Order in the matter of Gitanjali Udyog Limited

Under Sections 11 (1), 11(4), 11A and 11B of the Securities and Exchange Board of India Act, 1992 and Regulation 28 of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008, in respect of: 1. Gitanjali Udyog Limited, 2. Shri Paramasish Bhadury, 3. Shri Anil Kumar Mishra, 4. Shri Prabir Middey, 5. Shri Surajeet Ray, 6. Shri Sutanu Sarcar, 7. Shri Sanjay Bahadur, 8. Shri Nonigopal Mondal, 9. Shri Amit Samanta and 10.Shri Jagdish Chandra Nag.

In the matter of issuance of Non-Convertible Secured Redeemable Debentures by Gitanjali Udyog Limited

1. Securities and Exchange Board of India (hereinafter referred to as “SEBI”) conducted a preliminary examination into the issuance of Non-Convertible Secured Redeemable Debentures (hereinafter referred to as “NCDs”) by Gitanjali Udyog Limited (hereinafter referred to as “the company” or “GUL”)with a view to ascertain the possible violations of the public issue normsstipulated under the CompaniesAct, 1956 and other applicable laws pertaining to SEBI (Issue and Listing of Debt Securities) Regulations, 2008 (hereinafter referred to as “the ILDS Regulations”). 2. Pursuant to the examination, SEBI passed an interim order dated June 17, 2015 (hereinafter referred to as “interim order”) against GUL, its directors namely Shri

Order in respect of Gitanjali Udyog Limited and others

Paramasish Bhadury, Shri Anil Kumar Mishra, Shri Prabir Middey, Shri Surajeet Ray, Shri Sutanu Sarcar, Shri Sanjay Bahadur, Shri Nonigopal Mondal and the persons/ entity acting as the Debenture Trustees namely Shri Amit Samanta and Shri Jagdish Chandra Nag (collectively referred to as ‘the noticees’ and individually by their respective names), in view of the following reasons: “4.3 … iii. … a. …thenumberofallotteesandamountsraisedundertheOfferofNCDsduring theFinancialYears2011–12,2012–13,2013–14and2014–15,haveonlybeen takenfromthedocumentssubmittedwiththecomplaintsreceivedbySEBI, againstGUL.NodetailshavebeenprovidedbyeitherGULoritsDirectors despitebeinggivenseveralchancestodoso.Thisnon-cooperationonthepartof thecompanyhasalsobeennotedbytheHon'bleCalcuttaHighCourtinitsOrder dated September 16, 2014 … … … c. …duringtheFinancialYears2011–12,2012–13,2013–14and2014–15,GUL allotted NCDs to at least 291 individuals/ investors and mobilized funds amountingtoapproximately`39.02Lakhs,undertheOfferofNCDs.However,as pertheWritPetitionfiledbyGULbeforetheHon'bleCalcuttaHighCourt,the companyadmittedtohaving"raisedatotalsumof`51,78,60,850onthebasisof debentureswhichwereredeemableondifferentdates."Therefore,itismost certainlythattheactualnumberofallotteesandamountmobilizedbyGUL undertheOfferofNCDswouldbemuchmorethanthefigurescollatedbySEBI merelyonthebasisofcomplaintsreceived.Intheseproceedings,nothingelse hasbeenpossiblebecauseofnon–cooperationbythecompanyasdetailedin paragraph 4.3(iii)(a) above. d. Uponaconsiderationoftheaboveandhavingregardtothespecificnumberof investorstowhomallotmentsweremadeundertheOfferofNCDsduringthe FinancialYears2012–13and2013–14(detailsprovidedinTableatparagraph 3(v)ofpage6),IfindthatsuchOfferwasnothingbutapublicissueofsecurities, asprescribedunderthefirstprovisotoSection67(3)oftheCompaniesAct, 1956. … … …

Order in respect of Gitanjali Udyog Limited and others

…… 5.4…ShriAmitSamantaandShriJagdishChandraNag,haveactedasunregistered Debenture Trustees, which amounts to violation of the abovementioned provisions of the SEBI Act read with the Debenture Trustees Regulations.” 3. The interim order had issued the following directions: “i. GUL (PAN: AAMCS8602D) shall forthwith cease to mobilize funds from investorsthroughtheOfferofNCDsorthroughtheissuanceofequitysharesor anyothersecurities,tothe public and/orinvite subscription,inanymanner whatsoever, either directly or indirectly till further directions; ii. GUL and its present Directors, viz. Shri Paramasish Bhadury (PAN: ANNPB2618K;DIN:03535491),ShriAnilKumarMishra(DIN:03585327),Shri Prabir Middey (PAN: AIQPM0516K; DI N: 06583618), are prohibited from issuingprospectusoranyofferdocumentorissueadvertisementforsoliciting moneyfromthepublicfortheissueofsecurities,inanymannerwhatsoever, either directly or indirectly, till further orders; iii.ThepastDirectorsofGUL,viz.ShriSurajeetRay(PAN:AUAPR1861N;DIN: 02937174),ShriSutanuSarcar(PAN:CUJPS7833J;DIN:03490705),ShriSanjay Bahadur(PAN:ALGPB7497M;DIN:05309291),ShriNonigopalMondal(PAN: AKJPM5712E;DIN:05116933),areprohibitedfromissuingprospectusorany offerdocumentorissueadvertisementforsolicitingmoneyfromthepublicfor theissueofsecurities,inanymannerwhatsoever,eitherdirectlyorindirectly,till further orders; iv. GULanditsabovementionedpastandpresentDirectors,arerestrainedfrom accessingthesecuritiesmarketandfurtherprohibitedfrombuying,sellingor otherwisedealinginthesecuritiesmarket,eitherdirectlyorindirectly,tillfurther directions; v. GUL shall provide a full inventory of all its assets and properties; vi.GUL'sabovementionedpastandpresentDirectorsshallprovideafullinventory of all their assets and properties; vii.GUL anditspresent Directorsshall not dispose ofanyofthe propertiesor alienateorencumberanyoftheassetsowned/acquiredbythatcompanythrough the Offer of NCDs, without prior permission from SEBI; viii. GULanditsabovementionedpresentDirectorsshallnotdivertanyfunds

Order in respect of Gitanjali Udyog Limited and others raisedfrompublicatlargethroughtheOfferofNCDs,whicharekeptinbank account(s) and/or in the custody of GUL; ix.GULanditsabovementionedpastandpresentDirectorsshallfurnishcomplete andrelevantinformation(assoughtbySEBIletterdatedApril17,2013and February 12, 2014), within 14 days from the date of receipt of this Order includingfulldetailsofamountmobilizedundertheOfferofNCDstilldate,list ofdebentureholders,namesandaddressesofsuchdebentureholders,date(s)on which debentures were allotted under the Offer of NCDs, etc.; x. TheDebentureTrustees,viz.ShriAmitSamantaandShriJagdishChandraNag, areprohibitedfromcontinuingwiththeirassignmentasdebenturetrusteesin respect of the Offer of NCDs of GUL and also from taking up any new assignmentorinvolvementinanynewissueofdebentures,etc.inasimilar capacity, from the date of this order till further directions.” 4. Vide the interimorder, the company and its directors were also called upon to show cause as to why suitable directions/ prohibitions, under sections 11(1), 11(4), 11A and 11B of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as “SEBI Act”) including the following, should not be taken/ imposed against them : “i. DirectingthemjointlyandseverallytorefundmoneycollectedthroughtheOffer of NCDs alongwith interest, if any, promised to investors therein; ii. Directing them to not issue prospectus or any offer document or issue advertisementforsolicitingmoneyfromthepublicfortheissueofsecurities,in any manner whatsoever, either directly or indirectly, for an appropriate period; iii. Directingthemtorefrainfromaccessingthesecuritiesmarketandprohibiting themfrombuying,sellingorotherwisedealinginsecuritiesforanappropriate period.”

5. The Debenture Trustees, viz. Shri Amit Samanta and Shri Jagdish Chandra Nag were advised to show cause as to why suitable directions/prohibitions under sections 11(1), 11(4), 11Aand 11B of the SEBI Act, 1992 including restraining them from accessing the securities market and further restraining them from buying, selling or dealing in securities, in any manner whatsoever, for an appropriate period should not be issued. 6. The interimorderafforded the noticees an opportunity to file their response within 21

Order in respect of Gitanjali Udyog Limited and others days of receipt of the same and seek a personal hearing, if they desired. The interim orderwas forwarded to the noticees vide respective letters dated June 18, 2015. SEBI then proceeded further and granted an opportunity of personal hearing to the noticees on September 01, 2016. The noticees were informed of the date of hearing vide SEBI’s letter dated August 16, 2016. As the interimordercould not be delivered on certain noticeesat their last known address, SEBI made the public notice dated August 28, 2016 and August 29, 2016, in the newspapers namely ‘TimesofIndia’and ‘Anandabazar Patrika’respectively intimating the noticees about the interimorderand the personal hearing fixed on September 01, 2016. Vide the public notice the noticees were also advised to file their replies before the date of personal hearing. The Company and its directors were advised that in case they fail to appear before SEBI on the aforesaid date, then the matter would be proceeded ex-parte on the basis of material available on record. 7. On the date fixed for personal hearing, Shri Subhashis Dasgupta, Advocate appeared on behalf of Shri Paramasish Bhadury and Shri Sutanu Sarcar and made oral submissions.

He also filed a copy of the order passed by the Hon’ble Calcutta High Court in W.P. No. 18995(W) of 2014 and requested for one week’s time to submit the reply. The request of the representative was acceded to. The representative vide e-mail dated September 07, 2016, filed the reply of the company, which wastaken on record. The reply in brief, isas under: a. The company proposesto repay the amount collected from the debenture holdersby sale and/ or assignment of the entire leasehold,whichit isauthorizedandentitledtodounder the registered deed of lease dated September 30, 2011. b. For the same, the company preferred a Writ Petition before the Hon’ble Calcutta High Court bearing number 18995(W) of 2014 wherein the company had prayed for compounding of its default and the default of its officials. c. Hon’ble High Court vide its order dated September 16, 2014, had directed SEBI to sell the leasehold interest known as ‘Pather Abad Fishery’. 8. Other noticees neither filed replies nor appeared in the personal hearing despite service of notice. Accordingly, the hearing proceedings were concluded and I proceed to consider the case on merits on the basis of material available on record including the above said reply of the company.

Order in respect of Gitanjali Udyog Limited and others

9. I have considered the interimorderand material available on record. The primafacie findingsmade in theinterimorderare undisputed asnone of the noticeeshave filed their response on merits. As per the interimorder,the company had issued NCDs to at least 291 allottees during the Financial Years 2011-12, 2012-13, 2013-14 and 2014-15 and raised approximately `39.02 lakhs. The interimorderhas categorically stated that the number of allottees and the amount mobilized are taken from the documents submitted with the complaints received. I note that the noticees have failed to provide the details as asked by SEBI vide letter dated April 17, 2013, September 12, 2013, November 04, 2013, November 22, 2013, December 16, 2013 and February 12, 2014. 10. The Hon’ble Calcutta High Court in its Order dated September 16, 2014, in W.P. No. 18995(W) of 2014 [GitanjaliUdyogLimited&Anrs.Vs. TheUnionofIndia&Ors.] had also noted the non-co-operative attitude of GUL. From the said Writ Petition, it is observed that GUL had admitted that it ‘raisedatotalsumof`51,78,60,850/-onthe basisofdebentureswhichwereredeemableondifferentdates’. The same indicates that the actual number of allottees and amount mobilized by GUL is be much more than the indicated figures in the interimorder. Vide the said order, the Hon’ble Calcutta High Court had also observed that ‘… SEBI has initiated an investigation but due to non-cooperativeattitudeofthepetitioner,investigationhasnotprogressedmuchasno information has been forthcoming’. 11. In view of the above, I have no reason to differ from the observation that the company made a ‘public issue’ of NCDs in terms of first proviso to section 67(3) of the Companies Act, 1956. As the issuance of NCDs by the company was a ‘publicissue’, it ought to have complied with the applicable provisions of the Companies Act, 1956 and the ILDS Regulations as alleged in the interimorder. In the present case, there is no dispute to the fact that the company failed to comply with sections 60 read with sections 2(36), 56(1), 56(3), 73, 117B and 117C of the Companies Act, 1956 and regulations 4(2)(a), (b), (c), (d), 4(4), 5(2)(b), 6, 7, 8, 9, 12, 14, 15, 17, 19 and 26 of the ILDS Regulations. 12. The interim order was issued against the directors of the company namely Shri Paramasish Bhadury, Shri Anil Kumar Mishra, Shri Prabir Middey, Shri Surajeet Ray,

Order in respect of Gitanjali Udyog Limited and others

Shri Sutanu Sarcar, Shri Sanjay Bahadur and Shri Nonigopal Mondal. The details of the appointment and resignations of directors of the company are as under: Table A Name Date of Appointment Date of Cession Shri Paramasish Bhadury 29/04/2011 Continuing as director Shri Anil Kumar Mishra 30/07/2011 Continuing as director Shri Prabir Middey 07/01/2013 Continuing as director Shri Surajeet Ray 22/04/2009 23/02/2012 Shri Sutanu Sarcar 22/04/2009 07/01/2013 Shri Sanjay Bahadur 20/06/2012 30/07/2012 Shri Nonigopal Mondal 30/07/2012 05/04/2013 13. Shri Paramasish Bhadury, Shri Anil Kumar Mishra and Shri Prabir Middey are the present directors in the company. Shri Surajeet Ray, Shri Sutanu Sarcar, Shri Sanjay Bahadur and Shri Nonigopal Mondal are the past directors of the company. It has been concluded above that the company made public issue of NCDs during the Financial Years 2011-12, 2012-13, 2013-14 and 2014-15. Therefore, the aforesaid directors were part of the Board of Directors of the company during the period when the company mobilized public funds without complying with the public issue norms.

In terms of section 291 of the Companies Act, 1956, the Board of Directors of a company shall be entitled to exercise all such powers and do all such acts and things as the company is authorized to exercise and do. Therefore, the Board of Directors being responsible for the conduct of the business of a company will be liable for any non-compliance of law and such liability shall be upon the individual directors also. Section 56(1) and 56(3) read with section 56(4) imposes the liability for the non-compliance of the said provisions, on the company, every director and other personsresponsible for the issuance of the prospectus. The liability for non-compliance of section 60 of the Companies Act ison the Company, and every person who isa party to the non-compliance of issuing the prospectus as per the said section. Further, the directors of a company shall be liable for action in case of contravention of the ILDS Regulations. 14. The liability of the company and directors to repay under section 73(2) of the Companies Act, 1956 would remain until the whole of the subscription amount along with interest is refunded to the allottees/investors.

Therefore, the directors (irrespective of whether they continue or resign) who were present during the period when the company made the offer and allotted NCDs shall be liable for violation of sections 56,

Order in respect of Gitanjali Udyog Limited and others

60 and 73 of the Companies Act, 1956 and the ILDS Regulations. In this regard, I refer to and rely on the following observations made by the Hon’ble High Court of Madras in Madhavan Nambiar vs Registrar of Companies (2002 108 Comp Cas 1 Mad): “13. …. A director either full time or part time, either elected or appointed or nominatedisboundtodischargethefunctionsofadirectorandshouldhavetakenall the diligent steps and taken care in the affairs of the company. 14.Inthematterofproceedingsfornegligence,default,breachofduty,misfeasance orbreachoftrustorviolationofthestatutoryprovisionsoftheActandtherules,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.” 15. I note that the company or the noticees namely Shri Paramasish Bhadury and Shri Sutanu Sarcar have neither replied on the merits of the case nor submitted the complete details. The advocate who had appeared for the noticees namely Shri Paramasish Bhadury and Shri Sutanu Sarcar vide his e-mail dated September 07, 2016, while making submission on behalf of the company has stated that the company proposes to repay the amount collected from the debenture holders by sale and/or assignment of the entire leasehold, which is in registered deed of lease dated September 30, 2011. In this regard, he has also relied upon the Order of Hon’ble High Court of Calcutta dated September 16, 2014, wherein, SEBI was directed to sell the leasehold interest in ‘pather abadfishery’.

I note that theinterimorderhas already noted the compliance with regard to the order of Hon’ble High Court. The same is being reproduced below for ready reference: “2.4.3.IncompliancewiththeHon'bleHighCourt’sOrder,SEBItookstepstoseek valuationofGUL'spropertyandalsoappointedaValueronNovember26,2014. However,onthenexthearingheldintheabovementionedWritPetitioni.e. January13,2015,thecounselfortheStateofWestBengalsubmittedthatthe landmeasuring1280BighasinSaltLakeactuallybelongedtotheFisheries Department,Government ofWest Bengal andthe petitionerhadnoright to transfertheleaseholdinterestsinthesame.Thematteriscurrentlypending before the Hon'ble Calcutta High Court.” 16. Therefore, all the above persons namely Shri Paramasish Bhadury, Shri Anil Kumar

Order in respect of Gitanjali Udyog Limited and others

Mishra, Shri Prabir Middey, Shri Surajeet Ray, Shri Sutanu Sarcar, Shri Sanjay Bahadur and Shri Nonigopal Mondal being officersindefault, in terms of section 5 of the Companies Act, 1956, are responsible for the contravention committed by the company as found above and liable for the consequences of such default. The non-consequence of the aforesaid violations is refund of the subscription money by the company and its directors to the allottees along with interest at 15% p.a. as mandated under section 73(2) of the Companies Act, 1956 read with rule 3(c) of the Companies (Prospectus and Allotment of Securities) Rules, 2014.

17. The interimorder has observed that the company created a charge of `20 crore on August 02, 2011 and appointed Shri Amit Samanta and Shri Jagdish Chandra Nag as the debenture trusteesto secure the issue of NCDs. These personswere never registered with SEBI as a ‘debenture trustee’ and also does not qualify to be appointed in that capacity. Accordingly, I find Shri Amit Samanta and Shri Jagdish Chandra Nag guilty of contravening section 12(1) of the SEBI Act and regulation 7 of the SEBI (Debenture Trustees) Regulations, 1993 (hereinafter referred to as ‘Debenture Trustees Regulations’). 18. In view of the foregoing, I, in exercise of the powers conferred under sections 11(1), 11(4), 11A and 11B read with section 19 of the Securities and Exchange Board of India Act, 1992 and regulation 28 of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008, hereby issue the following directions: (i) Gitanjali Udyog Limited [PAN: AAMCS8602D] and its directors namely Shri Paramasish Bhadury [PAN: ANNPB2618K], Shri Anil Kumar Mishra [DIN: 03585327], Shri Prabir Middey [PAN: AIQPM0516K], Shri Surajeet Ray [PAN: AUAPR1861N], Shri Sutanu Sarcar [PAN: CUJPS7833J], Shri Sanjay Bahadur [PAN: ALGPB7497M] and Shri Nonigopal Mondal [PAN: AKJPM5712E] shall within a period of three months from the date of this order, jointly and severally refund the money collected through the issue of non-convertible secured redeemable debentures to the allottees with interest at the rate of 15% per annum from the date of receipt of money till the date of such refund. (ii) Such refund shall be made only in cash through a Demand Draft or Pay Order.

Order in respect of Gitanjali Udyog Limited and others (iii) Gitanjali Udyog Limited and its directors shall within fifteen days from the date of this Order submit to SEBI complete details of their assets (alongwith proofs thereof) certified by a peer reviewed Chartered Accountant. (iv) Gitanjali Udyog Limited and its directors are permitted to sell assets of the company and deposit the sale proceeds in an Escrow Account opened with a nationalized bank. Such proceeds shall be utilized for the sole purpose of making refund/ repayment to the allottees of equity shares till the full refund/ repayment as directed above is made. (v) Gitanjali Udyog Limited and its directors shall issue a public notice, in all editions of one English national daily and one vernacular daily with wide circulation, detailing the modalities for refund, including details of contact persons including names, addresses and contact details, within fifteen days of this order. (vi) Within seven days of completion of refund/ repayment as directed hereinabove, Gitanjali Udyog Limited and its directors shall file a certificate of such completion with SEBI from two independent peer reviewed Chartered Accountants who are in the panel of any public authority or public institution. Such certificate shall be issued by the Chartered Accountants after verifying the relevant documents including bank accounts of the Noticees and satisfying themselves that the refund has actually been made. (vii)For the purpose of this order, a peer reviewed Chartered Accountant shall mean a Chartered Accountant, who has been categorized so by the Institute of Chartered Accountants of India. (viii)Gitanjali Udyog Limited and its directors, Shri Paramasish Bhadury, Shri Anil Kumar Mishra, Shri Prabir Middey, Shri Surajeet Ray, Shri Sutanu Sarcar, Shri Sanjay Bahadur and Shri Nonigopal Mondal are restrained from, directly or indirectly, accessing the capital market by issuing prospectus, any offer document or advertisement soliciting money from the public and are further prohibited from buying, selling or otherwise dealing in the securities market, directly or indirectly, in whatsoever manner for a period of four years or till the date of refund of money to the allottees, whichever is later.

Order in respect of Gitanjali Udyog Limited and others (ix) Shri Paramasish Bhadury, Shri Anil Kumar Mishra, Shri Prabir Middey, Shri Surajeet Ray, Shri Sutanu Sarcar, Shri Sanjay Bahadur and Shri Nonigopal Mondal are also restrained from associating themselves, with any listed public company and any public company which intends to raise money from the public, for a period of four years or till the date of refund of money to the allottees, whichever is later. (x) Shri Amit Samanta and Shri Jagdish Chandra Nag are prohibited from buying, selling or otherwise dealing in the securities market, directly or indirectly, in whatsoever manner for a period of four years. (xi) For the purposesof sub-paragraphs(viii) and (ix) above, the period of restraint shall be counted from the date of the interim order. 19.The interim order cum show cause notice dated June 17, 2015, is disposed off accordingly. The above directions are without prejudice to the right of SEBI to take any other appropriate action for the violations found in this case or to initiate any action in case of failure to comply with the above directions, in accordance with the provisions of applicable laws including the proceedings under the provisions of section 28A of the SEBI Act. 20.The order shall come into force with immediate effect. A copy of the order shall be served on the Noticees to ensure compliance with the above directions. A copy of this Order shall also be forwarded to the recognised stock exchanges and depositories for information and necessary action. 21.A copy of this Order shall also be forwarded to the Ministry of Corporate Affairs/ concerned Registrar of Companies, for their information and necessary action.

Date : October 6th, 2016 RAJEEV KUMAR AGARWAL Place : Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA

Order in respect of Gitanjali Udyog Limited and others