Interim Order in the matter of Q & B Retail Limited

ORDER Under Sections 11, 11(4), 11A and 11B of the Securities and Exchange Board of India Act, 1992, in the matter of Q&B Retail Ltd. (earlier known as Basil Express Ltd.) (PAN: AACCB2213R) and its Directors viz. Arvind Tiwari (DIN: 01629407, PAN: ADXPT8691C), Pashupati Nath Dixit (DIN: 01664553, PAN: AJPPD9322G), Rajesh Kumar Sharma (DIN: 01731816 PAN: BFXPS2910E), Ramendra Prasad Sharma (DIN: 02518373, PAN: AOBPS4499A), Kishan Pal Singh (DIN: 02350363, PAN: AVVPS8411M), Chhotelal Shukla (DIN: 02706032, PAN: CLJPS2300B), Vishwa Bandhu Vasishtha (DIN: 02707338, PAN: ADFPV9924N), Deena Nath Maurya (DIN: 02824654 PAN: BJJPM1012K) and Mukesh Kumar Khare (DIN: 06400147, PAN: BBVPK0966N). 1. Securities and Exchange Board of India ("SEBI") received a reference dated July 12, 2012 from Serious Fraud Investigation Office (SFIO) regarding the fund mobilization in the nature of private placement by M/s Basil International Ltd. and its group companies, including Basil Express Ltd. ("Basil Express").

2. As part of the inquiry, SEBI, vide letters dated May 14, 2013 and November 22, 2013 inter alia sought the following details from Basil Express:

i. Copy of the Memorandum and Articles of Association, ii. Copy of Audited Annual Accounts and Annual Returns for the last 10 years; iii. Name, addresses and occupation of all the Promoters/Directors and Key Managerial Personnel of the company;

iv. Statement of fund mobilization through issue of preference shares duly certified by the Statutory Auditors of the company; v. Details regarding filing of prospectus/Red Herring Prospectus with Registrar of Companies, vi. Number of allottees and the list of allottees along with their name, address, number of preference shares issued, folio number, certificate number, etc. and date of allotment of preference shares; vii. Terms and conditions of the issue of preference shares; viii. Details regarding subscription amount raised; ix. Copies of brochure, application form, pamphlets, advertisements and other promotional materials, etc.

3. The aforesaid letters were returned as "Undelivered". Another letter was sent to the company on June 13, 2014 at the registered address of the company via hand delivery. However, the said letter also could not be delivered.

4. Thereafter, SEBI sent a letter dated June 17, 2014 to the Managing Director (MD) of the company viz. Mr. Mukesh Kumar Khare to his address mentioned in the MCA 21 Portal. The letter was delivered on June 20, 2014. However, he failed to reply.

5. As the company and its MD were not responding to SEBI letters, information regarding Basil Express was obtained from the website of Ministry of Corporate Affairs, MCA 21 Portal.

6. In the meanwhile, SEBI vide letter dated June 18, 2014 sought details/information regarding the companies including Basil Express from SFIO. In response, SFIO vide letter dated September 04, 2014 forwarded a copy of its investigation report to SEBI, wherein SFIO had made recommendations to SEBI on violations pertaining to fund mobilization by companies including Basil Express through issue of preference shares. It was observed inter alia from the investigation report that:

i. Basil Express has not done any business/production during the period 2004-2005 to 2010-2011. It acted as fund manager of other group companies. ii. The entire share capital including the preference share capital of Basil Express has been diverted as loans/investments in other group companies. iii. Basil Express has raised an amount of Rs. 10.12 Cr. by way of issuing redeemable preference shares during the year 2005-2006 to 2007-2008. iv. Basil Express had redeemed preference shares and reduced the preference share balance from Rs. 10.12 Cr. to Rs. 2.56 Cr. in 2008-2009. v. The financial statements of Basil Express for the FY 2004-2005 to 2010-2011 do not show the true and fair view of the state of affairs of the company.

7. SEBI also issued letter dated July 03, 2014 to the Chartered Accountant (who had been filing the Annual returns of the company), seeking the information being sought from the company. However, no reply was received from the Chartered Accountant. Thereafter, SEBI via emails dated July 17, 2014 and July 23, 2014 sought similar details/information (as sought from the company) from the company Auditors (who were acting as the company Auditors till Financial Year (FY) ending March 31,2011). The Auditors also did not respond to the e-mails sent by SEBI.

8. Considering the aforesaid findings of SFIO that Basil Express has redeemed preference shares and reduced the preference share capital from Rs. 10.12 Cr. to Rs. 2.56 Cr. in 2008-2009, SEBI vide letter dated December 04, 2014 (to the company) sought details of repayment stated to have been made by the company. The said letter also returned undelivered.

9. Thereafter, on examination of MCA 21 Portal, it was observed that pursuant to Basil Express's AGM dated September 30, 2013, it had redeemed all the preference share capital and that as on FY ending March 31, 2013 there was no subscribed preference share capital of the company. It was also observed that on October 20, 2014, Basil Express has changed its name to Q& B Retail Ltd. (hereinafter referred to as "QBRL") and had shifted their registered address to a new place.

10. SEBI, vide letter dated January 08, 2015 sought information regarding the fund mobilization by Basil Express from QBRL and its Directors. The letters sent to QBRL and its Directors, also returned undelivered.

11. In view of the above factual situation, SEBI appointed an independent auditor to, inter alia, ascertain: i. Amount mobilized from the investors, ii. Status of repayment of redeemable preference shares and mode of payment, iii. Whether the company continues to mobilize fresh funds.

12. The auditors appointed by SEBI informed that the letters sent by them to QBRL and its directors, seeking information returned undelivered. However, letter written to one of the Directors, Mr. Arvind Tiwari was delivered. The said Director however, did not reply.

13. The material available on record such as the reference received by SEBI and the documents contained therein and information obtained from the MCA 21 Portal, has been perused. On an examination of the same, it is observed that:

i. Basil Express (Basil Express Ltd.) (CIN: U64120DL1997PLC089923) was incorporated on September 29, 1997. Its Registered Office is situated at Room No. 6, 1st Floor, CB-201, Ring Road, Naraina, New Delhi-110028. The name of the company has been changed to QBRL (Q&B Retail Ltd) on October 20, 2014. The new registered office of QBRL is at 487/488, No. 1 First Floor, Mangal Bazar Road, Near Sidh Baba Mandir, Peeragarhi, New Delhi-110087.

ii. The details of present and past Directors /promoters of QBRL (as obtained from MCA 21 Portal) are:

Date Of Date of Sl.No Director Name DIN Designation Appointment Cessation 1 Arvind Tiwari 01629407 Additional Director 29-01-2015 - Pashupati Nath 29-01-2015 - 2 01664553 Additional Director Dixit Rajesh Kumar 29-07-2006 - 3 01731816 Additional Director Sharma Ramendra Prasad 29-01-2015 - 4 02518373 Additional Director Sharma 5 Kishan Pal Singh 02350363 Director 02-09-2008 12-02-2015 Chhotelal Shukla 02706032 Director 03-08-2009 12-02-2015 6 Vishwa Bandhu 02707338 Additional Director 01-03-2012 12-02-2015 7 Vasishtha Deena Nath 02824654 Additional Director 12-02-2015 8 Maurya 01-03-2012 9 Mukesh Kumar 06400147 22-04-2013 12-02-2015 Managing Director Khare iii. From the perusal of documents filed by the company with ROC it is observed that the company had mobilized money by issue of preference shares in the FY 2005-06. The issue of preference shares were termed as "preferential allotment" by Basil Express in the Form 23AC filed for the FY 2005-06 with ROC by the company.

iv. On perusal of the Annual Returns filed by the company with RoC for the FY ending March 31, 2006 to March 31, 2013 (obtained from MCA 21 Portal), it is observed as under:-

Total paid up preference share Number of Paid up capital Number of preference preference shares value per outstanding (in shareholders as per As on date outstanding share Rs.) annual return

31/03/2006 101,240 1000 101,240,000.00 Not indicated

31/03/2007 101,240 1000 101,240,000.00 Not indicated

31/03/2008 101,240 1000 101,240,000.00 7545*

31/03/2009 25,566 1000 25,566,000.00 1891*

31/03/2010 13,488 1000 13,488,000.00 Not indicated

31/03/2011 13,488 1000 13,488,000.00 Not indicated

31/03/2012 13,488 1000 13,488,000.00 Not indicated

31/03/2013 0 0 0 0

* List of preference shareholders was attached with the Annual Returns.

v. It is observed that as on March 31, 2008, the company had collected an amount of Rs. 10.12 Cr. from 7545 investors by way of issue of preference shares. The number of preference shareholders has not been indicated by the company except for the FY ending on March 31, 2008 and March 31, 2009. As on March 31, 2009, the amount mobilized and the number of investors are shown to have reduced to Rs. 2.56 Cr. and 1891 investors respectively. Subsequently, during the FY ending as on March 31, 2010, March 31, 2011 and March 31, 2012, the amount mobilized is shown to have further reduced to Rs. 1.35 Cr. Finally, as on March 31, 2013, the amount collected is shown to have come to 'nil'.

14. 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 QBRL during the FY 2005-2006, 2006-2007 and 2007-2008 through the aforesaid issue, is in accordance with the provisions of the SEBI Act, 1992 ("SEBI Act"), the Companies Act, 1956 and the SEBI (Disclosure and Investor Protection) Guidelines, 2000 ("SEBI DIP Guidelines") read with the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 ("ICDR Regulations").

15. I note that the jurisdiction of SEBI over various provisions of the Companies Act, 1956, 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, 1956. 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."

15.1 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:

"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 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 FYs 2005-2006 to 2007-2008, QBRL under the name Basil Express allotted Redeemable preference shares to at least 7545 individuals/investors mobilizing funds amounting to approximately ₹10.12 Cr. The number of investors to whom allotments were made under the Offer of Redeemable Preference Shares along with the amount mobilized therein, during the FY 2005-2006 to 2007-2008 (as provided in the Table at Paragraph 13(iv) above), would prima facie indicate that such Offer was a public issue of securities, as prescribed under the first proviso to Section 67(3) of the Companies Act, 1956. It is important to note that the number of allottees and amount raised under the Offer of Redeemable Preference Shares indicated in the aforesaid table have only been taken from the documents obtained from MCA21 Portal. It is therefore possible that the actual number of allottees and amount mobilized by QBRL could be much more than the figures indicated in the Table at Paragraph 13(iv) above.

b. It is observed that the company 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 QBRL 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 QBRL during the FY 2005-06 to 2007-2008 to 7545 persons, prima facie qualifies 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.

15.2 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. On perusal of the documents filed by QBRL with RoC, pursuant to its name change, it is noted that the present status of the amount mobilized by way of issue of preference shares is shown to be "nil" as on September 30, 2013. From this, it appears that QBRL has redeemed the entire preference shares issued to the investors. In this context, it is observed (as already mentioned in Paragraph No. 9 to 11 above) that SEBI has made several attempts to ascertain and verify the status of repayment stated to have been made by QBRL. This has however not been possible as neither the company nor the directors have responded to several communications from SEBI. Whether the company has redeemed the entire preference shares issued to the investors is therefore, still an undetermined fact.

iv. Under the facts and circumstances mentioned above and having regard to the abovementioned observations of the Hon'ble Supreme Court of India, since the Offer of Redeemable Preference Shares by QBRL was prima facie a public issue in accordance with the provisions of the Companies Act, 1956, the same would 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.

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

15.3 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, the Offer of Redeemable Preference Shares was a public issue of securities. Having made a public issue, QBRL was required to register a prospectus with the RoC under Section 60 of the Companies Act, 1956. I find that there is no evidence on record to indicate that QBRL has complied with the provisions of Section 60 of Companies Act, 1956. In view of the same, I find that QBRL has prima facie not complied with the provisions of Section 60 of Companies Act, 1956.

15.4 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 QBRL 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.

15.5 In addition to the above, reference may be made to the DIP Guidelines, framed by SEBI in the year 2000, in exercise of the powers conferred under the SEBI Act. The Hon'ble Supreme Court in the Sahara Case, observed: "DIP Guidelines had statutory force since they were framed by SEBI in exercise of its powers conferred on it under Sections 11 and 11A of the SEBI Act. Powers have been conferred on SEBI to protect the interests of the investors in securities and regulate the issue of prospectus, offer documents or advertisement soliciting money through the issue of prospectus. Section 11 of the Act, it may be noted has been incorporated, evidently to protect the interests of investors whose securities are legally required to be listed. DIP Guidelines were implemented by SEBI with regard to the listed and unlisted companies, which made public offer, until it was replaced by ICDR 2009". In this regard, I observe prima facie that QBRL has not complied with the following provisions of the DIP Guidelines as regards the Offer of Redeemable Preference Shares during the Financial Years 2005–06, viz.- a. Clause 2.1.1. – (Filing of offer document) b. Clause 2.1.4 – (Application for listing) c. Clause 2.1.5 – (Issue of securities in dematerialized form), d. Clause 2.8 – (Means of finance), e. Clause 4.1 – (Promoters contribution in a public issue by unlisted companies), f. Clause 4.11 – (Lock-in of minimum specified promoters contribution in public issues), g. Clause 4.14 – (Lock-In of pre-issue share capital of an unlisted company) h. Clause 5.3.1 – (Memorandum of understanding), i. Clause 5.3.3 – (Due Diligence Certificate) j. Clause 5.3.5 – (Undertaking), k. Clause 5.3.6 – (List Of Promoters Group And Other Details), l. Clause 5.4 – (Appointment of intermediaries) m. Clause 5.6 – (Offer document to be made public) n. Clause 5.6A – (Pre-issue Advertisement) o. Clause 5.7 – (Dispatch of issue material) p. Clause 5.8 – (No complaints certificate) q. Clause 5.9 – [Mandatory collection centres including Cl. 5.9.1 (Minimum no. of collection centres) r Clause 5.10 – (Authorized Collection Agents) s. Clause 5.12.1 – (Appointment of compliance officer) t. Clause 5.13 – (Abridged prospectus) u. Clause 6.0 – (Contents of offer documents) v. Clause 8.3 – (Rule 19(2)(b) of SC(R) Rules, 1957) w. Clause 8.8.1 – (Opening & closing date of subscription of securities) x. Clause 9 – (Guidelines on advertisements by Issuer Company) y. Clause 10.1 – (Requirement of credit rating) z. Clause 10.5 – (Redemption)

15.6 As per Regulation 111(1) of the ICDR Regulations, the DIP Guidelines, "shall stand rescinded". However, Regulation 111(2) of the ICDR Regulations, 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 observation made in respect of any draft offer document, any enquiry or investigation commenced or show cause notice issued in respect of the said Guidelines shall be deemed to have been done or taken under the corresponding provisions of these regulations; (b) Any offer document, whether draft or otherwise, filed or application made to the Board under the said Guidelines and pending before it shall be deemed to have been filed or made under the corresponding provisions of these regulations."

15.7 Upon a consideration of the aforementioned paragraphs, I am of the view that QBRL is prima facie engaged in fund mobilizing 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), and also the provisions of SEBI DIP Guidelines read with the SEBI ICDR Regulations.

16. I note that QBRL allotted Redeemable Preference Shares to the public during the FY 2005-2006 to 2007-2008. Arvind Tiwari, Pashupati Nath Dixit, Rajesh Kumar Sharma and Ramendra Prasad Sharma are the Present Directors of QBRL and Kishan Pal Singh, Chhotelal Shukla, Vishwa Bandhu Vasishtha, Deena Nath Maurya and Mukesh Kumar Khare are the past Directors. The aforementioned Directors are responsible under Section 27(2) of the SEBI Act, for the prima facie contraventions committed by QBRL through the Offer of Redeemable Preference Shares.

17. In the instant case, even though the Annual Return of 2012-2013 filed by the company with the RoC (obtained from MCA 21 Portal) indicates that the preferential share capital of the company as on March 31, 2013 is nil, there is no supporting material to verify or ascertain that the company has indeed repaid the entire amount mobilized as shown in its annual returns. It is also observed that the company and its directors are not co-operating with the preliminary examination conducted by SEBI. SEBI has a statutory duty to protect the interests of investors in securities market 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. Steps therefore, have to be taken in the instant matter to ensure only legitimate fund raising activities are carried on by QBRL 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 QBRL and its Directors, for preventing the company from further carrying on with its fund mobilizing activity under the Offer of Redeemable Preference Shares.

18. 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 Section 19 thereof, hereby issue the following directions – i. QBRL (Q&B Retail Ltd.) (PAN: AACCB2213R) shall not mobilize any fresh 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. QBRL and its Directors, viz., Arvind Tiwari (DIN: 01629407, PAN ADXPT8691C), Pashupati Nath Dixit (DIN:01664553, PAN:AJPPD9322G ), Rajesh Kumar Sharma (DIN: 01731816; PAN: BFXPS2910E), Ramendra Prasad Sharma (DIN: 02518373; PAN: AOBPS4499A), Kishan Pal Singh (DIN: 02350363; PAN: AVVPS8411M), Chhotelal Shukla (DIN: 02706032, PAN:CLJPS2300B), Vishwa Bandhu Vasishtha (DIN: 02707338; PAN: ADFPV9924N), Deena Nath Maurya (DIN:02824654; PAN:BJJPM1012K ) and Mukesh Kumar Khare (DIN: 06400147; PAN:BBVPK0966N) 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. QBRL 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. QBRL shall provide a full inventory of all its assets and properties;

v. The abovementioned Directors of QBRL shall provide a full inventory of all their assets and properties;

vi. QBRL 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 Offer of Redeemable Preference Shares, without prior permission from SEBI;

vii. QBRL and its abovementioned 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 QBRL;

viii. QBRL and its abovementioned Directors shall furnish complete information/documents in respect of the Offer of Redeemable Preference Shares (as sought by SEBI letters dated November 22, 2013 and January 08, 2014), within 14 days from the date of receipt of this Order, including,  Details of the repayment, if any made to the investors, as on date, duly certified by an independent auditors,  Names, addresses and contact numbers of the investors who have been repaid,  Mode of repayment,  Documents to prove redemption of preference shares, made by QBRL/Basil Express.

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

20. The prima facie observations contained in this Order are made on the basis of the material available on record i.e. correspondence exchanged between SEBI and QBRL and information obtained from the MCA 21 Portal. In this context, QBRL and its abovementioned Directors are advised to show cause as to why suitable directions/prohibitions under Sections 11(1), 11(4), 11A and 11B of the SEBI Act read with Section 73(2) of the Companies Act, 1956, including the following, should not be taken/imposed against them:

i. Directing them jointly and severally to refund money collected through the Offer of Redeemable Preference Shares along with interest, if any, promised to investors therein; ii. Directing them not to issue 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, for an appropriate period; iii. Directing them to refrain from accessing the securities market and prohibiting them from buying, selling or otherwise dealing in securities for an appropriate period.

21. QBRL and its abovementioned Directors, may, within 21 days from the date of receipt of this Order, file their replies, 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.

22. This interim order cum show cause notice is without prejudice to the right of SEBI to take any other action that may be initiated against QBRL and its abovementioned Directors, in accordance with law.

Place: Mumbai S. RAMAN Date: February 10, 2016 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA