Interim Order in the matter of RBX Land Developers India Limited

WTM/SR/WRO/ILO/101/05/2015 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA, MUMBAI CORAM: S. RAMAN, WHOLE TIME MEMBER ORDER Under Sections 11(1), 11(4), 11A and 11B of the Securities and Exchange Board of India Act, 1992, in the matter of RBX Land Developers India Limited (PAN: AAFCR9720E); its present/past Directors, viz. Mr. Kishore Rai (DIN:05120168), Mr. Arjun Singh (DIN:06874021), Mr. Shankar Singh (DIN:06874305), Mr. Raghuveer Singh Sisodiya (DIN:03565848, PAN:BXHPS2674H) and Mr. Hari Rathore Singh (DIN:05130181)

1. Securities and Exchange Board of India ("SEBI") received a complaint on April 01, 2014 alleging illegal mobilization of funds by RBX Land Developers India Limited (hereinafter referred to as 'RBX' or 'the company'). The complainant also provided a copy of the brochure issued by RBX.

2. As part of preliminary inquiry, SEBI vide letters dated May 05, 2014 advised RBX and its directors to furnish inter alia the following information, viz. – a. Memorandum and Articles of Associations of the company as filed with the Registrar of Companies (‘RoC”). b. Details of the past and present directors of the company including their names, addresses, PAN and contact details. c. Brochures pertaining to the schemes/offers of the company which were made available to public. d. Copies of application forms that are required to be submitted by investors/applicants to participate in the scheme. e. Sample copies of allotment letter issued to investors who subscribed to the schemes of the company. f. Sample copies of the agreement letter/contact required to be entered into by investor/applicant under the schemes.

g. Details of the scheme wise amount mobilized by the company till date alongwith the number of investors under the schemes. h. Names and addresses of all the investors in the scheme. i. List of all branches of the company with their addresses. j. Certified copy of audited financial statements for the FY 2012-13. k. Copy of Income Tax return filed by the company for FY 2012-13. l. Details of any other similar scheme(s), if any, floated by RBX or group/associate company or companies in which Directors of RBX are also Directors.

The letter addressed to the company was returned undelivered by postal authorities with remarks “Left”. No reply was received from directors of the company to the letters sent to them.

Meanwhile, it was observed from the website of the company and the brochure of the company provided by complainant that the company has an office at 308, Siddhi Vinayak Trade Centre, Near Sahid Park, Freeganj, Ujjain, Madhya Pradesh– 456006. Thereafter, SEBI sent letters dated July 17, 2014 to the company at both the addresses available on record. Letters dated July 17, 2014 were also sent to directors of the company. The aforesaid letters addressed to the company were also returned undelivered by postal authorities with remarks “Left”.

3. SEBI, however, received a letter on July 24, 2014 from RBX wherein it was stated that “it is come to our knowledge that we have to provide information which is desired by SEBI related EGM minutes, approving and allotment of debenture and board minutes, application form received by investors, name and person, name and address of debenture trustees, details of proprietor etc.” The company sought at least 15 days to furnish the reply. On July 30, 2014 the company provided copies of Memorandum and Articles of Association and a copy of certificate of incorporation of the company. The company also sought at least 8 days for filing of other information sought by SEBI. SEBI vide separate letters dated July 30, 2014 to the company and its directors granted extension in timeline till August 05, 2014 to submit the requisite information to SEBI. Letters to the company were once again returned undelivered by postal authorities with remark “Left”. Thereafter, SEBI sent reminder letters dated August 20, 2014 to the company and its directors. However, SEBI did not receive any reply from them.

4. Further, from the website of the company, it was observed that the company has an account in Axis Bank. SEBI vide letter dated August 25, 2014 sought information from Axis Bank, Ujjain Branch about the bank account details of the company. Axis bank vide their letter dated September 03, 2014 provided bank statement of the company from August 23, 2012 to September 03, 2014. Cash deposits of various amounts were observed to have been made in the said bank account during this period.

5. Thereafter, a SEBI official visited registered the office address of the company in Ujjain on October 21, 2014. It was observed that the company was not existing at its registered office address. SEBI official also visited another office address of the company at Sunshine Tower in Ujjain. The company was not found at third floor as per the available address, however, it was found operational at first floor of the Sunshine Tower. SEBI official hand delivered a letter dated October 13, 2014 and copies of letters dated July 17, 2014, July 30, 2014 and August 20, 2014. The said letter along with the copies of above mentioned letters were received by Shri Raghuveer Singh who is one of the directors of the company. Shri Raghuveer Singh assured that the requisite information will be submitted to SEBI. During the visit, following documents related to issuance of debentures by the company were collected by a SEBI Official: i. A document having 111 entries of ‘payable amounts’ towards various debenture plans (it appears prima facie that payments were received from 111 investors towards subscription of debentures. However, details of investors are not mentioned.) ii. ‘Distributor team Report’ where details of amount mobilized by one of the distributors under various debenture plans during March 01, 2014 to April 30, 2014 have been provided. iii. ‘Renewal Business Report’ which provides details of 22 investors to whom debentures were issued by RBX.

6. SEBI vide reminder letters dated November 18, 2014 and December 04, 2014 once again advised the company and its directors to provide the requisite information at the earliest. Letters to the company were sent at the address at which the company was found to be operational during physical visit by SEBI official. However, the said letters sent to company were returned undelivered by postal authorities with remark “Left”.

7. It was observed from the website of the company and the ‘Renewal Business Report’ collected by SEBI Official that software assistance to the company was provided by Acme Infosoft Pvt. Ltd. (hereinafter referred to as “Acme”). SEBI vide letter dated December 30, 2014 advised Acme to provide the list of the investors and the funds mobilized by RBX. On January 16, 2015 Acme submitted the details of 10,688 investors to whom debentures were issued by RBX.

8. It was observed from Form DIR-2 available on MCA website that the company appointed two new Directors viz. Mr. Arjun Singh and Mr. Shankar Singh on August 02, 2014. SEBI vide letters dated February 03, 2015 also sought the relevant Information from them. However, SEBI has not received any reply from them till date.

9. Efforts were also made to obtain the information from Ministry of Corporate Affair's Website i.e. MCA21 portal. It is observed from MCA website that the company has not filed Annual Reports, Form for return of allotment and Deed of Debenture Trust with MCA.

10. The material available on record i.e. correspondence exchanged between SEBI and RBX; information/documents obtained from Acme; information/documents obtained from the Ministry of Corporate Affairs' website i.e. 'MCA 21 Portal'; complaints received and the documents enclosed therewith have been perused. On an examination of the same, it is observed that – i. RBX (CIN: U70101MP2012PLC028828) was incorporated on July 13, 2012 with the RoC, Gwalior having its registered office at 202, 2nd floor, Sunshine Tower, Freeganj, Ujjain, Madhya Pradesh, India-456006.

ii. The promoters of the company are Mr. Raghuveer Singh Sisodiya (Managing Director), Mr. Hari Rathore Singh (Director), Mr. Kishore Rai (Director), Mr. Lokendra Singh Chauhan, Mr. Kushal Singh Panwar, Mr. Madan Singh and Mr. Vinod Sahani.

iii. The current Directors of RBX are Mr. Kishore Rai, Mr. Arjun Singh and Mr. Shankar Singh. Mr. Raghuveer Singh Sisodiya and Mr. Hari Rathore Singh were past directors of the company.

iv. It is observed from the copy of the brochure provided by complainant that RBX was offering various plans of debentures to investors which are reproduced as under:

Table 1: Installment Payment Plan (IPP) Plan No. D-3 (3 Years) Call Amount Expecte No. of A/R Face d Refund Debenture Benefi MLY QLY HLY YLY Value of s t Amount 36 100 295 590 1150 3600 4300 3600 72 200 590 1180 2300 7200 8600 7200 108 300 885 1770 3450 10800 12900 10800 144 400 1180 2360 4600 14400 17200 14400 180 500 1475 2950 5750 18000 21500 18000 360 1000 2950 5900 11500 36000 43000 36000 5% Extra benefit on the regular deposit premium. Table 2: Installment Payment Plan (IPP) Plan No. D-4 (4 Years) Call Amount Expecte No. of A/R Face d Refund Debenture Benefi MLY QLY HLY YLY Value of s t Amount 48 100 295 590 1150 4800 6048 4800 96 200 590 1180 2300 9600 12096 9600 144 300 885 1770 3450 14400 18144 14400 192 400 1180 2360 4600 19200 24192 19200 240 500 1475 2950 5750 24000 30240 24000 480 1000 2950 5900 11500 48000 60480 48000 10% Extra benefit on the regular deposit premium. Table 3: Installment Payment Plan (IPP) Plan No. D-5 (5 Years) Call Amount Expecte No. of A/R Face d Refund Debenture Benefi MLY QLY HLY YLY Value of s t Amount 60 100 295 590 1150 6000 8300 9000 120 200 590 1180 2300 12000 16600 18000

180 300 885 1770 3450 18000 24900 27000 240 400 1180 2360 4600 24000 33200 36000 300 500 1475 2950 5750 30000 41500 45000 600 1000 2950 5900 11500 60000 83000 90000 15% Extra benefit on the regular deposit premium.

Table 4: Installment Payment Plan (IPP) Plan No. D-6 (6.3 Years) Call Amount Expecte No. of A/R Face d Refund Debenture Benefi MLY QLY HLY YLY Value of s t Amount 90 120 360 720 1440 9000 13500 13500 180 240 720 1440 2880 18000 27000 27000 270 360 1080 2160 4320 27000 40500 40500 360 480 1440 2880 5760 36000 54000 54000 450 600 1800 3600 7200 45000 67500 67500 900 1200 3600 7200 14400 90000 135000 135000 15% Extra benefit on the regular deposit premium.

Table 5: Installment Payment Plan (IPP) Plan No. D-7 (8 Years) Call Amount Expecte No. of A/R Face d Refund Debenture Benefi MLY QLY HLY YLY Value of s t Amount 96 100 295 585 1160 9600 16128 14400 192 200 590 1170 2320 19200 32256 28800 288 300 885 1755 3480 28800 48384 43200 384 400 1180 2340 4640 38400 64512 57600 480 500 1475 2925 5800 48000 80640 72000 960 1000 2950 5850 11600 96000 161280 144000 15% Extra benefit on the regular deposit premium.

Table 6: Installment Payment Plan (IPP) Plan No. D-8 (16 Years) Call Amount Expecte No. of A/R Face d Refund Debenture Benefi MLY QLY HLY YLY Value of s t Amount 36 100 295 585 1150 3600 16200 9000 108 300 885 1755 3480 10800 48600 27000 180 500 1475 2925 5800 18000 81000 45000

360 1000 2950 5850 11600 36000 162000 90000

Table 7: Installment Payment Plan (IPP) Plan No. D-9 (18 Years) Call Amount Expecte No. of Face d Refund Debenture MLY QLY HLY YLY Value of s Amount 36 100 295 585 1160 3600 19800 9000 2700 108 300 885 1755 3480 10800 59400 0 4500 180 500 1475 2925 5800 18000 99000 0 9000 360 1000 2950 5850 11600 36000 198000 0

Table 8: Single Installment Payment Plan (IPP) Plan No. D-10 (5.6 Years) No. of Expected Refund Face Value A/R Benefit Debentures of Amount 50 5000 10000 5000 500 50000 100000 50000 1000 100000 200000 100000 v. It is also observed from the information received from Acme that RBX allotted debentures during FY 2009-10 to 2014-15 to 10,688 investors and mobilised funds amounting to Rs.11.98 Crores. The Details of the same are as under-

Financial Year Total no. of investors Amount Mobilised (in Rs.) 2009-10 11 7,000 2010-11 283 22,85,745 2011-12 1,284 92,91,519 2012-13 2,607 3,05,68,130 2013-14 5,049 4,67,32,070 2014-15* 1,454 3,09,37,105 Total 10,688 11,98,21,569 *Till September 2014.

It is noted that RBX was incorporated on July 13, 2012 with the RoC, Gwalior. However, it was raising money through the issuance of debentures since FY 2009-10 and has mobilized Rs. 11.98 Crores till September 2014.

vi. It is also observed from the information provided by Acme that RBX raised money from various States/Union Territories in India. A state-wise analysis of amount mobilized by RBX is given below:

Table: State-wise Analysis of Amount Mobilized by RBX Amount Mobilized State/UT No. of Investors (in Rs.) Madhya Pradesh 9,103 10,87,35,139 Rajasthan 641 50,03,865 Chhattisgarh 215 17,44,475 Andhra Pradesh 283 17,33,385 Andaman & Nicobar 262 13,95,705 Maharashtra 27 9,48,625 Karnataka 135 1,39,925 Others 22 1,20,450 Total 10,688 11,98,21,569 vii. During examination of the matter, it was also noted that as per MCA filings, Mr. Raghuveer Singh resigned on August 20, 2014 as a Director of the company. However, he was found working in the office of RBX during physical verification on October 21, 2014 and accepted the letters from SEBI (hand delivered by SEBI Official) in his capacity as Managing Director of RBX.

11. In the context of the abovementioned details of the offer of debentures, the issue for determination in the instant matter is whether the mobilization of funds by RBX 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") and the Companies Act, 1956.

12. 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 at the relevant time 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 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."

13. 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 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, after 13.12.2000, any offer of securities by a public company to fifty persons or more will be treated as a public issue under the Companies Act, even if it is of domestic concern or it is proved that the shares or debentures are not available for subscription or purchase by persons other than those receiving 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 debentures 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 the utmost importance.

a. It is observed from the information provided by Acme that RBX issued debentures to 10,688 investors and mobilized funds amounting to Rs.11.98 Crores during FY 2009-10 to 2014-15. In FY 2010-11 the company issued debentures to 283 investors, in FY 2011-12 to 1284 investors, in FY 2012-13 to 2607 investors, in FY 2013-14 to 5049 investors and in FY 2014-15 to 1454 investors. Debentures have thus been issued and subscribed by more than forty nine persons. A SEBI official, during his visit to the office of the company, also collected a document having 111 entries of ‘payable amounts’ towards various debenture plans. It appears prima facie that payments were received from 111 investors towards subscription of debentures. However, details of investors are not mentioned in the said document. RBX and its directors also failed to submit relevant information despite being granted several opportunities to do so. Further, in none of their replies to SEBI, the company has denied the mobilization of funds by them from general public by issuance of debentures. Based on the facts available in this case, including in particular the number of persons to whom the debentures have been issued by RBX, the only conclusion can be that this issue was nothing but a public issue of securities in terms of provisions of Section 67(3) of the Companies Act, 1956.

b. RBX is not stated to be a non-banking financial company or a public financial institution within the meaning of Section 4A of the Companies Act and therefore, is not covered under the second proviso to Section 67(3).

c. 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.

14. I note that – i. From the abovementioned, it will follow that since the offer of debentures 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 recognised 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 recognised 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 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 fifty 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 :

"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 debentures 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 provisions of Sections 73(2) and 73(3) of that Act.

iv. In the facts of the instant case, it prima facie appears that RBX has violated the provisions of Section 73 of the Companies Act, 1956, in respect of the offer of debentures.

15. 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 debentures was made to fifty persons or more, it has to be construed as a public offer. Having made a public offer, RBX was required to register a prospectus with the RoC under Section 60 of the Companies Act, 1956. In the instant case, there is no evidence on record to indicate whether or not RBX has filed a prospectus. In view of the same, I find that prima facie, RBX has not complied with the provisions of Section 60 of Companies Act, 1956.

16. 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 RBX has not complied with the provisions of Section 56(1) and 56(3) of the Companies Act, 1956 and therefore prima facie, has violated the aforesaid provisions.

17. 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. There is no evidence to indicate whether RBX has appointed the debenture trustee for the said issuance of debentures. Based on the material available on record, I find that RBX has not complied with the provisions of Sections 117B of the Companies Act, 1956 and therefore, has prima facie violated the aforesaid provisions.

Section 12(1) of the SEBI Act states: "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". Further, Regulation 7 of SEBI (Debenture Trustees) Regulations, 1993 ("Debenture Trustees Regulations"), provides that: "no person should act as a debenture trustee unless he is either – i. a scheduled bank carrying on commercial activity; or ii. a public financial institution within the meaning of section 4A of the Companies Act, 1956; or iii. an insurance company; or iv. body corporate."

There is no evidence to indicate whether RBX has appointed the debenture trustee for the said issuance of debentures. Thus, based on the material available on record, I find that RBX has not complied with the abovementioned provisions of the SEBI Act read with the Debenture Trustee Regulations.

18. 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 amounts shall be credited, from out of its profits every year until such debentures are redeemed. There is no evidence that the company has created any debenture redemption reserve. Thus, based on the material available on record, I find that RBX has not complied with the provisions of Sections 117C of the Companies Act, 1956 and therefore, has prima facie violated the aforesaid provisions.

19. 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 and listing of debt securities. 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 RBX, through the offer of debentures, 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. i. Regulation 4(2)(a) – Application for listing of debt securities ii. Regulation 4(2)(b) – In-principle approval for listing of debt securities iii. Regulation 4(2)(c) – Credit rating has been obtained iv. Regulation 4(2)(d) – Dematerialization of debt securities v. Regulation 4(4) – Appointment of Debenture Trustee vi. Regulation 5(2)(b) – Disclosure requirements in the Offer Document vii. Regulation 6 – Filing of draft Offer Document viii. Regulation 7 – Mode of disclosure of Offer Document ix. Regulation 8 – Advertisements for Public Issues x. Regulation 9 – Abridged Prospectus and application forms xi. Regulation 12 – Minimum subscription xii. Regulation 14 – Prohibition of mis-statements in the Offer Document xiii. Regulation 15 – Trust Deed xiv. Regulation 16 – Debenture Redemption Reserve xv. Regulation 17 – Creation of security xvi. Regulation 19 – Mandatory Listing xvii. Regulation 26 – Obligations of the Issuer, etc.

20. Upon a consideration of the aforementioned paragraphs, I am of the view that RBX is prima facie engaged in fund mobilising activity from the public, through the offer of debentures 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, Section 117B, Section 117C) and the Debt Securities Regulations.

21. 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 thinks 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 debentures to fifty persons or more, but do not comply with the applicable provisions of the aforesaid Companies Act and the Debt Securities Regulations. Steps therefore, have to be taken in the instant matter to ensure that only legitimate fund raising activities are carried on by RBX and no investors are defrauded. RBX and its directors also failed to submit the relevant information sought by SEBI despite being granted several opportunities to do so. In light of the same, I find that there is no other alternative but to take recourse through an interim action against RBX and its past/present Directors for preventing that company from further carrying on with its fund mobilising activity under the offer of debentures. Considering all the factors in the instant case, it is felt that urgent intervention by SEBI is warranted as otherwise there could be every possibility of irreparable damage to investors.

22. In view of the foregoing, I, in exercise of the powers conferred upon me under Sections 11(1), 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. RBX shall forthwith cease to mobilize any fresh funds from investors through the issuance of debentures 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. RBX and its present/past Directors, viz. Mr. Kishore Rai (DIN:05120168), Mr. Arjun Singh (DIN:06874021), Mr. Shankar Singh (DIN:06874305), Mr. Raghuveer Singh Sisodiya (DIN:03565848, PAN:BXHPS2674H) and Mr. Hari Rathore Singh (DIN:05130181), 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. RBX 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. RBX shall provide a full inventory of all its assets and properties; v. RBX's abovementioned Directors shall provide a full inventory of all their assets and properties; vi. RBX 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 debentures, without prior permission from SEBI; vii. RBX and its abovementioned present Directors shall not divert any funds raised from public at large through the offer of debentures, which are kept in bank account(s) and/or in the custody of RBX; viii. RBX shall furnish the information sought by SEBI vide letters dated May 05, 2014, July 17, 2014, July 30, 2014, August 20, 2014, October 13, 2014 and November 18, 2014 including Balance Sheets of the company for FY 2012-13 to 2014-15 and the details of the debenture trustee appointed, if any, within 21 days from the date of receipt of this Order.

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

24. 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 RBX; information/documents obtained from Acme; information/documents obtained from the Ministry of Corporate Affairs' website i.e. 'MCA 21 Portal'; complaint received and the documents enclosed there with. In this context, RBX 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 including the following, should not be taken/imposed against them:

i. Directing them jointly and severally to refund money collected through the offer of debentures along with interest, if any, promised to investors therein; ii. Directing them to not 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.

25. RBX 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.

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

Place: Mumbai S. RAMAN Date: May 12, 2015 WHOLE TIME MEMBER

SECURITIES AND EXCHANGE BOARD OF INDIA