Final Order-Wasankar Wealth Management Limited

WTM/PS/8/IMD/DoF-I/MAY/2015 SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: PRASHANT SARAN, WHOLE TIME MEMBER ORDER Under Sections 11, 11(4), 11A and 11B of Securities and Exchange Board of India Act, 1992 In the matter of Wasankar Wealth Management Limited In respect of: 1. Wasankar Wealth Management Limited [PAN:AAACW8073C] and its Promoters/ Directors, viz. 2. Mr. Prashant Jaidev Wasankar [PAN: AAIPW1864A], 3. Ms. Mithila Vinay Wasankar [PAN: ANFPM0123J], 4. Mr. Vinay Jaidev Wasankar [PAN: AALPW3215A], 5. Mr. Bhagyashree Prashant Wasankar [PAN: AALPW3274H] and 6. Mr. Abhijeet Jayant Chaudhari [PAN: AIUPC8611M]. 1. Securities and Exchange Board of India (hereinafter referred to as 'SEBI'), issued an ex-parte interim order dated July 31, 2014 (hereinafter referred to as 'the interim order') against Wasankar Wealth Management Limited (hereinafter referred to as 'Wasankar'/ 'the Company') and its promoters and directors including Mr. Prashant Jaidev Wasankar, Ms. Mithila Vinay Wasankar, Mr. Vinay Jaidev Wasankar, Ms. Bhagyashree Prashant Wasankar and Mr. Abhijeet Jayant Chaudhari (hereinafter collectively referred to as 'noticees'), pursuant to a preliminary enquiry into the alleged non-compliances with the public issue norms stipulated under the provisions of the Companies Act, 1956 including Sections 56, 60 (read with Section 2(36)), 73 and read with Section 67(3) thereof by the Company, in respect of its issue of the Non-convertible Preference Shares (hereinafter referred to as 'NCPS') during the financial years 2009-2010, 2010-2011 and 2012-2013.

2. The interim order made following observations/ allegations:

a. The Company was incorporated on July 16, 2008 and registered with the Registrar of Companies (hereinafter referred to as 'RoC'), Mumbai, Maharashtra. b. The Company vide its letter dated April 16, 2014, submitted that it had received 169 applications for issuing NCPS and a total of ₹8,03,47,000 was received. From the details submitted by the Company vide letter dated July 24, 2014, the following was revealed regarding the issue of NCPS: Table A Year No. of persons to whom Total Amount NCPS were allotted ( in ₹ Crores) 2009 – 2010 21 1.30 2010 – 2011 38* 3.56 2012 – 2013 169# 8.03 Total 228 12.89

* Wasankar on September 17, 2010, made allotment to 24 persons and raised ₹1.56 Crores. On February 15, 2011, Wasankar allotted NCPS to 14 persons and raised ₹2 Crores. The Company also partly redeemed and partly converted NCPS, issued by it in the financial year 2009-10 and 2010-11. # Wasankar allotted NCPS to 169 investors on August 18, 2012. c. It was observed that Wasankar had allotted NCPS to a total of 228 investors and had mobilized funds amounting to approximately ₹12.89 Crores during the financial years 2009–10, 2010–2011 and 2012–2013, respectively. d. Further, from the notice of Extra-ordinary General Meeting (EGM) held on August 18, 2012, it was observed that Wasankar had proposed to convene an EGM for according consent for the issue of NCPS for an amount not exceeding ₹9 Crores. Though the issue of NCPS was stated to be made on 'private placement' basis, the Company had admittedly allotted NCPS to 169 investors and mobilized an amount of ₹8.03 Crores as on August 18, 2012. The number of persons to whom the issue of NCPS was made by Wasankar during the financial year 2012–2013, was beyond the limit of 49 persons as prescribed under Section 67(3) of the Companies Act, 1956. e. As the Company was not stated to be a non-banking financial company or a public financial institution within the meaning of Section 4A of the Companies Act, it was not covered under the second proviso to section 67(3). f. The issue of NCPS prima facie qualifies as a 'public issue' under the first proviso to Section 67(3) of the Companies Act, 1956. Accordingly, the Company was mandated to comply with the requirement of listing such securities in a stock exchange in terms of Section 73 of the Companies Act, 1956. However, the Company failed to do so. In view of the same, the Company was mandated, under Section 73(2) to repay the amounts within a period of 8 days after the same became due. g. As there was no evidence on record to indicate whether or not funds received from the investors under the issue of NCPS had been kept in a separate bank account by the Company, the interim order also alleged that the Company prima facie failed to comply with the provisions of Section 73(3) of Companies Act, 1956. h. The Company was also alleged to have not complied with Section 56 and 60 (read with Section 2(36)) of the Companies Act, 1956.

3. In view of such alleged contraventions committed by Wasankar and its promoters/ directors, the following directions were issued by SEBI vide the interim order in order to protect the interests of investors and for preventing the Company from further carrying on with its fund mobilizing activity: "... ... 8. In view of the foregoing, I, in exercise of the powers conferred upon me under Sections 11, 11(4), 11A and 11B of the SEBI Act, hereby issue the following directions– i. WWML shall not mobilize funds from investors through the issue of NCPS or through the issue of equity shares or any other securities, to the public and/or invite subscription, in any manner whatsoever, either directly or indirectly till further directions; ii. WWML and its Promoters/ Directors, viz. Prashant Jaidev Wasankar (DIN: 02222183; PAN: AAIPW1864A), Mithila Vinay Wasankar (DIN: 02748336; PAN: ANFPM0123J), Vinay Jaidev Wasankar (DIN: 02217889; PAN: AALPW3215A), Bhagyashree Prashant Wasankar (DIN: 02737738; PAN: AALPW3274H) and Abhijeet Jayant Chaudhari (DIN: 02745525; PAN: AIUPC8611M), are prohibited from issuing prospectus or any offer document or issue advertisement for soliciting money from the public for the issue of securities, in any manner whatsoever, either directly or indirectly, till further orders; iii.

WWML and its abovementioned Promoters/ Directors, are restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in the securities market, either directly or indirectly, till further directions; iv. WWML shall provide a full inventory of all its assets and properties; v. WWML's abovementioned Promoters/ Directors shall provide a full inventory of all their assets and properties; vi. WWML and its abovementioned Promoters/ Directors shall not dispose of any of the properties or alienate or encumber any of the assets owned/ acquired by that company through the issue of NCPS, without prior permission from SEBI; vii. WWML and its abovementioned Promoters/ Directors shall not divert any funds raised from public at large through the issue of NCPS, which are kept in bank account(s) and/ or in the custody of WWML. 9. The above directions shall take effect immediately and shall be in force until further orders. ... ... 11. This Order is without prejudice to the right of SEBI to take any other action that may be initiated against WWML and its abovementioned Promoters/ Directors, in accordance with law."

The interim order advised the noticees that they may file their replies within a period of 21 days and also seek an opportunity of personal hearing.

4. The interim order forwarded to the noticees returned undelivered. Attempts were made to deliver the interim order by email, however the same could not be delivered. As the interim order was not getting delivered, attempts were made to deliver the same through the broker namely ISE Securities & Services Limited. The broker vide its letter dated September 27, 2014, intimated that the interim order could not be delivered to the noticees as the door was locked. It was also intimated that it had pasted the letter of SEBI at the premises of Wasankar and photographs were taken.

5. Before proceeding further with the matter, an opportunity of personal hearing was granted to the noticees on November 18, 2014. The notices in this regard were forwarded to ISE Securities & Services Limited for delivery to the noticees. In the meantime, it came to the knowledge of SEBI that the promoters/ directors of Wasankar were in jail. In view of the same, attempts were made to deliver the letters regarding intimation of the personal hearing through the Superintendent of Jail, Central Jail, Nagpur. The Superintendent of Jail, Central Jail, Nagpur vide his letter dated November 29, 2014, confirmed the service of the letters communicating the personal hearing to Mr. Prashant Wasankar, Mr. Vinay Wasankar and Mr. Abhijeet Choudhari.

In the meantime, SEBI received a letter dated November 15, 2014 from one Mr. Prakash Naidu, Advocate, who stated that he is representing the noticees in the matter and that the noticees are in jail and their matters are posted for arguments on bail in courts on the specified date of hearing. While submitting these, he requested for rescheduling of the personal hearing. The request was accepted and another opportunity of personal hearing was granted to the noticees on January 15, 2015. Intimation regarding the date of hearing was also forwarded to Mr. Prakash Naidu vide letter dated November 21, 2014, in addition to the letter forwarded to the Superintendent of Jail, Central Jail, Nagpur. However, on January 14, 2015, SEBI received an intimation from another advocate i.e. Mr. Prashant V. Ingle, who while writing on behalf of the noticees namely the Company, Mr. Prashant J. Wasankar, Ms. Bhagyashree P. Wasankar and Mr. Abhijeet J. Chudhari submitted that he has been engaged for the matter only on January 13, 2015 and has not yet received the complete information/ details relating to the matter and requested for an adjournment of six weeks. Considering the circumstances, another opportunity of personal hearing was granted to the noticees on February 02, 2015, which was rescheduled to February 11, 2015 and later to February 27, 2015. However, on February 27, 2015, none of the noticees turned up for the personal hearing.

6. Considering that adequate opportunities in compliance with the principles of natural justice have already been afforded to the noticees to file its reply/ written submissions and personal hearing in the matter, I find that further opportunity need not be afforded and the matter could be proceeded on the basis of the material available on record. In this regard, I have perused the interim order, the observations and allegations made therein against the noticees and other materials available on record.

7. I note that during the financial year 2012-2013, the Company had issued 80,34,700 NCPS to 169 investors. As per the Company, the said allotment was on private placement to a limited number of applicants. I also note the following observations from the interim order: "b. ... Although the issue of NCPS is stated to have been made on a private placement basis, yet, through the same, it is observed that during the Financial Year 2012–13, WWML exceeded the threshold for a private placement through the allotment of NCPS to 169 investors and for such allotment, it admittedly mobilized an amount of ₹8.03 Crores on August 18, 2012. In addition, The aforesaid facts clearly indicate that the number of persons to whom the issue of NCPS was made by WWML during the Financial Year 2012–13, was beyond the limit of forty–nine persons as prescribed under Section 67(3) of the Companies Act, 1956. c. In addition, WWML is not stated to be a non-banking financial company or a public financial institution within the meaning of Section 4A of the Companies Act and therefore, is not covered under the second proviso to Section 67(3). ..." In this regard, I have perused the Board Resolution dated August 18, 2012 and note that the Company had resolved to issue and allot, cumulative redeemable 12% NCPS of the face value of ₹10 each for an amount not exceeding ₹9,00,00,000. A simple calculation of the number of NCPS comes out as 90,00,000. The 'minutes of the Board Meeting' held on August 18, 2012, reveals that the Company had issued and allotted 80,34,700 NCPS of ₹10 each for cash, on preferential basis to 169 persons. In terms of the first proviso to Section 67(3) of the Companies Act, 1956, any offer or invitation to subscribe for shares or debentures made to 50 persons or more is construed to be an offer made to the public, notwithstanding the provisions of section 67(3)(a) and (b).

Accordingly, the offer and allotment of NCPS made to 169 investors by Wasankar during the financial year 2012-2013, is definitely a 'public offer of NCPS'. By making a public issue of NCPS, the Company was mandated to comply with all the legal provisions that govern and regulate such public issue of such securities, including the Companies Act, 1956 and the SEBI Act and regulations. In this context, I refer and rely on the observation made by the Hon'ble Supreme Court of India in the matter of Sahara India Real Estate Corporation Limited & Ors. Vs. SEBI (Civil Appeal no. 9813 and 9833 of 2011) (hereinafter referred to as the 'Sahara Case'): "... ... that any share or debenture issue beyond forty nine persons, would be a public issue attracting all the relevant provisions of the SEBI Act, regulations framed thereunder, the Companies Act, pertaining to the public issue. …"

8. As alleged in the interim order, the Company was mandated to comply with the provisions governing such public issue including Section 2(36) read with Section 60 of the Companies Act, 1956 (filing prospectus with Registrar and other requirements) and state therein (i.e., in the prospectus) the matters stipulated under Section 56 thereof. The interim order has noted the admission of Wasankar that "There was no Prospectus of the Company filed with ROC since this is a private placement and not intended for public issue." Further, the Company was also mandated to comply with Section 73 of the Companies Act, 1956, which mandates listing and dealing with such shares on a stock exchange. As per Section 73(1) and (2) of the Companies Act, 1956, a company is required to make an application to one or more recognized stock exchanges for permission for the shares or debentures to be offered to be dealt with in the stock exchange and if permission has not been applied for or not granted, the company is required to forthwith repay with interest all moneys received from the applicants. The Company appears to have contravened the said provisions as it has neither made an application seeking listing permission nor refunded the amounts on account of such failure. The Company has also not complied with the provisions of Section 73(3) as there is no evidence on record to indicate whether the funds received from the investors under the issue of NCPS have been kept in a separate bank account and failed to repay the same in accordance with Section 73(2). As the Company failed to comply with the Sections 56, 60 read with 2(36), 69 and 73 of the Companies Act, 1956, I find the Company guilty of having contravened the above said provisions of law in respect of its money mobilisation through the issue of NCPS and is therefore liable for the contraventions.

9. By virtue of Section 55A of the Companies Act, the provisions contained in Sections 55 to 58, 59 to 81 (including Sections 68A, 77A and 80A), 108, 109, 110, 112, 113, 116, 117, 118, 119, 120, 121, 122, 206, 206A and 207, so far as it relates to issue and transfer of securities, shall be administered by SEBI in the case of listed companies and companies who intend to get their securities listed. The Sections 56, 60, 67 and 73 that have been found to be contravened by the Company are covered under Section 55A of the Companies Act. When the Company made the offer and issued NCPS to more than 49 persons, it was mandated to list such securities in a stock exchange and also comply with other 'public issue' norms.

10. As regards, liability of the promoters/ directors of the Company, I note that Mr. Prashant Jaidev Wasankar became a director of Wasankar on July 16, 2008 and continues to be the director. Ms. Mithila Vinay Wasankar and Mr. Abhijeet Jayant Chaudhari became directors of Wasankar on July 01, 2010 and continues to be the director. It is noted that all the above persons were the directors when the impugned offer and allotments of NCPS were made to more than 49 persons by Wasankar during the financial year 2012-2013. Further, Mr. Vinay Jaidev Wasankar had become a director of Wasankar on July 16, 2008 and resigned on July 01, 2010. I note that he is one of the subscribers to the Memorandum of Association and continues to maintain it. As regards, Ms. Bhagyashree Prashant Wasankar, I note from the details submitted by the Company that she became a director of Wasankar on December 18, 2009 and had resigned on July 01, 2010. From another order passed by SEBI dated August 27, 2014, it is observed that Mr. Prashant Wasankar and his wife, Ms. Bhagyashree Wasankar have 60% and 37% shareholding respectively, in the Company. In view of the same giving a clean chit to Ms. Bhagyashree Prashant Wasankar is difficult.

11. I note that the scope of Sections 11, 11(4), 11A and 11B of the SEBI Act are wide enough to include a promoter/ director or other concerned persons. It can therefore be concluded that they being the persons in-charge of the affairs and policies of the Company were responsible for the contraventions committed by the Company as found above. Further, they were the 'officers in default' and were liable in terms of Section 73(2) of the Companies Act, 1956, to make the repayments. However, they have failed to do so. Considering the delay in making the repayments, it is appropriate that the Company and the above directors are directed to make the repayments along with interest at 15% from the date when the repayments became due till the date of actual payment.

In view of the foregoing, the above said promoters and directors namely Mr. Prashant Jaidev Wasankar, Ms. Mithila Vinay Wasankar, Mr. Vinay Jaidev Wasankar, Ms. Bhagyashree Prashant Wasankar and Mr. Abhijeet Jayant Chaudhari are responsible for the contraventions committed by the Company while issuing NCPS as observed above and also for the failure to make the repayments.

12. The natural consequence of not adhering to the norms governing the issue of securities to the public is to direct the Company and its promoters/ directors to refund the monies collected with interest to such investors. Further, in view of the violations committed by the Company/its directors, to safeguard the interest of the investors who had subscribed to such NCPS issued by the Company to safeguard their investments, and also to ensure that the Company does not collect any further monies pursuant to its offer of NCPS, it also becomes necessary for SEBI to issue appropriate directions against the Company, its promoters and directors.

13. In view of the foregoing, I, in exercise of the powers conferred upon me under section 19 of the Securities and Exchange Board of India Act, 1992 read with Sections 11(1), 11(4), 11A and 11B thereof hereby issue the following directions:

a. Wasankar Wealth Management Limited [PAN: AAAVW8073C] and its promoters/ directors including Mr. Prashant Jaidev Wasankar [PAN: AAIPW1864A], Ms. Mithila Vinay Wasankar [PAN: ANFPM0123J], Mr. Vinay Jaidev Wasankar [PAN: AALPW3215A], Mr. Bhagyashree Prashant Wasankar [PAN: AALPW3274H] and Mr. Abhijeet Jayant Chaudhari [PAN: AIUPC8611M] shall jointly and severally, forthwith refund the money collected by the Company through the issuance of Non-Convertible Preference Shares (which have been found to be issued in contravention of the public issue norms stipulated under the Companies Act, 1956), to the investors including the money collected from investors, till date, pending allotment of NCPS, if any, with an interest of 15% per annum compounded at half yearly intervals, from the date when the repayments became due (in terms of Section 73(2) of the Companies Act, 1956) to the investors till the date of actual payment.

b. The repayments to investors shall be effected only in cash through Bank Demand Draft or Pay Order.

c. The Company/ its present management is permitted to sell the assets of the Company only for the sole purpose of making the refunds as directed above and deposit the proceeds in an Escrow Account opened with a nationalised Bank.

d. The Company shall issue public notice, in all editions of two National Dailies (one English and one Hindi) and in one local daily (in Marathi) with wide circulation, detailing the modalities for refund, including details on contact persons including names, addresses and contact details, within fifteen days of this Order coming into effect.

e. After completing the aforesaid repayments, the Company 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. 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 ('ICAI').

f. Wasankar Wealth Management Limited and its promoters and directors including Mr. Prashant Jaidev Wasankar, Ms. Mithila Vinay Wasankar, Mr. Vinay Jaidev Wasankar, Mr.

Bhagyashree Prashant Wasankar and Mr. Abhijeet Jayant Chaudhari are also directed to provide a full inventory of all their assets and properties and details of all their bank accounts, demat accounts and holdings of shares/ securities, if held in physical form.

g. Wasankar Wealth Management Limited is directed not to, directly or indirectly, access the capital market by issuing prospectus, offer document or advertisement soliciting money from the public and is further restrained and prohibited from buying, selling or otherwise dealing in the securities market, directly or indirectly in whatsoever manner, from the date of this Order till the expiry of four (4) years from the date of completion of refunds to investors, made to the satisfaction of SEBI, as directed above. The Company is restrained from accessing the securities market for the purposes of raising funds with immediate effect.

h. The promoters and directors including Mr. Prashant Jaidev Wasankar, Ms. Mithila Vinay Wasankar, Mr. Vinay Jaidev Wasankar, Mr. Bhagyashree Prashant Wasankar and Mr. Abhijeet Jayant Chaudhari shall be restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in securities market, directly or indirectly, with immediate effect. They are also restrained from associating themselves with any listed public company and any public company which intends to raise money from the public, or any intermediary registered with SEBI. These directions shall come into force with immediate effect and shall continue to be in force for a further period of four (4) years on completion of the refunds to the investors, as directed above.

i. In case of failure of the Company/ its directors, to comply with the aforesaid directions, SEBI shall take appropriate action against them and other persons/ officers who are in default, including launching of prosecution proceedings, adjudication proceedings and recovery proceedings, in accordance with law.

j. The above directions shall come into force with immediate effect.

14. In case of failure of the company, Wasankar Wealth Management Limited and its promoters and directors including Mr. Prashant Jaidev Wasankar, Ms. Mithila Vinay Wasankar, Mr. Vinay Jaidev Wasankar, Mr. Bhagyashree Prashant Wasankar and Mr. Abhijeet Jayant Chaudhari to comply with the aforesaid directions, SEBI- a. shall recover such amounts in accordance with Section 28A of the SEBI Act including such other provisions contained in securities laws.

b. may initiate appropriate action against the Company, its promoters/ directors and the persons/ officers who are in default, including adjudication proceedings against them, in accordance with law. c. would make a reference to the State Government/ Local Police to register a civil/ criminal case against the Wasankar Wealth Management Limited, its promoters, directors and its managers/ persons in-charge of the business and its schemes, for offences of fraud, cheating, criminal breach of trust and misappropriation of public funds; and d. would also make a reference to the Ministry of Corporate Affairs, to initiate the process of winding up of the Wasankar Wealth Management Limited.

15. This Order is without prejudice to any action, including adjudication and prosecution proceedings, that might be taken by SEBI in respect of the above violations committed by the Company, its promoters, directors and other key persons.

16. Copy of this Order shall be forwarded to the recognised stock exchanges and depositories for information and necessary action.

17. A copy of this Order shall also be forwarded to the Ministry of Corporate Affairs/ concerned Registrar of Companies, for their information and necessary action with respect to the directions/ restraint imposed above against the Company and the individuals.

DATE : May 18, 2015 PRASHANT SARAN PLACE : Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA