Interim Order in the matter of The Canning Industries Cochin Limited

ORDER Under Sections 11(1), 11(4), 11A and 11B of the Securities and Exchange Board of India Act, 1992 in respect of The Canning Industries Cochin Limited (PAN: AAACC9788Q) and its Directors/Promoters, viz. Mr. Chiriankandath Palu Jose (PAN: ACPPJ8027R), Mr. Parappilly Varunny Davis (PAN: ABSPD2248Q), Mr. Paul Thalokaren Timothy (PAN: AENPP6875K), Mr. Mazhuvancheriparambath Kuriakose Aelias (PAN: ACPPA1949P), Mr. Chiriyankandath George Joy (PAN: ABSPJ1073H), Mr. Jessy Pavoo (PAN: ALXPP7358N), Mr. Vadakken Raphael (PAN: ABRPV9569B), Mr. Paul Ovungal Raphael (PAN: AEAPP2327R) and Mr. Ovungal Pyloth Rappai (PAN: ACKPR9190A) and the Debenture Trustee, Mr. Joseph Chiramel (PAN: AQXPJ4232C).

1.1 Securities and Exchange Board of India (“SEBI”) received some complaints against The Canning Industries Cochin Ltd. (hereinafter referred to as “CAICO”/the company) in November 2015 inter alia alleging that:  CAICO has been issuing Fully Convertible Debentures (“FCDs”) to all existing shareholders numbering 1926 shareholders.  The FCDs are of the face value of `250/- per unit and is convertible into 2 shares at a price of `125/- per share.  The FCDs were issued at 100 FCDs per shareholder irrespective of their holding.  The issue is neither a Rights Issue nor a Private Placement and shall be deemed as an offer to Public in violation of SEBI Act and rules thereunder.  As the said issue of FCDs by CAICO is in violation of the provisions of Section 42 and 62(1) (c) of Companies Act, 2013, Rule 14 of Companies (Prospectus and Allotment of Securities) Rules, 2014 and Rule 13 of Companies (Share Capital and Debenture) Rules 2014 of Companies Act, 2013, the same shall be treated as a deemed public offer under Section 42 (4) of Companies Act, 2013 which requires the company to follow all the provisions of SEBI Act, 1992 and Securities Contracts (Regulation) Act, 1956.

1.2 Thereafter, SEBI obtained information regarding the company from the MCA21 Portal.

1.3 Based on the information received from the aforesaid complaints and MCA21 Portal, SEBI vide letter dated December 03, 2015 sought the following details/information from CAICO in relation to their issue of FCDs: i. A certified copy of the Board resolution approving the issuance of the convertible debt securities ii. Certified copies of General Resolution authorizing such issuance. iii. Certified Copies of the minutes of Board/Committee meeting in which the resolution has been passed for allotment, filed with ROC, if any regarding issuance; iv. Certified sample copies of the application forms, Prospectus, Pamphlets, advertisements and other promotional materials circulated for issuance of such securities; v. A certified copy of the prospectus /red herring prospectus filed with Registrar in connection with this issue. vi. Copies of all filings made before the ROC relating to this matter. vii. Details of the Board of Directors of the company, including details regarding their name, address, DIN, PAN, etc. viii. Details of the promoters: Name, address, PAN, number of shares held, etc; ix. Details of the group companies (that are controlled directly or indirectly by the Promoters) Subsidiaries and Associates, x. Details of the shareholders of the company as on date. xi. Details of issuance of equity shares, debentures, convertible and other securities (from date of incorporation till date). 1.4 In response to this, CAICO vide letter dated December 07, 2015 sought two weeks’ time to provide the documents/information sought.

1.5 Thereafter, CAICO vide letter dated December 21, 2015 provided the following information/details: i. “The members of the company at their 68th Annual General Meeting duly held on 28th September, 2015 had approved the Special Resolution pursuant to Section 62(3) and 71 of the Companies Act, 2013, proposing to issue 192900 unsecured fully convertible Debentures (FCDs) of Rs250/- each to 1929 existing Members of the company at the rate of 100 FCDs to every shareholder holding equity shares on the Record Date to be fixed by the Board of directors, with no right to renounce. ii. A combined reading of Section 26(1) and (2) makes it clear that our company has to issue a Prospectus consequent to the deeming provision, but is entitled to claim exemption under Section 26(2) regarding the contents of the Prospectus because the proposed issue is to be made to the existing Members of the company. However, to avoid any confusion and in the larger interest, the company has, vide SRN C68719053 dated 02-11-2015, filed Prospectus in Form GNL-2 containing information as per Section 26 (1) read with Rules 3 -6 of the Companies ( Prospectus and allotment of Securities ) Rules 204. Further, as an attachment to form GNL-2, the company has informed ROC that its Board of Directors, at their duly held meeting on 2-11- 2015, has unanimously agreed that in the event of under subscription of the FCDs, the unsubscribed portion will be allotted only to the existing members of the Company.

Thus, by not giving an option of renouncement to its shareholders and the aforesaid decision of the Board, the Company has assured that the offer as well as the following allotment of FCDs shall be made only to its existing members and no member of public other than our existing shareholders will have a right to participate in the FCD issue. iii. Our Company is an unlisted public company with no intention to list its shares on any stock exchange. It is true that the offer of FCDs is made to more than 200 persons, but the persons to whom it is offered are not members of public, but own existing shareholders of the company. Again, the shareholders will have no right of renunciation and the Board of Directors does not intend to allot the unsubscribed portion, if any, to any person other than its own existing shareholders and as such, there is no chance for the offer to be subscribed by any person other than its own members and in that sense, there is no public offer. iv. Thus, the company has complied with Section 42 and Rule 14 of Companies (prospectus and allotment of Securities) Rules, 2014 and there is no violation as alleged. v. Violation of Section 62(1) ( c ) of the Companies Act, 2013: Section 62(1) (c) deals with further issue of capital to any persons, if it is authorized by a Special Resolution, whether or not those persons include the persons referred to in Clause 62(1) (a) or 62(1) (b) either for cash or for consideration other than cash, if the price of such shares is determined by the valuation Report of a Registered Valuer, subject to such conditions as may be prescribed. vi.

In this connection we wish to draw your attention to Section 62(3) of the Companies Act, 2013 which states that nothing in this section shall apply to the increase of the subscribed capital of a company caused by the exercise of an option as a term attached to the debentures issued or loan raised by the company to convert such debentures or loans into shares in the company provided that the terms of issue of such debentures or loan containing such an option have been approved before the issue of such debentures or the raising of loan by a Special Resolution passed by the Company in General Meeting. Thus, Sub Section 3 of Section 62 takes away the applicability of Section 62 for the increase in share capital caused by conversion of debentures, provided the conditions stipulated therein are satisfied. As mentioned above, the company has passed Special Resolution under Section 62(3) while approving the proposed issue of FCDs. Therefore, there is no violation of Section 62(1) ( c ). vii. The term “Preferential issue” has not been defined in the Companies Act 2013. However, Regulation 2(1) (z) of SEBI (ICDR) Regulations, 2009, defines it as “an issue of Specified securities by a listed issuer to any select person or group of persons on a private placement basis and does not include an offer of specified securities made through a public issue, rights issue, bonus issue, employee stock option scheme, employee stock purchase scheme or qualified institutions placement or an issue of sweat equity shares or depository receipts issued in a country outside India or foreign securities”.

Thus, preferential issue is made to any select person or group of persons on private placement basis. viii. Vide para 2(a) of your letter, it is stated that the company is making offer of 1900 shareholders as preferential issue, which is factually incorrect. As mentioned above, our offer of FCD is made to all the 1929 existing members of the company and therefore, it is an issue to all existing members and will not be a preferential issue to any select person or group of persons.

ix. It is also true that we have taken a stand before CLB that Section 62 of the Companies Act dealing with further issue of shares through rights issue or proportionate offer to the existing shareholders or right of renunciation, etc. will have no application in the issue of convertible debentures as sub section 3 of Section 62 has taken away the applicability of Section 62 to the issue of FCDs. x. Section 24 of the Companies Act 2013 This section deals with the powers of SEBI to regulate issue and transfer of securities etc. Sub Section 1 of Section 24 states that the provisions contained in this chapter ( Chapter III –Prospectus and allotment of securities ), Chapter IV(Share capital and debentures) and in Section 127 ( Punishment for failure to distribute dividends) shall (a) in so far as they relate to (i) issue and transfer of securities and (ii) non payment of dividend, by listed Companies or those companies which intend to get their securities listed on any recognized Stock exchange in India, except as provided under this Act, be administered by making regulation in this behalf and (b) in any other case, be administered by Central Government. The explanation to the sub section provides that for the removal of doubts, it is hereby declared that all powers relating to all other matters relating to Prospectus, Return of allotment, Redemption of preference shares and any other matter specifically provided in this act shall be exercised by the Central Government, the Tribunal or the Registrar as the case may be. xi. As mentioned in point no.1 our company is an unlisted Public company with no intention to list its shares on any stock exchange. Since the provision of prospectus is attracted as the offer is made is more than 200 existing members (Though with no right of renunciation and as decided by the Board, the company has no intention to allot unsubscribed portion, if any, to any persons other than its own members), The company has filed prospectus with ROC by Complying with the provisions of the Companies act 2013 and the Rules made thereunder relating to Prospectus.”

1.5.1 Vide the said letter, CAICO also furnished the following documents: a. Certified copy of Board Resolution dated 31-07-2015 approving the issue of FCDs, b. Certified copy of Special resolution dated 28-09-2015, c. Certified copy of Minutes of the Board Meeting dated 10-12-2015 and 16-12-2015 for allotment of FCDs., d. Copies of filings made before the RoC relating to the issue, e. Certified copy of Application Forms, Prospectus, etc. f. Details of Board of Directors, g. Details of Promoters, h. Details of shareholders of the company (in CD), i. Details of equity shares issued, j. Copies of Annual Report for 31-03-2013, 31-03-2014 and 31-03-2015, k. No. of application forms circulated for inviting subscription -1922 l. Copy of Debenture Trust Deed, m. Details of Debenture Trustee and his consent letter,

1.6 Thereafter, SEBI vide letter dated February 29, 2016 sought the following clarifications/additional information from CAICO: a. Details of allotment of FCDs to the directors/relative shareholders (aggregating to `2,00,50,000/-), b. Name, address and PAN of all the current directors of the company, c. Details of changes in the Authorised Share Capital of the company, from April 2002 till date, d. Equity share capital history of the company, from April 2002 till date, e. Issuance of shares by the company for consideration other than cash, from April 2002 till date, f. Issuance of debt securities/ preference shares etc., by the company for consideration other than cash, from April 2002 till date, g. Certified Copies of all statutory filings done by the company with Registrar Of Companies in connection with issuance of equity/ debt securities.

1.6.1 In response, CAICO vide letter dated March 12, 2016 provided the following information/documents: a. Details of allotment of FCDs to the Directors/relative shareholders (aggregating to `2,00,50,000/-), b. Name, addresses and PAN of all current directors, c. Details of changes in the Authorized share capital of the company from April 2001 to till date, d. Equity share capital history of the company from April 2002 till date, e. Certified copies of all statutory filings done with Registrar of Companies in connection with the issuance of equity debt securities.

1.7 In the meanwhile, Registrar of Companies (‘RoC’), Kerala & Lakshadweep vide letter dated March 15, 2016 inter alia informed SEBI: i. “CAICO filed a GNL -2 Form in MCA Portal for registration of Prospectus for issue of 1,92,900@ `250/- FCDs aggregating to ` 4,82,25,000/- to the existing members by passing special resolution under Section 62(3) read with Section 71 read with Rule 18 of the Companies (Share Capital and debentures) Rules, 2014, ii. As per SEBI ICDR Regulations…..a draft prospectus should be filed with SEBI before filing with RoC, It appears that the draft prospectus has not been filed with SEBI by the company.

iii. In this connection we request you to clarify whether the company has obtained any approval from SEBI in compliance with SEBI ICDR Regulations….If not, whether the action of the company filing prospectus with RoC without SEBI’s approval is in Order.”

1.8 In response, SEBI vide letter dated October 19, 2016 inter alia informed RoC that CAICO had not obtained any approval from SEBI nor did they file any draft prospectus in compliance with SEBI Act and other relevant SEBI Regulations. SEBI further stated that the action of CAICO, ie. proceeding with the issue without following the procedures as per SEBI Act and applicable SEBI Regulations is not in Order.

2.1 I have carefully perused the complaint received by SEBI along with the documents contained therein, correspondence exchanged between SEBI and CAICO and its directors, information/documents obtained from the MCA21 Portal, etc. and other material available on record. On an examination of the aforementioned material/information available on record, it is prima facie observed as under:

i. CAICO (The Canning Industries Cochin Ltd.) was incorporated on March 25, 1947. (CIN: U01122KL1947PLC000257). Its Registered Office is at -234-32, Caico Road, Valarkavu, Thrissur, Kerala-680 006, ii. The details of the present and past Chairman/directors /Key Managerial Personnel of CAICO are: Name of Design- DIN/DPI PAN Residential Date of Date of Director ation N address Appointment Resignation Chiriankandath Chairman 00764405 ACPPJ8027R Chiriankandath, N.A. N.A. Palu Jose Pipeline Road, Thrissur- 680001, Kerala Parappilly Director 01204901 ABSPD2248Q 8/5, Parappilly N.A. N.A. Varunny Davis House, East Fort, Thrissur- 680005, Kerala Paul Thalokaren Director 00668710 AENPP6875K 6/427, 30/07/2013 N.A. Timothy Thalokaren (Additional House, East director) Fort, Thrissur- 680005, Kerala 24/09/2013 (Director) Mazhuvancher- Director 00896687 ACPA1949P 7/12, Valia N.A. N.A. iparambath Veedu, College Kuriakose Aelias Road, Thrissur- 680001, Kerala

Chiriyankandath Director 01205014 ABSPJ1073H S/o N.A. N.A. George Joy Chiriyankandath George, 26/252, Chiriankandath House, Mylipadam Road, Thrisssur- 680020, Kerala Jessy Pavoo Director 06670178 ALXPP7358N Anchery House, 30/07/2013 N.A. Mission (in casual Quarters, vacancy of Thrissur-680005 director) 24/09/2013 (Director) Vadakken Additional 02028276 ABRPV9569B Vadakkan 30/07/2013 N.A. Raphael Director House, Thottanpetta, East Fort P.O., 24/09/2013 Thrissur-680006 Paul Ovungal Director 07407137 AEAPP2327R Ovungal house 30/01/2016 N.A. Raphael Latin Church Road Thrissur, Kerala India 680001 Ovungal Pyloth Past 00870144 ACKPR9190A TC-18-2437 N.A. 28/01/2016 Rappai Director Ovungal House, Latin Church Road, Thrissur Kerala-680001 Poothokaren Past 01547510 AGKPJ2999P Poothokaren N.A. Expired on Devassy Jose Chairman House, East 19/04/2016 Fort, Thrissur- 680005, Kerala Jiju Immatty Past 02824405 Immatty house N.A. 01/11/2013 Director Thrissur P.O., St.Thomas College Rd. Thrissur, Kerala- 680001 Anchery Johny Past 02824401 491(1432), N.A. Expired on Pavoo Director Anchery- 8 03/07/2013 Thrissur Municipality, Thrissur Kerala India - 680006 iii. The details of the amounts raised by CAICO from the public, as observed from the documents obtained from CAICO and MCA21 portal database are as under:

Serial No. Year Date of allotment Type of Security No. of Amount allottees raised (in ` lacs) 1. 2002-2011 April 01, 2002 to Equity Not provided 24.00 March 31, 2011 2. 2009 Not provided Fully Convertible 335 N.A. Debentures (Rights Issue) 3. 2011 April 20, 2011 to Equity (On account of 335 172.6[DU1] April 29, 2011 conversion of debentures (rights issue in 2009) to equity) 4. 2013 November 23, 2013 Equity (On account of 4 212.58 conversion of loan from directors) 5. 2015 December 10, 2015 Fully Convertible 332 83.00 Debentures 6. 2015 December 16, 2015 Fully Convertible 3 200.50 Debentures iv. With regard to the issuance of FCDs by CAICO during the period 2015 (as mentioned in the serial No. 5 & 6 of the above Table), I note that:

a. CAICO offered 100 FCDs ( `250/- per FCD) each to all 1929 shareholders (total of 1,92,900 FCDs aggregating to `4,82,25,000/-) of the company irrespective of their proportionate shareholding, b. Out of the 1929 shareholders, 332 shareholders applied for the issue and were allotted a total of 33,200 FCDs (100 FCDs for each allotee) aggregating to `83,00,000/- on December 10, 2015. c. Thereafter, on December 16, 2015, CAICO allotted 80,200 FCDs (out of the remaining 1,59,700 FCDs) to three of the directors/family members of directors aggregating to `2,00,50,000/-. d. Thus CAICO issued 1,13,400 FCDs (33,200+80,200) to 335 investors/members (332+3) of the company aggregating to `2,83,50,000/- (`83,00,000/-+ `2,00,50,000/-) in December 2015. e. The issuance of the said FCDs was pursuant to the Special Resolution (dated September 28, 2015), wherein the Board resolved “….pursuant to sec 62(3), 71 and other applicable provisions of the companies act, read with rule 18 of Companies (share Capital and debentures) Rules, 2014 and in accordance with 3 (t) of the MoA of the company to offer, allot and issue 1,92,900 (one lakh ninety two thousand and nine hundred) 10% (ten percent) Unsecured Mandatorily Fully Convertible Debentures of `250/- (rupees two hundred and fifty) each aggregating `4,82,25,000/- (Rupees four crore eighty two lakhs and twenty five thousand) in one or more tranches during a period of one year from the date of passing this resolution on such terms and conditions…”. The purpose of the issue was to meet the requirement of funds for automation of packaged drinking water project.

f. The terms and conditions of the said offer were as under: “Instrument: 10% Unsecured Mandatorily Fully Convertible Debentures Proportion of the offer: 100 (one hundred) FCDs for every shareholders holding equity shares on the record date to be fixed by the board of directors and the full amount is payable along with the application. Right to renunciation: The shareholders will have no right to renounce the offer in favour of any person. Under Subscription: In the event of under subscription, the under subscribed portion may be disposed of by the Board of Directors in such manner as they think most beneficial to the company. Put / Call option: No put option is available to the FCD holders and the company is free to exercise call option and convert the FCDs into equity at any time before maturity. Interest: 10% payable annually. Maturity Date: 5 years from the date of allotment of FCDs. Conversion: Every FCD will be compulsorily converted into two equity shares of ₹30/- each at a premium of ₹95/- on maturity or earlier, if the call option is exercised by the company. Justification for conversion Price: Valuation report issued by Mr. A. R Narayanan, Cost Accountant (Membership No. 14609). Transferability: The FCDs are freely transferable. Trustee: Mr. Joseph Chirammel, Advocate, Chiramel House, Ollukara PO, Trichur-680 012. The Explanatory Statement pursuant to Section 102 of the Companies Act, 2013 was passed as a special resolution. Period of issue: The issue opened for subscription on 11-11-2015 and was to close on 25-11-2015. The Board of Directors of the company (meeting held on 23-1-2015) extended closing date to 30 November 2015.” g. The details of the debenture trustees (as mentioned in the Prospectus issued by CAICO – forwarded to SEBI by CAICO vide letter dated December 21, 2015) are under: Sl Name Address No. 1 Adv. Joseph Chiramel Chiramel House, Olarikkara, Thrissur-680012 h. The prospectus also contains copy of the signed consent letter from Adv. Joseph Chiramel for acting as the Debenture Trustee. It is however noted that the Debenture Trustee has not obtained SEBI registration to act as a Debenture Trustee under Section 12 (1) of SEBI Act 1992.

i. Further, as per the Clause 5 of the “Debenture Trust Deed” dated December 23, 2015 entered into between CAICO and Mr. Joseph Chiramel (Trustee), the said FCDs are unsecured and fully convertible into equity shares and no charge whatsoever, is created on any assets of the company.

2.2 In the context of the abovementioned details of the Offer of FCDs, the issue for determination in the instant matter is whether the mobilization of funds by CAICO through the aforesaid issue, is in accordance with the provisions of the SEBI Act, 1992 ("SEBI Act"), the Companies Act, 2013 and the SEBI (Issue of Capital & Disclosure Requirements) Regulations, 2009 (hereinafter referred to as “SEBI ICDR Regulations”).

2.3 I note that the jurisdiction of SEBI over various provisions of the Companies Act, 2013, in the case of public companies, whether listed or unlisted, when they issue and transfer securities, flows from the provisions of Section 24(1) of the Companies Act, 2013, i,e. erstwhile 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." 2.3.1 In terms of the relevant provisions of the Section 24 (1) of the Companies Act, 2013, the provisions contained in Chapter III (Sections 23 to 42), Chapter - IV (Sections 43 to 72) and Section 127 of the Companies Act, 2013 in the case of listed public companies and in the case of those public companies which intend to get their securities listed on any recognised stock exchange in India, be administered by SEBI by making regulations in this behalf. In this regard, it is pertinent to note that by virtue of the said Section 24 of the Companies Act, 2013, Section 42 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. In view of the above observations, by virtue of Section 24 (1) and (2) of the Companies Act, 2013, SEBI has jurisdiction and would govern the alleged public issue of FCDs made by a company.

2.4 In the instant matter, for ascertaining whether the Offer of FCDs by CAICO is a public issue or issue on private placement basis in accordance with Section 42 of the Companies Act, 2013 read with Rule 14(2) of the Companies (Prospectus and Allotment of Securities) Rules, 2014 (Section 67 of the erstwhile Companies Act, 1956), the number of subscribers is of utmost importance. In this regard, i. Section 42 of the Companies Act, 2013 is reproduced as under: “42. (1) Without prejudice to the provisions of section 26, a company may, subject to the provisions of this section, make private placement through issue of a private placement offer letter. (2) Subject to sub-section (1), the offer of securities or invitation to subscribe securities, shall be made to such number of persons not exceeding fifty or such higher number as may be prescribed, [excluding qualified institutional buyers and employees of the company being offered securities under a scheme of employees stock option as per provisions of clause (b) of sub-section (1) of section 62], in a financial year and on such conditions (including the form and manner of private placement) as may be prescribed.

Explanation I.—If a company, listed or unlisted, makes an offer to allot or invites subscription, or allots, or enters into an agreement to allot, securities to more than the prescribed number of persons, whether the payment for the securities has been received or not or whether the company intends to list its securities or not on any recognised stock exchange in or outside India, the same shall be deemed to be an offer to the public and shall accordingly be governed by the provisions of Part I of this Chapter. Explanation II— For the purposes of this section, the expression— (i) "qualified institutional buyer’’ means the qualified institutional buyer as defined in the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 as amended from time to time. (ii) "private placement" means any offer of securities or invitation to subscribe securities to a select group of persons by a company (other than by way of public offer) through issue of a private placement offer letter and which satisfies the conditions specified in this section. (3) No fresh offer or invitation under this section shall be made unless the allotments with respect to any offer or invitation made earlier have been completed or that offer or invitation has been withdrawn or abandoned by the company.

(4) Any offer or invitation not in compliance with the provisions of this section shall be treated as a public offer and all provisions of this Act, and the Securities Contracts (Regulation) Act, 1956 and the Securities and Exchange Board of India Act, 1992 shall be required to be complied with.”

ii. Rule 14(2) (b) of the Companies (Prospectus and Allotment of Securities) Rules, 2014 states:

“(2) A company shall not make private placement of its securities unless- (b) such offer or invitation shall me made to not more than 200 persons in the aggregate in a financial year.”

iii. I therefore note that as per the provisions of Section 42 (1) of the Companies Act, 2013 (Explanation-I ) and Rule 14 (2) (b) of the Companies (Prospectus and Allotment of Securities) Rules, 2014, if a company, listed or unlisted, makes an offer to allot or invites subscription of securities to more than the prescribed number of persons, (i.e more than 200 persons as per the Rules) whether the company intends to list its securities or not on any recognised stock exchange in or outside India, the same shall be deemed to be an offer to the public and shall accordingly be governed by the provisions of Part I of the Chapter III of Companies Act, 2013 (which deals with the provisions in respect of Public Issue by Companies).

iv. While examining the scope of Section 67 of the Companies Act, 1956 (corresponding Section 42 of the Companies Act, 2013), 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. …"

v. In the instant matter, the material obtained from the MCA21 Portal and the documents provided by CAICO indicate that CAICO has issued FCDs to 335 investors during the period 2015-2016 (i.e in December 2015) (details mentioned in the table at Paragraph No.2.1 (iii) above). As per the Explanation 1 to Section 42(1) of the Companies Act, 2013 read with Rule

14 (2) (b) of the Companies (Prospectus and Allotment of Securities) Rules, 2014, a company, listed or unlisted, makes an offer to allot or invites subscription, or allots, securities to more than 200 persons in aggregate in a financial year, the same shall be deemed to be an offer to the public.

vi. As per Rule 14 (5) of the Companies (Prospectus and Allotment of Securities) Rules, 2014, a non-banking financial companies registered with Reserve Bank of India and housing finance companies registered with the National Housing Bank are exempted from the application of Rule 14 (2) (b) of the Companies (Prospectus and Allotment of Securities) Rules, 2014 (which mandates that a company shall not make a private placement of its securities unless offer or invite subscription of securities shall be made to not more than 200 persons in the aggregate in a financial year). In the instant case, it is observed that CAICO is not stated to be a Non–banking financial company or public financial institution within the meaning of Section 2 (72) of the Companies Act, 2013. In view of the aforesaid, I, therefore, find that CAICO is not covered under the Rule 14 (5) of the Companies (Prospectus and Allotment of Securities) Rules, 2014.

vii. In view of the above, the Offer of FCDs by CAICO during the FY 2015-2016, will prima facie qualify as a public issue under the Section 42 (4) of the Companies Act, 2013 read with Rule 14(2) (b) of the Companies (Prospectus and Allotment of Securities) Rules, 2014. In this regard, it is pertinent to note that by virtue of Section 24 of the Companies Act, 2013, Section 42 of that Act, so far as it relates to issue and transfer of securities, shall also be administered by SEBI.

2.5 Having observed that the FCDs issued by CAICO are prima facie in the nature of public issue, the Company was required to comply with provisions of the Companies Act, 2013, Companies (Prospectus and Allotment of Securities) Rules, 2014 and other relevant statutory provisions as applicable. I note that- a. By issuing FCDs to more than 200 persons, the Company had to compulsorily list such securities in compliance with the Section 40 of the Companies Act, 2013 (Section 73 of erstwhile Companies Act, 1956), in order to ensure that the subscribers to the shares have a facility to approach a stock exchange for having their holdings converted into cash whenever they desire. The same also provides liquidity and exit opportunity to the investors. In this regard- i. Section 40 of the Companies Act, 2013 (Section 73 of the erstwhile Companies Act, 1956), of which sub-sections (1), (2), (3), (4) and (5) are relevant for the instant case is reproduced as under: 1) Every company making public offer shall, before making such offer, make an application to one or more recognised stock exchange or exchanges and obtain permission for the securities to be dealt with in such stock exchange or exchanges.

(2) Where a prospectus states that an application under sub-section (1) has been made, such prospectus shall also state the name or names of the stock exchange in which the securities shall be dealt with. (3) All monies received on application from the public for subscription to the securities shall be kept in a separate bank account in a scheduled bank and shall not be utilised for any purpose other than— (a) for adjustment against allotment of securities where the securities have been permitted to be dealt with in the stock exchange or stock exchanges specified in the prospectus; or (b) for the repayment of monies within the time specified by the Securities and Exchange Board, received from applicants in pursuance of the prospectus, where the company is for any other reason unable to allot securities. (4) Any condition purporting to require or bind any applicant for securities to waive compliance with any of the requirements of this section shall be void. (5) If a default is made in complying with the provisions of this section, the company shall be punishable with a fine which shall not be less than five lakh rupees but which may extend to fifty lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than fifty thousand rupees but which may extend to three lakh rupees, or with both.

ii. In the Sahara Case, the Hon'ble Supreme Court of India also examined Section 73 of the Companies Act, 1956 (now Section 40 of the Companies Act, 2013), wherein it observed that – "Section 73(1) of the Act casts an obligation on every company intending to offer shares or debentures to the public to apply on a stock exchange for listing of its securities. Such companies have no option or choice but to list their securities on a recognized stock exchange, once they invite subscription from over forty nine investors from the public. If an unlisted company expresses its intention, by conduct or otherwise, to offer its securities to the public by the issue of a prospectus, the legal obligation to make an application on a recognized stock exchange for listing starts. Sub-section (1A) of Section 73 gives indication of what are the particulars to be stated in such a prospectus. The consequences of not applying for the permission under sub-section (1) of Section 73 or not granting of permission is clearly stipulated in sub-section (3) of Section 73. Obligation to refund the amount collected from the public with interest is also mandatory as per Section 73(2) of the Act. Listing is, therefore, a legal responsibility of the company which offers securities to the public, provided offers are made to more than 50 persons.

… Section 73(2) says that every company and every director of the company who is an officer in default, shall be jointly and severally liable to repay that money with interest at such rate, not less than four per cent and not more than fifteen per cent, as may be prescribed. The scope of the above mentioned provisions came up for consideration before this Court in Raymond Synthetics Ltd. & Ors. V. Union of India (supra), wherein the Court held that in a case where the company has not applied for listing on a stock exchange, the consequences will flow from the company’s disobedience of the law, the liability to pay interest arises as from the date of receipt of the amounts, for the company ought not to have received any such amount in response to the prospectus. I am, therefore, of the view that since Saharas had violated the listing provisions and collected huge amounts from the public in disobedience of law, SEBI is justified in directing refund of the amount with interest."

iii. Having regard to the abovementioned observations of the Hon'ble Supreme Court of India, since the Offer of FCDs is prima facie a public issue in accordance with the provisions of the Companies Act, 2013, the same will attract the requirement of compulsory listing before a recognized stock exchange in terms of Section 40(1) of the Companies Act, 2013 and also compliance with the provisions of Sections 40(2) and 40(3) of that Act.

iv. As mentioned above, the Offer of FCDs was a public issue of securities. Having made a public issue, CAICO was required to make an application to one or more stock exchanges under Section 40 of the Companies Act, 2013. Further, CAICO was also required to keep the monies received on application from the public for subscription to the securities in a separate bank account. I find that there is no evidence on record to indicate that CAICO has complied with the provisions of Section 40 of Companies Act, 2013. In view of the same, I find that CAICO has prima facie not complied with the provisions of Section 40 of Companies Act, 2013.

2.6 In addition to the compliance with the provisions of the Companies Act, 2013, the Company was mandated to comply with the applicable provisions of under SEBI Rules/Regulations/Guidelines. In this regard I note that: i. The Hon'ble Supreme Court of India in Sahara Case observed: "90. ……… 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." ii. In the instant matter, as the issue of FCDs by CAICO (to 335 investors) was in 2015, the provisions of Companies Act, 2013 and the relevant Rules made thereunder are applicable to the said issue. As already explained in the earlier paragraphs, presently, the prescribed limit for an issue to be deemed as a public issue under Section 42 Companies Act, 2013 read with Rule 14 (2) (b) of the Companies (Prospectus and Allotment of Securities) Rules, 2014 is now 200 or more investors. It is therefore clear that the public issue of FCDs by CAICO attracts the provisions of SEBI Act and Regulations framed thereunder.

iii. SEBI had framed the SEBI (Disclosure and Investor Protection) Guidelines, 2000 ("SEBI DIP Guidelines") in exercise of the powers conferred upon itself under the SEBI Act. The Hon'ble Supreme Court in Sahara Case has observed that:

"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".

iv. The SEBI DIP Guidelines were applicable to all public issues by listed and unlisted companies. The SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (SEBI ICDR Regulations) (which came into effect from August 28, 2009) has replaced the SEBI DIP Guidelines and all public issues are now required to comply with the SEBI ICDR Regulations. The SEBI ICDR Regulations operate as reasonable safeguards for the investors who subscribed or intend to subscribe in the public issues of securities. In this regard, I prima facie observe that CAICO failed to comply with the relevant Regulations of SEBI ICDR Regulations in respect of the public issue. The Directors, viz. Mr. Chiriankandath Palu Jose, Mr. Parappilly Varunny Davis, Mr. Paul Thalokaren Timothy, Mr. Mazhuvancheriparambath Kuriakose Aelias, Mr. Chiriyankandath George Joy, Mr. Jessy Pavoo, Mr. Vadakken Raphael, Mr. Paul Ovungal Raphael and Mr. Ovungal Pyloth Rappai, who were in charge and responsible for the day to day affairs and business of CAICO during the period of issue of FCDs by the company are also liable for the non-compliance of the SEBI ICDR Regulations. The relevant provisions of SEBI ICDR Regulations are: - Regulation 4(2), (d) and (e) (Common conditions for public issues and Rights Issues),

- Regulation 5(1), (2), (5) and (7) (Appointment of merchant banker and other intermediaries), - Regulation 6(1) (Filing of offer document), - Regulation 7 (In-principle approval from recognized stock exchanges), - Regulation 26(1), (2) and (6) (Conditions for Initial Public Offer), - Regulation 32 (1) (Minimum promoters contribution), - Regulation 36 (Lock-in of specified securities held by promoters), - Regulation 37 (Lock-in of specified securities held by persons other than promoters), - Regulation 46 (1) (Period of subscription), - Regulation 47 (1 (Pre-issue advertisement for public issue), - Regulation 49 (1) (Minimum application value), - Regulation 57 (1) (Manner of disclosures in the offer documents), - Regulation 58(1) and (2) (Abridged prospectus and abridged letter of offer), and - Regulation 63 (Appointment of compliance offer).

2.7 SEBI vide letter dated December 03, 2015 sought comments from CAICO, with regard to the non-compliance of various provisions including the provisions relating to public issue norms under the Companies Act, 2013, the Companies (Prospectus and Allotment of Securities) Rules, 2014 and also SEBI ICDR Regulations. 2.7.1 CAICO in its reply vide letter dated December 21, 2015 stated that a combined reading of Section 26 (1) and (2) makes it clear that the company has to issue a prospectus consequent to the deeming provision, but is entitled to claim exemption under Section 26(2) regarding the contents of the prospectus because the issue is made to the existing shareholders of the company only. CAICO further stated that they have filed the Prospectus dated November 02, 2015 with the RoC as per Section 26 (1) read with Rules 3-6 of the Companies (Allotment and of Securities) Rules, 2014. In this regard, it is observed that Section 26(2) of the Companies Act, 2013 only excludes the applicability of Regulation 26(1), which contains a list of particulars to be included in the Prospectus in accordance with the Companies Act, 2013 and Rules made thereunder. It is pertinent to note that no such exemption is given from the applicability of the provisions of SEBI Act and SEBI ICDR Regulations. Thus, the Prospectus issued by the company should comply with the requirements specified in the SEBI ICDR Regulations.

2.7.2 CAICO in the aforesaid letter also contended that SEBI Act and SEBI ICDR Regulations are not applicable to them as the company is an unlisted company with no intention to list its shares on any Stock Exchange. They also stated that only listed companies and companies intended to list will come under the purview of SEBI under Section 24 of the Companies Act, 2013, hence Section 24 of the Companies Act, 2013 is not applicable to CAICO. CAICO in their reply further stated that even though FCDs were issued to more than 200 persons, those were existing shareholders of the Company (with no right to renounce) and not members of the general public. According to CAICO, they have complied with Section 42 of the Companies Act, 2013 and Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014. As already stated earlier (in paragraph No. 2.4 above), provisions of Section 42 of the Companies Act, 2013 read with Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 clearly states that if a company, whether listed or unlisted, makes an offer to allot or invites subscription, or allots securities to more than the prescribed number of persons (i.e. 200 or more persons), whether the payment for the securities has been received or not or whether the company intends to list its securities or not on any recognised stock exchange, the same shall be deemed to be an offer to the public and shall accordingly be governed by the provisions relating to public offer in the Companies Act, 2013. As per Section 24(1) of the Companies Act, 2013, the provisions of Chapter III in so far as it relates to issue and transfer of securities and non-payment of dividend are administered by SEBI. It is therefore, clear that SEBI Act and SEBI ICDR Regulations are applicable to the instant issue of FCDs by CAICO.

2.7.3 CAICO in its reply further stated that the said issue of FCDS was made pursuant to the passing of special resolution under Section 62(3), Section 71 and other applicable provisions of the Companies Act, 2013. Section 62(3) of the Companies Act, 2013 states that nothing contained in Section 62 of the Companies Act, 2013 shall apply to the increase of the subscribed capital of a company caused by the exercise of an option as a term attached to the debentures issued or loan raised by the company to convert such debentures or loans into shares in the company. They have contended that the said exemption takes away the applicability of Section 62(1) (c) of the Companies Act, 2013 (which lays down the procedures to be complied by a company in case of fresh issue of capital to any persons). In this regard, it is relevant to note that the exemption under Section 62 (3) is applicable only if the increase of the subscribed capital is caused by the exercise of the option attached to the debentures and not at the time of the offer of debentures. Further, Section 62 of the Companies Act, provides for Rights Issue which inter-alia states that shares should be offered to existing shareholders in proportion to the paid-up share capital by sending a letter of offer and unless the articles of the company otherwise provide, the offer shall be deemed to include a right exercisable by the person concerned to renounce the shares offered to him or any of them in favour of any other person.

In the instant case, the issue made by the company cannot be termed as a Rights Issue, as the offer of 100 FCDs each was made to all shareholders of the company irrespective of their proportion of shareholding and the shareholders do not have the right of renunciation of the shares offered. It is also pertinent to note that the denial of such right is also not provided in the articles of the Company. Further, CAICO has filed a Prospectus with RoC and not the Letter of Offer. In any case, the company vide letter dated December 21, 2015 has accepted that the said issue is not a Rights issue. The said issue cannot also be considered as Preferential Issue as the offer was made to more than 200 persons in a FY triggering public issue requirements under Companies Act 2013, irrespective of the fact that the company has passed a resolution under Section 62 (3) of the Companies Act 2013. It is relevant to note the following observations made by the Hon’ble Supreme Court in the matter of Sahara India Real Estate Corporations Limited & Ors. Vs SEBI & Anr. [(2013) 1 SCC 1] in respect of the corresponding provision of erstwhile Companies Act, 1956: 98. The above discussion clearly indicates that from the years 1988 to 2000, private placement of preferential allotment could be made to fifty or more persons if the requirements of Clauses (a) and (b) of Section 67(3) are satisfied.

However, after the amendment to the Companies Act, 1956 on 13.12.2000, every private placement made to fifty or more persons becomes an offer intended for the public and attracts the listing requirements under Section 73(1).

2.8 From the Prospectus issued by CAICO, it is observed that CAICO has appointed Adv. Joseph Chiramel as the Trustee for the Offer of FCDs by the company.

2.9 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".

2.9.1 In addition, Regulation 7 of SEBI (Debenture Trustees) Regulations, 1993 ("Debenture Trustees Regulations"), provides: "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."

2.9.2 Based on the material available on record, I find that Trustee of the Debenture Holders, Adv. Joseph Chiramel has acted as a Debenture Trustee without obtaining SEBI registration, which amounts to violation of the abovementioned provisions of the SEBI Act read with the provisions of Debenture Trustee Regulations.

3 I note that CAICO allotted FCDs to 335 investors, during the FY 2015-2016, prima facie violating the various provisions of Companies Act, 2013 relating to public issue norms and also various provisions of SEBI ICDR Regulations (as explained in the forgoing paragraphs). The present Directors of CAICO are Mr. Chiriaankandath Palu Jose, Mr. Parappilly Varunny Davis, Mr. Paul Thalokaren Timothy, Mr. Mazhuvancheriparambath Kuriakose Aelias, Mr. Chiriyankandath George Joy, Mr. Jessy Pavoo, Mr. Vadakken Raphael and Mr. Paul Ovungal Raphael and past directors are Mr. Ovungal Pyloth Rappai and Mr. Jiju Immatty. I note that Mr. Jiju Immatty, one of the past directors of CAICO resigned on November 01, 2013, i.e. prior to company coming up with the offer of FCDs. As per the data obtained from MCA 21 Portal, one of the directors, viz. Mr. Anchery Johny Pavoo expired on July 03, 2013 and the then Chairman of CAICO Mr. Poothekaren Devassy Jose expired on April 19, 2016.

4.1 In respect of the instant issue of FCDs by CAICO to 335 investors (on December 10, 2015 and December 16, 2015), I note that out of the 1,92,900 FCDs offered to the 1929 shareholders, only 332 investors subscribed for the FCDs. Accordingly on December 10, 2015, the said 332 shareholders were allotted 33,200 FCDs (100 FCDS for each allottee). I further note that the remaining unsubscribed portion of the FCDs, i.e. 1,59,700 FCDs were allotted to three persons, out of whom two were directors of CAICO, viz. Mr. Chiriankandath Palu Jose (present MD of CAICO) and Mr. Vadakken Raphael. The third allottee was a relative of one of the directors of CAICO. It is further seen that, prior to the current issue of FCDs by CAICO, Mr. Chiriankandath Palu Jose (present MD of CAICO) was allotted 1,63,250 shares on November 23, 2013 by conversion of loan to equity. Prior to that he was holding only 1611 shares. This conversion of loan to equity wherein a loan amount of ` 2,04,06,264/- was converted to 1,63,250 shares propelled his shareholding to a sizeable 43.64%, that brought the company (that have large land resources) under his control. Similarly, other directors, viz. Mr. Poothekaren Devassy Jose (then Chairman, who expired on April 19, 2016), Mr. Mazhuvancheriparambath Kuriakose Aelias and Mr. Anchery Johny

Pavoo also increased their stake by conversion of loan into equity. The conversion of the current FCDs, would also considerably increase their shareholding at the expense of other shareholders. It is also pertinent to note that in respect of the said issuance of equity shares to the directors by conversion of loan in 2013, certain shareholders of CAICO have filed a criminal complaint before the Hon’ble Additional Chief Judicial Magistrate Court (Economic Offences), Ernakulam, Kerala against the CAICO, its Directors, Auditors and Company Secretary inter alia alleging that the Chairman and the directors of the Company have illegally and fraudulently allotted shares of the company to themselves by abusing their position as directors with the intent to deceive the shareholders of the Company. The shares were allegedly allotted (in 2013) to the Chairman and the directors of the Company by fraudulently showing conversion of loan into equity shares.

4.2 It is pertinent to mention here that in respect of the current issue of FCDs, SEBI, on receipt of the information regarding the possible issue of FCDs by CAICO, sought information from CAICO vide letter dated December 03, 2015. CAICO furnished some of the information/details on December 21, 2015 i.e. after completing the issuance of FCDs to 332 investors (on December 10, 2015) and to 3 investors (on December 16, 2015).

4.3 As per the provisions of Section 24 of the Companies Act, 2013, 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 24(1) of the Companies Act, 2013. As explained in the forgoing paragraphs, the current issue of FCDs by CAICO, is prima facie in violation of the public issue norms stipulated in the Companies Act, 2013 and SEBI ICDR Regulations. 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. In the instant matter, measures have to be taken to ensure that only legitimate fund raising activities are carried on by CAICO and no investors are defrauded. In view of this, I find that there is no other alternative but to take recourse through an interim action against CAICO and its Directors, for preventing the company from further carrying on with its fund mobilizing activity under the Offer of FCDs.

5 In view of the foregoing, I, in exercise of the powers conferred upon me under Sections 11,

11(4), 11A and 11B of the SEBI Act, hereby issue the following directions:- i. CAICO shall forthwith cease to mobilize fresh funds from investors through the Offer of FCDs 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. CAICO (PAN: AAACC9788Q), its present directors viz. Mr. Chiriankandath Palu Jose (PAN: ACPPJ8027R), Mr. Parappilly Varunny Davis (PAN: ABSPD2248Q), Mr. Paul Thalokaren Timothy (PAN: AENPP6875K), Mr. Mazhuvancheriparambath Kuriakose Aelias (PAN: ACPPA1949P), Mr. Chiriyankandath George Joy (PAN: ABSPJ1073H), Mr. Jessy Pavoo (PAN: ALXPP7358N), Mr. Vadakken Raphael (PAN: ABRPV9569B) and Mr. Paul Ovungal Raphael (PAN: AEAPP2327R) and the past Director viz., Mr. Ovungal Pyloth Rappai (PAN: ACKPR9190A) are prohibited from issuing prospectus or any offer document or issue advertisement for soliciting money from the public/investors for the issue of securities, in any manner whatsoever, either directly or indirectly, till further orders;

iii. CAICO and its abovementioned Directors shall provide a full inventory of all their assets and properties;

iv. CAICO and its present Directors, viz. Mr. Chiriankandath Palu Jose (PAN: ACPPJ8027R), Mr. Parappilly Varunny Davis (PAN: ABSPD2248Q), Mr. Paul Thalokaren Timothy (PAN: AENPP6875K), Mr. Mazhuvancheriparambath Kuriakose Aelias (PAN: ACPPA1949P), Mr. Chiriyankandath George Joy (PAN: ABSPJ1073H), Mr. Jessy Pavoo (PAN: ALXPP7358N), Mr. Vadakken Raphael (PAN: ABRPV9569B) and Mr. Paul Ovungal Raphael (PAN: AEAPP2327R) shall not dispose of any of the properties or alienate or encumber any of the assets owned/acquired by that company, without prior permission from SEBI;

v. CAICO and its abovementioned present Directors shall not divert any funds raised from public at large through the Offer of FCDs, which are kept in bank account(s) and/or in the custody of CAICO, vi. CAICO and its abovementioned Directors shall co-operate with SEBI and shall furnish all information/documents sought by SEBI;

vii. The Debenture Trustee, viz. Mr. Joseph Chiramel (PAN: AQXPJ4232C) is prohibited from continuing with its assignment as debenture trustee in respect of the Offer of FCDs of CAICO 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.

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

7 The prima facie observations contained in this interim-order-cum-show cause notice are made on the basis of the material available on record i.e. correspondence exchanged between SEBI and CAICO and information obtained from the MCA 21 Portal. CAICO, its present directors including Mr. Chiriankandath Palu Jose, Mr. Parappilly Varunny Davis, Mr. Paul Thalokaren Timothy, Mr. Mazhuvancheriparambath Kuriakose Aelias, Mr. Chiriyankandath George Joy, Mr. Jessy Pavoo, Mr. Vadakken Raphael and Mr. Paul Ovungal Raphael, past director, viz. Mr. Ovungal Pyloth Rappai and the debenture trustee, viz., Mr. Joseph Chiramel are advised to show cause as to why suitable directions/ prohibitions, under the Sections 11(1), 11(4), 11A and 11B of the SEBI Act read with the SEBI ICDR Regulations, including the following, should not be taken/imposed against them: a. Directing CAICO and its past and present Directors to jointly and severally refund money collected from investors through the issue of FCDs that are impugned in this Order, along with interest of 15% per annum; b. Directing CAICO, its past and present Directors 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; c. Restraining CAICO, its past and present Directors and debenture trustee, viz. Mr. Joseph Chiramel from accessing the securities market and prohibiting them from buying, selling or otherwise dealing in securities for an appropriate period;

8 The Canning Industries Cochin Ltd., its aforementioned present and past Directors and the debenture trustee, viz. Mr. Joseph Chiramel may file their replies/ submissions within a period of 21 days from the date of receipt of this interim order –cum-show cause notice and may also indicate whether they desire to avail an opportunity of personal hearing in the matter.

9 This Order is without prejudice to the right of SEBI to take any other action that may be initiated against The Canning Industries Cochin Ltd., its aforementioned present and past Directors and the debenture trustee, viz. Mr. Joseph Chiramel in accordance with law.

10 Copy of this Order shall be forwarded to the recognized stock exchanges and depositories for information and necessary action. A copy of this Order may also be forwarded to MCA/concerned RoC for their information and necessary action with respect to the directions imposed on the company and its Directors.

Place: Mumbai S. RAMAN Date: August 09, 2017 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA