Interim Order in the matter of Mega Mould India Limited.

WTM/SR/ERO/33/07/2014 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 Mega Mould India Limited and its Directors, viz. Shri Anukul Maiti (DIN: 01884307), Smt. Kanika Maiti (DIN: 02029931 ) and Shri Swapan Roy (DIN: 02621357); its Debenture Trustees, viz. ICore E-Services Limited and Mega Mould Debenture Trust.

1. Securities and Exchange Board of India ("SEBI") received brochures evidencing issue of Secured Redeemable Non–Convertible Debentures ("NCDs") by Mega Mould India Limited ("Mega Mould"). In this regard, vide letters dated April 10, 2013 and April 29, 2013, SEBI advised Mega Mould to furnish inter alia the following information in respect of issuance of NCDs, viz. – i. Copy of Prospectus/Red Herring Prospectus/Statement in lieu of Prospectus/Information Memorandum filed with Registrar of Companies (“ROC”) for issuance of NCDs. ii. Copy of the Memorandum and Articles of Association of the company; iii. Audited Balance Sheet and Profit & Loss Account of the company for the last 3 years; iv. Name, addresses and occupation of all the Promoters/Directors of the company; v. Names and details of the Key Managerial Personnel of the company; vi. Other information in respect of every series of NCDs 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; e. Number of NCDs allotted and value of such allotment against each allottee's name. f. Details regarding subscription amount raised; g. Date of allotment of NCDs;

h. Copies of the minutes of Board/Committee meeting in which the resolution was passed for allotment; i. Date of dispatch of NCDs certificates, etc.; j. Details of the total number of applicants for each of Mega Mould's scheme besides the list of final allottees; k. Copies of application forms, pamphlets, advertisements and other promotional material circulated for issuance of NCDs. l. Terms and conditions of the issue of NCDs.

2. In its reply dated June 05, 2013, Mega Mould provided the following details to SEBI :- i. Company had made Private Placement of Debentures to friends, relatives and associates for which company had not issued any prospectus and hence there was no filing of the same in ROC. ii. The company has till date issued Debentures on two occasions through Private Placement. a. The date of Opening of First Series was from August 15, 2010 to August 14, 2011. b. The date of Opening of Second Series was from October 01, 2011 to September 30, 2012. iii. The company had circulated more than 6,00,000 Application Forms inviting subscription for Debentures. iv. Till date the company has received 5,25,128 applications. v. The company had allotted 5,25,128 Debenture Certificates. vi. The company had allotted all the debentures after August 14, 2010. vii. The company had not issued any pamphlets nor any advertisement in regard to issue of Debentures. viii. There is no any other scheme except issue of Debentures mentioned above.

3.1 Subsequently, SEBI vide letter dated May 27, 2014, sought the following information from Mega Mould, viz. – i. Copies of Financial Accounts/Balance Sheet for the Financial Years 2011–12, 2012– 13 and 2013–14; ii. Details of amount raised from the First Series of issue of NCDs alongwith the applicant details thereof; iii. Details of amount raised per the resolution dated October 22, 2011, passed by the Board of Directors of Mega Mould;

3.2 Vide the abovementioned letter, SEBI also sought explanation/clarification from Mega Mould in respect of the following, viz. – i. As per the resolution dated August 7, 2010, passed by the Board of Directors of Mega Mould, an amount of ₹200 Crores was to be raised by the company. However, the Financial Accounts/Balance Sheet for the Financial Year 2010–11 does not indicate the amount raised in this regard. ii. As per the submission made by Mega Mould vide letter dated June 5, 2013, the Second Series of issue of NCDs opened on October 1, 2011 and closed on September 30, 2012. However, the list of allottees provided by Mega Mould vide the aforesaid letter contained data pertaining to issue of NCDs even after September 30, 2012. iii. The list of allottees provided by Mega Mould vide letter dated June 5, 2013, contained a column titled 'Applicants Name', which included entries such as '0' and names beginning with 'LATE'.

3.3 However, as on date, no reply to the abovementioned letter dated May 27, 2014, has been received from Mega Mould.

4. SEBI vide letter dated May 27, 2014, sought information from the ROC (West Bengal), Kolkata inter alia regarding copies of Financial Accounts/Balance Sheet of Mega Mould for the Financial Years 2011–12, 2012–13 and 2013–14. In its reply dated June 02, 2014, the ROC stated that Mega Mould had not filed its Balance Sheet for the year ending March 31, 2012 and March 31, 2013.

5. The material available on record i.e. correspondences exchanged between SEBI and Mega Mould alongwith the documents contained therein; correspondences exchanged between SEBI and ROC (West Bengal), Kolkata and information obtained from MCA21 Portal, have been perused. On an examination of the same, it is observed - i. Mega Mould was incorporated on July 19, 2005, with the ROC (West Bengal), Kolkata with CIN as U27109WB2005PTC104263, having its Registered Office at Vill. Monoharbahal, P.O. Ethora, Dist. Burdwan, West Bengal – 713359, India and Administrative Office at 54/2, Rafi Ahmed Kidwai Road, Kolkata – 700016. The Directors of Mega Mould are Shri Anukul Maiti, Smt. Kanika Maiti and Shri Swapan

Roy. Mega Mould became a subsidiary of ICore E Services Limited by virtue of a Board Resolution dated June 30, 2010. ii. From the documents circulated for application towards the First Series of issue of NCDs, the following is observed - Issue Size ₹200 Crores Nature of Secured Redeemable Non–Convertible Debentures Instrument Instrument Form Physical /Demat Face Value ₹100 per Debenture Issue Price ₹100 per Debenture Minimum 10 Debentures in multiples of 10 Debenture thereafter Subscription Tenure 364 days/ 3 years/ 5 years/ 8 years/ 10 years/ 12 years Put & Call Option None Redemption/ At par Maturity Coupon Rate Plan A B C D E F Issue Price minimum 1000 1000 1000 1000 1000 1000 10 Debentures @ 100 Per Debenture (100x10) Redemption Period 364 3 Years 5 Years 8 Years 10 Years 13 days Years Redemption Premium 120 500 1000 3000 5000 9000 Maturity Amount 1120 1500 2000 4000 6000 10000 Annualized Yield on 12% 13.75% 14.11% 17.71% 18.32% 19.65% Investment TD 3 Years 3 Years 6 Years 6 Years 9 Years Minimum 10 12% 12.5% for 14% for 14.5% for Debentures General Senior General Senior Citizen Citizen N.B.: Another 50% Bonus at the time of Redemption. Subject to achievement of the projected business target (for TD only) Interest Payment On Maturity Issue Time Table Open (15.08.2010) Close (14.08.2011) Resolution of 07.08.2010 Board of Directors Who can Apply Individuals/ Scheduled Commercial Banks/ Financial Institutions/ Insurance Companies/ Mutual Funds/ Bodies Corporate Trustees Shri Chandan Dey and Smt. Kanika Maiti of I-Core E-Services Ltd iii. As per the FORM 10 available on MCA21 Portal regarding particulars for registration of charges for debentures issued by Mega Mould, it is observed –

Trustee I Core E-Services Limited Date of creation of charge 22.09.2010 Amount of present issue ₹200 Crores of series Resolution of Board of 07.08.2010 Directors Description of property Immovable Properties/ Plant & Machinery/ Intangible Assets/ charged Others Particulars of the property Land measuring 0.32 acres & 0.42 acres in name of Mega charged Mould India Ltd at Dist. Burdwan P.S. Faridpur, Mouza. Sorpi, J.L. No. 36, Khatian No. 1363, Plot No. 68 & 69. All intangible assets of the Company valued at ₹225 Crores together with all future tangible assets.

iv. From the documents circulated for application towards the Second Series of issue of NCDs, the following is observed –

Issue Size ₹150 Crores Nature of Secured Non–Convertible Redeemable Debentures Instrument Instrument Form Physical /Demat Face Value ₹100 per Debenture Issue Price ₹100 per Debenture Minimum 10 Debentures in multiples of 10 Debenture thereafter Subscription Tenure 364 days/ 3 years/ 5 years/ 8 years/ 10 years/ 12 years Put & Call Option None Redemption/ At par Maturity Coupon Rate Plan A B C D E F Issue Price 1000 1000 1000 1000 1000 1000 minimum 10 Debentures @ 100 Per Debenture (100x10) Redemption Period 364 3 Years 5 Years 8 Years 10 Years 13 Years days Redemption 120 500 1000 3000 5000 9000 Premium Maturity Amount 1120 1500 2000 4000 6000 10000 Annualized Yield 12% 13.75% 14.11% 17.71% 18.32% 19.65% on Investment TD 3 Years 3 Years 6 Years 6 Years 9 Years Minimum 10 12% 12.5% for 14% for 14.5% for Debentures General Senior General Senior Citizen Citizen N.B.: Another 50% Bonus at the time of Redemption. Subject to achievement of the projected business target (for TD only) Interest Payment On Maturity Issue Time Table Open (01.10.2011) Close (30.09.2012) Resolution of Board 07.09.2011 of Directors Who can Apply Individuals/ Scheduled Commercial Banks/ Financial Institutions/ Insurance Companies/ Mutual Funds/ Bodies Corporate Trustees Mega Mould Debenture Trust v. Another charge is seen to have been created by Mega Mould in 2011 and as per FORM 10 available on MCA21 Portal regarding particulars for registration of charges for debentures, the following is observed -

Trustee Mega Mould Debenture Trust Date of creation of charge 22.10.2011 Amount of present issue of series ₹150 Crores Resolution of Board of Directors 22.10.2011 Description of property charged Immovable Properties/ Others Particulars of the property charged Present Property

7.1 In the context of the abovementioned facts, the issue for determination in the instant matter is whether the mobilization of funds by Mega Mould through the aforesaid offer, is in accordance with the provisions of the SEBI Act, 1992 ("SEBI Act") read with the SEBI (Issue and Listing of Debt Securities), Regulations, 2008 ("Debt Securities Regulations"); the Companies Act, 1956 read with the Companies Act, 2013.

7.2 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:

"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."

7.3 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. (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 invitation 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 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 :

"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 issue of NCDs 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. As per the submission of Mega Mould, it is observed that the company made two series of offers under the issue of NCDs during the period from August 15, 2010 to August 14, 2011 and from October 1, 2011 to September 30, 2012. The company has represented that it had circulated more than 600000 Application Forms and allotted 525128 Debenture Certificates.

b. The following facts were also observed from the list of allottees under the issue of NCDs, as submitted by Mega Mould in its reply dated June 5, 2013, viz. - i. Information regarding NCDs was given in Excel Sheet format in a single sheet for the period October 1, 2011 to November 19, 2012. However, as per Mega Mould's written submission, the Second Series of issue of NCDs closed on September 30, 2012. Therefore, the list of allottees contained data regarding issue of NCDs even after September 30, 2012, prima facie indicating further issuance of NCDs. ii. The column 'Applicants Name' consisted of 525088 rows wherein the list of names included 532 entries such as '0', etc. Again in 16473 instances, the names began with 'LATE' indicating that application/allotment were made in the name of deceased persons.

iii. Although the total amount raised through the issue of NCDs was not provided by Mega Mould, on adding up the 'Total Amount' column, it was observed that the company had raised approximately ₹716 Crores. However, from the dates mentioned therein, it is observed that details regarding allottees of NCDs issued in the First Series of issue of NCDs i.e. during the period August 15, 2010 to August 14, 2011, were not made available by Mega Mould. In view of the same, it would appear that the aforesaid amount mobilized under the issue of NCDs pertains to only the Second Series of issue of NCDs i.e. during the period October 1, 2011 to November 19, 2012.

c. It is observed that the invitation made by Mega Mould for subscription to the issue of NCDs was extended to Individuals, Corporate Bodies, Financial Institutions, Insurance Companies, Mutual Funds, etc. Under the issue of NCDs, Mega Mould admittedly circulated more than 600000 Application Forms and allotted 525128 Debenture Certificates to subscribers. An amount of ₹716 Crores was mobilized under such issue.

d. The company has not provided SEBI with the total number of investors under the issue of NCDs. In view of how such issue has been handled by Mega Mould (i.e. 600000 Application Forms were circulated and allotment of 525128 Debenture Certificates was made to subscribers), I feel it is an eminently reasonable conclusion to draw from the facts in the instant matter that issue of NCDs would have been subscribed several times over the threshold for a private placement. I therefore, find that the issue of NCDs was nothing but a public issue of securities.

e. The Reserve Bank of India vide letter dated July 4, 2013, has stated that Mega Mould is not registered with it and therefore, is out of its regulatory purview. Further, Mega Mould is not stated to be a public financial institution within the meaning of Section 4A of the Companies Act, 1956. In view of the same, I find that Mega Mould is not covered under the second proviso to Section 67(3).

f. In view of the above, the issue of NCDs made by Mega Mould, would prima facie qualify as a public issue under the first proviso to Section 67(3) of the Companies Act, 1956, as the offer and allotment was made to more than 49 persons. 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 in the case of companies who intend to get their securities listed.

7.4 I note that – i. From the abovementioned, it will follow that since the issue of NCDs 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 Section 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) … (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 facts of the instant case, since the issue of NCDs was made to fifty persons or more by Mega Mould, 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. It therefore prima facie appears that Mega Mould has violated the provisions of Section 73(1) of the Companies Act, 1956, since it has failed to ensure listing with a recognized stock exchange.

iii. As per Section 73(2) of the Companies Act, 1956, the obligation to refund the amount with interest that was collected from investors under the issue of NCDs is mandatory on Mega Mould. In this regard, there is no evidence on record to indicate whether or not Mega Mould has paid interest to the investors where securities are not allotted within 8 days under the issue of NCDs, as per the aforesaid Section. In view of the same, I find that Mega Mould has prima facie not complied with the provisions of Section 73(2) of the Companies Act, 1956.

iv. Section 73(3) of Companies Act, 1956, states that all monies received shall be kept in a separate bank account maintained with a Scheduled Bank 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. In the instant case, there is no evidence on record to indicate whether or not funds received from the investors under the issue of NCDs has been kept in separate bank account by Mega Mould. In view of the same, I find that Mega Mould has prima facie not complied with the provisions of Section 73(3) of Companies Act, 1956.

v. 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 issue of NCDs was made to fifty persons or more, it has to be construed as a public offer. Having made a public offer, Mega Mould was required to register a prospectus with the ROC under Section 60 of the Companies Act, 1956. In this regard, Mega Mould in its letter dated June 05, 2013, submitted: "Company had made Private Placement of Debentures to friends, relatives and associates for which company had not issued any prospectus and hence there was no filing of the same in ROC". In view of the same, I find that Mega Mould has not complied with the provisions of Section 60 of Companies Act, 1956.

vi. 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 Mega Mould 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 by not filing prospectus either with SEBI or ROC.

vii. Under Section 117B of the Companies Act, 1956, no company shall issue a prospectus or a letter of offer to the public for subscription of its debentures, unless it has, before such issue, appointed one or more debenture trustees for such debentures and the company has, on the face of the prospectus or the letter of offer, stated that the debenture trustee or trustees have given their consent to the company to be so appointed. Further, under Section 117C of the aforesaid Act, where a company issues debentures, it shall create a debenture redemption reserve for the redemption of such debentures, to which adequate amount shall be credited out of its profits every year until such debentures are redeemed. Based on the material available on record, I find that Mega Mould has not complied with the provisions of Sections 117B & 117C of the Companies Act, 1956 and therefore, has prima facie violated the aforesaid provisions.

viii. As per Section 465(1) of the Companies Act, 2013, the Companies Act, 1956, "shall stand repealed". However, Section 465(2)(i) of the Companies Act, 2013, provides that:

"(2) Notwithstanding the repeal under sub-section (1) of the repealed enactments,— (a) anything done or any action taken or purported to have been done or taken, including any rule, notification, inspection, order or notice made or issued or any appointment or declaration made or any operation undertaken or any direction given or any proceeding taken or any penalty, punishment, forfeiture or fine imposed under the repealed enactments shall, insofar as it is not inconsistent with the provisions of this Act, be deemed to have been done or taken under the corresponding provisions of this Act;"

ix. In addition to the above, reference may be made to the Debt Securities Regulations, which were framed by SEBI in exercise of its powers under Section 30 of the SEBI Act and are applicable to the public issue of debt securities and listing of debt securities issued through public issue or on private placement basis on a recognized stock exchange. It may be relevant to note that under the aforesaid Regulations, 'debt securities' have been defined as 'non-convertible debt securities which create or acknowledge indebtedness, and include debenture…' In this context, I find that Mega Mould, through the issue of NCDs, which is a public issue of debt securities, has prima facie violated the following provisions of the aforesaid Regulations, which contain inter alia conditions for public issue and listing of debt securities, viz.

a. Regulation 4(2)(a) – Application for listing of debt securities b. Regulation 4(2)(b) – In-principle approval for listing of debt securities c. Regulation 4(2)(c) – Requirement of Credit Rating d. Regulation 4(2)(d) – Dematerialization of debt securities e. Regulation 4(4) – Appointment of Debenture Trustee f. Regulation 5(2)(b) – Disclosure requirements in the Offer Document g. Regulation 6 – Filing of draft Offer Document h. Regulation 7 – Mode of disclosure of Offer Document i. Regulation 8 – Advertisements for Public Issues j. Regulation 9 – Abridged Prospectus and application forms k. Regulation 12 – Minimum subscription l. Regulation 14 – Prohibition of mis-statements in the Offer Document m. Regulation 15 – Trust Deed n. Regulation 16(1) – Debenture Redemption Reserve o. Regulation 17 – Creation of security p. Regulation 19 – Mandatory Listing q. Regulation 26 – Obligations of the Issuer, etc.

7.5 Upon a consideration of the aforementioned paragraphs, I am of the view that Mega Mould is prima facie engaged in fund mobilising activity from the public, through the issue of NCDs and as a result of such activity has violated the provisions of the Companies Act, 1956 (Section 56, Section 60 read with Section 2(36), Section 73, Sections 117B–C) read with Section 465 of the Companies Act, 2013 and the Debt Securities Regulations.

8. 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, over companies who issue NCDs to fifty persons or more, but do not comply with the applicable provisions of the aforesaid Companies Acts and the Debt Securities Regulations.

9.1 From information obtained by SEBI from the MCA 21 Portal, it is observed that Mega Mould appointed ICore E-Services Limited and Mega Mould Debenture Trust as Debenture Trustees for the issue of NCDs by that company.

9.2 Section 12(1) of the SEBI Act states that: "No… trustee of trust deed … shall buy, sell or deal in securities except under, and in accordance with, the conditions of a certificate of registration obtained from the Board in accordance with the regulations made under this Act". Based on the material available on record, I find that ICore E-Services Limited and Mega Mould Debenture Trust are not registered with SEBI as Debenture Trustee and therefore, have prima facie acted as unregistered Debenture Trustee, which is a violation of the abovementioned provisions of the SEBI Act.

9.3 Regulation 13A(a)–(b) of SEBI (Debenture Trustees) Regulations, 1993 ("Debenture Trustees Regulations"), provides that: "No debenture trustee shall act as such for any issue of debentures in case – a. it is an associate of the body corporate, or b. it has lent and the loan is not yet fully repaid or is proposing to lend money to the body corporate: Provided that this requirement shall not be applicable in respect of debentures issued prior to the commencement of the Companies (Amendment) Act, 2000, where – (i) recovery proceedings in respect of the assets charged against security has been initiated, or (ii) the body corporate has been referred to Board for Industrial and Financial Reconstruction under the Sick Industrial Companies (Special Provisions) Act, 1985, prior to commencement of the Securities and Exchange Board of India (Debenture Trustees) (Amendment) Regulations, 2003."

9.4 It is noted that Mega Mould is a subsidiary of ICore E-Services Ltd. In view of the same, it would follow that both ICore E-Services Ltd. and Mega Mould are associates. Further, from the Balance Sheet of Mega Mould as on March 31, 2011, it is observed that ICore E-Services Ltd. has given a loan of ₹160 Crores to Mega Mould and the same has not yet been fully repaid. In view of the aforesaid, I find that Mega Mould has prima facie violated the provisions of Regulation 13A(a)-(b) of the Debenture Trustees Regulations.

10. Protecting the interests of investors is the foremost mandate for SEBI and therefore, steps have to be taken in the instant matter to ensure only legitimate fund raising activities are carried on by Mega Mould and no investors are defrauded. It is noted that Mega Mould has raised ₹716 crores (approx.) from the public. It is also pertinent to note that Mega Mould failed to furnish information sought vide SEBI letter dated May 27, 2014. In light of the same, I find there is no other alternative but to take recourse through an interim action against Mega Mould and its Directors alongwith its Debenture Trustees for preventing that company from further carrying on with its fund mobilizing activity under the issue of NCDs.

11. 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 Debt Securities Regulations and the Debenture Trustee Regulations, hereby issue the following directions – i. Mega Mould shall not mobilize funds from investors through the issue of NCDs 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. Mega Mould and its Directors, viz. Shri Anukul Maiti, Smt. Kanika Maiti and Swapan Roy, 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 directions;

iii. Mega Mould and its abovementioned 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. Mega Mould shall provide a full inventory of all its assets and properties; v. Mega Mould and its abovementioned 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 NCDs, without prior permission from SEBI; vi. Mega Mould and its abovementioned Directors shall not divert any funds raised from public at large through the issue of NCDs, which are kept in bank account(s) and/or in the custody of Mega Mould; vii. ICore E-Services Limited and Mega Mould Debenture Trust are prohibited from continuing with their present assignment as debenture trustees in respect of the issue of NCDs of Mega Mould and also from taking up any new assignment or involvement in any new issue of debentures, etc. in a similar capacity, from the date of this Order till further directions; viii. Mega Mould shall, within 21 days from the date of receipt of this Order, provide SEBI with all relevant and necessary particulars, as sought vide the abovementioned SEBI letter dated May 27, 2014.

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

13.1 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 Mega Mould alongwith the documents contained therein; correspondences exchanged between SEBI and ROC (West Bengal), Kolkata and information obtained from MCA21 Portal. In this context, Mega Mould and its abovementioned 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.

13.2 Similarly, the Debenture Trustees i.e. ICore E-Services Limited and Mega Mould Debenture Trust, 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.

14. This Order is without prejudice to the right of SEBI to take any other action that may be initiated against Mega Mould and its abovementioned Directors; the Debenture Trustees, in accordance with law.

Place: Mumbai Date: July 23, 2014 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA