Order in the matter of GSHP Realtech Limited

WTM/PS/83/ERO/MAR/2015 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, against - GSHP Realtech Limited its Directors, Mr. Sanjay Kumar Srivastava, Mr. Arun Kumar Singh, Mr. Dharampal Kumar Rawat, Mr. Mahesh Kumar Singh and Mr. Raj Kumar Mondal; and its Debenture Trustee, namely, GSHP Welfare and Development Trust

Date of personal hearing : August 22, 2014 Appearance: Mr. Surendar Sharma and Mr. Sanjay Rai, Chartered Accountants for Mr. Dharampal Kumar Rawat For SEBI : Ms. Soma Majumder, General Manager, Mr. T. Vinay Rajneesh, Assistant General Manager and Ms. Nikki Agarwal, Assistant Manager Date of personal hearing : December 11, 2014 Appearance For the noticees: The Company, GSHP Realtech Limited was represented by Mr. Sanjay Kumar Srivastava and Mr. Satish Kumar Agarwal, Consultant. Mr. Arun Kumar Singh and Mr. Raj Kumar Mondal appeared in person. For SEBI : Mr. T. Vinay Rajneesh, Assistant General Manager and Mr. Mohammad Shahid, Assistant Manager

1. Securities and Exchange Board of India (hereinafter referred to as "SEBI") had issued an ex-parte interim order dated May 15, 2014 ("the SEBI Order") in respect of a company, GSHP Realtech Limited ("the Company" or "GSHP"), its directors Mr. Sanjay Kumar Srivastava, Mr. Arun Kumar Singh, Mr. Dharampal Kumar Rawat, Mr. Mahesh Kumar Singh and Mr. Raj Kumar Mondal and its Debenture Trustee GSHP Welfare and Development Trust (collectively referred to as "the noticees"). The SEBI Order had inter alia observed that the Company had issued 2,88,167 numbers of Secured Non-Convertible Redeemable Debentures ("NCDs") on several occasions since incorporation to 570 investors and raised an amount of Rs.2,88,16,700/- (approx. Rs.2.88 crores). In this context, it was observed that during the financial year 2011-12, under the "Offer of NCDs", GSHP allotted NCDs to only 35 individuals/investors, from which it collected approximately Rs.0.24 Crores. However, for the financial year 2012–13, GSHP allotted NCDs to 535 individuals/investors under the "Offer of NCDs" and mobilized funds amounting to approximately Rs.2.64 Crores. Hence, the "Offer of NCDs" for the financial year 2012-13 was alleged to in violation of sections 56, 60, 73, 117B and 117C of the Companies Act, 1956 and the provisions of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008 ("the ILDS Regulations"). The SEBI Order also alleged that the Company had appointed GSHP Welfare and Development Trust as its debenture trustee, without it obtaining registration from SEBI in contravention of section 12(1) of the SEBI Act, 1992.

2. In view of the alleged violations, to prevent the Company from further carrying on with its mobilization activity under its offer and issue of NCDs and also to ensure that no investors are defrauded, SEBI issued the following directions vide the SEBI Order: ".............. 12. 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 and the Debenture Trustee Regulations, hereby issue the following directions – i. GSHP shall not mobilize funds from investors through the issue of Secured Non–Convertible Redeemable Debentures 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. GSHP and its Directors, viz. Shri Sanjay Kumar Srivastava, Shri Arun Kumar Singh and Shri Dharampal Kumar Rawat, Shri Mahesh Kumar Singh and Shri Raj Kumar Mondal, 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. GSHP and its abovementioned Directors shall provide a full inventory of all its assets and properties; iv. GSHP 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 issue of Secured Non–Convertible Redeemable Debentures, without prior permission from SEBI; v. GSHP and its abovementioned Directors shall not divert any funds raised from public at large through the issue of Secured Non–Convertible Redeemable Debentures, which are kept in bank account(s) and/or in the custody of GSHP; vi. GSHP Welfare and Development Trust is prohibited from continuing with his present assignment as a debenture trustee in respect of the issue of Secured Non–Convertible Redeemable Debentures of GSHP 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. 13. The above directions shall take effect immediately and shall be in force until further orders.

14. ....................... 15. This Order is without prejudice to the right of SEBI to take any other action that may be initiated against GSHP and its abovementioned Directors; its Debenture Trustee, viz. GSHP Welfare and Development Trust, in accordance with law." 3. The observations contained in the SEBI Order were made on the basis of the material available on record i.e. correspondences exchanged between SEBI and GSHP alongwith the documents contained therein; information obtained from the 'MCA 21 Portal'. The SEBI Order advised the noticees to file their reply and to indicate whether they desired to avail an opportunity of personal hearing.

4. The Company vide letter dated June 24, 2014 inter alia made the following submissions: a) The Company's issue of debentures was made on 'private placement' and did not circulate any application form to the public. The offer was restricted to friends, associates and well wishers of the Company and as such there was no date of opening and closing of the issue. b) The Company had not issued debentures to more than 49 persons in any one of the offer or invitation. c) The Company admitted and accepted that SEBI had power to investigate any violation related to issue and transfer of securities. However, the Company was not a listed company and there could not be violation of the Companies Act, 1956 with respect to the issue of NCDs on private placement. d) The Company did not know about the exchange of correspondence between SEBI and RoC or with RBI or other agencies and as such was not in a position to make any comments. e) With respect to Form-10 dated December 22, 2011 and June 27, 2012 for modifying charge of Rs.1 crore to 31 crores with a proposal to increase issue of debentures to the extent of Rs.31 crores, the Company submitted that it issued debentures to not more than 49 persons at a time against each offer/invitation and therefore there was no violation of the statutory provisions as alleged. f) The Board of Directors had formed a committee for allotment of debentures, who held meetings and allotted NCD to less than 50 persons at any given instance. The said committee issued debentures on various dates, which were adopted and ratified by the Board of Directors.

g) It would be clear from the records that the Company did not violate section 67 of the Companies Act, 1956 in any manner whatsoever. h) The findings made in the SEBI Order were not acceptable to the Company in respect of offer of NCDs. Therefore, the question of issuing a prospectus did not arise as per the provisions of section 73 of the Companies Act. i) SEBI Regulations were also not applicable in the case where the issue of securities were made to associates on a private placement. The Company requested SEBI to withdraw the SEBI Order issued against it, the directors and the debenture trustee.

5. An opportunity of personal hearing was afforded to the noticees on August 22, 2014. On the said day, noticee, Mr. Dharampal Kumar Rawat was represented by Mr. Sanjay Rai and Mr. Surendar Sharma, Chartered Accountants, who tendered reply dated August 19, 2014. The representatives submitted that the submissions in the reply be taken on record and considered in the matter. The following submissions were made by Mr. Dharampal Kumar Rawat: a) He was one of the directors of the Company till October 22, 2013. Copy of Form-32 was enclosed with respect to his cessation as director. b) Though he resigned during October 2013, he was disassociated with the Company as early as July 2013. c) He was not aware of the inquiry conducted on the Company and he came to know of the proceedings only vide the SEBI Order. d) He was stationed at Kolkata and the funds collected by issuance of debentures from other places of the Company were taken care of by other directors/officers of the Company. As per his knowledge, a 'major chunk' of the funds by issuance of debentures were mobilized from outside Kolkata and West Bengal. e) Till March 31, 2012, the Company had mobilised funds to the tune of Rs.17,12,508/- and till March 31, 2013, the total mobilisation was Rs.2,88,45,043/-. f) During his tenure, the funds collected by issuance of debentures were deposited in Bank accounts of the Company which were utilised for the purchase of fixed assets, current assets and in the form of cash and bank balances, which are reflected in the balance sheet (FY 2011- 2012 and 2012-2013) of the Company. g) Post his resignation, he does not have any knowledge of the affairs of the Company.

h) The Company had also issued 'no claim/no liability' certificate and the Company had passed a resolution in this respect.

The Company, vide letter dated August 22, 2014, requested SEBI for another opportunity on the ground that its key managerial personnel was not available. There was no representation from the other noticees in the personal hearing held on August 22, 2014.

6. As requested by the Company, another opportunity of personal hearing was afforded on September 26, 2014. This opportunity was also for other noticees for whom the hearing was not completed. However, the concerned noticees failed to appear in this personal hearing. Accordingly, hearing opportunity was closed in the matter. However, SEBI received two letters dated September 26, 2014 from noticees, Mr. Sanjay Kumar Srivastava and Mr. Arun Kumar Singh.

Mr. Sanjay Kumar Srivastava, while acknowledging the previous notices/letters of SEBI, submitted that he was appointed as a director in the Company on July 25, 2011. However, due to his pre-occupation, he had resigned from the Company during 2013. He also submitted that his resignation was updated in the RoC records on October 22, 2013 and the same could be verified from the MCA 21 portal. He also stated that he was not aware of the day to day activities of the Company and would not be able to throw light on issues related to the SEBI investigation. He requested that SEBI should excuse his presence in the personal hearing and that the same should not be interpreted that he was hiding facts and not willing to co-operate with SEBI.

Mr. Arun Kumar Singh stated that he was fully prepared to attend the personal hearing held on September 26, 2014. However, due to his health and liver related ailments, his doctor had advised his rest and prohibited him to travel. He requested for another opportunity of personal hearing (to be fixed after a period of one month) on these grounds and assured that he would appear in the hearing once his health permits.

7. In view of the above request, the personal hearing was fixed on December 11, 2014. The Company was represented by Mr. Sanjay Kumar Srivastava and Mr. Satish Kumar Agarwal, Consultant. Mr. Arun Kumar Singh and Mr. Raj Kumar Mondal appeared in person. The noticees were granted liberty to file written submissions with supporting documents, if any, within a period of seven days. It is noted that till date, no submissions have been filed by the said noticees. No replies were received from noticees, Mr. Mahesh Kumar Singh and the debenture trustee, GSHP Welfare and Development Trust.

8. I have considered the observations and allegations made in the SEBI Order, the submissions made by the Company and other noticees who had filed replies and other material available on record. The allegation against the Company and the directors is that the Company did not comply with the 'public issue' norms mandated under sections 56, 60, 73, 117B and 117C of the Companies Act, 1956 and the provisions of the ILDS Regulations in respect of its offer and issuance of NCDs. The SEBI Order had, while considering the submissions made by the Company, alleged that the Company made a public issue of NCDs during the Financial Year 2012-2013 to a total of 535 persons for an amount of Rs.2,63,94,200/-. In this regard, the table providing the details of the allotment is reproduced herein below from the SEBI Order: Financial Date of allotment No. of No. of persons to Total Amount (Rs.) Year debentures whom allotted allotted 28.06.2012 11470 21 1,147,000 01.10.2012 38930 48 3,893,000 03.10.2012 11740 19 1,174,000 15.12.2012 7245 31 724,500 18.12.2012 8040 35 804,000 22.12.2012 17020 46 1,702,000 28.12.2012 31265 45 3,126,500 2012-13 29.12.2012 7390 11 739,000 01.01.2013 19775 46 1,977,500 04.01.2013 17950 47 1,795,000 08.01.2013 23872 45 2,387,200 10.01.2013 28805 46 2,880,500 31.01.2013 14870 32 1,487,000 28.02.2013 13720 31 1,372,000 30.03.2013 11850 32 1,185,000 Total 263942 535 Rs.2,63,94,200/-

The Company has contended that the Board of Directors have constituted a Committee for Allotment of NCDs and that such allotments were always made to 49 persons or less in private placement and therefore its offer and issuance of NCDs is not a public issue.

Section 67 of the Companies Act, 1956, lays down the criteria to test whether the offer of securities is made on a private basis or made to the public at large. Accordingly, it would be important to refer to the provisions of section 67(1) and (3) of the Companies Act, 1956. "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 the first proviso to section 67(3), any offer or invitation to subscribe for shares or debentures made to 50 persons or more is construed to be an offer made to the public. The allegation of SEBI is that the Company, by making an offer and allotting securities to more than 50 persons, had made a public issue. The Company has contended that it had allotted securities in tranches and had consciously kept the number of allottees to less than 50 in each of the allotments. Whether this manner of allotment would allow the Company to state that it made the offer and allotment on private placement is the question to be answered. In this regard, it needs to be noted that the Company, had merely made the above contention, without proper proof to show that "shares or debentures available for subscription or purchase were not available to persons other than those receiving the offer or invitation" or "the offer or invitation can be regarded as a domestic concern of the persons making and receiving the offer or invitation". As the Company had asserted that it made a private placement of securities and the same was made to friends/family etc., the burden to prove the same shifted on it, as per section 67 of the Companies Act, 1956. However, the Company has not substantiated with proof that it has made offer and allotted securities to 'friends, associates and well wishers of the Company' and that it knew them before hand and made specific offers. Further, SEBI is also in receipt of numerous complaints from investors of NCDs alleging that the Company has not returned their investments, which proves that the offer made by the Company was not in terms of section 67(3)(a) and (b) of the Companies Act. Further, by merely contending that the allotment was on 'private placement' would necessarily mean the same and the nature of the offer and issue - whether private or public, has to be decided on the basis of the terms and conditions and conduct of the Company.

9. I also note the following observations made in the SEBI Order and agree with the same: ".............. c. It is pertinent to note that the allotments made during the financial year 2012–13, consisted of inter alia the following series of allotments, viz. –

Period of Allotment No. of Investors/Allottees October 1–3, 2012 67 December 15–22, 2012 112 December 28, 2012–January 4, 2013 149 January 8–10, 2013 91 d. The abovementioned allotments during the financial year 2012–13, were made within a very short span of approximately 2–8 days between each such allotment; for example, allotment to 67 investors/allottees was made within a very short time span between October 1–3, 2012. Vide its letter dated August 24, 2013, GSHP submitted that: "the proceeds of issue of NCDs has been utilized for procuring land, real estates, investment in business". While it is observed that each allotment of NCDs was approved by a resolution passed by the Board of Directors of GSHP [as stated in paragraph 8.4(iii)b], the frequency of and time span between such approvals coupled with the series of allotments made thereafter would prima facie indicate that the "Offer of NCDs" was a public issue of securities and such method adopted by GSHP for mobilization of funds is nothing but a device to circumvent the provisions of section 67(3) of the Companies Act, 1956. In view of the same, the abovementioned allotments under the "Offer of NCDs", therefore, have to be construed as emanating from a single offer of securities and prima facie indicate that the number of persons to whom such offer was made by GSHP in tranches during the financial year 2012–13, was above the limit of forty– nine persons as prescribed under Section 67(3) of the Companies Act, 1956.

The manner of offer and allotments made by the Company and its admission that it had kept the number of allottees below 49 in each of the allotments made within a short span of time, in the light of the above observations, can be concluded that the same was a scheme or artifice employed by the Company to evade the provisions of section 67(3) and to comply with the public norms as alleged. The Hon'ble Courts have always criticized persons/entities who employ a colourable scheme to evade the provisions of law. In this regard, I refer to the following observations made by the Hon'ble Courts:

(a) The Hon'ble Supreme Court of India in the matter of Hindustan Lever & Anr vs State Of Maharashtra & Anr decided on November 18, 2003 had observed "In Hindustan Lever Employees Union case (supra) it has been held by this Court that Section 394 casts an obligation on the Court to be satisfied that the scheme of amalgamation or merger was not contrary to the public interest; the basic principle of such satisfaction is none other than the broad and general principle inherent in any compromise or settlement entered between the parties that it should not be unfair or contrary to public policy or unconscionable or that the scheme should not be a device to evade the law."

(b) The Hon'ble Gujarat High Court in Patel Ratilal Maganbhai [2003 (1) GLR 562] had observed that "... Equity is always known to defend the law from crafty evasions and new subtleties invented to evade law...".

(c) There are a plethora of cases, wherein the Courts/Tribunal have considered whether a 'scheme' was a colourable device to evade the payment of tax by an assessee. The Courts have held that tax could be avoided within the four corners of law but colourable device shall not be allowed for evading tax.

The manner of allotment by the Company, even as per its admission of having cautiously allotted to not more than 49 investors at a time, is therefore a scheme or artifice employed to evade the law laid down under first proviso to section 67(3) of the Companies Act, 1956.

I also note the following observation from the SEBI Order : f. "In addition to the above, it is observed that GSHP created a charge amounting to `1 Crore on December 22, 2011 and filed Form 10 with the ROC on January 9, 2012, for issue of series of debentures amounting to `1 Crore; as part of the aforementioned "Offer of NCDs", GSHP attached a list to the e–form (filed by GSHP as part of the aforesaid Form 10) containing the names of 46 individuals, which was certified by the Director of that company to be a "list of proposed debenture holder". Thereafter, GSHP again filed Form 10 with the ROC on June 27, 2012, for modifying the existing charge from `1 Crore to `31 Crore alongwith a proposed increase in the issue of series of debentures to `31 Crores; the same list containing the names of 46 individuals was filed as an attachment to the e–form in respect of the subsequent "Offer of NCDs". However, on a comparison of the aforementioned two lists each containing names of 46 individuals against the list of 570 debenture holders (submitted by GSHP vide letter dated August 24, 2013) to whom the "Offer of NCDs" was made by GSHP, it is observed that only 3 names were common in such lists. "

In such facts and circumstances, it is proved that the offer and allotments were not restricted to 'friends, associates and well wishers of the Company' and the offer was available to the public to accept the same and invest their money in NCDs. The Company also submitted that there was no date of opening and closing of the issue. I also note from the SEBI Order that the Company had invited subscription for NCDs of Rs.100/- each aggregating Rs.31 crores in accordance with various schemes. This would indicate that the Company made a single offer to mobilize funds and the allotments were cautiously done in various tranches to less than 49 persons in order to stay away from the regulatory purview and evade the liability of complying with the public issue norms as alleged in the SEBI Order.

10. In view of the foregoing, it would be in accordance with the law laid down under the first proviso to section 67(3) of the Companies Act, 1956 to include all the allotments done by the Company under the same Resolution. Accordingly, the offer and allotment of NCDs made to 535 investors (offer and allotment to more than 50 persons) during the financial year 2012-2013 is definitely a 'public offer of NCDs'. The Company has, through this public issue of NCDs, mobilized Rs.2,63,94,200/-. By making a public issue of NCDs, the Company was mandated to comply with all the legal provisions that govern and regulate such public issue of NCDs, 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 India Real Estate Corporation Limited & Ors. Vs. SEBI (Civil Appeal no. 9813 and 9833 of 2011) (hereinafter referred to as the '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. …"

11. As alleged in the SEBI Order, the Company was mandated to comply with the provisions of sections 56, 60 and 73 of the Companies Act, 1956 in respect of its offer and issue of 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'. As recorded in the SEBI Order, the Company has admitted that it did not issue any Prospectus, Advertisement or other promotional material for issuing NCDs. The SEBI Order has also alleged that the Company did not comply with sections 117B and 117C of the Companies Act, 1956. The relevant portion of the said sections are reproduced below for reference:

"117B. APPOINTMENT OF DEBENTURE TRUSTEES AND DUTIES OF DEBENTURE TRUSTEES (1) No company shall issue a prospectus or a letter of offer to the public for subscription of its debentures, unless the company 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..." "117C. LIABILITY OF COMPANY TO CREATE SECURITY AND DEBENTURE REDEMPTION RESERVE (1) Where a company issues debentures after the commencement of this Act, 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 submitted that it has complied with these provisions. Further, there is no material on record to arrive at a finding that such provisions had been complied with by the Company. Accordingly, the Company is found liable for the contravention of sections 117B and 117C of the Companies Act, 1956.

12. Further, by issuing NCDs to more than 50 persons, the Company had to compulsorily list such securities in compliance with section 73 of the Companies Act, 1956. As per section 73(1) and (2) 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 and if permission has not been applied for or not granted, the company is required to forthwith repay with interest all moneys received from the applicants. The Company appears to have contravened the said provisions as it has neither made an application seeking listing permission nor refunded the amounts on account of such failure. 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. The Company has not complied with the above said provisions of law and is therefore liable for the contraventions.

13. The SEBI Order has also alleged that the Company has not complied with the provisions of the ILDS Regulations in respect of its issue of NCDs to the public. In terms of the ILDS Regulations, 'debt securities' are 'non-convertible debt securities which create or acknowledge indebtedness, and include debenture…'. The NCDs are debentures which are non-convertible in nature and acknowledge debt. Accordingly, the ILDS Regulations would be applicable for the offer and issue of NCDs made by the Company. I therefore find the Company liable for contravening 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 16 – Debenture Redemption Reserve xv. Regulation 17 – Creation of security xvi. Regulation 19 – Mandatory Listing xvii. Regulation 26 – Obligations of the Issuer, etc.

14. The SEBI Order has been issued to the Company as well as its directors, Mr. Sanjay Kumar Srivastava, Mr. Arun Kumar Singh, Mr. Dharampal Kumar Rawat, Mr. Mahesh Kumar Singh and Mr. Raj Kumar Mondal.

Mr. Dharampal Kumar Rawat contended that he ceased to be a director of the Company from October 22, 2013. In this regard, I note that he was appointed as a director in the Company on August 19, 2010. The Company is found to have contravened the norms governing public issue of securities which were issued during 2012-2013 (i.e., from 28.06.2012 to 30.03.2013). It is noticed that Mr. Dharampal Kumar Rawat was a director during the period when such impugned NCDs were issued.

Mr. Sanjay Kumar Srivastava submitted that he was appointed as a director in the Company on July 25, 2011 and that due to his pre-occupation, had resigned from the Company during 2013. He also submitted that his resignation was updated in the RoC records on October 22, 2013. The above said date of appointment and cessation as a director is correct as per the relevant documents (Register of directors, managing directors, manager and secretary etc) obtained from the MCA portal. This person also served as the director in the Company during the period when the impugned securities were issued.

I have also perused the various Minutes of the Board of Directors pertaining to the allotment of NCDs as mentioned in the Table at paragraph 8 (page 6) and note that Mr. Sanjay Kumar Srivastava, and Mr. Dharampal Kumar Rawat were part of the Board of Directors that approved the offer and allotment of the impugned securities to the public investors. Accordingly, the above persons are held to be 'officers in default' and are accordingly found liable for the violations committed by the Company including the failure to refund the amounts collected, as directed under section 73 of the Companies Act, 1956.

I also note that the SEBI Order was also issued against Mr. Arun Kumar Singh, Mr. Mahesh Kumar Singh and Mr. Raj Kumar Mondal. As per the List of Signatories (table below) of the Company, available from MCA portal, these persons are the present directors of the Company. Accordingly, it can be presumed that they are in-charge of the affairs and business of the Company.

List of Signatories Present residential Date of DIN/DPIN/PAN Full Name Designation address Appointment PITHAGHAT,PO.RAMPUR ARUN KUMAR, P.S-GORKHA,DISTRICT - 06530628 Director 22/04/2013 SINGH CHAPRA, PATNA, 841311, Bihar, INDIA EAST UDAY RAJPUR MAHESH ,DARPARA, MADHYAM 06719386 Director 22/10/2013 KUMAR SINGH GRAM, KOLKATA, 700129, West Bengal, INDIA 55/3, M N K ROAD NORTH, PO & PS RAJ KUMAR 06719424 BARANAGAR, KOLKATA, Director 22/10/2013 MONDAL 700036, West Bengal, INDIA

It is noted that Mr. Arun Kumar Singh was appointed as a director on April 22, 2013 and that the other two persons were appointed on October 22, 2013. Though they were appointed later than March 30, 2013, I note that they have not exercised necessary diligence while taking charge of directorship in the Company. The very inaction by these directors against the previous management (for violating the public issue norms as stipulated under the Companies Act, 1956 and the ILDS Regulations while making the offer and issuing the NCDs), even after the receipt of the SEBI Order, leads one to conclude on a possible collusion at their end with the Company and its previous management. Further, these noticees have also not taken any steps to remedy the violations committed. Nor have they filed their submissions in this proceeding. Therefore, I hold Mr. Arun Kumar Singh, Mr. Mahesh Kumar Singh and Mr. Raj Kumar Mondal to be 'officers in default' and hence liable for the contraventions found against the Company and also for the consequences of such violations. Further, the liability of the Company to refund the public funds collected through offer and allotment of the impugned NCDs is a continuing liability and such liability would continue till repayments are made. In addition to the Company and the former directors (Mr. Sanjay Kumar Srivastava and Mr. Dharampal Kumar Rawat), the present directors i.e., Mr. Arun Kumar Singh, Mr. Mahesh Kumar Singh and Mr. Raj Kumar Mondal are also responsible for making the refunds in accordance with section 73(2) of the Companies Act.

15. In view of the foregoing, the natural consequence of not adhering to the norms governing the issue of securities to the public and making repayments as directed under section 73(2) of the Companies Act, 1956 is to direct the Company, its former directors (who were the directors when the impugned offer and allotment of NCDs were done) and its present promoters/directors to refund the monies collected with interest to such investors. Accordingly, the Company and its former directors (who were the directors during the period of violations committed by the Company as found in this Order) namely Mr. Dharampal Kumar Rawat and Mr. Sanjay Kumar Srivastava and its present directors, namely, Mr. Arun Kumar Singh, Mr. Mahesh Kumar Singh and Mr. Raj Kumar Mondal, shall be jointly and severally liable for making the refunds. Further, in view of the violations committed by the Company and its former directors, to safeguard the interest of the investors who had subscribed to such NCDs issued by the Company, to safeguard their investments, and also to ensure that the Company does not collect any further monies pursuant to its offer of NCDs, it also becomes necessary for SEBI to issue appropriate directions against the Company and the other noticees.

16. The SEBI Order has stated that as per the information available from the MCA 21 portal, GSHP Welfare and Development Trust has been appointed by the Company as the debenture trustee for the issue of NCDs. The SEBI Order has alleged that GSHP Welfare and Development Trust has contravened section 12(1) of the SEBI Act as the entity has acted an a debenture trustee without obtaining registration from SEBI. As mentioned above, the said Trust has not filed any submissions. Section 12(1) of the SEBI Act mandates 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. " It is a fact that the said Trust is not registered with SEBI in the capacity as a 'Debenture Trustee'. Without obtaining registration, the Trust had acted as a debenture trustee of the Company in respect of its impugned NCDs. This conduct is therefore in contravention of section 12(1) of the SEBI Act, as alleged.

17. In view of the foregoing, 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, GSHP Realtech Limited (CIN - U45200WB2010PLC152445), its promoters and present directors including Mr. Arun Kumar Singh (DIN - 06530628), Mr. Raj Kumar Mondal (DIN - 06719424) and Mr. Mahesh Kumar Singh (DIN - 06719386) and its former directors (who were the directors during the period of violations committed by the Company as found in this Order) namely Mr. Dharampal Kumar Rawat and Mr. Sanjay Kumar Srivastava, jointly and severally, shall forthwith refund the money collected by the Company through the issuance of Secured Non-Convertible Redeemable Debentures (which have been found to be issued in contravention of the public issue norms stipulated under the Companies Act, 1956 and the SEBI (Issue and Listing of Debt Securities) Regulations, 2008), with returns that were promised by the Company to its investors. In case of delay in making the repayments, the Company, its promoters and present directors, shall jointly and severally, return the money collected from its investors with an interest of 15% per annum compounded at half yearly intervals, from the date of this Order till the date of actual payment. The above directed interest on the delayed payments shall be over and above the returns that are due to its investors of such instruments.

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

(c) The Company/its present management is 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, GSHP Realtech Limited shall issue public notice, in all editions of two National Dailies (one English and one Hindi) and in one local daily (in Bengali) 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 coming into effect.

(e) After completing the aforesaid repayments, the Company 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. 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) The Company, GSHP Realtech 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 4 years from the date of completion of refunds to investors, made to the satisfaction of SEBI, as directed above. The Company is restrained from accessing the securities market for the purposes of raising funds with immediate effect.

(g) The present directors Mr. Arun Kumar Singh (DIN - 06530628), Mr. Raj Kumar Mondal (DIN - 06719424) and Mr. Mahesh Kumar Singh (DIN - 06719386) shall be restrained from accessing the securities market and would be further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, if the above directed refunds are not completed within a period of 3 months from the date of this Order. This restraint shall continue to be in force till the repayments are made in compliance with this Order.

(h) The noticees (former directors of the Company), namely, Mr. Dharampal Kumar Rawat (DIN - 02730667) and Mr. Sanjay Kumar Srivastava (DIN - 02860713) are hereby restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, for a period of 4 years. 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, for a period of 4 years.

(i) GSHP Welfare and Development Trust, the entity who was engaged by the Company as its debenture trustee in contravention of law, shall not offer itself to be engaged as a 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, GSHP Welfare and Development Trust is restrained from accessing the securities market and is further restrained from buying, selling or dealing in securities, in any manner whatsoever, for a period of 4 years.

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

18. In case of failure of the company, GSHP Realtech Limited and its promoters/directors to comply with the aforesaid directions, SEBI shall take appropriate action against them and other persons/officers who are in default, including launching of prosecution proceedings, adjudication proceedings and attachment and recovery proceedings against them, in accordance with law. SEBI would also - a. 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 b. make a reference to the Ministry of Corporate Affairs, to initiate the process of winding up of the company, GSHP Realtech Limited.

19. 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.

20. Copy of this Order shall 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 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 : March 18, 2015 Place: Mumbai