Order in the matter of ATM Agro Industries India Limited

WTM/PS/15/ERO/APR/2016 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: PRASHANT SARAN, WHOLE TIME MEMBER ORDER Under Sections 11, 11(4), 11A and 11B of the Securities and Exchange Board of India Act, 1992 In the matter of ATM Agro Industries India Limited In respect of: 1. ATM Agro Industries India Limited [PAN: AAICA4906A], 2. Mr. Taimur Ali Gayen [PAN: AEBPG4001N], 3. Mr. Yusuf Ali Gayen [PAN: AYNPG5900E], 4. Mr. Indrajit Roy [PAN: BHQPR8645J], 5. Mr. Hasem Mirza [PAN: BAGPM1763F], 6. Ms. Ashmin Khatun [PAN: BKBPK8720K], 7. Mr. Mirza Dinar [PAN: BAGPM1764C], 8. Ms. Nandini Chatterjee [PAN: ACEPC4432C], 9. Mr. Debasish Dasgupta [PAN: APDPD8203N], 10. Mr. Kamal Kishore Lodha [PAN: AAYPL5577B], 11. Mr. Debabrata Ghosh [PAN: AFWPG1415L], 12. Mr. Pradip Das [PAN: ACZPD8269R], 13. Mr. Tahidur Rahaman Gayen [PAN: BDOPG6790F], 14. Mr. Arun Kumar Mishra [PAN: AIIPM2433R], 15. Mr. Saiful Alam [PAN: AVFPA7748F], 16. Mr. Mohammad Younus [PAN: AHJPM6572H] and 17. ATM Secured Deventure Development Trust (represented by its Trustees, viz. Mr. Arghya Sengupta, Mr. Jagadish Chandra Nag and Mr. Ram Sunder Bhattacharya). Date of Hearing: September 03, 2015 Appearances: Mr. Saiful Alam appeared in person; Mr. Mohammad Younus appeared in person; Mr. Anjan Kumar B. authorized representative of Mr. Arun Kumar Mishra For SEBI: Mr. Prashanta Mahapatra, General Manager, Mr. T. Vinay Rajneesh, Assistant General Manager, Mr. N. Murugan, Assistant General Manager and Ms. Nikki Agarwal, Assistant Manager. Date of Hearing: November 23, 2015

Appearances: None appeared 1. Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’), vide an ex-parte interim Order dated February 12, 2015 (hereinafter referred to as ‘the interim order’) had observed that the company, ATM Agro Industries India Limited (hereinafter referred to as ‘ATM Agro’ or ‘the Company’) is prima facie engaged in fund mobilising activity from the public, through the Offer of Redeemable Preference Shares (hereinafter referred to as ‘RPS’) and Secured Redeemable Non-Convertible Debentures (‘NCD’) had allegedly violated the provisions of Sections 56, 60 (read with Section 2(36)), 67, 73 117B and 117C of the Companies Act, 1956 and the relevant provisions of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008 (hereinafter referred to as ‘the ILDS Regulations’).

The interim order also alleged that the debenture trustee, ATM Secured Deventure Development Trust (represented by its Trustees, viz. Mr. Arghya Sengupta, Mr. Jagadish Chandra Nag and Mr. Ram Sunder Bhattacharya) had acted as an unregistered debenture trustee in violation of the provisions of Section 12(1) of the SEBI Act, 1992 (hereinafter referred to as ‘SEBI Act’) and the SEBI (Debenture Trustees) Regulations, 1993 (hereinafter referred to as ‘DT Regulations’).

2. In order to protect the interest of investors and to ensure that only legitimate fund raising activities are carried on by the Company and its directors, SEBI had issued the following directions: “… … 8. In view of the foregoing, I, in exercise of the powers conferred upon me under Sections 11, 11(4), 11A and 11B of the SEBI Act, hereby issue the following directions– i. AAIIL shall not mobilize funds from investors through the Offer of Redeemable Preference Shares and Offer of NCDs 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. AAIIL and its present Directors, viz. Shri Taimur Ali Gayen (PAN: AEBPG4001N; DIN: 02108358), Shri Yusuf Ali Gayen (PAN: AYNPG5900E; DIN: 05136738) and Shri Indrajit Roy (PAN: BHQPR8645J;

DIN: 06754713) including its past Directors, viz. Shri Hasem Mirza (PAN: BAGPM1763F; DIN: 02763820), Smt. Ashmin Khatun (PAN: BKBPK8720K; DIN: 02762776), Shri Mirza Dinar (DIN: 02761080), Smt. Nandini Chatterjee (PAN: ACEPC4432C; DIN: 02985377), Shri Debasish Dasgupta (PAN: APDPD8203N; DIN: 03544876), Shri Kamal Kishore Lodha (PAN: AAYPL5577B; DIN: 05106473), Shri Debabrata Ghosh (PAN: AFWPG1415L; DIN: 05159545), Shri Pradip Das (PAN: ACZPD8269R; DIN: 05166308), Shri Tahidur Rahaman Gayen (PAN: BDOPG6790F; DIN: 05256592), Shri Arun Kumar Mishra (PAN: AIIPM2433R; DIN: 05257673), Shri Saiful Alam (PAN: AVFPA7748F; DIN: 06773537) and Shri Mohammad Younus (PAN: AHJPM6572H; DIN: 06773530), 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. AAIIL and its abovementioned past and present Directors, are restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in the securities market, either directly or indirectly, till further directions; iv.

AAIIL shall provide a full inventory of all its assets and properties; v. AAIIL's abovementioned past and present Directors shall provide a full inventory of all their assets and properties; vi. AAIIL and its abovementioned present Directors shall not dispose of any of the properties or alienate or encumber any of the assets owned/acquired by that company through the Offer of NCDs, without prior permission from SEBI; vii. AAIIL and its abovementioned present Directors shall not divert any funds raised from public at large through the Offer of Redeemable Preference Shares and Offer of NCDs, which are kept in bank account(s) and/or in the custody of AAIIL; viii. AAIIL and its abovementioned past and present Directors shall furnish complete and relevant information (as sought by SEBI letters dated February 3, 2014 and February 11, 2014), within 21 days from the date of receipt of this Order. ix. The Debenture Trustee, viz. ATM Secured Deventure Development Trust (represented by its Trustees, viz. Shri Arghya Sengupta, Shri Jagadish Chandra Nag and Shri Ram Sunder Bhattacharya), is prohibited from continuing with its assignment as debenture trustee in respect of the Offer of NCDs of AAIIL 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.

9. The above directions shall take effect immediately and shall be in force until further orders. 10. ... 11. This Order is without prejudice to the right of SEBI to take any other action that may be initiated against AAIIL and its abovementioned Directors; its Debenture Trustee, viz. ATM Secured Deventure Development Trust (represented by its Trustees, viz. Shri Arghya Sengupta, Shri Jagadish Chandra Nag and Shri Ram Sunder Bhattacharya), in accordance with law.”

3. The interim order observed that the prima facie observations made therein were on the basis of the correspondences exchanged between SEBI and the Company, complaint received by SEBI and the information/ documents obtained from the ‘MCA-21’ portal. The interim order advised the Company, its directors and the debenture trustee to file their replies within 21 days from the date of its receipt and also seek an opportunity of personal hearing.

4. The interim order was forwarded to the Company and its directors namely Mr. Taimur Ali Gayen, Mr. Yusuf Ali Gayen, Mr. Indrajit Roy, Mr. Hasem Mirza, Ms. Ashmin Khatun, Mr. Mirza Dinar, Ms. Nandini Chatterjee, Mr. Debasish Dasgupta, Mr. Kamal Kishore Lodha, Mr. Debabrata Ghosh, Mr. Pradip Das, Mr. Tahidur Rahaman Gayen, Mr. Arun Kumar Mishra, Mr. Saiful Alam, Mr. Mohammad Younus and the debenture trustee namely ATM Secured Deventure Development Trust (represented by its Trustees, viz. Mr. Arghya Sengupta, Mr. Jagadish Chandra Nag and Mr. Ram Sunder Bhattacharya) vide letters dated February 13, 2015. The letters issued to the Company, Mr. Taimur Ali Gayen, Mr. Indrajit Roy, Mr. Hasem Mirza, Ms. Ashmin Khatun, Mr. Mirza Dinar, Mr. Debabrata Ghosh, Mr. Pradip Das, Mr. Tahidur Rahaman Gayen, Mr. Debasish Dasgupta, Mr. Ram Sunder Bhattacharya, ATM Secured Deventure Development Trust and Mr. Jagadish Chandra Nag had returned undelivered. The letter of Mr. Kamal Kishore Lodha had returned undelivered with the remark ‘deceased’, however, no supporting document was provided.

5. Mr. Debabrata Ghosh and Mr. Arghya Sengupta (one of the trustee of ATM Secured Deventure Development Trust) vide letters dated March 10, 2015 and February 20, 2015, respectively, replied to the interim order. Thereafter, SEBI proceeded further and granted an opportunity of personal hearing to the Company, its directors and the debenture trustee on September 03, 2015. The scheduled date was communicated vide SEBI letter dated July 28, 2015. The date of hearing was also communicated vide the public notice in the newspapers namely ‘Ananda Bazar Patrika’ and ‘Times of India’ both dated September 03, 2015. The Company and its directors were advised that in case they fail to appear for the personal hearing before SEBI on the aforesaid date, then the matter would be proceeded ex-parte on the basis of the material available on record.

6. On the date fixed for personal hearing i.e. September 03, 2015, Mr. Saiful Alam appeared in person and stated that he had resigned from the Company on March 23, 2014. He also submitted a copy of the written submissions dated August 10, 2014, which were taken on record. Mr. Mohammad Younus also appeared in person and stated that he had also resigned from the Company and adopted the written submissions of Mr. Saiful Alam excluding the date of joining and resignation from the Company. On the date fixed, Mr. Arun Kumar Mishra entered his appearance through the authorized representative and submitted that he was fraudulently inducted by using the copies of his PAN and voter details. He also requested liberty for filing written submissions. Considering the request, he was granted one week’s time for making written submissions. The other directors of the Company and the debenture trustee remained absent. Later, Mr. Arun Kumar Mishra vide his letter received by SEBI on September 24, 2015, filed the written submissions which were taken on record.

7. In the meantime, Mr. Debabrata Ghosh, one of the directors vide a fax dated September 03, 2015, intimated that due to sudden health problem, he was unable to attend the personal hearing on the scheduled date and requested for another date of hearing for making submissions. Thereafter, Ms. Nandini Chatterjee, one of the directors visited the SEBI office on September 10, 2015 and requested for another date of personal hearing. Considering the request, another date of personal hearing was granted to these on November 23, 2015. On the date fixed, no one turned up for the personal hearing. Mr. Debabrata Ghosh vide his letter dated November 23, 2015, reiterated his earlier submissions made vide letter dated March 10, 2015 and expressed his inability to appear for the personal hearing due to heart ailment and advise of the doctor to take bed rest.

Considering the reasonable opportunities already afforded for making submissions in the matter, I am inclined to proceed further with the matter.

8. The submissions in brief are as under: a. Mr. Debabrata Ghosh vide his letter dated March 10, 2015 and November 23, 2015 submitted as under: - He had no connection with the business of the Company or its day to day working, during his tenure as additional director. - He had joined the Company as an additional director on December 29, 2011 and had resigned on March 31, 2012. - He became the director of the Company on the request of Mr. Taimur Ali Gayen for implementation of a project in IIT Kharagpore area (a proposed joint biscuit factory, which was supposed to start in February 2012). However, as even after 15/20 days of his inclusion no progress in the said project was made, he had immediately resigned from the Company and had handed over his resignation to Mr. Taimur Ali Gayen. The resignation was later submitted to the Registrar of Companies (RoC) by Mr. Taimur Ali Gayen on March 31, 2012, for the reasons best known to him. He does not have any relation with the Company after his resignation. - He had not taken any advantage/ director’s remuneration from the Company or attended any meeting of the Company. No documents of the Company were signed by him. - After resigning, he had demanded to return his investment, however, the same were not returned. He has filed a criminal case against the Company for refund of his investment at Mindapore Court. Consequent to this, one of the directors namely Mr. Dinar Mirza was arrested and the case is pending.

b. The submissions of Mr. Saiful Alam and Mr. Mohammad Younus are: - They were neither involved in any administrative work of the Company nor day to day work of the Company. - The registered office of the Company was closed by the Jhargram Police Station and a case is pending before the Hon’ble Jhargram SDJM Court.

c. Mr. Arun Kumar Mishra vide his letter received by SEBI on September 24, 2015, submitted as under: - He has no relation with the Company and is not aware of its activities. He had not attended any meetings of the Company. He was only a depositor with the Company. He has lost ₹11,00,000 along with the money in the recurring deposit of the Company. - He is not a qualified person. He has proprietorship business by the name of M/s A.K. Enterprise, which deals with the building materials and general order supply. Mr. Taimur Ali Gayen had taken his signatures fraudulently on the documents filed before the Registrar of Companies. The details as to how his signatures were taken are as under: i. In the year 2010, Mr. Taimur Ali Gayen came to his office for opening office on rental basis. He along with his partner had agreed for the same for a rental of ₹12,000 per month. ii. He had not interfered in the business of Mr. Taimur Ali Gayen. Later Mr. Taimur Ali Gayen requested for more space in the building, which was agreed to for a rent of 26,000 per month. Later, Mr. Taimur Ali Gayen purchased the said premises (at 2nd and 3rd Floor, 385, 12 Panchanantal Road, G.T.

Road, Bally, Howrah) and then only he came to know that Mr. Taimur Ali Gayen is the managing director of the Company. iii. Thereafter, Mr. Taimur Ali Gayen again visited him and asked for more space, which was also agreed to. For the sale of the same, Mr. Taimur Ali Gayen appointed an advocate, who had visited Mr. Arun Kumar Mishra for signatures on certain papers (printed in English). He being an illiterate person and on good faith, signed the documents so provided to him. At the time of execution of sale deed for the space, an amount of ₹11,00,000 had remained due from Mr. Taimur Ali Gayen which was promised to be paid at the earliest. iv. After few days, Mr. Taimur Ali Gayen visited him and offered fixed deposit certificates of the Company against the said amount of ₹11,00,000. He was also offered per month interest on the same. As no other option was available for recovering the money, Mr. Arun Kumar Mishra accepted the proposal of Mr. Taimur Ali Gayen and had signed the relevant papers and the fixed deposits were opened in the name of his two minor sons and wife. v. Mr. Taimur Ali Gayen then suggested to him that instead of taking monthly interest, deposit the same in a recurring deposit scheme of the Company.

Lured by the maturity amount of fixed deposit and the recurring deposit, he had agreed with the proposal. - On becoming aware that he is a director of the Company, he had confronted Mr. Taimur Ali Gayen on the same. Thereafter, on his advice he had submitted his resignation to Mr. Taimur Ali Gayen, who had assured him of taking necessary action, in this regard. - He had not received any remuneration in the capacity of the director of the Company and requested for a refund of ₹11,00,000. - All the documents relating to the Company were retained by Mr. Taimur Ali Gayen, the Managing Director of the Company. - The registered office of the Company is closed by the Jhargram Police Station on account of a case pending before the Hon’ble Jhargram SDJM Court. Till such time the case is settled, the registered office of the Company cannot be reopened. - As he had resigned from the Company, his powers as director and relationship with the Company had also extinguished.

d. Mr. Arghya Sengupta (one of the trustee of ATM Secured Deventure Development Trust) vide his letter dated February 20, 2015, replied as under: - He has no connection with the ATM Secured Deventure Development Trust or any member/ director of the trust. - He also stated that trust deed was not signed by him and his signatures on the same are forged.

9. I have considered the interim order and the material available on record. The following are the observations from the interim order: “… i. AAIIL was incorporated on May 5, 2010, with the ROC, Kolkata with CIN No. as U01120WB2010PLC146651. Its Registered Office is at Judges Court Road, Circuit House More, Medinipur, Kolkata – 721101, West Bengal, India. ii. The present Directors in AAIIL are Shri Taimur Ali Gayen, Shri Yusuf Ali Gayen and Shri Indrajit Roy. iii. Shri Hasem Mirza, Smt. Ashmin Khatun, Shri Mirza Dinar, Smt. Nandini Chatterjee, Shri Debasish Dasgupta, Shri Kamal Kishore Lodha, Shri Debabrata Ghosh, Shri Pradip Das, Shri Tahidur Rahaman Gayen, Shri Arun Kumar Mishra, Shri Saiful Alam and Shri Mohammad Younus, who were earlier Directors in AAIIL, have since resigned. iv. Form 2 (Form for Return of Allotment – filed by AAIIL with the ROC in accordance with the provisions of the Companies Act, 1956) for the Financial Years 2011–12 and 2012–13, reveals that AAIIL issued "Redeemable Preference Shares" ("Offer of Redeemable Preference Shares") to investors, details of which are provided below – Type of Year No. of persons to whom Total Amount Security preference shares were allotted (₹ in Crores) Redeemable 2011–12 108 3.37 Preference Shares 2012–13 192 2.25 TOTAL 300 5.62 v. From the material available on record, it is noted that AAIIL also issued Secured Redeemable Non – Convertible Debentures ("Offer of NCDs"), details of which are provided below – Year Type of Security Amount Raised Number of (₹ in Crores) Allottees *2011 – 12 Secured Redeemable Non – 13.36 Details not available 2012 – 13 Convertible Debentures 2.26 1232 TOTAL 15.62 *As per the Balance Sheet of AAIIL for the financial year ended March 31, 2012, it is observed that the company issued debentures amounting to ₹13.36 Crores during the financial year 2011- 12. However, AAIIL has not provided details of debentures issued during the year 2011-12 in its Annual Return filed for that year.

AAIIL has provided details of debenture holders to whom debentures have been issued during the year 2012-13. It is observed that AAIIL has issued debentures amounting to ₹2.26 Crores to 1232 number of investors. Hence, it may be presumed that a much higher amount of ₹13.36 Crores raised by it during the year 2011-12 through issue of such debentures must have been from more than 49 persons. vi. It is also noted that the abovementioned NCDs were allotted in accordance with the following terms and conditions as contained in the brochure circulated by AAIIL –

Monthly Installment Scheme Plan IDM2 IDM3 IDM 4.7 IDM 7.1 IDM 9.7 IDM 13.7 Minimum Deposit 25000 General 10.08% 14.40% 18.00% 20.64% 22.80% 25.20% Benefit per month 210 300 375 430 475 525 Return Amount 25000 26250 27400 28500 29250 30000 Term Deposit Scheme Plan IDF2 IDF3 IDF 4.7 IDF 7.1 IDF 9.7 IDF 13.7 Issue Price Minimum 100 Debentures 1000 1000 1000 1000 1000 1000 Adjustment Amount 230 500 1000 2000 4000 9000 Maturity Value 1230 1500 2000 3000 5000 10000

The Offer of NCDs may be subscribed to by an Individual, Trust, Financial Institution, HUF, NRI, Co-operative body, Others, etc. …” 10. Having considered the above, it is now necessary to determine whether the Company had made a public issue as alleged in the interim order and if so, whether the Company had complied with the public issue norms. The liability of the directors of the Company also needs to be determined as they have also been alleged in the interim order.

11. In order to ascertain whether an issue of securities is a ‘public issue’ or done on ‘private placement’, it is necessary to make a reference to Section 67(3) of the Companies Act, 1956, which reads as under: “67. (1) Any reference in this Act or in the articles of a company to offering shares or debentures to the public shall, subject to any provision to the contrary contained in this Act and subject also to the provisions of sub-sections (3) and (4), be construed as including a reference to offering them to any section of the public, whether selected as members or debenture holders of the company concerned or as clients of the person issuing the prospectus or in any other manner. (2) ... (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).” 12. 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. In terms of the first proviso 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 conclude whether an issue of shares are for public or on a private placement basis. In view of the same, if an offer of securities are made to fifty or more persons, it would be deemed to be a public issue.

13. I now place my reliance on the order of Hon'ble Supreme Court of India in the matter of Sahara India Real Estate Corporation Limited & Others Vs. SEBI and 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. …” 14. In the present case, I note that the Company had offered and allotted RPSs to 300 persons during the financial years 2011-12 and 2012-13 and had raised ₹5.62 crore. The Company had also issued NCDs during the financial years 2011-12 and 2012-13 and had raised ₹15.62 crore from more than 1,232 investors. The Company has not replied to the allegations made in the interim order.

From the interim order, it is observed that during the financial year 2012-13, the Company had allotted NCDs to 1,232 persons for the value of ₹2.26 crore. I note that during the financial year 2011-12, the Company had issued NCDs for the value of ₹13.36 crore, however, the details of the debenture holders was not submitted by the Company. From the brochure of the Company for its offer of NCDs, it is noted that the invitation for subscription was to a generalized category of investors. The huge value of NCDs suggests that the number of allottees for the same would have been much more. In view of the same, it can be concluded that the total number of NCD holders will definitely be more than 1,232.

In view of the same, it can be concluded that the total number of persons to whom RPSs and NCDs were issued by the Company are clearly more than 49 persons. Considering the discussion, it can be said that the Company had made a public issue of RPSs and NCDs (in terms of the first proviso to Section 67(3) of the Companies Act, 1956) during the period alleged in the interim order.

15. By making a public issue of RPSs and NCDs, as discussed above, the Company was mandated to comply with all the legal provisions that govern and regulate 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 case: “... ... 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. …” 16. In view of the above observations, by virtue of Section 55A(a) and (b), SEBI has jurisdiction and would govern the issue of RPS and NCD as the same was clearly made to more than 49 persons. In terms of Section 55A of the Companies Act, 1956, SEBI shall administer various provisions (as mentioned therein) of the said Act with respect to issue and transfer of securities by listed companies, companies that intend to list and also those companies that are required to list its securities while making offer and issue of securities to the public. While examining the scope of Section 55A of the Companies Act, 1956, the Hon'ble Supreme Court of India in Sahara Case, had observed that:

"We, therefore, hold that, so far as the provisions enumerated in the opening portion of Section 55A of the Companies Act, so far as they relate to issue and transfer of securities and non-payment of dividend is concerned, SEBI has the power to administer in the case of listed public companies and in the case of those public companies which intend to get their securities listed on a recognized stock exchange in India." " SEBI can exercise its jurisdiction under Sections 11(1), 11(4), 11A(1)(b) and 11B of SEBI Act and Regulation 107 of ICDR 2009 over public companies who have issued shares or debentures to fifty or more, but not complied with the provisions of Section 73(1) by not listing its securities on a recognized stock exchange". Under Section 11A of the SEBI Act, SEBI is also empowered to regulate, by regulations/ general or special orders, the matters pertaining to issue of capital, transfer of securities and matters related thereto. Accordingly, the Company, having made a public offer and issue of securities, as observed above, is under the jurisdiction of SEBI.

17. As alleged in the interim order, the Company was mandated to comply with the provisions of Sections 56, 60, 73, 117B and 117C of the Companies Act, 1956 and the provisions of the ILDS Regulations is required to be complied by the Company in respect of its offer and issue of RPSs and NCDs. 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’.

18. The interim order further alleged that the Company had failed to comply with Section 73 of the Companies Act, 1956, in respect of its issuance of RPSs and NCDs. By issuing RPSs and NCDs to more than 49 persons, the Company had to compulsorily list such securities in compliance with Section 73(1) of the Companies Act, 1956. As per Section 73(1) of the 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. There is no material on record to say that the Company has filed an application with a recognised stock exchange to enable the RPSs and NCDs to be dealt with in such exchange. Therefore, the Company has failed to comply with this requirement.

19. Section 73(2) of the Companies Act, 1956 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 RPSs and NCDs, 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, would be jointly and severally liable to repay with interest at such rate. There is no material on record to say that the Company has complied with the provisions of Section 73(3).

20. 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. The Company has admittedly not filed any prospectus. Therefore, the said provision has not been fully complied with. Further, appointment of ‘debenture trustee’ shall be in terms of all applicable law. Section 117C of the Companies Act, 1956, 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 interim order has observed “From the Balance Sheet filed by AAIIL with the ROC for the Financial Year 2011-12, it is observed that the company has created Debenture Redemption Reserve for an amount of ₹8.53 Lakhs. However, AAIIL has not filed any Balance Sheets with the ROC thereafter.” I have perused the balance sheet of the Company as on March 31, 2012 and note that ₹8,53,040.58 were transferred to the ‘debenture redemption reserve’.

21. As the NCDs are ‘debt securities’ in terms of the ILDS Regulations, the Company was also mandated to comply with the provisions of the ILDS Regulations in respect of its public issue of NCDs. However, the Company has failed to comply with the following provisions of 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) – Credit rating has been obtained iv. Regulation 4(2)(d) – Dematerialization of debt securities v. Regulation 4(4) – Appointment of Debenture Trustee vi. Regulation 5(2)(b) – Disclosure requirements in the Offer Document vii. Regulation 6 – Filing of draft Offer Document viii. Regulation 7 – Mode of disclosure of Offer Document ix. Regulation 8 – Advertisements for Public Issues x. Regulation 9 – Abridged Prospectus and application forms xi. Regulation 12 – Minimum subscription xii. Regulation 14 – Prohibition of mis-statements in the Offer Document xiii. Regulation 15 – Trust Deed xiv. Regulation 17 – Creation of security xv. Regulation 19 – Mandatory Listing xvi. Regulation 26 – Obligations of the Issuer, etc.

22. From the foregoing, it is concluded that the Company has failed to comply with the provisions of Sections 56, 60, 2(36), 73, 117B and 117C of the Companies Act, 1956 and the respective provisions of the ILDS Regulations, in respect of its offer and issuance of RPSs and NCDs and is liable for suitable action under the Companies Act, 1956, the SEBI Act and the ILDS Regulations. The Company shall therefore be liable to make refunds as per the mandate under Section 73(2) of the Companies Act, 1956 and also for regulatory action for committing the above violations.

23. The interim order has noted that the Company had created a charge for an amount of ₹20 crore and had appointed ATM Secured Deventure Development Trust (represented by its Trustees, viz. Mr. Arghya Sengupta, Mr. Jagadish Chandra Nag and Mr. Ram Sunder Bhattacharya) as Debenture Trustee for its offer of NCDs. I note that ATM Secured Deventure Development Trust had acted without registration from SEBI as required under Section 12(1) of the SEBI Act. In this regard, I note that the said trust is not registered with SEBI to perform the functions of a ‘debenture trustee’

in the capital market. Further, the following conditions under Regulation 7 of the DT Regulations are also not satisfied by the said trust: "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." From the above, it is seen that ATM Secured Deventure Development Trust do not satisfy the eligibility conditions stipulated under Regulation 7 of the DT Regulations. The debenture trustee has not disputed the allegations. I note that a person who accepts a position which carries certain responsibilities and eligibility criteria under law, ought to have satisfied the same. In the present case, ATM Secured Deventure Development Trust is not registered as ‘debenture trustees’ with SEBI as required under Section 12(1) of the SEBI Act. Further, it does not satisfy the conditions under Regulation 7 of the DT Regulations, which prescribes that only a scheduled bank carrying on commercial activity or a public financial institution within the meaning of Section 4A of the Companies Act, 1956 or an insurance company or a body corporate should act as a debenture trustee. One of the trustees namely Mr. Arghya Sengupta vide his letter dated February 20, 2015 has argued that he has no connection with ATM Secured Deventure Development Trust or any member/ director of the trust and his signatures on the trust deed are forged. I note that Mr. Arghya Sengupta has only made a claim that his signature on the trust deed were forged. No document in support of such claim has been submitted by him to show that he has initiated any action relating to his forged signatures as against the persons responsible for the same. In the absence of any such action and considering the fact that Mr. Arghya Sengupta’s name was available in the trust deed of ATM Secured Deventure Development Trust, I am not inclined to accept his submissions.

In view of the same, I find ATM Secured Deventure Development Trust (represented by its Trustees, viz. Mr. Arghya Sengupta, Mr. Jagadish Chandra Nag and Mr. Ram Sunder Bhattacharya) guilty of violating the provisions of Section 12(1) of the SEBI Act and Regulation 7 of the DT Regulations. In view of these observations, it can be said that the provisions of Section 117B of the Companies Act, 1956, have not been completely complied with. 24. Liability of Directors: The interim order was issued against the directors of the Company namely Mr. Taimur Ali Gayen, Mr. Yusuf Ali Gayen, Mr. Indrajit Roy, Mr. Hasem Mirza, Ms. Ashmin Khatun, Mr. Mirza Dinar, Ms. Nandini Chatterjee, Mr. Debasish Dasgupta, Mr. Kamal Kishore Lodha, Mr. Debabrata Ghosh, Mr. Pradip Das, Mr. Tahidur Rahaman Gayen, Mr. Arun Kumar Mishra, Mr. Saiful Alam and Mr. Mohammad Younus.

a. The details of their appointment and resignations are as under: Name Date of Appointment Date of Cessation Mr. Taimur Ali Gayen 05/05/2010 Continuing as director Mr. Yusuf Ali Gayen 03/12/2011 Continuing as director Mr. Indrajit Roy 19/03/2014 Continuing as director Mr. Hasem Mirza 05/05/2010 02/12/2013 Ms. Ashmin Khatun 05/05/2010 02/12/2013 Mr. Mirza Dinar 02/06/2010 25/07/2013 Ms. Nandini Chatterjee 02/06/2010 01/06/2011 Mr. Debasish Dasgupta 01/06/2011 04/09/2011 Mr. Kamal Kishore Lodha 24/10/2011 01/02/2013 Mr. Debabrata Ghosh 29/12/2011 31/03/2012 Mr. Pradip Das 15/02/2012 27/04/2013 Mr. Tahidur Rahaman Gayen 17/04/2012 26/04/2013 Mr. Arun Kumar Mishra 18/04/2012 26/04/2013 Mr. Saiful Alam 16/12/2013 19/03/2014 Mr. Mohammad Younus 16/12/2013 20/06/2014 b. As per 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 held liable for any non-compliance of law and such liability is also on the individual directors. In this regard, refer to the order of Hon’ble High Court of Madras in the matter of Madhavan Nambiar Vs. Registrar of Companies [2002 108 Comp Cas 1 Mad] wherein it was observed that “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.”.

I note that the position of a ‘director’ in a public company/ listed company comes along with responsibilities and compliances under law, which have to be fulfilled by such director or face the consequences for any violation or default thereof.

c. I note that the Company had offered and issued RPSs during the financial years 2011- 12 and 2012-13. Further, it had also offered and issued NCDs during the financial years 2011-12 and 2012-13. Section 56 of the Companies Act, 1956 imposes the liability for the compliance, on the company, every director, and persons responsible for the issuance of the prospectus. The liability of the Company to repay under Section 73(2) of the Companies Act, 1956 read with Section 27 of the SEBI Act, is continuing and the same continues till all the repayments are made to the investors/ public. Therefore, the directors who were present during the period when the Company had made the offer and allotted RPSs and NCDs shall be liable for violation of Sections 56, 60 and 73 of the Companies Act, 1956 including the default in making refunds as mandated therein. As the liability to make repayments under Section 73(2) of the Companies Act read with Section 27 of the SEBI Act is a continuing liability, the persons who joined the Company’s Board pursuant to the offer and allotment of RPS and NCD shall also be liable if the Company and the concerned directors have failed to make refunds, as mandated under the discussed provisions of law.

d. From the table above, it is noted that Mr. Taimur Ali Gayen, Mr. Yusuf Ali Gayen, Mr. Hasem Mirza, Ms. Ashmin Khatun, Mr. Mirza Dinar, Ms. Nandini Chatterjee, Mr. Debasish Dasgupta, Mr. Kamal Kishore Lodha, Mr. Debabrata Ghosh, Mr. Pradip Das, Mr. Tahidur Rahaman Gayen, Mr. Arun Kumar Mishra, Mr. Saiful Alam and Mr. Mohammad Younus were the directors of the Company at the time of impugned issues and allotment of RPSs and NCDs and were responsible for the affairs of the Company at the relevant point of time. Mr. Taimur Ali Gayen and Mr. Yusuf Ali Gayen continue to be the director of the Company.

Mr. Hasem Mirza, Ms. Ashmin Khatun, Mr. Mirza Dinar, Ms. Nandini Chatterjee, Mr. Debasish Dasgupta, Mr. Kamal Kishore Lodha, Mr. Debabrata Ghosh, Mr. Pradip Das, Mr. Tahidur Rahaman Gayen, Mr. Arun Kumar Mishra, Mr. Saiful Alam and Mr. Mohammad Younus had resigned from the Company on dates as mentioned in the para 24(a) above.

Mr. Debabrata Ghosh, Mr. Saiful Alam and Mr. Mohammad Younus vide respective letters have submitted that they were not involved in the day to day working of the Company during the respective tenures. The submissions made by these persons are of no help in the light of the discussed order of Hon’ble High Court of Madras in the matter of Madhavan Nambiar Vs. Registrar of Companies (supra).

Mr. Arun Kumar Mishra vide his letter dated September 24, 2015, has submitted that he is an illiterate man and Mr. Taimur Ali Gayen had taken his signatures fraudulently on the documents. He has also submitted that he is a depositor of the Company and requested for a refund of ₹11,00,000. I note that Mr. Arun Kumar Mishra has not submitted any document in support of his claim to show that he has initiated any action relating to his forged signatures as against the persons responsible for the same. In the absence of any such action against the Company or the alleged person and considering the fact that his name was available in the record of RoC as a director during the period of allotment of RPSs and NCDs, I am unable to accept his submissions.

In view of the same, it can be concluded that Mr. Taimur Ali Gayen, Mr. Hasem Mirza, Ms. Ashmin Khatun, Mr. Mirza Dinar, Ms. Nandini Chatterjee, Mr. Debasish Dasgupta, Mr. Kamal Kishore Lodha, Mr. Debabrata Ghosh, Mr. Pradip Das, Mr. Tahidur Rahaman Gayen, Mr. Arun Kumar Mishra, Mr. Saiful Alam and Mr. Mohammad Younus are responsible for the violations committed by the Company and liable, jointly and severally, for making refunds along with interest to the investors as mandated under Section 73(2) of the Companies Act, 1956 read with Section 27 of the SEBI Act.

e. I note that Mr. Indrajit Roy was appointed as a director of the Company on March 19, 2014 i.e. after the available dates of impugned issues. He is also one of the present directors of the Company. It is observed that he has not exercised necessary diligence after becoming director in the Company. The inaction by him against the management (for violating the public issue norms as stipulated under the Companies Act, 1956), even after the receipt of the interim order, leads one to conclude on a possible collusion with the Company and its management. Mr. Indrajit Roy has also not taken any steps to remedy the violations committed. As discussed earlier, the liability to refund is a continuous liability and would be discharged only when the repayments are done. Therefore, I hold Mr. Indrajit Roy liable for the same.

25. At this stage, I note that the Company and its directors namely Mr. Taimur Ali Gayen, Mr. Yusuf Ali Gayen, Mr. Indrajit Roy, Mr. Hasem Mirza, Ms. Ashmin Khatun, Mr. Mirza Dinar, Ms. Nandini Chatterjee, Mr. Debasish Dasgupta, Mr. Kamal Kishore Lodha, Mr. Debabrata Ghosh, Mr. Pradip Das, Mr. Tahidur Rahaman Gayen, Mr. Arun Kumar Mishra, Mr. Saiful Alam and Mr. Mohammad Younus were required to provide full inventory of the assets and properties within 21 days from the date of receipt of the interim order. However, no such details have been filed till date.

26. In view of the discussion above, appropriate action in accordance with law needs to be initiated against the Company and the directors/ promoters in charge of the affairs of the Company, during the relevant period.

27. Therefore, 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 and 11B thereof hereby issue the following directions:

a. The Company, ATM Agro Industries India Limited [PAN: AAICA4906A],Mr. Taimur Ali Gayen [PAN: AEBPG4001N], Mr. Yusuf Ali Gayen [PAN: AYNPG5900E], Mr. Indrajit Roy [PAN: BHQPR8645J], Mr. Hasem Mirza [PAN: BAGPM1763F],Ms. Ashmin Khatun [PAN: BKBPK8720K], Mr. Mirza Dinar [PAN: BAGPM1764C], Ms. Nandini Chatterjee [PAN: ACEPC4432C], Mr. Debasish Dasgupta [PAN: APDPD8203N], Mr. Kamal Kishore Lodha [PAN: AAYPL5577B], Mr. Debabrata Ghosh [PAN: AFWPG1415L],Mr. Pradip Das [PAN: ACZPD8269R], Mr. Tahidur Rahaman Gayen [PAN: BDOPG6790F], Mr. Arun Kumar Mishra [PAN: AIIPM2433R], Mr. Saiful Alam [PAN: AVFPA7748F], Mr. Mohammad Younus [PAN: AHJPM6572H] jointly and severally, shall forthwith refund the money collected by the Company through the issuance of Redeemable Preference Shares and Non-Convertible Debentures (which have been found to be issued in contravention of the public issue norms stipulated under the Companies Act, 1956 and ), to the investors including the money collected from investors, till date, pending allotment of RPS and NCD, if any, 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 repayments to investors shall be effected only in cash through Bank Demand Draft or Pay Order.

c. The Company and/or its present management 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.

d. The Company and its present management shall issue public notice, in all editions of two National Dailies (one English and one Hindi) and in one local daily with wide circulation, detailing the modalities for refund, including details on contact persons including names, addresses and contact details, within fifteen days of this Order coming into effect.

e. After completing the aforesaid repayments, the Company shall file a certificate of such completion with SEBI, within a period of three months from the date of this Order, from two independent peer reviewed Chartered Accountants who are in the panel of any public authority or public institution. 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 (‘ICAI’).

f. ATM Agro Industries India Limited, Mr. Taimur Ali Gayen, Mr. Yusuf Ali Gayen, Mr. Indrajit Roy, Mr. Hasem Mirza, Ms. Ashmin Khatun, Mr. Mirza Dinar, Ms. Nandini Chatterjee, Mr. Debasish Dasgupta, Mr. Kamal Kishore Lodha, Mr. Debabrata Ghosh, Mr. Pradip Das, Mr. Tahidur Rahaman Gayen, Mr. Arun Kumar Mishra, Mr. Saiful Alam and Mr. Mohammad Younusare 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.

g. In case of failure of the Company, ATM Agro Industries India Limited, its directors including Mr. Taimur Ali Gayen, Mr. Yusuf Ali Gayen, Mr. Indrajit Roy, Mr. Hasem Mirza, Ms. Ashmin Khatun, Mr. Mirza Dinar, Ms. Nandini Chatterjee,

Mr. Debasish Dasgupta, Mr. Kamal Kishore Lodha, Mr. Debabrata Ghosh, Mr. Pradip Das, Mr. Tahidur Rahaman Gayen, Mr. Arun Kumar Mishra, Mr. Saiful Alam and Mr. Mohammad Younus in complying with the aforesaid directions, SEBI, on expiry of three months from the date of this Order,- i. shall recover such amounts in accordance with section 28A of the SEBI Act including such other provisions contained in securities laws. ii. 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. iii. 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 iv. would also make a reference to the Ministry of Corporate Affairs, to initiate appropriate action as deemed fit.

h. The Company namely ATM Agro Industries India Limited is directed not to, directly or indirectly, access the capital market by issuing prospectus, offer document or advertisement soliciting money from the public and is 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 four (4) years from the date of completion of refunds to investors, made to the satisfaction of SEBI, as directed above.

i. The directors of the Company namely Mr. Taimur Ali Gayen, Mr. Yusuf Ali Gayen, Mr. Indrajit Roy, Mr. Hasem Mirza, Ms. Ashmin Khatun, Mr. Mirza Dinar, Ms. Nandini Chatterjee, Mr. Debasish Dasgupta, Mr. Kamal Kishore Lodha, Mr. Debabrata Ghosh, Mr. Pradip Das, Mr. Tahidur Rahaman Gayen, Mr. Arun Kumar Mishra, Mr. Saiful Alam and Mr. Mohammad Younus are restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, 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, with immediate effect. This restraint shall continue to be in force for a further period of four (4) years on completion of the repayments, as directed above.

j. ATM Secured Deventure Development Trust, Mr. Arghya Sengupta, Mr. Jagadish Chandra Nag and Mr. Ram Sunder Bhattacharya shall not offer themselves to be engaged as debenture trustees or in any capacity as an intermediary in the securities market, without obtaining a certificate of registration to undertake that assignment as required under law. Further, they are restrained from accessing the securities market and are further restrained from buying, selling or dealing in securities, in any manner whatsoever, for a period of four (4) years.

k. The above directions shall come into force with immediate effect.

28. 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.

29. Copy of this Order shall be forwarded to the recognised stock exchanges and depositories for information and necessary action.

30. 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.

DATE : April 29th, 2016 PRASHANT SARAN PLACE : Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA