Order in respect of Micro Finance Limited[SAT Appeal No.61/2017]

WTM/RKA/ERO/BLO/161 /2016 SECURITIES AND EXCHANGE BOARD OF INDIA ORDER Under sections 11(1), 11(4), 11A and 11B of the Securities and Exchange Board of India Act, 1992 in respect of: 1) Micro Finance Limited, 2) Mr. Durga Prasad Misra, 3) Mr. Ashok Kumar Patnaik, 4) Mr. Baikuntha Nath Patnaik, 5) Ms. Padmabati Patnaik, 6) Ms. Santilata Patnaik, 7) Ms. Sashi Patnaik, 8) Mr. Haricharan Jena, 9) Mr. Dharmananda Swain, 10) Dr. Jugal Kishore Satapathy and 11) Mr. Bijoy Kumar Routray. In the matter of issuance of Cumulative Convertible Preference Shares by Micro Finance Limited.

1. Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) conducted a preliminary examination into the issuance of Cumulative Convertible Preference shares (hereinafter referred to as ‘CCPS’) by Micro Finance Limited (hereinafter referred to as ‘MFL’ or ‘the company’) with a view to ascertain the possible violations of the public issue norms stipulated under the Companies Act, 1956, SEBI (Disclosure and Investor Protection) Guidelines, 2000 (as applicable at the relevant point of time) (hereinafter referred to as ‘DIP Guidelines’) and SEBI (Issue of Capital & Disclosure Requirements) Regulations, 2009 (hereinafter referred to as ‘ICDR Regulations’). Pursuant to the examination, SEBI passed an interim order dated January 14, 2015 (hereinafter referred to as “interim order”) against MFL and its promoters and directors namely Mr. Durga Prasad Misra, Mr. Ashok Kumar Patnaik, Mr. Baikuntha Nath Patnaik, Ms. Padmabati Patnaik, Ms. Santilata Patnaik, Ms. Sashi Patnaik, Mr. Haricharan Jena, Mr. Dharmananda Swain, Dr. Jugal Kishore Satapathy and Mr. Bijoy Kumar Routray (hereinafter collectively referred to as “the noticees” and individually by their respective names) in view of the following: “6….

Order in respect of Micro Finance Limited and others.

c. From the extract of the minutes of meetings of the Board of Directors of MFL held between September 30, 2005 - March 25, 2013, it is prima facie noted that the Company has allotted CCPS (Cumulative Convertible Preference shares) of `100 each on several occasions, the details of which are as follows: … … it is seen that MFL had issued CCPS in various tranches and had mobilized funds to the tune of `88,91,98,400 from 1,21,222 allottees till March 25, 2013. I note that the number of allottees is substantial. It is also noted that the number of allottees in each of the offer and allotment is more than 50.” 2. The following directions were issued against the noticees vide the interim order: “a. The Company, namely, Micro Finance Limited [CIN No.: U65923OR1983PLC001232] and its promoters and directors including Mr. Durga Prasad Misra [DIN: 00627749 & PAN: AATPM7049N], Mr. Ashok Kumar Patnaik [DIN: 00622238 & PAN: ABMPP5207H], Mr. Baikuntha Nath Patnaik [DIN: 01666591 & PAN: AAQPP3037J], Ms. Padmabati Patnaik, Ms. Santilata Patnaik, Ms. Sashi Patnaik, Mr. Haricharan Jena, Mr. Dharmananda Swain [PAN: AXRPS2952F], Dr. Jugal Kishor Satapathy [PAN: AOEPS8695B] and Mr. Bijoy Kumar Routray [DIN: 02382909 & PAN: AIBPR3316B] are restrained from mobilizing funds through the issue of cumulative convertible preference shares or through the issuance of equity shares or through any other form of securities, to the public and/ or invite subscription, in any manner whatsoever, either directly or indirectly till further directions. b. Micro Finance Limited and its promoters and directors including Mr. Durga Prasad Misra, Mr. Ashok Kumar Patnaik, Mr. Baikuntha Nath Patnaik, Ms. Padmabati Patnaik, Ms. Santilata Patnaik, Ms. Sashi Patnaik, Mr. Haricharan Jena, Mr. Dharmananda Swain, Dr. Jugal Kishor Satapathy and Mr. Bijoy Kumar Routray 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. c. Micro Finance Limited and its promoters and directors including Mr. Durga Prasad Misra, Mr. Ashok Kumar Patnaik, Mr. Baikuntha Nath Patnaik, Ms. Padmabati Patnaik, Ms. Santilata Patnaik, Ms. Sashi Patnaik, Mr. Haricharan Jena, Mr. Dharmananda Swain, Dr. Jugal Kishor Satapathy and Mr. Bijoy Kumar Routray shall not dispose of any of the properties or alienate the assets of the Company or dispose off any of their properties or alienate their assets. d. Micro Finance Limited and its promoters and directors including Mr. Durga Prasad Misra, Mr. Ashok Kumar Patnaik, Mr. Baikuntha Nath Patnaik, Ms. Padmabati Patnaik, Ms. Santilata Patnaik, Ms. Sashi Patnaik, Mr. Haricharan Jena, Mr. Dharmananda Swain, Dr. Jugal Kishor Satapathy and Mr. Bijoy Kumar Routray shall not divert any funds raised from public at large through the issuance of the impugned cumulative convertible preference shares, kept in its bank accounts and/or in the custody of the Company without prior permission of SEBI until further orders. e. Micro Finance Limited and its promoters and directors including Mr. Durga Prasad Misra, Mr. Ashok Kumar Patnaik, Mr. Baikuntha Nath Patnaik, Ms. Padmabati Patnaik, Ms. Santilata Patnaik, Ms. Sashi Patnaik, Mr. Haricharan Jena, Mr. Dharmananda Swain, Dr. Jugal Kishor Satapathy and Mr. Bijoy Kumar Routray are restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities in any manner whatsoever, either directly or indirectly, till further directions. f. Micro Finance Limited and its promoter and directors including the above named persons shall co-operate with SEBI and shall furnish all the documents. g. Micro Finance Limited, its promoters and directors are also directed to provide a full inventory of all their assets and properties and details of all their bank accounts, demat accounts and holdings of shares/ securities, if held in physical form.” 3. Vide the interim order, the noticees were also called upon to show cause as to why suitable directions/ prohibitions, under sections 11(1), 11(4), 11A and 11B of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as “SEBI Act”) including the following, should not be taken/ imposed against them : a. directing them jointly and severally to refund the money collected through the issue of convertible preference shares that are impugned in this Order, along with interest that is promised to the investors; b. directing them to 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. directions restraining them from accessing the securities market and prohibiting them from buying, selling or otherwise dealing in securities for an appropriate period; d. directing them and other companies in which their directors hold substantial or controlling interest, to not access the capital market for an appropriate period.

4. The interim order advised the noticees to file their replies within 21 days from the date of its receipt and also to seek an opportunity of personal hearing. The interim order was forwarded to the Noticees vide SEBI letters dated January 14, 2015. 5. Mr. Haricharan Jena vide his letter (received by SEBI on January 27, 2016) submitted that he is an uneducated farmer and has no relation with the company. It has been submitted that he was approached by Mr. Ashok Kumar Patnaik, who took his signatures on certain papers/ documents for becoming member of the company and was made not aware of the contents of such papers/ documents.

6. The company vide its letter dated February 03, 2015, while submitting the following requested for an extension of fifteen days’ time for replying to the interim order: a. The head office of the company is locked up by the EOW of the Crime Investigation Department since March 29, 2014. The records/ documents have been seized by them as well as by CBI for investigation. b. The managing director of the company Mr. Ashok Kumar Patnaik and the ex-managing director Mr. Durga Prasad Mishra are in judicial custody. c. Another director Mr. Baikuntha Nath Patnaik is suffering from ophthalmic disorder and is under medical treatment and unable to make any reply to the interim order. 7. Another noticee namely Dr. Jugal Kishore Satapathy vide his letter dated February 03, 2015, submitted that he had joined the company as a honorary director on October 07, 2005 and was relieved of the assignment by the Managing Director of the company on May 25, 2013 and by the company on October 31, 2013. It has been submitted that he was not the director of the company when the company had started issuing CCPS.

It was also submitted that he was never directly involved in the process of running the business of the company. 8. Mr. Baikuntha Nath Patnaik vide his letters dated February 03, 2015, February 18, 2015 and March 10, 2015 while explaining his health condition (i.e. ophthalmic problem) requested for extension of time for submitting the reply to the interim order. 9. Thereafter, SEBI proceeded further and granted an opportunity of personal hearing to the noticees on August 19, 2015. The scheduled date was communicated to the noticees vide SEBI letter dated July 22, 2015. The same was also communicated vide the public notice dated August 08, 2015 in the newspapers namely ‘Times of India’ and ‘The Samaja’. Vide the public notice the company and its directors were advised that in case they fail to appear before SEBI on the aforesaid date, then the matter would be proceeded ex-parte on the basis of the material available on record. 10. In the meantime, the noticee Ms. Padmabati Pattnaik vide her letter dated August 14, 2015 requested for exemption from the personal hearing. Vide the said letter she also made following submissions: a. She is a 75 year old widow woman and depended upon the family pension of her late husband for livelihood.

She has not taken any undue advantage or misappropriated the public money. b. She was holding 500 equity shares of `100 each in the company till September 15, 2005. The said shares were transferred to Mr. Durga Prasad Mishra on September 15, 2005.

The transfer details filed with the annual return shows that she had ceased to be even a member of the company during the period of irregularity. c. She had subscribed only 10 equity shares to the Memorandum of Association on the request of her late husband who was known to the promoters of the company namely Mr. Durga Prasad Mishra, Mr. Ashok Kumar Patnaik and Mr. Baikuntha Nath Patnaik to complete the list of seven subscribers as required to incorporate a public limited company. d. She was never a promoter/ director/ substantial shareholder of the company till the date she had ceased to be a member of the company on September 15, 2005. e. She was not even a relative of the promoters and directors within the meaning of schedule 1A of the Companies Act, 1956.

11. On the date fixed for the personal hearing i.e. on August 19, 2015 one Mr. Tapa Kumar Acharya, Advocate appeared on behalf of the company, Mr. Durga Prasad Misra and Mr. Ashok Kumar Patnaik. The advocate while requesting for a copy of the interim order sought four weeks’ time to make submissions in the matter. The request of the advocate was acceded to. However, no submissions have been received by SEBI, till date. Other noticees failed to appear for the personal hearing.

12. Thereafter, one more opportunity of personal hearing was granted to the noticees on October 29, 2015. The noticee namely Mr. Haricharan Jena vide his letter (received by SEBI on October 27, 2015) submitted that he has already submitted his ignorance regarding the board of MFL and expressed his inability of writing/ speaking any other language except Odia. It was also submitted that he is a chronic patient suffering from high BP and neuro problems and for the said reasons, it will not be possible for him to travel to distant places as per the advice of doctors.

13. The hearing fixed for October 29, 2015 was rescheduled to December 15, 2015 and then to February 04, 2016. On the date fixed no one had turned up for the personal hearing. In the interest of natural justice, one last opportunity of personal hearing was granted to Mr. Haricharan Jena on August 03, 2016. On this date as well he failed to appear for the personal hearing. Considering sufficient opportunities of personal hearing are already granted in the matter, the hearing proceedings were concluded and the matter was proceeded to be considered on merits on the basis of material available on record. 14. I have considered the interim order and the material available on record. The noticees in the respective submissions have not disputed the fact of allotment of CCPS. The particulars of allotment of CCPS as detailed in the interim order are as under:

Table A S.No. Date of Allotment No. of CCPS No. of Value of Amount of of CCPS Allotted Allotees Allotment (`) Subscription (`) 1 30-09-2005 42,386 469 42,38,600 42,38,600 2 21-12-2005 1,80,150 1,226 1,80,15,000 1,80,15,000 3 30-06-2006 41,000 789 41,00,000 41,00,000 4 16-04-2007 20,817 546 20,81,700 20,81,700 5 27-04-2007 34,699 954 34,69,900 34,69,900 6 30-04-2007 45,542 941 45,54,200 45,54,200 7 17-07-2007 46,861 3,089 46,86,100 46,86,100 8 24-07-2007 91,210 6,703 91,21,000 91,21,000 9 22-09-2007 3,35,398 8,443 3,35,39,800 3,35,39,800 10 26-03-2008 4,27,429 11,171 4,27,42,900 4,27,42,900 11 24-06-2008 7,65,664 19,279 7,65,66,400 7,65,66,400 12 05-09-2008 5,49,637 13,762 5,49,63,700 5,49,63,700 13 18-09-2008 1,94,272 4,605 1,94,27,200 1,94,27,200 14 20-10-2008 1,94,696 4,733 1,94,69,600 1,94,69,600 15 30-01-2009 6,32,640 15,764 6,32,64,000 6,32,64,000 16 17-07-2009 2,66,043 1,989 2,66,04,300 2,66,04,300 17 27-07-2009 47,916 768 47,91,600 47,91,600 18 19-10-2009 2,19,732 1,677 2,19,73,200 2,19,73,200 19 26-12-2009 1,63,379 1,676 1,63,37,900 1,63,37,900 20 15-02-2010 37,141 403 37,14,100 37,14,100 21 06-03-2010 36,612 307 36,61,200 36,61,200 22 29-03-2010 36,035 342 36,03,500 36,03,500 23 11-05-2010 40,180 412 40,18,000 40,18,000 24 17-07-2010 53,795 587 53,79,500 53,79,500 25 21-08-2010 30,550 289 30,55,000 30,55,000 26 22-09-2010 41,250 388 41,25,000 41,25,000 27 30-10-2010 35,075 304 35,07,500 35,07,500 28 16-12-2010 1,68,171 1,247 1,68,17,100 1,68,17,100 29 28-02-2011 2,71,167 1,376 2,71,16,700 2,71,16,700 30 12-04-2011 1,29,566 659 1,29,56,600 1,29,56,600 31 20-05-2011 1,38,569 881 1,38,56,900 1,38,56,900 32 12-08-2011 1,10,833 643 1,10,83,300 1,10,83,300 33 25-10-2011 2,97,283 1,325 2,97,28,300 2,97,28,300 34 21-03-2012 2,68,235 1,074 2,68,23,500 2,68,23,500 35 31-03-2012 3,76,574 1,553 3,76,57,400 3,76,57,400 36 18-06-2012 9,92,371 4,798 9,92,37,100 9,92,37,100 37 17-08-2012 6,65,366 2,829 6,65,36,600 6,65,36,600 38 25-03-2013 8,63,740 3,221 8,63,74,000 8,63,74,000 Total 88,91,984 1,21,222 88,91,98,400 15. As per the interim order, MFL had issued CCPS during the years 2005 to 2013 to at least 1,21,222 allottees and mobilised funds amounting to `88,91,98,400/-.

The interim order has categorically stated that SEBI had received certain investor complaints alleging therein that the company has defaulted in the payment of interest on the investments. The company vide its letter dated February 03, 2015, has inter alia submitted that its records/ documents have been seized by EOW/ CBI for investigation. However, no seizure details have been submitted by the company.

16. Considering the available facts, I find no reason to differ with the observations made in the interim order that the company made a ‘public issue’ of CCPS in terms of first proviso to section 67(3) of the Companies Act, 1956. As the issuance of CCPS by the company was a ‘public issue’, it ought to have complied with the applicable provisions of the Companies Act, 1956 as alleged in the interim order. In the present case, there is no dispute to the fact that the company failed to comply with the provisions of law regulating such public issues i.e. Section 56, 60 read with Section 2(36) and 73 of the Companies Act, 1956 and Clause 2.1.1, 2.1.4, 2.1.5, 2.8, 4.1, 4.11, 4.14, 5.3.1, 5.3.3, 5.3.5, 5.3.6, 5.4, 5.6, 5.6A, 5.7, 5.8, 5.9, 5.10, 5.12.1, 6.0, 6.1 to 6.15, 6.16 to 6.34 including 6.17.13, 8.3, 8.8.1, 9, 10.1, 10.5 of the DIP Guidelines and Regulations 4(2), 5, 6, 7, 25, 26, 36, 37, 46, 47, 57 and 63 of the ICDR Regulations. Accordingly, I find the company liable for violating the aforesaid provisions of law.

17. I note that the jurisdiction of SEBI in respect of issuance of securities including CCPS, intention/ obligation of the issuer to list such securities, etc. have been settled by the Hon’ble Supreme Court in its judgment and order dated August 31, 2012, in matter of Sahara India Real Estate Corporation Limited & Ors. Vs SEBI & Anr. - Civil Appeal No. 9813 and 9833 of 2011 [(2013) 1 SCC 1] (hereinafter referred to as “the Sahara Order”).

18. The interim order was issued against the directors/ promoters of the company namely Mr. Durga Prasad Misra, Mr. Ashok Kumar Patnaik, Mr. Baikuntha Nath Patnaik, Ms. Padmabati Patnaik, Ms. Santilata Patnaik, Ms. Sashi Patnaik, Mr. Haricharan Jena, Mr. Dharmananda Swain, Dr. Jugal Kishore Satapathy and Mr. Bijoy Kumar Routray. The details of the appointment and resignations of directors of the company are as under: Table A Name Date of Appointment Date of Cessation Mr. Durga Prasad Misra 25/07/1983 02/12/2013 Mr. Ashok Kumar Patnaik 25/07/1983 Continuing as director Mr. Baikuntha Nath Patnaik 25/07/1983 Continuing as director Mr. Dharmananda Swain 30/06/2004 Dr. Jugal Kishore Satapathy 30/08/2005 31/10/2013* Mr. Bijoy Kumar Routray 30/08/2005 13/05/2013 *date of cessation submitted by Dr. Jugal Kishore Satapathy 19. From the interim order it is noted that the noticees namely Mr. Durga Prasad Misra, Mr. Ashok Kumar Patnaik, Mr. Baikuntha Nath Patnaik, Ms. Padmabati Patnaik, Ms. Santilata Patnaik, Ms. Sashi Patnaik, Mr. Haricharan Jena were the original subscribers to the MoA/ promoters of the company.

I note that the company had offered and issued CCPS during the financial years 2005-06 to 2012-13 (the first and last available dates of allotment of CCPS is September 30, 2005 and March 25, 2013 respectively). From the table above, it is noted that the noticees namely Mr. Durga Prasad Misra, Mr. Ashok Kumar Patnaik, Mr. Baikuntha Nath Patnaik, Mr. Dharmananda Swain, Dr. Jugal Kishore Satapathy and Mr. Bijoy Kumar Routray were in the Board of Directors of the company and instrumental in formulation of plan to mobilize public funds without complying with the public issue norms at the relevant point of time. In terms of section 291 of the Companies Act, 1956, the Board of Directors of a company shall be entitled to exercise all such powers and do all such acts and things as the company is authorized to exercise and do. Therefore, the Board of Directors being responsible for the conduct of the business of a company will be liable for any non-compliance of law and such liability shall be upon the individual directors also. Section 56(1) and 56(3) read with section 56(4) of the Companies Act, 1956 imposes the liability for the non-compliance of the said provisions, on the company, every director, and other persons responsible for the issuance of the prospectus.

The liability for non-compliance of section 60 of the Companies Act, 1956 is on the Company, and every person who is a party to the non-compliance of issuing the prospectus as per the said section. The liability of the company and directors to repay under section 73(2) of the Companies Act, 1956 would remain until the whole of the subscription amount along with interest is refunded to the allottees/ investors. In this regard, I refer to the following observations made by the Hon’ble High Court of Madras in Madhavan Nambiar vs Registrar of Companies (2002 108 Comp Cas 1 Mad): “13. …. A director either full time or part time, either elected or appointed or nominated is bound to discharge the functions of a director and should have taken all the diligent steps and taken care in the affairs of the company. 14. In the matter of proceedings for negligence, default, breach of duty, misfeasance or breach of trust or violation of the statutory provisions of the Act and the rules, there is no difference or distinction between the whole-time or part time director or nominated or co-opted director and the liability for such acts or commission or omission is equal.

So also the treatment for such violations as stipulated in the Companies Act, 1956.” 20. The noticees namely Ms. Padmabati Patnaik vide her letter dated August 14, 2015, has contended that she had subscribed only 10 equity shares of the company on the request of her late husband in order to complete the list of seven subscribers as required to incorporate a public limited company. She has contended that she was never a promoter/ director/ substantial shareholder of the company. It has also been contended by her that she had ceased to be a member of the company since September 15, 2005, the date on which she had transferred her 500 equity shares of the company to Mr. Durga Prasad Misra. I have seen the copy of the annual return submitted by Ms.

Padmabati Patnaik (filed on February 13, 2008 by the company) and note that she had transferred her shares to Mr. Durga Prasad Misra on September 15, 2005. Considering the same and in absence of any other contrary material to show her connection with the company, the interim directions against her needs to be revoked. 21. Mr. Haricharan Jena in his reply has submitted that he has no relation with the company and he was approached by Mr. Ashok Kumar Patnaik who took his signatures on certain papers/ documents for becoming member of the company. It has also been submitted by him that he was not aware of the contents of such papers/ documents. I have considered his submissions and note that he has not produced any document to show that he is not connected with the company. Mr. Haricharan Jena, Ms. Santilata Patnaik and Ms. Sashi Patnaik inter alia being the original subscriber to the Memorandum of Association/ promoters of the company, now cannot deny their connection with the company. These persons have not submitted anything to show that they were not instructing the Board of directors of MFL.

In view of the same, it is difficult to grant any relief to these persons, at this stage. Further, the public interest requires that the persons who had knowledge/ consent/ connivance in the act/ omission which constitutes violation of the provisions of the public issue or who neglected in preventing such issue be made accountable to the investors. 22. The other promoters namely Mr. Durga Prasad Misra, Mr. Ashok Kumar Patnaik, Mr. Baikuntha Nath Patnaik became the first directors of the company. I note that Mr. Ashok Kumar Patnaik, Mr. Baikunth Nath Patnaik and Mr. Suratha Das are the present directors of the company. As noted above Mr. Durga Prasad Misra, Mr. Ashok Kumar Patnaik, Mr. Baikuntha Nath Patnaik, Mr. Dharmananda Swain, Dr. Jugal Kishore Satapathy and Mr. Bijoy Kumar Routray were the directors of MFL at the relevant point of time. None of these have submitted reply on merits. Mr. Jugaa Kishore Satapathy vide his letter dated February 03, 2015, has admitted of joining the company as director, he has also submitted that he was relieved by the Managing Director of the company on May 25, 2013 and by the company on October 31, 2013. I have noted the submission of Mr. Jugal Kishore Satapathy and note that he had resigned after the last available date of allotment of CCPS.

Considering the same, he cannot escape the liability.

23. Further, it is also noted that the date of resignation from the directorship of the company of Mr. Dharmananda Swain is not available on record. Mr. Dharmananda Swain was appointed as director of the company on June 30, 2004. It is noted that Mr. Dharmananda Swain has not submitted any reply to the interim order. From the certified copy of the Annual Return filed along with Form 20B by the company after its Annual

General Meeting dated September 29, 2012, it is noted that the name of Mr. Dharmananda Swain is appearing as director of the company. Taking note of the same, Mr. Dharmananda Swain is responsible for the violations committed by the Company. 24. Therefore, all the above persons being officers in default, in terms of section 5 of the Companies Act, 1956 read with section 2(60) of the Companies Act, 2013, are responsible for the contravention committed by the company as found above and liable for the consequences of such default. The non-consequence of the aforesaid violations is refund of the subscription money by the company and its directors to the allottees along with interest under section 73(2) of the Companies Act, 1956. In this regard, I further note that in terms of rule 4D of the Companies (Central Government’s) General Rules and Forms, 1956 read with rule 3(c) of the Companies (Prospectus and Allotment of Securities) Rules, 2014, the rate of interest prescribed in this regard is 15%. Accordingly, the company and its directors are liable to pay interest to the subscribers at such statutory rate of interest.

25. It is noted from the Annual Return filed by the company with RoC after its Annual General Meeting dated September 30, 2010 that one Mr. Durga Prasanna Sarangi was one of the directors of the company who had joined the company on June 30, 2004. It appears that he was also part of the Board of Directors of the company when it issued CCPS. Further, from the information/ documents obtained from the ‘MCA 21 Portal’ accessed on October 25, 2016, that one Mr. Suratha Das is one of the present director of the company. It is seen that he had joined the company on November 25, 2013 i.e. after the last available date of allotment of CCPS and prima facie responsible to make refunds to the investors. I note that the said two persons have neither been named in the interim order nor a show cause notice has been issued to them. SEBI is therefore advised to examine their role in the public issue of CCPS by the company and take appropriate action as deemed fit in accordance with law.

26. In view of the foregoing, I, in exercise of the powers conferred under sections 11(1), 11(4), 11A and 11B read with section 19 of the Securities and Exchange Board of India Act, 1992 and regulation 107 read with regulation 111 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, hereby issue the following directions: (i) The noticees i.e. Micro Finance Limited [CIN No.: U65923OR1983PLC001232] and its promoters and directors including Mr. Durga Prasad Misra [PAN: AATPM7049N], Mr. Ashok Kumar Patnaik [PAN: ABMPP5207H], Mr. Baikuntha Nath Patnaik [PAN: AAQPP3037J], Mr. Dharmananda Swain [PAN: AXRPS2952F], Dr. Jugal Kishor

Satapathy [PAN: AOEPS8695B] and Mr. Bijoy Kumar Routray [PAN: AIBPR3316B] shall within a period of three months from the date of this order, jointly and severally refund the money collected through the issue of Cumulative Convertible Preference Shares to the allottees with interest at the rate of 15% per annum from the date of receipt of money till the date of such refund. (ii) Such refund shall be made only in cash through a Demand Draft or Pay Order. (iii) Micro Finance Limited and its directors shall within fifteen days from the date of this Order submit to SEBI complete details of their assets (alongwith proofs thereof) certified by a peer reviewed Chartered Accountant. (iv) Micro Finance Limited and its directors are permitted to sell assets of the company and deposit the sale proceeds in an Escrow Account opened with a nationalized bank. Such proceeds shall be utilized for the sole purpose of making refund/ repayment to the allottees till the full refund/ repayment as directed above is made. (v) Micro Finance Limited and its directors shall issue a public notice, in all editions of one English national daily and one vernacular daily with wide circulation, detailing the modalities for refund, including details of contact persons including names, addresses and contact details, within fifteen days of this order.

(vi) Within seven days of completion of refund/ repayment as directed hereinabove, Micro Finance Limited and its directors shall file a certificate of such completion with SEBI from two independent peer reviewed Chartered Accountants who are in the panel of any public authority or public institution. Such certificate shall be issued by the Chartered Accountants after verifying the relevant documents including bank accounts of the Noticees and satisfying themselves that the refund has actually been made. (vii) For the purpose of this order, a peer reviewed Chartered Accountant shall mean a Chartered Accountant, who has been categorized so by the Institute of Chartered Accountants of India. (viii) Micro Finance Limited and its directors/ promoters namely Mr. Durga Prasad Misra, Mr. Ashok Kumar Patnaik, Mr. Baikuntha Nath Patnaik, Ms. Santilata Patnaik, Ms. Sashi Patnaik, Mr. Haricharan Jena, Mr. Dharmananda Swain, Dr. Jugal Kishor Satapathy and Mr. Bijoy Kumar Routray are restrained from, directly or indirectly, accessing the capital market by issuing prospectus, any offer document or advertisement soliciting money from the public and are further prohibited from buying, selling or otherwise dealing in the securities market, directly or indirectly, in whatsoever manner for a period of four years or till the date of refund of money to the allottees, whichever is later.

(ix) Mr. Durga Prasad Misra, Mr. Ashok Kumar Patnaik, Mr. Baikuntha Nath Patnaik, Ms. Santilata Patnaik, Ms. Sashi Patnaik, Mr. Haricharan Jena, Mr. Dharmananda Swain, Dr. Jugal Kishor Satapathy and Mr. Bijoy Kumar Routray are also restrained from associating themselves, with any listed public company and any public company which intends to raise money from the public, for a period of four years or till the date of refund of money to the allottees, whichever is later. (x) For the reasons stated above in this Order, the directions imposed on Ms. Padmabati Patnaik, vide the interim order dated January 14, 2015, are revoked and the proceedings against her is disposed of. (xi) For the purposes of sub-paragraphs (viii) and (ix) the period of restraint shall be counted from the date of the interim order. 27. The interim order cum show cause notice dated January 14, 2015, is disposed off accordingly. The above directions are without prejudice to the right of SEBI to take any other appropriate action for the violations found in this case or to initiate any action in case of failure to comply with the above directions, in accordance with the provisions of applicable laws including the proceedings under the provisions of section 28A of the SEBI Act.

28. The order shall come into force with immediate effect. A copy of the order shall be served on the Noticees to ensure compliance with the above directions. A copy of this Order shall also be forwarded to the recognised stock exchanges and depositories for information and necessary action.

29. A copy of this Order shall also be forwarded to the Ministry of Corporate Affairs/ concerned Registrar of Companies, for their information and necessary action

DATE : OCTOBER 27th, 2016 RAJEEV KUMAR AGARWAL PLACE : MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA