Order in the matter of Lokmangal Agro Industries Ltd

ORDER Under Section 11(1), 11(4), 11A (1)(b) and 11B of the Securities and Exchange Board of India Act, 1992 in the matter of- Lokmangal Agro Industries Limited (PAN: AAACL7933N) and its directors/promoters, viz. Mr.Mahesh Satishchandra Deshmukh (PAN: AGXPD4794K), Mr.Subash Sureshchandra, Deshmukh (PAN: ABEPD7883R), Ms.Smita Subhash Deshmukh (PAN: ABGPD4907Q), Mr.Vijinath Nagappa Lature (PAN: AAIPL4725B), Mr.Anil Vasantrao Pandhare (PAN: ABBPP7745D), Mr.Parag Suresh Patil (PAN: AMZPP5693B), Mr.Audumber Sandipan Deshmukh (PAN: ABFPD6320A), Mr. Shahaji Gulchand Pawar (PAN: ANGPP9753N) and Mr.Gurrana Apparao Teli (PAN: AKMPT5879J).

1. Securities and Exchange Board of India (hereinafter referred to as 'SEBI') received a letter dated August 8, 2014 from Registrar of Companies (hereinafter referred to as 'RoC'), Pune, stating that while carrying out the Technical Scrutiny of Balance Sheet of M/s Lokmangal Agro Industries Limited (hereinafter referred to as 'Lokmangal Agro'/the company), for the financial years from 01/04/2010 to 31/03/2013, it was observed that a sum of Rs 11,59,20,500/- was shown as share application money pending for allotment. It was further informed that the company in their letter dated July 31, 2012 addressed to RoC interalia stated that: a. “The farmers who are cane suppliers, apply for shares in the company; b. The amount referred above was received as share application money mainly from the farmers who supply sugarcane to the Company's sugar factory; c. The farmers usually put in the share application money in instalments. d. The company was expecting more amounts from farmers as the sugarcane crushing season was in progress.”

2. Subsequent to this, SEBI vide letter dated August 27, 2014 requested the RoC to provide the copies of said Technical Scrutiny Report and the copy of the aforesaid letter sent by Lokmangal Agro to RoC.

3. RoC vide its letter dated September 4, 2014 furnished the aforesaid information/documents sought by SEBI.

4. As part of the inquiry, SEBI vide letter dated January 1, 2015 sought the following details from Lokmangal Agro:

i. Details of issuance of equity shares and/or convertible securities during last 5 years (since April 2009 till date) such as the date of RHP/Prospectus filed if any, date of allotment, no. of allottees and amount raised, ii. Copies of the RHP/Prospectus/Information Memorandum, if any filed in connection with the issuance of equity shares.

5. In response, the company vide letter dated March 7, 2015 furnished a list containing the details of equity shares issued by the company since April 2009 till March 2011. In addition, the company submitted as under: i. “Company has not undertaken any public issue of equity shares or other securities. Accordingly, the company has never prepared/filed any RHP/Prospectus/Information Memorandum, ii. Ours is a sugar manufacturing company ….in Solapur Dist., Maharashtra. Our shareholders are sugarcane cultivators from the surrounding areas with whom company is associated and deals with on a regular basis… iii. They have been issued and allotted equity shares in the company on a preferential basis in accordance with the provisions of the Companies Act against payments received by the company in cheque. iv. Necessary returns/forms in relation to the same have also been filed by the company with RoC, v. None of the original allottees of the equity shares have further sold/transferred their shareholding in the company.”

6. On examining the data available on MCA21 website, it is observed that: i. Pursuant to shareholders resolution passed on March 03, 2011, the company allotted shares to 49 persons on a daily basis from October 01, 2011 to December 13, 2011, ii. In total, the company had allotted shares to 3626 investors raising approx. Rs 72.52 Cr.

7. Subsequently, information was sought again from the RoC regarding further allotment of securities, if any, by the company after the period under observation. RoC vide e-mail dated June 20, 2016 informed that no allotment of shares has been made by the company after December 13, 2011.

8.1 The material available on record such as information received by SEBI from RoC and the documents contained therein, correspondence exchanged between SEBI and Lokmangal Agro, and information obtained from the MCA 21 Portal, has been perused. On an examination of the same, it is prima facie observed that:

a. Lokmangal Agro (Lokmangal Agro Industries Ltd.) (CIN: U01122PN1998PLC012974) was incorporated on October 16, 1998. Its registered address is at Lokmangal House 8536-A/11, Murarji Peth, Near Old Poona Naka, Solapur, Maharashtra, Pin: 413001.

b. Lokmangal Agro is an unlisted company with a paid up capital of Rs 99.96 Cr. The present and past Directors/promoters of Lokmangal Agro are: Date Of Date of Director Name Designation Address SNo Appointment Cessation 13 A, Sahaydri Nagar, Mr. Mahesh Managing Hotgi Road, Solapur - 05-Dec-2006 31-Mar-2013 1 Satishchandra Director 413 003 Deshmukh

Mr.Subhash 13 A, Sahaydri Nagar, 31-Mar-2009 Sureshchandra Hotgi Road, Solapur - 16-Oct-1998 2. Director Deshmukh 413 003

13 A, Sahaydri Nagar, 31-Mar-2013 Ms.Smita Subhash Hotgi Road, Solapur - 16-Oct-1998 3. Deshmukh Director 413 003

72-73, Co-op, Industrial 31-Mar-2013 Mr.Vijinath Nagappa estate, Signal Camp, 16-Oct-1998 4. Lature Director Latur - 413 512

157, Railway Lines, 31-Mar-2013 Mr.Anil Vasantrao 16-Oct-1998 5. Director Solapur - 413 001 Pandhare A/P - Mardi, Tal North 31-Mar-2013 Mr.Audumber 16-Oct-1998 6. Director Solapur, dist. - Solapur Sandipan Deshmukh A/P - Mardi, Tal North 31-Mar-2013 Mr. Shahaji Gulchand 16-Oct-1998 7. Director Solapur, dist. - Solapur Pawar

A/P- Honmurgi, 31-Mar-2013 Mr.Gurrana Apparao Tal.South Solapur, dist. 16-Oct-1998 8. Teli Director Solapur

A 5/7, Suncity, Nr Jam - Mill compound, Laxmi 01-Feb-2010 9. Mr.Parag Suresh Patil Director Peth Damani Nagar, Solapur, 413 001

13 A, Sahaydri Nagar, - Mr. Mahesh Subhash Hotgi Road, Solapur - 31-Mar-2013 10. Director Deshmukh 413 003

165/6 Tejasi Tara - Building, Railway Lines, 02-Mar-2015 11. Director Prashant Prabhakar Solapur 413 001 Patil 13 A, Sahaydri Nagar, - Aboli Mahesh Hotgi Road, Solapur - 02-Mar-2015 12. Director Deshmukh 413 003 c. As per the data obtained from the MCA21 website, it is observed that the company has filed balance sheets till March 31, 2014. It is further observed that the Company has received share application monies during the year 2011, from about 3626 farmers who supplied sugarcane to the Company's sugar factory. The company raised Rs 72.52 Cr. from them during the period October 01, 2011 to December 13, 2011. Further, on perusal of the list containing the details of allotment of shares furnished by the company vide letter dated March 7, 2015, it is observed that the company itself had admitted that it had collected an amount of Rs.74.82 Cr. from 4751 investors during the period 2009- 2011.

8.2 In the context of the abovementioned details of the Offer of equity Shares, the issue for determination in the instant matter is whether the mobilization of funds by Lokmangal Agro through the aforesaid issue, is in accordance with the provisions of the SEBI Act, 1992 ("SEBI Act"), the Companies Act, 1956 (since repealed) read with the Companies Act, 2013, the SEBI (Disclosure and Investor Protection) Guidelines 2003 (hereinafter referred to as 'DIP Guidelines') read with the SEBI (Issue of Capital & Disclosure Requirements) Regulations, 2009 (hereinafter referred to as 'ICDR Regulations').

8.3 I note that the jurisdiction of SEBI over various provisions of the Companies Act, 1956, in the case of public companies, whether listed or unlisted, when they issue and transfer securities, flows from the provisions of Section 55A of the Companies Act, 1956. While examining the scope of Section 55A of the Companies Act, 1956, the Hon'ble Supreme Court of India in Sahara India Real Estate Corporation Limited & Ors. vs. SEBI (Civil Appeal no. 9813 of 2011) (Judgment dated August 31, 2012) (hereinafter referred to as the "Sahara Case"), had observed: "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."

8.3.1 In terms of the relevant provisions of the Section 55A of the Companies Act, 1956, the provisions contained in Sections 55 to 58, 59 to 81 (including Sections 68A, 77A and 80A), 108, 109, 110, 112, 113, 116, 117, 118, 119, 120, 121, 122, 206, 206A and 207 of the Companies Act,1956 read with Section 24 of the Companies Act, 2013 so far as they relate to the issue and transfer of securities shall be in the case of listed public companies and in the case of those public companies which intend to get their securities listed on any recognised stock exchange in India, be administered by SEBI. In this regard, it is pertinent to note that by virtue of Section 55A of the Companies Act, Section 67 of that Act, so far as it relates to issue and transfer of securities, shall also be administered by SEBI in the case of companies who intend to get their securities listed. In view of the above observations, by virtue of Section 55A(a) and (b), SEBI has jurisdiction and would govern the alleged public issue of equity shares made by the Company during the period March 2001-March 2014, as discussed above.

8.4 As the equity shares have been issued to the public during the year 2011, the provisions of sub- Sections (1), (2) and (3) of the Section 67 of the Companies Act, 1956, are applicable to the allotments made by Lokmangal Agro. In this regard, i. Sections 67(1) and 67(3) of the Companies Act, 1956, are reproduced as under :

"67. Construction of reference to offering shares or debentures to the public, etc.

(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) Any reference in this Act or in the articles of a company to invitations to the public to subscribe for shares or debentures shall, subject as aforesaid, be construed as including a reference to invitations to subscribe for them extended 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. (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).”

ii. While examining the scope of Section 67 of the Companies Act, 1956, the Hon'ble Supreme Court of India in the Sahara Case observed :

"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. …"

iii. In the instant matter, for ascertaining whether the Offer of equity Shares by Lokmangal Agro is a public issue or issue on private placement basis in accordance with Section 67 of the Companies Act, 1956, the number of subscribers is of utmost importance.

a. Lokmangal Agro has issued equity shares to 3626 investors and mobilized funds to the tune of Rs 72.52 Cr. during the year 2011. Further, the Company has admitted to have mobilized Rs74.82 Cr. during the period 2009 to 2011 from 4751 investors. As per the first proviso to Section 67(3) of the Companies Act, 1956, where the “offer” or “invitation to subscribe for shares or debentures” is made to fifty persons or more, then it has to be construed as a public offer. In view of the foregoing, it is prima facie observed that the aforesaid issues of equity shares made by Lokmangal Agro were deemed public issues.

b. It is observed that Lokmangal Agro is not stated to be a Non–banking financial company or public financial institution within the meaning of Section 4A of the Companies Act, 1956. In view of the aforesaid, I, therefore, find that Lokmangal Agro is not covered under the second proviso to Section 67(3) of the Companies Act, 1956.

c. In view of the above, the Offer of equity Shares by Lokmangal Agro during the Financial Year 2006-07, 2008-09 and 2013-14, will prima facie qualify as a public issue under the first proviso to Section 67(3) of the Companies Act, 1956. In this regard, it is pertinent to note that by virtue of Section 55A of the Companies Act, 1956, Section 67 of that Act, so far as it relates to issue and transfer of securities, shall also be administered by SEBI.

8.5 Having observed that the equity shares issued by Lokmangal Agro are prima facie in the nature of public issue, the Company was required to comply with provisions of the Companies Act, 1956 and other relevant statutory provisions as applicable. I note that- a. Under Section 2(36) read with Section 60 of the Companies Act, 1956, a company needs to register its prospectus with the RoC, before making a public offer or issuing the prospectus. As per the aforesaid Section 2(36), “prospectus” means any document described or issued as a prospectus and includes any notice, circular, advertisement or other document inviting deposits from the public or inviting offers from the public for the subscription or purchase of any shares in, or debentures of, a body corporate. As mentioned above, the Offer of equity Shares was a public issue of securities. Having made a public issue, Lokmangal Agro was required to register a prospectus with the RoC under Section 60 of the Companies Act, 1956. I find that there is no evidence on record to indicate that Lokmangal Agro has complied with the provisions of Section 60 of Companies Act, 1956. It is also observed that Lokmangal Agro in their reply vide letter dated March 7, 2015 categorically mentioned that ..the company has never prepared/filed any Red Herring Prospectus/Prospectus/Information Memorandum”. In view of the same, I find that Lokmangal Agro has prima facie not complied with the provisions of Section 60 of Companies Act, 1956. Under 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 or debentures of a company, unless the form is accompanied by abridged prospectus, contain disclosures as specified. Based on the material available on record, I find that Lokmangal Agro has not complied with the provisions of Section 56(1) and 56(3) of the Companies Act, 1956 and therefore, has prima facie violated the aforesaid provisions.

b. By issuing equity shares to more than 49 persons, the Company had to compulsorily list such securities in compliance with Section 73 of the Companies Act, 1956, in order to ensure that the subscribers to the shares have a facility to approach a stock exchange for having their holdings converted into cash whenever they desire. The same also provides liquidity and exit opportunity to the investors. In this regard- i. Sections 73 of the Companies Act, 1956, of which sub-Sections (1), (2) and (3) are relevant for the instant case is reproduced as under:

"73. (1) Every company intending to offer shares or debentures to the public for subscription by the issue of a prospectus shall, before such issue, make an application to one or more recognised stock exchanges for permission for the shares or debentures intending to be so offered to be dealt with in the stock exchange or each such stock exchange. (1A) Where a prospectus, whether issued generally or not, states that an application under sub-section (1) has been made for permission for the shares or debentures offered thereby to be dealt in one or more recognized stock exchanges, such prospectus shall state the name of the stock exchange or, as the case may be, each such stock exchange, and any allotment made on an application in pursuance of such prospectus shall, whenever made, be void, if the permission has not been granted by the stock exchange or each such stock exchange, as the case may be, before the expiry of ten weeks from the date of the closing of the subscription lists: Provided that where an appeal against the decision of any recognized stock exchange refusing permission for the shares or debentures to be dealt in on that stock exchange has been preferred under section 22 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956), such allotment shall not be void until the dismissal of the appeal.

(2) 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.

(3) All moneys received as aforesaid shall be kept in a separate bank account maintained with a Scheduled Bank 1 [until the permission has been granted, or where an appeal has been preferred against the refusal to grant such. permission, until the disposal of the appeal, and the money standing in such separate account shall, where the permission has not been applied for as aforesaid or has not been granted, be repaid within the time and in the manner specified in sub-section (2)]; and if default is made in complying with this sub-section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees.”

ii. In the Sahara Case, the Hon'ble Supreme Court of India also examined Section 73 of the Companies Act, 1956, wherein it observed that – "Section 73(1) of the Act casts an obligation on every company intending to offer shares or debentures to the public to apply on a stock exchange for listing of its securities. Such companies have no option or choice but to list their securities on a recognized stock exchange, once they invite subscription from over forty nine investors from the public. If an unlisted company expresses its intention, by conduct or otherwise, to offer its securities to the public by the issue of a prospectus, the legal obligation to make an application on a recognized stock exchange for listing starts. Sub-section (1A) of Section 73 gives indication of what are the particulars to be stated in such a prospectus. The consequences of not applying for the permission under sub-section (1) of Section 73 or not granting of permission is clearly stipulated in sub-section (3) of Section 73. Obligation to refund the amount collected from the public with interest is also mandatory as per Section 73(2) of the Act. Listing is, therefore, a legal responsibility of the company which offers securities to the public, provided offers are made to more than 50 persons.

… Section 73(2) says that every company and every director of the company who is an officer in default, shall 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. The scope of the above mentioned provisions came up for consideration before this Court in Raymond Synthetics Ltd. & Ors. V. Union of India (supra), wherein the Court held that in a case where the company has not applied for listing on a stock exchange, the consequences will flow from the company’s disobedience of the law, the liability to pay interest arises as from the date of receipt of the amounts, for the company ought not to have received any such amount in response to the prospectus. I am, therefore, of the view that since Saharas had violated the listing provisions and collected huge amounts from the public in disobedience of law, SEBI is justified in directing refund of the amount with interest."

iii. Having regard to the abovementioned observations of the Hon'ble Supreme Court of India, since the Offer of equity Shares is prima facie a public issue in accordance with the provisions of the Companies Act, 1956, the same will attract the requirement of compulsory listing before a recognized stock exchange in terms of Section 73(1) of the Companies Act, 1956 and also compliance with the provisions of Sections 73(2) and 73(3) of that Act.

iv. In the facts of the instant case, it prima facie appears that Lokmangal Agro has violated the provisions of Section 73 of the Companies Act, 1956, in respect of the Offer of equity Shares.

8.6 In addition to the compliance with the provisions of the Companies Act, 1956, the Company was mandated to comply with the applicable provisions of under SEBI Rules/Regulations/Guidelines. I note that:

i. SEBI had framed the DIP Guidelines in exercise of the powers conferred upon itself under the SEBI Act. The Hon'ble Supreme Court in Sahara Case has observed that: "DIP Guidelines had statutory force since they were framed by SEBI in exercise of its powers conferred on it under Sections 11 and 11A of the SEBI Act. Powers have been conferred on SEBI to protect the interests of the investors in securities and regulate the issue of prospectus, offer documents or advertisement soliciting money through the issue of prospectus. Section 11 of the Act, it may be noted has been incorporated, evidently to protect the interests of investors whose securities are legally required to be listed. DIP Guidelines were implemented by SEBI with regard to the listed and unlisted companies, which made public offer, until it was replaced by ICDR 2009".

ii. The DIP Guidelines were applicable to all public issues by listed and unlisted companies. The ICDR Regulations (which came into effect from August 28, 2009) has replaced the DIP Guidelines and all public issues are now required to comply with the ICDR Regulations. The DIP Guidelines (as applicable at the relevant time) operated as reasonable safeguards for the investors who subscribed or intended to subscribe in the public issues of securities. In this regard, I prima facie observe that Lokmangal Agro has not complied with the following clauses of DIP Guidelines: - Clause 2.1.1 (filing of offer document) - Clause 2.1.4 (application for listing) - Clause 2.1.5(issue of securities in dematerialized form), - Clause 2.8. (means of finance), - Clause 4.1 (promoters contribution in a public issue by unlisted companies), - Clause 4.11 (lock-in of minimum specified promoters contribution in public issues), - Clause 4.14 (lock-in of pre-issue share capital of an unlisted company) - Clause 5.3.1 (memorandum of understanding), - Clause 5.3.3 (due diligence certificate) - Clause 5.3.5 (undertaking) - Clause 5.3.6 (list of promoters group and other details) - Clause 5.4 (appointment of intermediaries) - Clause 5.6 (offer document to be made public) - Clause 5.6A (Pre-issue Advertisement) - Clause 5.7 (despatch of issue material) - Clause 5.8 (no complaints certificate) - Clause 5.9 (mandatory collection centres and Clause 5.9.1.(minimum number of collection centres) - Clause 5.10 (authorised collection agents) - Clause 5.12.1 (appointment of compliance officer), - Clause 6.0 (contents of offer documents) - Clause 6.1 to Clause 6.15 (contents of prospectus) - Clause 6.16 to Clause 6.34 (contents of abridged prospectus) including Clause 6.17.13 - Clause 8.3 (Rule 19(2)(b) of SC(R) Rules, 1957) - Clause 8.8.1 (Opening & closing date of subscription of securities) - Clause 9 (guidelines on advertisements by issuer company)

8.7 In this regard, it is important to note the following observation made by the Hon'ble Supreme Court of India in Sahara Case: "90. ……… 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."

8.8 I note that the Company had commenced allotment of equity shares to the public since October 2011. It can reasonably be inferred that the directors/ promoters of the Company namely Mr.Subhash Sureshchandra Deshmukh, Ms.Smita Subhash Deshmukh, Mr.Mahesh Satishchandra Deshmukh, Mr.Vijinath Nagappa Lature, Mr.Anil Vasantrao Pandhare, Mr.Parag Suresh Patil, Mr. Audumber Sandipan Deshmukh, Mr. Shahaji Gulchand Pawar and Mr. Gurrana Apparao Teli were involved in the mobilisation of public funds through the issue of equity shares without complying with the applicable law, as discussed above.

9. SEBI has a statutory duty to protect the interests of investors in securities market and promote the development of, and to regulate, the securities market. Section 11 of the SEBI Act has empowered it to take such measures as it deems fit for fulfilling its legislative mandate. Further, as per the provisions of Section 55A of the Companies Act, 1956, administrative authority on the subjects relating to public issue of securities is exclusively with SEBI. For this purpose, SEBI can exercise its jurisdiction under Sections 11(1), 11A, 11B and 11(4) of the SEBI Act read with Section 55A of the Companies Act, 1956. In view of the above violations committed by Lokmangal Agro and its directors/promoters by raising money from the public through the issue of equity shares without complying with the relevant provisions of the Companies Act, 1956 and SEBI Act/Regulations/Guidelines, etc. (as discussed in the forgoing paragraphs), it becomes necessary for SEBI, as the regulator for the securities market, to intervene and issue suitable directions including restraining the Company and its dircetors/promoters from carrying on activities in contravention of the law. Steps also need to be taken in the instant matter to ensure only legitimate fund raising activities are carried on by Lokmangal Agro and no investors are defrauded. In light of the facts in the instant matter, I find that there is no other alternative but to take recourse through an interim action against Lokmangal Agro and its Directors, for preventing the company from further carrying on with its fund mobilizing activity under the Offer of equity Shares.

10. In view of the forgoing, I, in exercise of the powers conferred under Sections 11(1), 11(4), 11A(1)(b) and 11B of the Securities and Exchange Board of India Act, 1992 read with Section 19 thereof and Regulation 107 read with Regulation 111 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, hereby issue the following directions :

a. Lokmangal Agro Industries Limited [PAN: AAACL7933N] and its promoters and directors including Mr. Subhash Sureshchandra Deshmukh [PAN: ABEPD7883R], Ms. Smita Subhash Deshmukh [PAN: ABGPD4907Q], Mr. Mahesh Satishchandra Deshmukh [PAN: AGXPD4794K], Mr. Vijinath Nagappa Lature [PAN: AAIPL4725B], Mr. Anil Vasantrao Pandhare [PAN: ABBPP7745D], Mr. Parag Suresh Patil [PAN: AMZPP5693B], Mr. Audumber Sandipan Deshmukh [PAN: ABFPD6320A], Mr. Shahaji Gulchand Pawar [PAN: ANGPP9753N] and Mr. Gurrana Apparao Teli [PAN: AKMPT5879J] are restrained from mobilizing funds through the issue of equity shares or through any other form of securities, to the public and/ or invite subscription, in any manner whatsoever, either directly or indirectly till further directions.

b. Lokmangal Agro Industries Limited and its aforementioned promoters and directors 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.

c. Lokmangal Agro Industries Limited and its aforementioned promoters and directors are restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities in any manner whatsoever, either directly or indirectly, till further directions.

d. Lokmangal Agro Industries Limited and its aforementioned promoters and directors shall not divert any funds raised from public at large through the issuance of equity shares, kept in its bank accounts and/or in the custody of the Company without prior permission of SEBI until further orders.

e. Lokmangal Agro Industries Limited 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 Offer of equity Shares, without prior permission from SEBI;

f. Lokmangal Agro Industries Limited and its directors and promoters shall provide a full inventory of all its assets and properties and details of all their bank accounts, demat accounts and holdings of shares/ securities, if held in physical form.

g. Lokmangal Agro Industries Limited and its promoter and directors shall co-operate with SEBI and shall furnish all the documents in respect of the offer of equity shares.

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

9. The prima facie observations contained in this Order are made on the basis of the material available on record i.e. correspondence exchanged between SEBI and Lokmangal Agro and information obtained from the MCA 21 Portal. Lokmangal Agro and its promoters and directors including Mr. Subhash Sureshchandra Deshmukh, Ms. Smita Subhash Deshmukh, Mr. Mahesh Satishchandra Deshmukh, Mr. Vijinath Nagappa Lature, Mr. Anil Vasantrao Pandhare, Mr. Parag Suresh Patil, Mr. Audumber Sandipan Deshmukh, Mr. Shahaji Gulchand Pawar and Mr. Gurrana Apparao Teli are advised to show cause as to why suitable directions/ prohibitions, under the Sections 11(1), 11(4), 11A and 11B of the SEBI Act read with the ICDR Regulations, including the following, should not be taken/imposed against them : a. directing them jointly and severally to refund the money collected through the issue of equity shares that are impugned in this Order, along with interest that is promised to the investors; b. directing them not to issue 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, for an appropriate period; c. directions restraining them from accessing the securities market and prohibiting them from buying, selling or otherwise dealing in securities for an appropriate period.

10. Lokmangal Agro Industries Limited and its aforementioned promoters and directors may file their replies/ submissions within a period of 21 days from the date of receipt of this Order and may also indicate whether they desire to avail an opportunity of personal hearing in the matter.

11. This interim Order cum show cause notice is without prejudice to the right of SEBI to take any other action including prosecution proceedings under Section 24 of the SEBI Act and Section 621 of the Companies Act, 1956 read with the relevant provisions of the Companies Act, 2013 and adjudication proceedings under the SEBI Act, against Lokmangal Agro Industries Limited and its promoters and directors including Mr. Subhash Sureshchandra Deshmukh, Ms. Smita Subhash Deshmukh, Mr. Mahesh Satishchandra Deshmukh, Mr. Vijinath Nagappa Lature,

Mr.Anil Vasantrao Pandhare, Mr. Parag Suresh Patil, Mr. Audumber Sandipan Deshmukh, Mr. Shahaji Gulchand Pawar and Mr. Gurrana Apparao Teli, in accordance with law.

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

Place: Mumbai S. RAMAN Date: August 01, 2016 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA