Order in respect of Sanatan Benerjee in the matter of Ganga Sagar Food & Beverages India Ltd.

Final Order in the matter of Ganga Sagar Foods & Beverages India Ltd.

WTM/AB/WRO/WRO/7770/2020-21

SECURITIES AND EXCHANGE BOARD OF INDIA FINAL ORDER

UNDER SECTIONS 11(1), 11(4) AND 11B OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 READ WITH SECTION 73 OF COMPANIES ACT, 1956

In respect of: S. No. Name of the entity PAN No. 1. Mr. Sanatan Banerjee AUEPB3112A

In the matter of Ganga Sagar Foods & Beverages India Ltd.

1. SEBI had passed an ex-parte interim order dated February 12, 2019 (hereinafter referred to as ‘the interim order’) against the company – Ganga Sagar Foods & Beverages India Ltd. (hereinafter referred to as ‘GSFBIL’/ ’the Company’) and its directors for violation of public issue norms by the Company by issuing Non- Convertible Redeemable Secured Debentures (hereinafter referred to as ‘NCDs’) to at least 71 investors in the Financial Year 2012-13 and thereby, illegally raising a sum of Rs. 43,14,600/-. The interim order found the Company had prima facie violated Regulations 4(2), 5, 6, 7, 8, 9, 12, 14, 15, 16, 17, 19 and 26 of SEBI (Issue and Listing of Debt Securities) Regulations, 2008 (hereinafter referred to as “ILDS Regulations”) and Sections 56, 60 (1), 73(1) and 73(3) of Companies Act, 1956. The interim order also found that M/s Ganga Sagar Debenture Trust represented by Ms. Madhumita Saha, had prima facie violated Section 12(1) of Securities and Exchange Board of India Act, 1992 (hereinafter referred to as “SEBI Act, 1992”). For the aforesaid violations, the interim order issued certain directions to the Company, its directors and the debenture trustee, which are as under:

i. GSFBIL shall cease to mobilize fresh funds through offer and issuance of NCDs or through offer and issuance of any other securities, to the public and/or invite subscription, in any manner whatsoever, either directly or indirectly.

ii. GSFBIL and its Directors, viz. Gopal Saha, Sachin Ray, Narayan Paul, Sekh Ranjan Ali, Somnath Santra and Sanatan Banerjee shall not buy, sell or otherwise deal in the securities market, either directly or indirectly, or associate themselves with any listed company or company intending to raise money from the public. iii. GSFBIL and its above mentioned Directors shall not dispose of or alienate or encumber any of its/their assets or properties nor divert any fund raised from the public through offer and allotment of NCDs without prior permission from SEBI. iv. GSFBIL and its above named directors shall co-operate with SEBI and shall furnish all information/documents in connection with the offer and issuance of securities, including the documents sought earlier. v. Ms. Madhumita Saha, the trustee of Ganga Sagar Debenture Trust shall not henceforth act as debenture trustees in respect of the issuance of NCDs of GSFBIL and shall not take up any new assignment or involve himself in any new issue of securities in a similar capacity. vi. M/s Ganga Sagar Debenture Trust and Ms. Madhumita Saha shall not buy, sell or otherwise deal in the securities market, either directly or indirectly, or associate themselves with any listed company or company intending to raise money from the public.

2. The interim order also called upon GSFBIL and its abovementioned directors and debenture trustee, to show cause as to why suitable directions/prohibitions under Sections 11, 11(4), and 11B of the SEBI Act, 1992 should not be issued/imposed, including the following directions, namely:

i. GSFBIL and its directors, viz. Gopal Saha, Sachin Ray and Narayan Paul to jointly and severally refund the money collected through the offer and allotment of NCDs, with an interest of 15% per annum (the interest being calculated from the date when the repayments became due in terms of Section 73(2) of the Companies Act, 1956 till the date of actual payment); ii. The money refunded should be supported by a certificate of two independent Chartered Accountants to the satisfaction of SEBI (to be submitted to SEBI within 7 days of completion of the refund); and iii. The Noticees to be refrained / prohibited from accessing the securities market by issue of prospectus / offer document / advertisement and buying, selling or otherwise dealing in securities in any manner whatsoever, directly or indirectly, for a period of four years from the date of effecting the refund as mentioned above. 3. I note that GSFBIL and its directors and the debenture trustee were given time till 90 days from the date of receipt of the interim order to furnish their reply or seek an opportunity of personal hearing from SEBI, failing which the interim order stipulated that, the prima facie findings with respect to violation of public issue norms by the Company would become final and the directions contained in para 2 above would become final and absolute against all the Noticees to the interim order.

4. I note that none of the Noticees to the interim order, except Noticee no. 4 thereto, either furnished a reply or sought for a personal hearing after receipt of the interim order. Thus, I note that in terms of the directions, as quoted at para 2 above (as contained in para 18 of the interim order) have become final and absolute against all the Noticees to the interim order, except Noticee no. 4 thereto. I note that Noticee no. 4 to the interim order had filed an unsigned reply dated May 27, 2019. I also note that an opportunity of personal hearing was granted to Noticee no. 4 on March 11, 2020, which Noticee no. 4 has failed to avail without asking for any adjournment of hearing.

5. Now the question for determination before me is whether Noticee no. 4, as the director of GSBIL, is liable for directions as contemplated in para 18 (iii) of the interim order, namely:

iii. The Noticees to be refrained / prohibited from accessing the securities market by issue of prospectus / offer document / advertisement and buying, selling or otherwise dealing in securities in any manner whatsoever, directly or indirectly, for a period of four years from the date of effecting the refund as mentioned above.

6. From the records available on MCA 21 Portal, I note that Noticee no. 4 is a director in GSFBIL since July 17, 2014. I note that Noticee no. 4 has disputed the information available on MCA 21 Portal with respect to GSFBIL, as being false, fake and fabricated. His reply indicates that he disputes his directorship in GSFBIL. I note that apart from the bald claims, Noticee no. 4 has not submitted any evidence in support thereof. I note that the records available on MCA 21 Portal are in the nature of public records which required to be filed in terms of the provisions of the Companies Act, 1956/Companies Act, 2013 and a presumption is created in favour of its genuineness. If Noticee no. 4 were to dispute its genuineness then it has to disprove it. I note that Noticee no. 4 has not produced any proof to disprove the MCA 21 records. I do not find any material on record to show that Noticee no. 4 has approached any authority/court/forum/RoC to rectify the alleged false records on the MCA 21 Portal even after passing of the interim order. In fact, it appears that Noticee no. 4 has taken this plea for the first time in these proceedings as an afterthought. Thus, I do not find any merit in the contentions raised by Noticee no. 4 and find that he indeed is the director of GSFBIL since July 17, 2014.

7. I note that Noticee no. 4 was not the director of the Company during the FY 2012- 13 when the NCD’s were issued and funds were raised, by the GSBIL. Hence, no liability for refund of money can be attached to Noticee no. 4, in terms of section 73(2) of the Companies Act, 1956. Here, it is pertinent to note the observations of Hon’ble SAT in its order dated July 17, 2017 passed in Appeal No. 66 of 2006 - Manoj Agarwal Vs. SEBI wherein Hon’ble SAT directed that liability (under Section 73(2) of the Companies Act, 1956) of the appellant director therein would be restricted to refund the amount which was collected during the period of his directorship in the company, jointly and severally with the company and other directors. Since, there is no material on record to show that funds were raised by GSBIL through issue of NCDs during the directorship of Noticee no. 4 i.e. FY 2014- 15 to FY 2020-21, hence, Noticee no. 4 cannot be held liable for refund under section 73 (2) of the Companies Act, 1956.

8. However, I note that Noticee no. 4 did not take any steps to ensure refund of the money to the investors through GSBIL, which GSBIL was directed to refund vide the interim order dated February 12, 2009 when the Noticee no. 4 was also a director in GSIBL. I note that recovery proceedings have been initiated by SEBI against GSBIL and some of its directors pursuant to their failure in complying with the directions for refund in the interim order. Thus, I find that being the present director of GSBIL, Noticee no. 4 has failed to take any steps for refund to the investors, by GSBIL.

9. In view of the above findings, I, in exercise of powers conferred upon me under Sections 11 and 11B of the SEBI Act, 1992 read with Section 19 thereof, hereby directs that Mr. Sanatan Banerjee (Noticee no. 4 to the interim order) shall be refrained/prohibited from accessing the securities market by issue of prospectus/offer document/advertisement or otherwise in any manner whatsoever, and shall be refrained/prohibited from buying, selling or otherwise dealing in securities in any manner whatsoever, directly or indirectly, for a period of four years from the date of this order or till the completion of refund to the investors of GSBIL, as directed in the interim order, whichever is later.

10. Copy of this Order shall be forwarded to the Noticee no. 4, recognised stock exchanges, depositories and RTA’s of all Mutual Funds for information and necessary action.

11. 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 with respect to the directions/restraint imposed above against the director of the Company.

Sd/- Date: May 28, 2020 ANANTA BARUA Place: Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA