Interim Order - GBC Enterprise Limited

WTM/SR/SEBI – ERO/32/02/2015 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA, MUMBAI CORAM: S. RAMAN, 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 GBC Enterprise Limited (PAN: AACCG5669G) and its Directors, viz. Shri Krishnendu Das (DIN: 02240156; PAN: AEVPD1072L), Smt. Sugata Bal Das (DIN: 02240157; PAN: ALOPB4676N), Shri Pramathes Dutta (DIN: 05236527; PAN: APFPD4625L), Shri Basab Dasgupta (DIN: 01179877; PAN: AJQPD5126R) and Shri Sujoy Nandi (DIN: 01179933; PAN: ABIPN1070A).

1.1 Securities and Exchange Board of India ("SEBI") received several complaints against GBC Enterprise Limited ("GEL") alleging illegal mobilization of funds from the public through the issue of Redeemable Preference Shares ("RPS").

1.2 SEBI was also in receipt of copy of a Writ Petition (W.P. No. 23573 of 2014 – Kajal Kumar Mondal & Ors vs. State of West Bengal and Ors.), which was filed before the Hon'ble Calcutta High Court. A perusal of the aforesaid Writ Petition reveals that the petitioner therein had inter alia alleged illegal mobilization of funds from the public by GEL, through the issue of RPS.

2.1 SEBI vide letters each dated August 1, 2014, advised GEL and its Directors to furnish inter alia the following information within 15 days from the date of receipt of the aforesaid letter, viz. – i. Copy of Prospectus/Red Herring Prospectus/Statement in lieu of Prospectus/Information Memorandum filed with ROC for issuance of preference shares. ii. Audited Annual Accounts and Annual Returns of the company for the last 3 years; iii. Name, addresses and occupation of all the Promoters/Directors and Key Managerial Personnel of the company; iv. Nature of Business of company; v. Other information in respect of every series of debenture/shares issued by the company, viz. – a. Date of opening and closing of the subscription list; b. Details regarding the number of application forms circulated inviting subscription; c. Details regarding the number of applications received; d. Details regarding the number of allottees and list of such allottees in prescribed format; e. Copies of the minutes of Board/Committee meeting in which the resolution has been passed for allotment; f. Copies of application forms, pamphlets, advertisements and other promotional material circulated for issuance of debenture/shares; g. Terms and conditions of the issue of debenture/shares; h. Details of listing with stock exchanges; i. Copy of Form 2 and Form 10 filed with the ROC; j. Details of debenture trustee viz. name, address, Board Resolution authorizing their appointment, etc.

2.2 Since no reply was forthcoming, SEBI, vide letters each dated August 13, 2014, once again sought the information (sought vide abovementioned letter dated August 8, 2014) from GEL and its Directors.

2.3.1 GEL replied vide an undated letter (received at SEBI on August 28, 2014). Further, similar replies vide undated letters (received at SEBI on September 18, 2014) were submitted by two Directors of GEL, viz. Shri Krishnendu Das and Smt. Sugata Bal Das. As per the aforesaid replies, the following documents were submitted – i. Copy of the Memorandum and Articles of Association of the company; ii. Audited Balance Sheet and Profit & Loss Account of the company for the last 3 years; iii. Details of Directors/ Key Managerial Personnel of the company;

2.3.2 Further, GEL and its Directors submitted – i. "No such Prospectus/Red Herring Prospectus/SLP/Information Memorandum filled with the RoC for issuance of Shares as the company issued its preference Shares on strictly Private Placement basis to its associates only.

ii. ... The details regarding the list of allottees on preferential allotment and value of allotment is currently not ready, we will provide you in due course. iii. Copies of the minutes of Board/Committee Meeting in which the resolution has been passed for allotment will be provided to your good office in due course. iv. Copy of Form 2 for the purpose of allotment made to Preference Shares on Closely held group which has been filed with ROC is currently not ready, we will provide you in due course and no Form 10 filed with RoC."

2.4 Since information pertaining to details of allottees, etc. were not provided by GEL, SEBI vide letter dated October 24, 2014, advised GEL and its Directors once again to submit the same.

2.5 Thereafter, vide undated letters received in SEBI on October 31, 2014 and November 13, 2014, GEL submitted list of allottees, copies of Form- 2, Board Resolution, etc. in a compact disk to SEBI. GEL submitted that Redeemable Preference Shares were allotted purely on private placement basis and were never issued to more than 49 persons at a time or under any single offer and/or invitation.

2.6 SEBI vide letter dated November 10, 2014, advised GEL and its Directors to furnish a Certificate from the Statutory Auditor of that company confirming that Redeemable Preference Shares were allotted purely on private placement basis and were never issued to more than 49 persons at a time or under any single offer and/or invitation for all the years in which such issues of Redeemable Preference Shares were made. However, this Certificate has not been received from GEL and its Directors till date.

3. The material available on record i.e. correspondences exchanged between SEBI and GEL alongwith information contained therein; information obtained from the Ministry of Corporate Affairs' website i.e. 'MCA 21 Portal' alongwith the abovementioned complaints received by SEBI, have been perused. On an examination of the same, it is observed that – i. GEL was incorporated on May 22, 1992, with the ROC, Kolkata with CIN as U24119WB1992PLC055518. GEL's Registered Office is at Stephen House, Room No. 106, 6th Floor, 4 B. B. D. Bag (East), Kolkata – 700001, West Bengal, India.

ii. The present Directors in Shri Krishnendu Das, Smt. Sugata Bal Das and Shri Pramathes Dutta.

iii. Shri Sujoy Nandi and Shri Basab Dasgupta, who were earlier Directors in GEL, have since resigned.

iv. From the information submitted by GEL, the following details regarding the Redeemable Preference Shares issued by that company ("Offer of Redeemable Preference Shares") was observed –

Type of Security Year Date of No. of persons to whom Total Amount allotment preference shares were allotted (₹ in Crores) Redeemable Preference 2012–13 15.03.2013 73432 53.30 Shares 2013–14 17.03.2014 7764 7.29 TOTAL 81196 60.59 v. From the extracts of meeting of the Board of Directors of GEL, which was held on March 15, 2013 (as submitted by that company), the following is observed:

"... The company received an application money of ₹532,970,100/- (Rupees Fifty Three Crore Twenty Nine Lakhs Seventy Thousand One Hundred only ) against 5,32,97,010 preference share capital of the Company of Rs. 10/- each as on 1st March, 2013... Resolved that 5,32,97,010 preference share capital of the Company of ₹10/- each in the Preference Share Capital of the Company be and is hereby allotted to the list of allottees in physical form which is attached separately...

vi. Further, from the extracts of meeting of the Board of Directors of GEL, which was held on March 17, 2014 (as submitted by that company), the following is observed:

"... The company received an application money of ₹7,28,59,400/- (Rupees Seven Crore Twenty eight Lakh fifty nine thousand four hundred ) against 5,32,97,010 preference share capital of the Company of Rs. 10/- each as on 3rd March, 2014 for the financial year 2013-2014... Resolved that 72859400 preference share capital of the Company of ₹10/- each in the Preference Share Capital of the Company be and is hereby allotted to the list of allottees in physical form which is attached separately..."

vii. From the copies of Redeemable Preference Shares certificates submitted by 12 complainants (submitted at SEBI on various dates during the period November – December, 2013), it is observed that GEL issued such Redeemable Preference Shares during the Financial Years 2008–09. Further, from the copies of Redeemable Preference Shares certificates submitted by 29 complainants (submitted at SEBI on November 18, 2014), it is observed that GEL issued Redeemable Preference Shares on various dates between the period March 26, 2010 and March 30, 2013. However, as stated in paragraph 3(iv) above, the dates of allotment of Redeemable Preference Shares (as submitted by GEL) were only 15.03.2013 and 17.03.2014.

viii. From the MCA21 Portal, it is observed that – a. As per the Balance Sheet for the year ended 31.03.2009, GEL issued Redeemable Preference Shares amounting to ₹17.39 Crores (including Share Premium amounting ₹10.20 Crores). No Form 2 for issue of Redeemable Preference Shares was filed by GEL with the ROC. b. However, as per the Balance Sheet for the year ended 31.03.2010, GEL has shown an amount of ₹31.90 Crores and the corresponding amount of ₹17.39 Crores under "Share application money received pending allotment" for the Financial Years ended 31.03.2010 and 31.03.2009, respectively.

4.1 In the context of the abovementioned details of the Offer of Redeemable Preference Shares, the issue for determination in the instant matter is whether the mobilization of funds by GEL through the aforesaid, is in accordance with the provisions of the SEBI Act, 1992 ("SEBI Act") read with SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013 ("Issue and Listing of Non–Convertible Redeemable Preference Shares Regulations") and the Companies Act, 1956.

4.2 I note that the jurisdiction of SEBI over various provisions of the Companies Act in the case of public companies, whether listed or unlisted, when they issue and transfer securities, flows from the provisions of Section 55A of the Companies Act. While examining the scope of Section 55A of the Companies Act, 1956, the Hon'ble Supreme Court of India in Sahara India Real Estate Corporation Limited & Ors. vs. SEBI (Civil Appeal no. 9813 of 2011) (Judgment dated August 31, 2012) (hereinafter referred to as the "Sahara Case"), had observed that:

"We, therefore, hold that, so far as the provisions enumerated in the opening portion of Section 55A of the Companies Act, so far as they relate to issue and transfer of securities and non-payment of dividend is concerned, SEBI has the power to administer in the case of listed public companies and in the case of those public companies which intend to get their securities listed on a recognized stock exchange in India."

4.3 In this regard – i. Reference is also made to Sections 67(1) and 67(3) of the Companies Act, 1956, which are reproduced as under:

"67. Construction of reference to offering shares or debentures to the public, etc. 67. (1) Any reference in this Act or in the articles of a company to offering shares or debentures to the public shall, subject to any provision to the contrary contained in this Act and subject also to the provisions of sub-sections (3) and (4), be construed as including a reference to offering them to any section of the public, whether selected as members or debenture holders of the company concerned or as clients of the person issuing the prospectus or in any other manner. (2) Any reference in this Act or in the articles of a company to invitations to the public to subscribe for shares or debentures shall, subject as aforesaid, be construed as including a reference to invitations to subscribe for them extended to any section of the public, whether selected as members or debenture holders of the company concerned or as clients of the person issuing the prospectus or in any other manner. (3) No offer or invitation shall be treated as made to the public by virtue of sub-section (1) or sub-section (2), as the case may be, if the offer or invitation can properly be regarded, in all the circumstances- (a) as not being calculated to result, directly or indirectly, in the shares or debentures becoming available for subscription or purchase by persons other than those receiving the offer or invitation; or (b) otherwise as being a domestic concern of the persons making and receiving the offer or invitation. Provided that nothing contained in this sub-section shall apply in a case where the offer or invitation to subscribe for shares or debentures is made to fifty persons or more:

Provided further that nothing contained in the first proviso shall apply to non-banking financial companies or public financial institutions specified in section 4A of the Companies Act, 1956 (1 of 1956).”

ii. While examining the scope of Section 67 of the Companies Act, 1956, the Hon'ble Supreme Court of India in the Sahara Case observed that:

"Section 67(1) deals with the offer of shares and debentures to the public and Section 67(2) deals with invitation to the public to subscribe for shares and debentures and how those expressions are to be understood, when reference is made to the Act or in the articles of a company. The emphasis in Section 67(1) and (2) is on the “section of the public”. Section 67(3) states that no offer or invitation shall be treated as made to the public, by virtue of subsections (1) and (2), that is to any section of the public, if the offer or invitation is not being calculated to result, directly or indirectly, in the shares or debentures becoming available for subscription or purchase by persons other than those receiving the offer or invitation or otherwise as being a domestic concern of the persons making and receiving the offer or invitations. Section 67(3) is, therefore, an exception to Sections 67(1) and (2). If the circumstances mentioned in clauses (1) and (b) of Section 67(3) are satisfied, then the offer/invitation would not be treated as being made to the public. The first proviso to Section 67(3) was inserted by the Companies (Amendment) Act, 2000 w.e.f. 13.12.2000, which clearly indicates, nothing contained in Sub-section (3) of Section 67 shall apply in a case where the offer or invitation to subscribe for shares or debentures is made to fifty persons or more. … Resultantly, if an offer of securities is made to fifty or more persons, it would be deemed to be a public issue, even if it is of domestic concern or proved that the shares or debentures are not available for subscription or purchase by persons other than those received the offer or invitation. … I may, therefore, indicate, subject to what has been stated above, in India 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. …"

iii. In the instant matter, for ascertaining whether the Offer of Redeemable Preference Shares is a public issue or an issue on private placement basis in accordance with Section 67 of the Companies Act, 1956, the number of subscribers is of utmost importance.

a. Under the Offer of Redeemable Preference Shares, it is observed that during the Financial Years 2012–13 and 2013–14, GEL allotted redeemable preference shares to a total of more than 81196 individuals/investors and mobilized an amount of ₹60.59 Crores (Table at para 3(iv) of page 4). The number of investors to whom allotments were made under the Offer of Redeemable Preference Shares during the aforesaid Financial Years alongwith the amount mobilized therein, would prima facie indicate that the number of persons to whom such Offer was made, was above the limit of forty–nine persons as prescribed under the first proviso to Section 67(3) of the Companies Act, 1956.

b. It is observed that GEL is not stated to be a Non – banking financial company or public financial institution within the meaning of Section 4A of the Companies Act, 1956. In view of the aforesaid, I, therefore, find that GEL is not covered under the second proviso to Section 67(3) of the Companies Act, 1956.

c. In view of the above, the Offer of Redeemable Preference Shares by GEL, would prima facie qualify as a public issue under the first proviso to Section 67(3) of the Companies Act, 1956. In this regard, it is pertinent to note that by virtue of Section 55A of the Companies Act, 1956, Section 67 of that Act, so far as it relates to issue and transfer of securities, shall also be administered by SEBI.

4.4 I note that – i. From the abovementioned, it will follow that since the Offer of Redeemable Preference Shares is a public issue of securities, such securities shall also have to be listed on a recognized stock exchange, as mandated under Section 73 of the Companies Act, 1956. In this regard, reference is made to Sections 73 of the Companies Act, 1956, of which sub-Sections (1), (2) and (3) are relevant for the instant case, which is reproduced as under:

"73. (1) Every company intending to offer shares or debentures to the public for subscription by the issue of a prospectus shall, before such issue, make an application to one or more recognised stock exchanges for permission for the shares or debentures intending to be so offered to be dealt with in the stock exchange or each such stock exchange.

(1A) Where a prospectus, whether issued generally or not, states that an application under sub-section (1) has been made for permission for the shares or debentures offered thereby to be dealt in one or more recognized stock exchanges, such prospectus shall state the name of the stock exchange or, as the case may be, each such stock exchange, and any allotment made on an application in pursuance of such prospectus shall, whenever made, be void, if the permission has not been granted by the stock exchange or each such stock exchange, as the case may be, before the expiry of ten weeks from the date of the closing of the subscription lists: Provided that where an appeal against the decision of any recognized stock exchange refusing permission for the shares or debentures to be dealt in on that stock exchange has been preferred under section 22 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956), such allotment shall not be void until the dismissal of the appeal. (2) Where the permission has not been applied under subsection (1) or such permission having been applied for, has not been granted as aforesaid, the company shall forthwith repay without interest all moneys received from applicants in pursuance of the prospectus, and, if any such money is not repaid within eight days after the company becomes liable to repay it, the company and every director of the company who is an officer in default shall, on and from the expiry of the eighth day, be jointly and severally liable to repay that money with interest at such rate, not less than four per cent and not more than fifteen per cent, as may be prescribed, having regard to the length of the period of delay in making the repayment of such money.

(3) All moneys received as aforesaid shall be kept in a separate bank account maintained with a Scheduled Bank 1 [until the permission has been granted, or where an appeal has been preferred against the refusal to grant such. permission, until the disposal of the appeal, and the money standing in such separate account shall, where the permission has not been applied for as aforesaid or has not been granted, be repaid within the time and in the manner specified in sub-section (2)]; and if default is made in complying with this sub-section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees.”

ii. In the Sahara Case, the Hon'ble Supreme Court of India also examined Section 73 of the Companies Act, 1956, wherein it observed that – "Section 73(1) of the Act casts an obligation on every company intending to offer shares or debentures to the public to apply on a stock exchange for listing of its securities. Such companies have no option or choice but to list their securities on a recognized stock exchange, once they invite subscription from over forty nine investors from the public. If an unlisted company expresses its intention, by conduct or otherwise, to offer its securities to the public by the issue of a prospectus, the legal obligation to make an application on a recognized stock exchange for listing starts. Sub-section (1A) of Section 73 gives indication of what are the particulars to be stated in such a prospectus. The consequences of not applying for the permission under sub-section (1) of Section 73 or not granting of permission is clearly stipulated in sub-section (3) of Section 73. Obligation to refund the amount collected from the public with interest is also mandatory as per Section 73(2) of the Act. Listing is, therefore, a legal responsibility of the company which offers securities to the public, provided offers are made to more than 50 persons. … Section 73(2) says that every company and every director of the company who is an officer in default, shall be jointly and severally liable to repay that money with interest at such rate, not less than four per cent and not more than fifteen per cent, as may be prescribed. The scope of the above mentioned provisions came up for consideration before this Court in Raymond Synthetics Ltd. & Ors. V. Union of India (supra), wherein the Court held that in a case where the company has not applied for listing on a stock exchange, the consequences will flow from the company‟s disobedience of the law, the liability to pay interest arises as from the date of receipt of the amounts, for the company ought not to have received any such amount in response to the prospectus. I am, therefore, of the view that since Saharas had violated the listing provisions and collected huge amounts from the public in disobedience of law, SEBI is justified in directing refund of the amount with interest."

iii. Having regard to the abovementioned observations of the Hon'ble Supreme Court of India, since the Offer of Redeemable Preference Shares is prima facie a public issue in accordance with the provisions of the Companies Act, 1956, the same will attract the requirement of compulsory listing before a recognized stock exchange in terms of Section 73(1) of the Companies Act, 1956 and also compliance with the provisions of Sections 73(2) and 73(3) of that Act.

iv. In the facts of the instant case, it prima facie appears that GEL has violated the provisions of Section 73 of the Companies Act, 1956, in respect of the Offer of Redeemable Preference Shares.

4.5 Under Section 2(36) read with Section 60 of the Companies Act, 1956, a company needs to register its prospectus with the ROC, before making a public offer or issuing the prospectus. As per the aforesaid Section 2(36), “prospectus” means any document described or issued as a prospectus and includes any notice, circular, advertisement or other document inviting deposits from the public or inviting offers from the public for the subscription or purchase of any shares in, or debentures of, a body corporate. As mentioned above, since the Offer of Redeemable Preference Shares was made to fifty persons or more, it has to be construed as a public offer. Having made a public offer, GEL was required to register a prospectus with the ROC under Section 60 of the Companies Act, 1956. I find that in its reply dated August 28, 2014, GEL submitted: "No such Prospectus/Red Herring Prospectus/SLP/Information Memorandum filled with the ROC for issuance of Shares…". In view of the same, I find that GEL has prima facie not complied with the provisions of Section 60 of Companies Act, 1956.

4.6 Under Section 56(1) of the Companies Act, 1956, every prospectus issued by or on behalf of a company, shall state the matters specified in Part I and set out the reports specified in Part II of Schedule II of that Act. Further, as per Section 56(3) of the Companies Act, 1956, no one shall issue any form of application for shares in or debentures of a company, unless the form is accompanied by abridged prospectus, contain disclosures as specified. Based on the material available on record, I find that GEL has not complied with the provisions of Section 56(1) and 56(3) of the Companies Act, 1956 and therefore, has prima facie violated the aforesaid provisions.

4.7 In addition to the above, reference may be made to the Issue and Listing of Non- Convertible Redeemable Preference Shares Regulations, which were framed by SEBI in exercise of its powers under Section 30 of the SEBI Act, 1992 and are applicable to the public issue and listing of Non–Convertible Redeemable Preference Shares. It may be relevant to note that under the aforesaid Regulations, 'non-convertible redeemable preference share' has been defined as „a preference share which is redeemable in accordance with the provisions of Companies Act, 1956 and does not include a preference share which is convertible into or exchangeable with equity shares of the issuer…'. In this context, I find that GEL, through the Offer of Redeemable Preference Shares, which is a public issue of securities, has prima facie violated the following provisions of the aforesaid Regulations, which contain inter alia conditions for public issue and listing of non – convertible redeemable preference shares, viz.

i. Regulation 4(2)(a) – Application for listing of securities ii. Regulation 4(2)(b) – In-principle approval for listing of securities iii. Regulation 4(2)(c) – Credit rating has been obtained iv. Regulation 4(2)(d) – Dematerialization of securities v. Regulation 4(2)(e) – Minimum tenure vi. Regulation 4(3) – Capital Redemption Reserve vii. Regulation 4(5) – Appointment of Merchant Banker viii. Regulation 5 – Disclosures in the offer document ix. Regulation 6 – Filing of draft offer document x. Regulation 7 – Mode of disclosure of offer document xi. Regulation 8 – Advertisements for Public Issues xii. Regulation 9 – Abridged Prospectus and application forms xiii. Regulation 13 – Minimum subscription xiv. Regulation 15 – Prohibition of mis-statements in the offer document xv. Regulation 16 – Mandatory Listing xvi. Regulation 22 – Obligations of the Issuer, etc.

4.8 Upon a consideration of the aforementioned paragraphs, I am of the view that GEL is prima facie engaged in fund mobilising activity from the public, through the Offer of Redeemable Preference Shares and as a result of the aforesaid activity has violated the aforementioned provisions of the Companies Act, 1956 (Section 56, Section 60 read with Section 2(36), Section 73) read with the Issue and Listing of Non–Convertible Redeemable Preference Shares Regulations.

5. SEBI has a statutory duty to protect the interests of investors in securities and promote the development of, and to regulate, the securities market. Section 11 of the SEBI Act has empowered it to take such measures as it deems fit for fulfilling its legislative mandate. Further, as per the provisions of Section 55A of the Companies Act, 1956, administrative authority on the subjects relating to public issue of securities is exclusively with SEBI. For this purpose, SEBI can exercise its jurisdiction under Sections 11(1), 11A, 11B and 11(4) of the SEBI Act read with Section 55A of the Companies Act, 1956 (as mentioned in paragraphs 4.1–4.8 above). Steps therefore, have to be taken in the instant matter to ensure only legitimate fund raising activities are carried on by GEL and no investors are defrauded. In light of the facts in the instant matter, I find that there is no other alternative but to take recourse through an interim action against GEL and its Directors, for preventing that company from further carrying on with its fund mobilising activity under the Offer of Redeemable Preference Shares.

6. I note that Shri Sujoy Nandi and Shri Basab Dasgupta, who were earlier Directors in GEL, have since resigned.

7. 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 read with the Issue and Listing of Non– Convertible Redeemable Preference Shares Regulations, hereby issue the following directions – i. GEL (PAN: AACCG5669G) shall not mobilize funds from investors through the Offer of Redeemable Preference Shares or through the issuance 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. GEL and its past and present Directors, viz. Shri Krishnendu Das (DIN: 02240156; PAN: AEVPD1072L), Smt. Sugata Bal Das (DIN: 02240157; PAN: ALOPB4676N), Shri Pramathes Dutta (DIN: 05236527; PAN: APFPD4625L), Shri Basab Dasgupta (DIN: 01179877; PAN: AJQPD5126R) and Shri Sujoy Nandi (DIN: 01179933; PAN: ABIPN1070A), 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. GEL and its abovementioned past and present 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. GEL shall provide a full inventory of all its assets and properties; v. The abovementioned past and present Directors of GEL shall provide a full inventory of all their assets and properties; vi. GEL and its abovementioned present Directors shall not dispose of any of the properties or alienate or encumber any of the assets owned/acquired by that company through the Offer of Redeemable Preference Shares, without prior permission from SEBI; vii. GEL and its abovementioned present Directors shall not divert any funds raised from public at large through the Offer of Redeemable Preference Shares, which are kept in bank account(s) and/or in the custody of GEL.

8. The above directions shall take effect immediately and shall be in force until further orders.

9. The prima facie observations contained in this Order are made on the basis of the material available on record i.e. correspondences exchanged between SEBI and GEL alongwith information contained therein; information obtained from the Ministry of Corporate Affairs' website i.e. 'MCA 21 Portal' alongwith the complaints received by SEBI. In this context, GEL and its abovementioned past and present Directors may, within 21 days from the date of receipt of this Order, file their reply, if any, to this Order and may also indicate whether they desire to avail themselves an opportunity of personal hearing on a date and time to be fixed on a specific request made in that regard.

10. This Order is without prejudice to the right of SEBI to take any other action that may be initiated against GEL and its abovementioned past and present Directors in accordance with law.

Place: Mumbai S. RAMAN Date: February 20, 2015 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA