue a clarification regarding the applicability of the said SEBI circular in this case. Vide another letter dated March 17, 2016, Astha indicated a correction in respect of number of allottees mentioned in their previous letter dated March 10, 2016 under employees category that the number of allottees is to be read as 8 in place of 7. Astha, therefore indicated that the total number of allottees in the allotment made on December 10, 2007 would fall down to 186. 5. Meanwhile, the entities filed an appeal before the Hon’ble SAT (Appeal No.71/2016) against the order of SEBI dated January 1, 2016. In the said appeal, the entities challenged the said order stating that SEBI ought to have given effect to the policy decision in respect of refund procedure notified in the SEBI circular dated December 31, 2015. The entities had also pointed out that vide letter dated January 9, 2016, SEBI was requested to consider the refund procedure notified in the SEBI circular dated December 31, 2015 instead of the one directed vide order dated January 1, 2016 but SEBI had not replied till then to the letters dated January 9, 2016 and January 11, 2016. Hon’ble SAT, vide order dated May 2, 2016, disposed of the said Appeal directing SEBI to dispose of the proposal of the appellant dated March 10, 2016 within a period of 6 weeks from the date of the order. 6. Thereafter, the proposal of the entities made vide letter dated March 10, 2016 was examined by SEBI and the decision of the undersigned was caused to be communicated to Astha vide a reasoned letter dated May 27, 2016. Astha was also informed vide the said letter that principles of refund procedure prescribed in the said SEBI circular dated December 31, 2015 may be followed by Astha while making refund to the allottees.

7. Subsequently, the entities filed another appeal (SAT Appeal No. 226 of 2016) before Hon’ble SAT impugning the order dated January 1, 2016 and SEBI letter dated May 27, 2016 and prayed as under: i. to quash and set aside the impugned orders dated January 1, 2016 and May 27, 2016 and restrain the respondent from proceeding in furtherance thereof, in any manner, whatsoever; ii. pending the hearing and final disposal of the appeal to stay the operation and effect of the impugned order passed by the respondent; iii. Alternatively permit the appellant to refund monies to the existing shareholders and follow the procedure as laid down in the SEBI circular dated December 31, 2015 for the purpose of refunding monies to the shareholders; iv. For the costs of and incidental to this appeal to be paid by the respondent to the appellants, and v. For such other and further reliefs as may deem fit and proper in the facts and circumstances of the case. 8. The said Appeal was disposed of by Hon’ble SAT vide its order dated September 6, 2016 thereby directing SEBI to pass an order on the representations of the appellants (i.e. the entities herein) in accordance with law within four weeks form September 6, 2016. 9. I have perused the representation of the entities dated March 10, 2016 and other related representations.

SEBI circular dated December 31, 2015 specified that in respect of offers of securities prior to April 1, 2014 to more than 49 persons but up to 200 persons in a financial year, penal action may be avoided, if the companies provide the investors with an option to surrender the securities and get the refund amount along with 15% interest p.a. thereon or such higher returns as promised to investors. Further, the said SEBI circular has also provided for the refund procedure, and inter alia reads as under: “Refund Procedure 3 The process followed by companies for providing option to their security holders to surrender securities and obtain refund shall be supported by proof of dispatch through Registered or Speed post by India post or proof of delivery of letters if effected through any other mode. 4 The refund to security holders who have opted for such surrender shall be made only through banking channels through crossed account payee cheque / crossed demand draft / internet banking channels to enable audit trail. 5 Companies are allowed to adjust the amounts already paid to the allottees either as interest / dividend or otherwise from the amount of refund to be paid to the investors.

6. In case of transfer of securities by the original allottees, the option for refund shall be provided to the current holders of the securities. Certification 7 The company shall submit a certificate from an independent peer reviewed practicing Chartered Accountant certifying compliance as mentioned above. 8 The certificate as provided above shall state that the certification has been made after verifying various documentary evidences including proof of dispatch / delivery of letters, response of investors, complaints from investors, bank statements of the company, etc.” 10. It is an admitted fact that Astha had made allotment to 214 allottees on December 10, 2007. As regards the clarification given by Astha vide letter dated March 10, 2016 that the actual number of allottees in the allotment made on December 10, 2007 was 187 excluding promoters, employees, repetition of shareholder names, I note that SEBI circular dated December 31, 2015 does not make any distinction in respect of any category of allottees for the purpose of counting/calculating the 200 allottees. However, section 42(2) of the Companies Act, 2013 excludes from the calculation of 200 allottees, the following categories of allottees: a. Qualified institutional buyers and b. Employees of the company being offered securities under a scheme of employees stock option as per provisions of clause (b) of sub-section (1) of section 62. 11. In my view, since the intent of the circular flows from the Companies Act, 2013, which prescribes higher cap on the permissible allottees in private placement of securities, it would be in consonance with the intent of the circular, if the aforesaid categories of persons (mentioned in section 42(2) of the Companies Act, 2013) are deducted from the total number of permissible allottees in a financial year.

12. In the present case, it is clear that none of the allottees in the allotment made by Astha on December 10, 2007 fall within the above mentioned categories of shareholders. Further, even after excluding the repetitive 6 shareholders from the total number of 214 allottees, the number comes down to 208 which is still above the cap of 200 shareholders specified in the SEBI circular dated December 31, 2015. 13. In view of the above, I note that Astha had made allotment to more than 200 persons on December 10, 2007. Therefore, the SEBI circular dated December 31, 2015 would not be applicable to allotments made by Astha on December 10, 2007.

14. However, I find that there is a commonality between the SEBI order dated January 1, 2016 and SEBI circular dated December 31, 2015 that refund of monies to all the existing shareholders is mandatory on part of Astha. Considering that the primary objective of SEBI’s order dated January 1, 2016 is to ensure refund to all the existing shareholders of Astha, I allow Astha to follow the refund procedure prescribed in Clause 3 to 6 of the SEBI circular dated December 31, 2015 while making refund to the allottees. 15. The representations of Astha and its directors in this regard are disposed of accordingly.

Sd/-

DATE : October 3rd, 2016 RAJEEV KUMAR AGARWAL PLACE : MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA