Order in the matter of Aspen Projects India Limited

WTM/PS/39/ERO/IMD/AUG/2015

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: PRASHANT SARAN, WHOLE TIME MEMBER ORDER Under sections 11(1), 11(4), 11A and 11B of the Securities and Exchange Board of India Act, 1992 In the matter of Aspen Projects India Limited In respect of – 1. Aspen Projects India Limited (CIN:U45400WB2009PLC133653; PAN: not available), its Directors 2. Mr. AbhijitDasgupta(PAN: not available; DIN: 02475280), 3. Mr. BhaskarSaha(PAN:ALAPS8382A; DIN: 02531517), 4. Mr. AshimMaitra(PAN:ADQPM0497A;DIN:02532064), 5. Mr. Ujjal Kumar Roy (PAN:AHMPR4384B; DIN: 02555033), 6. Mr. Avijit Kumar Ganguly( PAN:AGQPG6356F; DIN: 02575466), 7. Mr. Debopam Sur (PAN: BEIPS2119R; DIN: 03079702)and 8. Mr. Goutam Sarkar (PAN: BMWPS6539M; DIN: 03356712) andits Debenture Trustees, 9. Mr. Ram Sunder Bhattacharya (PAN not available) and 10. Smt. Mita Roy(PAN not available)

1. Securities and Exchange Board of India (hereinafter referred to as "SEBI"), vide an ex-parte interim Order dated June 05, 2014 (hereinafter referred to as "the interim order") observed that the company, Aspen Projects India Limited (hereinafter referred to as "the Company" or "APIL") had prima facie engaged in fund mobilising activity from the public, through theissuance of Secured Redeemable Debentures(“SRDs”)alongwith theissuance of Redeemable Preference Shares(“RPSs”) and by doing so had allegedly violated the provisions of sections 56, 60 read with section 2(36), 73, 117B and 117C of the Companies Act, 1956 and the SEBI (Issue and Listing of Debt Securities) Regulations, 2008 (hereinafter referred to as "the ILDS Regulations"). The Secured Redeemable Debentures were issued by the Company from 2009-2010 to 2011-2012 and had raised Rs.14.90 crore and the Preference Shares were issued during 2010-2011 and 2011-2012 raising Rs.76.1 lakh.

2. The interim order also alleged that the Company had appointed Mr. Ram Sunder Bhattacharya and Smt. Mita Roy as Debenture Trustees for the issuance of Secured Redeemable Debenturesand that such persons prima facie failed to meet the eligibility criteria specified under regulation 7 of the SEBI (Debenture Trustees) Regulations, 1993 (hereinafter referred to as "the Debenture Trustees Regulations") and have acted as unregistered Debenture Trustees, in violation of which is a violation of the provisions of section 12(1) of the SEBI Act read with the Debenture Trustee Regulations.

3. In view of the alleged violations and in order to prevent the Company from continuing with its fund mobilizing activity and ensure investors are not defrauded, SEBI issued the following directions vide the interim order in respect of the Company, its directors, namely, Mr.AbhijitDasgupta, Mr.BhaskarSaha, Mr. AshimMaitra, Mr. Ujjal Kumar Roy, Mr.Avijit Kumar Ganguly, Mr.Debopam Sur and Mr. Goutam Sarkar, and the persons appointed as debentures trustees, namely, Mr. Ram Sunder Bhattacharya and Smt. Mita Roy :

13. In view of the foregoing, I, in exercise of the powers conferred upon me under Sections 11, 11(4), 11A and 11B of the SEBI Act read with the Debt Securities Regulations, CIS Regulations and the Debenture Trustee Regulations, hereby issue the following directions – i. APIL shall not mobilize any more funds from investors through the issuance of Secured Redeemable Debentures or the issuance of Preference Shares or through the issuance of equity shares or any other securities, to the public and/or invite subscription, in any manner whatsoever, either directly or indirectly till further directions; ii. APIL and its Directors, viz. Shri AbhijitDasgupta, Shri BhaskarSaha, Shri AshimMaitra, Shri Ujjal Kumar Roy, Shri Avijit Kumar Ganguly, Shri Debopam Sur and Shri Goutam Sarkar, are prohibited from issuing prospectus or any offer document or issue advertisement for soliciting money from the public for the issue of securities, in any manner whatsoever, either directly or indirectly, till further orders; iii. APIL shall provide a full inventory of all its assets and properties; iv. APIL and its abovementioned Directors shall not dispose of any of the properties or alienate or encumber any of the assets owned/acquired by that company through the issuance of Secured Redeemable Debentures or the issuance of Preference Shares, without prior permission from SEBI; v. APIL and its abovementioned Directors shall not divert any funds raised from public at large through the issuance of Secured Redeemable Debentures or the issuance of Preference Shares, which are kept in bank account(s) and/or in the custody of APIL;

vi. Shri Ram Sunder Bhattacharya and Smt. Mita Roy are prohibited from continuing with their present assignment as debenture trustees in respect of the issuance of Secured Redeemable Debentures of APIL 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. vii. APIL and its abovementioned Directors shall provide all necessary and relevant information in respect of the schemes 'Advance against product purchase‟ and „Advance from customer–land' (as sought vide SEBI letters dated February 27, 2013; April 16, 2013; April 26, 2013; December 3, 2013; January 31, 2014 and February 14, 2014) within 15 days from the date of receipt of this Order.

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

4. The interim order was issued without prejudice to the right of SEBI to take any other action that may be initiated against the Company, its directors and debenture trustees, in accordance with law. The interim order advised the Company and its directors that they may file their response within a period of 21 days and to inform whether they desire an opportunity of personal hearing in the matter.

5. For the sake of convenience, the Company, its directors and its debenture trustees are hereinafter collectively referred to as "the noticees" and individually by their respective names. The interim order was sent to the noticees on their addresses available with SEBI.

6. Thereafter, vide letter datedJuly 22, 2014, Mr. R.L. Gaggar, Advocate stated that he represents the Company and forwarded inter alia the following documents :

(a) Copy of the audited annual accounts for the year ending March 13, 2013; (b) Form-2 filed with RoC; (c) Form 10 filed with RoC; (d) Year-wise details regarding the number of allottes and list of such allottes of preference shares and debentures. The Advocate requested SEBI to take such documents on record, drop the proceedings and inform in advance the schedule of personal hearing. Subsequently, vide letter July 31, 2014, Mr. R.L. Gaggar, Advocate referred to the aforementioned letter and enclosed a Vakalatnama executed by the Company.

7. An opportunity of personal hearing was fixed on August 22, 2014 and the same informed to the noticees. Subsequently, one Mr. Aditya Kanodia, Advocate vide letter dated August 20, 2014 informed that Mr. R.L. Gaggar, Advocate was no longer engaged in the matter and that he is the Advocate engaged by the Company and its 7 directors and requested for time of 4 weeks for examining the documents in the matter, which according to him were voluminous.

8. In the personal hearing held on August 22, 2014,Mr. Aditya Kanodia and Mr. SandipMajumder, Advocates appeared on behalf of the Company and its 7 directors and reiterated their requestmade in the above said letter. They filed the vakalatnama executed by the said noticees. They requested for time, which was acceded to and the personal hearing was fixed on September 23, 2014. There was no appearance or representation from the debenture trustees. The personal hearing fixed on September 23, 2014 was later on rescheduled to September 26, 2014.

9. The revised date of hearing was informed to the noticees vide SEBI letters dated September 04, 2014. However, Mr. Aditya Kanodia, Advocate vide letter dated September 15, 2014 informed that Mr. DebasishKundu, Senior Advocate engaged in the matter was not available on September 26, 2014 and requested for fixing the personal hearing in the first week of November 2014. The hearing was scheduled on November 07, 2014 and then re-scheduled on November 14, 2014. On the said day, Mr. SandipMajumder, Advocate appeared and made submissions. The concerned noticees were granted 10 days‟ time for submitting the reply and other details sought in the interim order.

10. Thereafter, Mr. SandipMajumder, Advocate, vide letter dated November 25, 2014 stated that he had filed the reply along with all annexures. He requested for another hearing stating that the same is required for proper adjudication of the matter. In view of such request, a final opportunity of personal hearing was afforded and the same was scheduled on December 11, 2014.

11. It is noted that the Company and 7 directors inter alia made the following submissions in their application dated November 24, 2014:

a) By an application made to the Central Assistant Public Information officer (CAPIO) of SEBI, Mr. AshimMaitra, a director of the Company sought information under the Right to information Act, 2005 as to whether any prior approval was required from SEBI for issuance of Secured Redeemable preference Shares and Debentures on private placement basis by a company under the Companies Act, 1956, if not listed. In response, SEBI vide letter dated

December 14, 2009 informed that no approval was required from SEBI for listed as well as unlisted companies in issuing redeemable preference shares and debentures on private placement. b) Therefore, from the statement made by SEBI, it was clear that the Company was not required to take any prior permission for issuance of Secured Redeemable Preference Shares or Debentures and that the percentage of interest offered was commercial in nature which was not within the domain of SEBI to suggest. c) Armed with the aforesaid information, the Company commenced the business of issuance of Redeemable Preference Shares (RPSs) and Secured Redeemable Debentures (SRDs) with effect from December 15, 2009. Along with the aforesaid business, the Company also commenced the business of product purchase from interested buyers. d) During the financial years 2009-10, 2010-11, 2011-12, 2012-13 and 2013-14, the Company issued SRDs to various persons amounting to Rs.14.90/- crore approximately; RPSs for Rs.0761 crore 1 (sic)approximately and products were purchased for Rs.22.67 crore approximately. The entire year-wise details of aforesaid liabilities were given to SEBI vide letters dated March 13, 2013, May 6, 2013, November 19, 2013 and July 22, 2014 which were also recorded in the interim order. e) In so far as the amounts received from the debenture holders and preference shareholders and by way of product purchase, the Company apart from paying them back within the time limit promised along with interest thereon, had also utilized the same by purchasing fixed/immovable assets so that the same could secure the aforesaid liabilities. f) The year-wise details of such purchase of fixed/immovable assets have been set out in the respective balance sheets, copies whereof were submitted to SEBI. g) As the Company was regularly repaying its debenture-holders and preference share-holders and product purchase customers, the Company does not contemplate that SEBI would stop the functioning of the Company‟s business and prohibit the sale of assets.

According to the Company, this view was evident from the interim order. Unlike other companies carrying on similar activities, the investments of the investors in the Company are wholly secured with regard to amounts invested by them. h) With the Sahara case pending before the Hon‟ble Supreme Court, SEBI came down heavily on these sort of businesses and in the interactions/correspondences with SEBI, the Company felt

1 The amount is Rs.0.761 crore as per the interim order.

that it would be prudent to slowly close down these sort of businesses and repay the entire money along with interest to the debenture/preference shareholders. The Company ceased issuing RPS or SRDs or indulged in product purchase on and from September 2013. i) With the passing of the interim order, there was a total stoppage as far as the Company was concerned for realizing the monies by way of sale of immovable properties or pay cash to the investors. j) The investors whose payments had matured were thus paid off by cheque along with interest after the interim order. The Company apprehends that with the paucity of funds which has been mainly utilized in paying off the liabilities of the investors shortly, the Company may be in a very difficult position to make payment if they are not permitted to sell the immovable properties and repay the monies from sale proceeds thereof so that the applicants may not face any criminal proceeding at the hands of the investors. k) Till date, none of the immovable properties purchased by the Company have been mortgaged and/or charged with any banks or financial institutions and therefore the same can be sold and best price obtained at market value. l) The Company had no ill intentions and had already repaid several investors who had invested money and the same would be evident from the fact that in FY 2010-2011, those investors who had invested funds against advances from purchase of land were repaid along with interest and informed to SEBI vide letter dated May 06, 2013. Such fact was also recorded in the interim order. m) As far as RPSs are concerned, a sum of Rs.0.761 crore approximately has been repaid along with interest in FY 2013-2014, and the same will reflect in the Balance Sheet shortly to be disclosed before SEBI after filing with the statutory authorities. n) As far as SRDs are concerned, out of a total sum of Rs.14.90 crore approximately, a sum of Rs.13.50 crore has been repaid along with interest to the debenture holders during the Financial Year 2013-2014 and the details will be available on filing of Balance Sheet before the statutory authorities. o) Regarding advance against purchase of products are concerned which have been invested by various purchasers from the Company was concerned, a sum of Rs.22 crore approx. was outstanding at the end of the FY 2012-2013.

The same has been mentioned in the interim order. No advances against purchase of products were received by the Company from the following year onwards.

p) During FY 2013-2014, a sum of Rs.2.5 crore approx. as principal along with interest has been paid to the buyers. The details would be available after filing of Balance Sheet with the statutory authorities. q) The Company and directors are not able to make major payments as they are put on hold by the interim order. If not for the interim order, the entire liabilities could have been paid off with interest with the financial year and the following financial year after disposing of the immovable properties to the extent required for repayment of liabilities. r) The Company has fully secured the investments of the debenture-holders and/or investors and/or buyers from any losses either of the principal sum or interest. s) Therefore, it was all the more necessary that the interim order be recalled and/or varied to enable the Company to sell off such portion of the immovable properties which may be required for repayment of the claims of the investors. t) If necessary, the Company and directors are willing to sell the properties under the aegis of authorities appointed by SEBI and the monies received would be directly paid to the investors along with interest and the Company would furnish necessary documents to SEBI showing payments of the claims. u) In the alternative, SEBI may appoint a fit and proper person to dispose of such immovable assets and properties to the extent required to make repayments. v) As regards the maintainability of allegations are concerned, the Company and directors wish to deal with them subsequently as the primary consideration at present was to ensure repayment to the investors. w) The Hon‟ble High Court at Calcutta has also passed similar orders directing the authorities to sell the properties of such companies for repayment of dues of investors. According to the noticees, the balance of convenience was overwhelmingly in favour of the orders as requested by them.

The Company and its directors requested SEBI to- (a) Recall/modify the interim order to the extent of granting leave to them to dispose of the immovable assets and properties of the Company to make repayment to the investors to such extent as may be required for repayment of the entire dues. (b) In the alternative, SEBI may appoint persons to dispose of such immovable assets to the extent required to pay the investors.

(c) Such order or further orders as deemed necessary.

12. On December 11, 2014, the Company was represented by Mr. DebasishKundu, Senior Advocate and Mr. SandipMajumder, Advocate. The learned senior advocate made submissions and claimed that the Company had already repaid around Rs.13 crore to investors and requested SEBI to permit the Company to sell its immovable assets for the purpose of making the refunds. Liberty was granted to make an application in this regard to SEBI with documents evidencing repayments that are claimed to have been made to investors within a period of 15 days. The Company/noticees were also directed to furnish information/documents as directed in paragraph 13(vii) of the interim order. As requested by the counsel, the personal hearing was not concluded.

13. In compliance with natural justice, a final opportunity of personal hearing was afforded on March 31, 2015. The schedule was communicated vide SEBI letters dated March 17, 2015. In response to the same, Mr. SandipMajumder, Advocate vide his letter dated February 27, 2015 (received by SEBI on March 30, 2015) stated that Mr. DebasishKundu, Senior Advocate was engaged on the said day and requested that the hearing be fixed after the second week of April 2015. The matter was fixed for hearing on April 22, 2015 when few other matters were also placed for hearing in the SEBI office at Kolkata. The SEBI notices informing the said hearing, clearly indicated that failure to appear or make submissions on the said date would result in conclusion of the hearing opportunity and the matter would be proceeded further on the basis of material available on record.

14. On April 22, 2015, Mr. DebasishKundu, Senior Advocate and Mr. SandipMajumder, Advocate appeared for the Company. The senior advocate submitted an application dated April 22, 2015 requesting SEBI to permit the applicants (company and its 7 directors) to deal with and dispose of the assets/immovable properties of the Company to utilize the sale proceeds for repaying the investors. The following submissions were inter alia made therein: (a) The application was in the nature of an affidavit of Mr. BhaskarSaha, one of the directors of the Company. (b) Audited Balance sheet of the Company for FY 2013-2014 was stated to be enclosed. (c) Out of the outstanding sum of Rs.14.89 crore on account of SRDs, a sum of Rs.14.3 crore was repaid to investors as on March 31, 2014, leaving only a balance of Rs.59.62 lakh to be repaid.

(d) Out of Rs.22.52 crore invested by investors under the product purchase scheme, a sum of Rs.3.90 crore was repaid till March 31, 2014, with a balance of Rs.18.62 crore remaining to be repaid. (e) During FY 2014-2015, a further sum of Rs.40 lakh was repaid on account of SRDs and the actual figure for the current year will be ascertained when the Balance Sheet for the current Financial Year is audited and submitted. (f) The accounts of the Company would show that presently no cash balance is available for repayment of the alleged dues of investors. However, the assets of the Company are more than sufficient to pay the outstanding amounts to the investors. (g) The Company and directors have engaged a Chartered Valuer to evaluate such assets. However, the same may take some time. (h) The above said noticees do not agree that the „Product Purchase scheme‟ of the Company was a Collective Investment Scheme (CIS) and reserve the right to make appropriate submissions, if occasion arises. However, if SEBI permits the Company to sell its assets to repay the investors, then the question whether the Company operated would be only academic in nature. (i) On receipt of the interim order, they have stopped collecting money from the market.

The applicants sought permission to sell/dispose off and/or deal with the assets and immovable properties of the Company. If necessary, the same may be done under the aegis of SEBI so that sale proceeds can be utilized for repaying the alleged dues of the investors.

The learned senior advocate reiterated the submissions made in the application. The personal hearing was concluded.

15. Pursuant to the personal hearing, the Company vide letter dated May 06, 2015 had forwarded photocopies of sale deeds which were stated to be pertaining to its various properties. It is noted that copies of nine deeds were enclosed and that the documents flagged at „A‟ to „H‟ are Sale Deeds and the documents flagged as „I‟ is a deed of conveyance. These deeds pertain to various properties purchased by the Company over a period from different vendors.

16. I have considered the interim order, the submissions made by the noticees and the material available on record. I note the following observation/allegations made in paragraphs 8.1 and 8.4 of the interim order: Observations made in paragraph 8.1 of the interim order: i. “APIL was incorporated on March 9, 2009, with the ROC, Kolkata, West Bengal with CIN No. as U45400WB2009PLC133653, having its Office at 16/7/2B, Keyatala Road, Kolkata – 700029, West Bengal, India. ii. The Directors in APIL are Shri AbhijitDasgupta (DIN 02475280), Shri BhaskarSaha (DIN 02531517), Shri AshimMaitra (DIN 02532064), Shri Ujjal Kumar Roy (DIN 02555033), Shri Avijit Kumar Ganguly (DIN 02575466), Shri Debopam Sur (DIN 03079702) and Shri Goutam Sarkar (DIN 03356712). iii. From the information submitted by APIL to SEBI, it is observed that it issued Secured Redeemable Debentures since incorporation, details of which are reproduced below –

Year Type of Security Total Amount (₹ in Crores) 2009 – 10 Secured Redeemable Debentures 1.33 2010 – 11 Secured Redeemable Debentures 7.30 2011 – 12 Secured Redeemable Debentures 6.27 Total 14.90 iv. In addition to the above, APIL also issued preference shares, details of which are reproduced below – No. of Total Amount Year Type of Security Subscribers to (₹ in Crores) the Issue 2010 – 11 Preference Shares 222 0.304 2011 – 12 Preference Shares 309 0.457 Total 531 0.761

Observations made in paragraph 8.4 of the interim order: “ ………….. iii. For ascertaining whether the issuance of Secured Redeemable Debentures alongwith the issuance of Preference Shares are individually a public issue or an issue on private placement basis in accordance with Section 67 of the Companies Act, 1956, the number of subscribers is of utmost importance. In the facts of the instant case, it is observed that APIL (through its replies to SEBI made vide letters dated March 13, 2013 and May 6, 2013), has merely submitted that "… we have not made any public placement of debentures or preference shares … The Secured Redeemable Debentures of ₹14.96 Crores was by way of Private Placement to a co-operative society."

iv. However, through the issuance of Preference Shares, APIL has mobilized an amount of ₹0.761 Crores from 531 subscribers/investors. The aforesaid clearly indicates that the number of persons to whom the issuance of Preference Shares was made by APIL was way beyond the prescribed limit of forty–nine persons. In addition to the aforesaid, APIL has mobilized an amount of ₹14.90 Crores through the issuance of Secured Redeemable Debentures. The quantum of fund mobilization by APIL through the aforementioned issuance of Secured Redeemable Debentures when considered in light of APIL's refusal to submit relevant information to SEBI regarding such issuance (till date, APIL has not responded to the SEBI letter October 28, 2013, wherein information was sought in respect of issuance of Secured Redeemable Debentures), prima facie leads me to draw an adverse but eminently reasonable inference that the number of persons to whom it was made was also way beyond the prescribed limit of forty–nine persons.

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

17. The interim order has alleged that the Company had issued SRDs during 2009-10, 2010-11 and 2011-12 and raised a total amount of Rs.14.90 crore. The Company was also found to have issued RPSs during 2010-11 and 2011-12 to 222 and 309 persons respectively, thereby raising a total of Rs.76 lakhs. The Company is alleged to have violated the norms mandated for making public issue of securities under the Companies Act, 1956 and the SEBI Regulations (ILDS Regulations in respect of issuance of SRDs) while issuing such RPSs and SRDs. Though, the Company and its directors, in their submissions, have reserved their right to make submissions on such allegations, they have not contended the same nor disputed the same. Therefore, it can be inferred that they have admitted such charges.

18. In order to ascertain whether an issue of securities is a 'public issue' or done on 'private placement', a reference to section 67(3) of the Companies Act, 1956 needs to be made: 67. (1) Any reference in this Act or in the articles of a company to offering shares or debentures to the public shall, subject to any provision to the contrary contained in this Act and subject also to the provisions of sub-sections (3) and (4), be construed as including a reference to offering them to any section of the public, whether selected as members or debenture holders of the company concerned or as clients of the person issuing the prospectus or in any other manner. (2) ...

(3) No offer or invitation shall be treated as made to the public by virtue of sub-section (1) or sub-section (2), as the case may be, if the offer or invitation can properly be regarded, in all the circumstances- (a) as not being calculated to result, directly or indirectly, in the shares or debentures becoming available for subscription or purchase by persons other than those receiving the offer or invitation; or (b) otherwise as being a domestic concern of the persons making and receiving the offer or invitation … Provided that nothing contained in this sub-section shall apply in a case where the offer or invitation to subscribe for shares or debentures is made to fifty persons or more: Provided further that nothing contained in the first proviso shall apply to non-banking financial companies or public financial institutions specified in section 4A of the Companies Act, 1956 (1 of 1956).

In terms of section 67(3), as amended by the Companies (Amendment) Act, 2000, with effect from December 13, 2000, no offer or invitation shall be treated as made to the public by virtue of sub-sections (1) or (2), as the case may be, if the offer or invitation can properly be regarded, in all circumstances – (a) as not being calculated to result, directly or indirectly, in the shares or debentures becoming available for subscription or purchase by persons other than those receiving the offer or invitation; or (b) otherwise as being a domestic concern of the persons making and receiving the offer or invitation. More importantly, in terms of the firstproviso to the aforesaid section, the provisions of section 67(3) shall not apply in a case where the offer or invitation to subscribe for shares or debentures is made to fifty persons or more. Therefore, the number of subscribers becomes relevant to judge whether an issue of shares are for public or on a private placement basis, in the light of the above said provision. Therefore, if an offer of securities are made to fifty or more persons, it would be deemed to be a public issue.

19. The Hon'ble Supreme Court of India in the matter of Sahara India Real Estate Corporation Limited & Others vs. SEBIand another(Civil Appeal Nos. 9813 and 9833 of 2011; decided on August 31, 2012) ("the Sahara case") had inter alia held that - "Section 67(1) deals with the offer of shares and debentures to the public and Section 67(2) deals with invitation to the public to subscribe for shares and debentures and how those expressions are to be understood, when reference is made to the Act or in the articles of a company. The emphasis in Section 67(1) and (2) is on the “section of the public”. Section 67(3) states that no offer or invitation shall be treated as made to the public, by virtue of subsections (1) and (2), that is to any section of the public, if the offer or invitation is not being calculated to result, directly or indirectly, in the shares or debentures becoming available for subscription or purchase by persons other than those receiving the offer or invitation or otherwise as being a domestic concern of the persons making and receiving the offer or invitations. Section 67(3) is, therefore, an exception to Sections 67(1) and (2). If the circumstances mentioned in clauses (1) and (b) of Section 67(3) are satisfied, then the offer/invitation would not be treated as being made to the public. The first proviso to Section 67(3) was inserted by the Companies (Amendment) Act, 2000 w.e.f. 13.12.2000, which clearly indicates, nothing contained in Sub-section (3) of Section 67 shall apply in a case where the offer or invitation to subscribe for shares or debentures is made to fifty persons or more. … Resultantly, 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. …"

20. In thepresent matter, as far as the issue of RPSs is concerned, it is seen that the Company had made an offer and allotted such securities to 222 person in FY 2010-11 and to 309 persons during FY 2011-12. The number of allottees are definitely more than 49 and therefore in terms of the first proviso to section 67(3) of the Companies Act, 1956, it can be concluded that the Company made a public issue of RPSs. As regards the issuance of SRDs are concerned, it is noted from the documents/information forwarded vide letter dated July 22, 2014 (letter from Mr. R.L. Gaggar, Advocate on behalf of the Company) to SEBI that the Companyhad issued SRDs as per details below:

F.Y. No. of debenture holders (approx.) 2009-2010 2,082 2010-2011 10,605 2011-2012 13,474

{The approximate figures for the number of investors were arrived at by examining documents forwarded by the Advocate as the details were not readily available therein.} Considering the number of investors who had subscribed to the SRDs offered and issued by the Company during the relevant period, it can be held without doubt that the Company made an offer and issue of SRDs in terms of the first proviso to section 67(3) of the Companies Act, 1956. It is also noted that the Company had mobilized a total of Rs.14.90/- crore through such SRDs. Further, in view of the information provided by the Company with respect to the (approximate) number of investors in SRDs, the Company‟s earlier submission (as mentioned in the interim order) that „SRDs of Rs.14.96 crore was made on private placement to a co-operative society‟ is erroneous.

21. Having made public issue of RPSs and SRDs during the relevant period, as discussed above, the Company was mandated to comply with all the legal provisions that govern and regulate the public issue of such securities, including the Companies Act, 1956 and the SEBI Act and regulations. In this context, I refer and rely on the below mentioned observation made by the Hon'ble Supreme Court of India in the matter of Sahara: ... ... 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. …"

22. In view of the above observations, by virtue of section 55A(a) and (b), the SEBI has jurisdiction and would govern the issue of the securities when made to the public. As alleged in the SEBI Order, the Company was mandated to comply with the provisions of sections 56, 60, 73, 117B and 117Cof the Companies Act, 1956 and the ILDS Regulations in respect of its public issue of RPSs and SRDs.

23. In terms of section 56(1) of the Companies Act, 1956, every prospectus issued by or on behalf of a company, shall state the matters specified in Part I and set out the reports specified in Part II of Schedule II of that Act. Further, as per section 56(3) of the Companies Act, 1956, no one shall issue any form of application for shares in a company, unless the form is accompanied by abridged prospectus, contain disclosures as specified. Section 2(36) of the Companies Act read with section 60 thereof, mandates a company to register its 'prospectus' with the RoC, before making a public offer/ issuing the 'prospectus'. Having made a public offer, the Company was required to register a prospectus with the RoC under section 60 of the Companies Act, 1956. The Company vide its letter dated May 6, 2013 has admitted "We have no prospectus/Red Herring Prospectus and/or statement in lieu of Prospectus”. Therefore, I conclude that the Company failed to comply with the provisions of sections 56 and 60 of the Companies Act, 1956.

24. The interim order has alleged that the Company failed to comply with section 73 of the Companies Act, 1956. By making a public offer for subscription to the RPS and SRDs issued by the Company, the Company had to compulsorily list such securities in compliance with section 73(1) of the Companies Act, 1956. As per section 73(1) Companies Act, 1956, a company is required to make an application to one or more recognized stock exchanges for permission for the shares or debentures to be offered to be dealt with in the stock exchange. The Company has not disputedthat this allegation is incorrect. Further, there is no material to say that the Company has filed an application with a recognized stock exchange to enable the SRDs and RPSs to be dealt with in such exchange. Therefore, the Company has failed to comply with this requirement.

Section 73(2) states that "Where the permission has not been applied under subsection (1) or such permission having been applied for, has not been granted as aforesaid, the company shall forthwith repay without interest all moneys received from applicants in pursuance of the prospectus, and, if any such money is not repaid within eight days after the company becomes liable to repay it, the company and every director of the company who is an officer in default shall, on and from the expiry of the eighth day, be jointly and severally liable to repay that money with interest at such rate, not less than four per cent and not more than fifteen per cent, as may be prescribed, having regard to the length of the period of delay in making the repayment of such money". As the Company failed to make an application for listing such securities, the Company had to forthwith repay such money collected from investors. If such repayments are not made within 8 days after the Company becomes liable to repay, the Company and every director of the Company, who is an officer in default, is jointly and severally liable to repay with interest at such rate. Considering that the mobilizationcommenced from 2009-2010 and continued till FY 2011-12, as per the interim order, it would be appropriate to levy an interest of 15% as provided for under the above section. Further, the liability of the Company to refund the public funds collected through offer and allotment of the impugned RPS is a continuing liability and such liability would continue till repayments are made by the Company and the officers in default.The Company has also not complied with the provisions of section 73(3) as it has not kept the amounts received from investors in a separate bank account and failed to repay the same in accordance with section 73(2) as observed above.

25. The Company and directors have stated in their replies/submissions that the they have repaid – (a) Rs.14.3 crore out of Rs.14.89crore collected under the offer and allotment of SRDs, with an outstanding balance of Rs.59.62 lakh to the investors as on March 31, 2014; (b) a sum of Rs.0.761 crore approximately (mobilized through RPS) was repaid along with interest in FY 2013-2014 and a further sum of Rs.40 lakhs was repaid in FY 2014-2015.

However, they have not furnished any proof regarding the same. Mere Balance Sheet entries would not suffice to take a view that such payments indeed reached the ultimate investors who subscribed to the securities of the Company. Although the Company submitted a copy of audited balance sheet for F.Y. 2013-14 to SEBI during the course of hearings as stated above, it has not (i.e. till 25.07.2015) yet filed the same with the RoC.

26. The interim order has also alleged “Based on the material available on record, I find that APIL has not complied with the provisions of Sections 117B–C of the Companies Act, 1956, in respect of the issuance of Secured Redeemable Debentures and therefore, has prima facie violated the aforesaid provisions”. I note that section 117B of the Companies Act, 1956, prescribes that no company shall issue a prospectus or a letter of offer to the public for subscription of its debentures, unless it has, before such issue, appointed one or more debenture trustees for such debentures and the company has, on the face of the prospectus or the letter of offer, stated that the debenture trustee or trustees have given their consent to the company to be so appointed. Further, section 117C of the said Act stipulates that, where a company issues debentures, it shall create a debenture redemption reserve for the redemption of such debentures, to which adequate amounts shall be credited, from out of its profits every year until such debentures are redeemed. The Company has not disputed the allegation. Accordingly, I also find the Company guilty for non-compliance with the aforesaid provisions.

27. The Company was also mandated to comply with the provisions of ILDS Regulations while issuing SRDs. The SRDs are „debt securities‟ as defined under the said regulations. The interim order has stated that the Company failed to comply with the following provisions, inter alia dealing with conditions for issue and listing of SRDs, mandated under the ILDS Regulations: i. Regulation 4(2)(a) – Application for listing of debt securities ii. Regulation 4(2)(b) – In-principle approval for listing of debt securities iii. Regulation 4(2)(c) – Requirement of Credit rating iv. Regulation 4(2)(d) – Dematerialization of debt securities v. Regulation 4(4) – Appointment of Debenture Trustee vi. Regulation 5(2)(b) – Disclosure requirements in the Offer Document vii. Regulation 6 – Filing of draft Offer Document viii. Regulation 7 – Mode of disclosure of Offer Document ix. Regulation 8 – Advertisements for Public Issues x. Regulation 9 – Abridged Prospectus and application forms xi. Regulation 12 – Minimum subscription xii. Regulation 14 – Prohibition of mis-statements in the Offer Document xiii. Regulation 15 – Trust Deed xiv. Regulation 16(1) – Debenture Redemption Reserve xv. Regulation 17 – Creation of security xvi. Regulation 19 – Mandatory Listing xvii. Regulation 26 – Obligations of the Issuer, etc.

28. I also note the following observations made in the interim order: “……….. i. Form 10 (filed by APIL with the ROC in accordance with the provisions of the Companies Act, 1956), reveals that APIL created Charge for an amount of ₹14.96 Crores on December 7, 2009, in respect of the issuance of Secured Redeemable Debentures. Further, the aforesaid document reveals that the debentures so issued, shall be secured by way of deposit of title deeds of immovable property with the Debenture Trustees. However, from the Balance Sheet for the year ending March 31, 2010 (as submitted by APIL), it is seen that the value of fixed assets including investments made by that company, was only ₹0.41 Crores. The aforesaid fact clearly indicates that Charge created by APIL to secure the issuance of Secured Redeemable Debentures, was not backed by sufficient assets. ii. From the Balance Sheet for the year ending March 31, 2012, it is observed that there was a significantly high Debt–Equity ratio i.e. 30:1. Such a high Debt–Equity ratio is prejudicial to the interest of the debenture holders and may significantly hamper the ability of the company to fulfill its obligation of redeeming the debentures on maturity.”

29. Liability of directors : The interim order was issued in respect of the Company‟s directors – Mr.AbhijitDasgupta, Mr.BhaskarSaha, Mr.AshimMaitra, Mr.Ujjal Kumar Roy, Mr.Avijit Kumar Ganguly, Mr.Debopam Sur and Mr.Goutam Sarkar. The following details accessed from the MCA website gives information as to their date of appointment as directors in the Company.

DIN/DPIN/PAN Full Name Present residential address Designation Date of Appointment AVIJIT KUMAR RAMSITA LANE, HALISAHAR, HALISAHAR, 02575466 Director 03/11/2009 GANGULY 743134, West Bengal, INDIA 251A/23A, N.S.C.BOSE ROAD, KOLKATA, 02532064 ASHIM MAITRA Director 09/03/2009 700047, West Bengal, INDIA TALPUKUR, WARD 101, JADAVPUR, 02475280 ABHIJIT DASGUPTA SOUTH 24-PARGANAS, KOLKATA, 700032, Director 09/03/2009 West Bengal, INDIA 42, BALLYGUNGE PLACE, KOLKATA, 02531517 BHASKAR SAHA Managing director 09/03/2009 700019, West Bengal, INDIA 73/1 BAGHBAZAR STREET 7 03079702 DEBOPAM SUR SHYAMPUKUR, KOLKATA, 700003, West Director 13/11/2010 Bengal, INDIA 233C, fakir para road, kolkata, 700034, 02555033 UJJAL KUMAR ROY Director 13/11/2010 West Bengal, INDIA C.M.C. -116, BEHALA, 24 PARGANAS, 03356712 GOUTAM SARKAR Director 06/12/2010 KOLKATA, 700053, West Bengal, INDIA

Considering the fact that the Company commenced mobilisation of public funds from FY 2009-2010, it can be concluded that the above directors, who are also the noticees in the interim order, were responsible and liable for the violations committed by the Company while making offer and issuing the securities. These persons continue to hold their position as directors. Further, these directors are „officers in default‟ in terms of section 73(2) of the Companies Act and also liable for not making the refunds as mandated therein. As mentioned above, the liability to refund the public funds collected through offer and allotment of the impugned RPS and SRD is continuing and such liability would continue till repayments are made by the Company and the officers in default.

30. As regards the persons allegedly appointed as debenture trustees, the interim order had alleged the following; “10.1 From information obtained by SEBI from the MCA 21 Portal, it is observed that APIL appointed Shri Ram Sunder Bhattacharya and Smt. Mita Roy as Debenture Trustees for the issuance of Secured Redeemable Debentures by that company, which is also observed from the extracts of the Minutes of the Extra Ordinary General Meeting of the Board of Directors of that company held on December 9, 2009 (as submitted vide APIL's letter dated May 6, 2013).

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

10.3 Based on the material available on record, I find that Shri Ram Sunder Bhattacharya and Smt. Mita Roy have prima facie failed to meet the eligibility criteria specified under the provisions of the Debenture Trustees Regulations and therefore, have acted as unregistered Debenture Trustees, which is a violation of the provisions of the SEBI Act read with the Debenture Trustee Regulations.”

Noticees, Mr. Ram Sunder Bhattacharya and Smt. Mita Roy have not responded despite service of interim order/notices. I therefore find them guilty for acting as intermediary in the capacity as debenture trustees in the securities market without registration from SEBI, in violation of section

12(1) of the SEBI Act. It is also found that these noticees have accepted such roles without even satisfying the eligibility conditions mandated under the Debenture Trustees Regulations. Their appointment as debenture trustees are also not in satisfaction of section 117B of the Companies Act, 1956.

31. The interim order has also observed – “12.2 APIL mobilized funds amounting to ₹11.75 Crores under the head 'Advance against product purchase‟, which increased to ₹22.67 Crores in the financial year 2011–12 and ₹0.61 Crores under the head „Advance from customer – land'. In that context, SEBI had requested APIL to provide information in respect of the aforesaid Schemes vide several letters dated February 27, 2013; April 16, 2013; April 26, 2013; December 3, 2013; January 31, 2014 and February 14, 2014”.

12.4 APIL failed to provide complete and relevant documentary information to SEBI in respect of its fund mobilizing activities through „Advance against product purchase‟ and „Advance from customer–land' (as sought vide SEBI letters February 27, 2013; April 16, 2013; April 26, 2013; December 3, 2013; January 31, 2014 and February 14, 2014). The information sought by SEBI through the aforesaid letters is essential for facilitating determination of whether or not such schemes launched by APIL are 'Collective Investment Schemes' under the SEBI Act and CIS Regulations.”

Accordingly, the interim order had directed the Company and its directors to provide all necessary and relevant information in respect of the schemes 'Advance against product purchase‟ and „Advance from customer– land' (as sought vide SEBI letters dated February 27, 2013; April 16, 2013; April 26, 2013; December 3, 2013; January 31, 2014 and February 14, 2014). This direction was also made in the personal hearings held in the matter. However, instead of providing such information/documents, as directed, the Company and directors in their submissions dated April 22, 2015 have merely stated that they do not agree that the „Product Purchase scheme‟ of the Company was a Collective Investment Scheme (CIS) and reserve the right to make appropriate submissions, if occasion arises. They have also undertaken that if SEBI permits the Company to sell its assets to repay the investors, then the question whether the Company operated a CIS would be only academic in nature.

Considering the fact that the Company is willing to repay the investors who have invested in its product/land purchase schemes (alleged to be CIS in the interim order), it would be appropriate to allow the Company to refund these monies also.

32. In view of the above findings and observations, it becomes necessary to issue directions for refund against the Company and its directors and other directions in the interest of investors and the securities market. The request of the Company and its directors is that SEBI should permit them to sell the assets of the Company for making refunds to the investors. As the interest of investors is of paramount concern of SEBI, it is proper and reasonable to allow the Company and its directors to sell their assets (properties of the Company as well as the directors as the liability is joint and several) – both movable and immovable, for the sole purpose of making refunds to the investors of their subscriptions/investments along with 15% interest. As mentioned above, in the absence of proper proof for repayments from the Company, it cannot be concluded that the Company has made the repayments as claimed.

33. For the above reasons, I, in exercise of the powers conferred upon me under section 19 of the Securities and Exchange Board of India Act, 1992 read with sections 11(1), 11(4), 11A and 11B thereof hereby issue the following directions:

(a) The Company, Aspen Projects India Limited (CIN: U45400WB2009PLC133653; PAN: Not Found)and its promoters and Directors including Mr. AbhijitDasgupta(PAN: Not Found; DIN: 02475280), Mr. BhaskarSaha(PAN:ALAPS8382A; DIN: 02531517), Mr. AshimMaitra(PAN:ADQPM0497A;DIN:02532064), Mr. Ujjal Kumar Roy (PAN:AHMPR4384B; DIN: 02555033), Mr. Avijit Kumar Ganguly( PAN:AGQPG6356F; DIN: 02575466), Mr. Debopam Sur (PAN: BEIPS2119R; DIN: 03079702)and Mr. Goutam Sarkar (PAN: BMWPS6539M; DIN: 03356712),jointly and severally, shall forthwith refund the money collected by the Company through the issuance of Secured Redeemable Debentures and Redeemable Preference Shares (which have been found to be issued in contravention of the public issue norms stipulated under the Companies Act, 1956 and the SEBI Regulations) including the money collected from investors, till date, pending allotment of securities, if any,to the investors with an interest of 15% per annum compounded at half yearly intervals, from the date when the repayments became due (in terms of Section 73(2) of the Companies Act, 1956) to the investors till the date of actual payment.

(b) The Company and its directors shall also repay the monies mobilized from investors through their product/land purchase schemes {alleged to be Collective Investment Schemes vide the SEBI Interim

Order dated June 05, 2014} along with interest of 15% per annum compounded at half yearly intervals, from the date when such monies were collected till the date of actual payment to the investors.

(c) The repayments to investors shall be effected only in cash through Bank Demand Draft or Pay Order.

(d) The Companyand the above directors are permitted to sell the assets of the Company only for the sole purpose of making the refunds as directed above and deposit the proceeds in an Escrow Account opened with a nationalised Bank.

(e) The Companyand its promoters and directorsshall issue public notice, in all editions of two NationalDailies (one English and one Hindi) and in one local daily (in Bengali) with wide circulation, detailing themodalities for refund, including details of contact persons including names,addresses and contact details, within fifteen days of this Order coming intoeffect.

(f) After completing the aforesaid repayments, the Company and its directors shallfile acertificate of such completion with SEBI, within a period of three months from the date of this Order, from two independent peer reviewedChartered Accountants who are in the panel of any public authority or publicinstitution. For the purpose of this Order, a peer reviewed Chartered Accountantshall mean a Chartered Accountant, who has been categorized so by the Institute ofChartered Accountants of India ("ICAI").

(g) The Company and its 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.

(h) In case of failure of the company, Aspen Projects India Limited and its promoters and Directors including Mr. AbhijitDasgupta, Mr. BhaskarSaha, Mr. AshimMaitra, Mr. Ujjal Kumar Roy, Mr. Avijit Kumar Ganguly, Mr. Debopam Sur and Mr. Goutam Sarkarin complying with the aforesaid directions, SEBI, on expiry of three months from the date of this Order - a) shall recover such amounts in accordance with section 28A of the SEBI Act including such other provisions contained in securities laws. b) may initiate appropriate action against the Company, its promoters/ directors and the persons/ officers who are in default, including adjudication proceedings against them, in accordance with law. c) would make a reference to the State Government/ Local Police to register a civil/ criminal case against the Company, its promoters, directors and its managers/ persons in-charge of the business and its schemes, for offences of fraud, cheating, criminal breach of trust and misappropriation of public funds; and d) would also make a reference to the Ministry of Corporate Affairs, to initiate the process of winding up of the Company.

(i) The Companyis directed not to, directly or indirectly, access the capital market by issuing prospectus, offer document or advertisement soliciting money from the public and are further restrained and prohibited from buying, selling or otherwise dealing in the securities market, directly or indirectly in whatsoever manner, from the date of this Order till the expiry of 4 years from the date of completion of refunds to investors as directed above.

(j) The directorsof the Company, namely,Mr. AbhijitDasgupta, Mr. BhaskarSaha, Mr. AshimMaitra, Mr. Ujjal Kumar Roy, Mr. Avijit Kumar Ganguly, Mr. Debopam Sur and Mr. Goutam Sarkar are restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in the securities market, directly or indirectly in whatsoever manner, with immediate effect. They are also restrained from associating themselves with any listed public company and any public company which intends to raise money from the public, or any intermediary registered with SEBI. The above directions shall come into force with immediate effect and shall continue to be in force from the date of this Order till the expiry of 4 years from the date of completion of refunds to investors as directed above.

(k) For the violations (i.e. acted as debenture trustee when they were not eligible to act as debenture trustees and acted so without registration from SEBI) committed by Mr. Ram Sunder Bhattacharya(PAN - not available) and Smt. Mita Roy(PAN - not available), they are hereby restrained from accessing the securities market and further restrained from buying, selling or dealing in securities, in any manner whatsoever, for a period of 4 years.

(l) The above directions shall come into force with immediate effect.

34. This Order is without prejudice to any action, including adjudication and prosecution proceedings that might be taken by SEBI in respect of the above violations committed by the Company, its promoters, directors and other key persons.

35. Copy of this Ordershall be forwarded to the recognised stock exchanges and depositories for information and necessary action.

36. 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 Company and the individuals.

PRASHANT SARAN WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA Date : August 14th, 2015 Place: Mumbai