Order-In the matter of PAFL Industries Limited

WTM/PS/35/ERO/IMD/ AUG/2015 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: PRASHANT SARAN, WHOLE TIME MEMBER ORDER Under sections 11(1), 11(4), 11A and 11B of the Securities and Exchange Board of India Act, 1992 In the matter of PAFL Industries Limited In respect of - 1. PAFL Industries Limited (CIN : U29253WB2011PLC161075; PAN AAFCP9552J) 2. Mr. Anjan Das (DIN: 02611879; PAN :AGAPD6510E), 3. Mr. SankarSaha (DIN: 03053658; PAN : AKUPS5629M), 4. Mr. SatyaCharanMondal (DIN: 03065451: PAN: AWZPM0095L), 5. Ms. Mita Mukherjee (DIN: 05330663: PAN: AJNPM7974K), 6. Mr. SanjoyBiswas (DIN: 06619539: PAN : APVPB0765K), 7. Mr. Abdul Malek (DIN: 06792696; PAN : APYPM6292D), 8. Mr. Krishna Dakuya (DIN: 06792698; PAN : AWUPD0139P), 9. Mr. MabudHossain (DIN: 06792700; PAN : AELPH0259M), 10. Mr. RejaulSeikh (DIN: 06793785; PAN :EPXPS8288L) and 11. Mr. SudipBala (DIN: 06815979)

1. Securities and Exchange Board of India (hereinafter referred to as "SEBI"), vide an interim ex-parte Order dated July 31, 2014 (hereinafter referred to as "the interim order") had observed that the company, PAFL Industries Limited (hereinafter referred to as "PAFL" or "the Company") is prima facie engaged in fund mobilising activity from the public, by making offer and issuing Redeemable Preference Shares (hereinafter referred to as "RPS") and had allegedly violated the provisions of sections 56, 60 read with section 2(36), 73 of the Companies Act, 1956 read with Section 465 of the Companies Act, 2013. In order to protect the investors who have subscribed to the impugned offer and issue of RPS and to ensure that the Company and its directors are restrained from carrying on with their fund mobilizingactivity, SEBI had issued the following directions:

"7. In view of the foregoing, I, in exercise of the powers conferred upon me under Sections 11, 11(4), 11A and 11B of the SEBI Act, hereby issue the following directions – i. PAFL shall not mobilize funds from investors through the issue of RPS 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. PAFL and its Directors, viz. Mr. Anjan Das (DIN: 02611879), Mr. SankarSaha (DIN: 03053658), Mr. SatyaCharanMondal (DIN: 03065451), Ms. Mita Mukherjee (DIN: 05330663), Mr. SanjoyBiswas (DIN: 06619539), Mr. Abdul Malek (DIN: 06792696), Mr. Krishna Dakuya (DIN: 06792698), Mr. MabudHossain (DIN: 06792700), Mr. RejaulSeikh (DIN: 06793785) and Mr. SudipBala (DIN: 06815979), 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. PAFL and its abovementioned Directors, are restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in the securities market, either directly or indirectly, till further directions; iv. PAFL shall provide a full inventory of all its assets and properties; v. PAFL's abovementioned Directors shall provide a full inventory of all their assets and properties; vi. PAFL 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 RPS, without prior permission from SEBI; vii. PAFL and its abovementioned Directors shall not divert any funds raised from public at large through the issue of RPS, which are kept in bank account(s) and/or in the custody of PAFL; viii. PAFL and its abovementioned Directors shall, within 21 days from the date of receipt of this Order, provide SEBI with all relevant and necessary information, as sought vide SEBI letters dated November 5, 2012 and April 30, 2013.

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

2. The interim order was issued without prejudice to the right of SEBI to take any other action that may be initiated against the Company and its directors in accordance with law. The interim order observed that the prima facie observations made therein were on the basis of the correspondences exchanged between SEBI and PAFL alongwith the documents contained therein; information obtained from the 'MCA 21 Portal' and advised the Company and its directors that they may file their response within a period of 21 days and to inform whether they desire an opportunity of personal hearing in the matter.

3. The Company vide letter dated August 21, 2014 (under signature of Mr. Abdul Malek, director) submitted that they have taken all steps to pay-off the amount received by the erstwhile directors and that from the available papers they were not able to find out any such debenture/preference shares. The Company requested that allegations from investor (i.e. complaints) be forwarded to it. In their letter to SEBI, the following documents were also stated to be enclosed : a) Memorandum and Articles of Association of Company; b) Balance Sheet; c) Name of directors of the Company; d) Name of key managerial personnel of the Company; e) Details regarding the debentures/preference shares not furnished as documents not available with it.

It was alsointer alia stated "We confirmthat since we have assumed the charges of the company we have not acted to float or realize money by way of debentures or preference share or in any other format".

On perusal of the above documents, I note the following: (a) As per the list of directors submitted, it is noted that the names, DIN, addresses, designation and date of appointment of the noticee directors are mentioned. (b) As per the Balance Sheet as at March 31, 2013, the Company has issued 20,954 preference shares @Rs.1000/- each for 2,09,54,000/-.

(c) As per Form 20B pertaining to March 31, 2013, the subscribed and paid-up capital of the Company is Rs.2,14,54,000/- including Rs.2,09,54,000/- from preference shares. (d) As on the date of AGM relating to FY March 2013, Anjan Das, SankarSaha, Mita Mukherjee and SanjoyBiswas were the directors. (e) As per the MoA and AoA, the initial subscribers/promoters of the Company are - SankarSaha, Anjan Das, Priya Das, BithikaSaha, ManajitSaha, Mita Mukherjee and SekharSaha.

4. An opportunity of personal hearing in the matter was fixed on November 07, 2014 in the matter and the same was communicated to the noticees vide SEBI notices dated September 26, 2014. However, there was no appearance by the noticees (i.e. Company and its directors named in the interim order). Thereafter, Noticee, Mr. SudipBala vide letter dated November 10, 2014, December 06, 2014 (sent through email) and letter dated March 20, 2015 inter alia stated that he could not attend the personal hearing and submitted that - a) he was an agent and not a director as stated in the letter (i.e. interim order); b) he does not know about the whereabouts of the company; c) his duty was to collect new customers for the company and stated that photocopy of his identity card as agent is attached; d) the company was closed on May 05, 2013 and since then he was not engaged in any work for company as agent; e) he was a daily labourer and cannot travel to Mumbai and that he would assist in all respect regarding the company through letters. f) requested SEBI to consider his case sympathetically.

Mr. SudipBalavide his letter dated March 20, 2015 stated that he is poor and cannot travel beyond his home town.

5. Subsequently, it was discovered that the interim order and notices informing the personal hearing was not served on other noticees - SankarSaha, SatyaCharanMondal, MitaMukjerjee, Krishna Dakuya, Anjan Das and SanjoyBiswas. Therefore, a notice dated March 31, 2015 was published in the newspaper (Times of India dated April 10, 2015 and Ananda Bazar dated April 10, 2015) regarding the proceedings against the Company and its directors initiated vide the interim order. The newspaper notice also mentioned that another opportunity of personal hearing was afforded to the noticees on April 22, 2015 in Kolkata. The noticees 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 on record. SEBI also sent notices informing the schedule of personal hearing.

6. On April 22, 2015, none of the noticees(including Mr. SudipBala) appeared despite issuing notices and publication in the newspapers. In view of such non-appearance, the opportunity of personal hearing was closed.

7. I have considered the interim order, the submissions of the above noticees and material available on record. The following are the observations from the interim order : "................ i. PAFL was incorporated on March 23, 2011, with the ROC, Kolkata, West Bengal with CIN No. as U29253WB2011PLC161075. PAFL's Registered Office is at 189 RabindraSarani, 1st Floor, Kolkata–700007, West Bengal, India.

ii. The Directors in PAFL are Mr. SankarSaha, Mr. SatyaCharanMondal, Mr. Abdul Malek, Mr. Krishna Dakuya, Mr. MabudHossain, Mr. RejaulSeikh, Mr. SudipBala, Mr. Anjan Das, Ms. Mita Mukherjee and Mr. SanjoyBiswas.

iii. PAFL invited subscription for "Redeemable Preference Shares" ("Issue of RPS") in accordance with inter alia the following terms and conditions –

Plan A B C D Minimum Investment 1000 1000 1000 1000

Redemption Period 3 Years 5 Years 10 Years 14 Years

Indicative/Estimate Yield 500 1000 5000 10000

Estimated Maturity Value 1500 2000 6000 10000 a. Redemption: The principal shall be paid on maturity on surrender of the RPS Certificate. The Share Certificate may be surrendered to the Company in advance i.e. 3 months before the due date to enable the Company to issue repayment warrant/DD in time.

b. Principal terms of offer: RPS now being offered are subject to the terms of Memorandum and Articles of Association of the company, this offer document, the application form. The principal terms are as follows:

Face value: Each RPS will have a face value of 1000. Application can be made for a minimum of 1 share amounting 1000 each. Terms of payment: An amount of 1000 per share is payable on application.

c. Share of Application and Transferability of shares: The company has absolute and sole discretion to accept or reject any application without assigning any reason the incomplete applications are liable to be rejected.

d. Mode of payment: The entire amount of 1000 per share is payable on application.

iv. It is observed that PAFL allotted RPS to a large number of investors during the Financial Years 2011– 12 and 2012–13, details of which are provided below -

Sl. No. Financial Date of Amount No. of No. of persons Total Amount Year allotment per share preference to whom ( in Lakhs) ( ) shares allotted allotted 1. 19.04.2011 549 45 5.49 2. 20.04.2011 241 22 2.41 3. 22.04.2011 833 44 8.33 4. 23.04.2011 479 49 4.79 5. 25.04.2011 1584 22 15.84

6. 26.04.2011 98 11 0.98 7. 27.04.2011 1054 45 10.54 8. 30.04.2011 361 49 3.61 9. 02.05.2011 734 40 7.34 10. 05.05.2011 425 41 4.25 11. 10.05.2011 388 47 3.88 2011–12 1000 12. 14.05.2011 629 41 6.29 13. 20.05.2011 297 49 2.97 14. 04.06.2011 688 40 6.88 15. 11.06.2011 538 41 5.38 16. 16.06.2011 906 49 9.06 17. 18.06.2011 356 45 3.56 18. 25.06.2011 262 49 2.62 19. 05.07.2011 840 45 8.40 20. 11.07.2011 421 49 4.21 21. 20.07.2011 265 49 2.65 22. 08.08.2011 388 28 3.88 23. 16.08.2011 485 49 4.85 24. 25.08.2011 2163 49 21.63 25. 12.09.2011 331 49 3.31 26. 27.09.2011 2450 49 24.50 27. 13.10.2011 464 49 4.64 28. 28.10.2011 350 7 3.50 29. 11.11.2011 391 49 3.91 30. 12.12.2011 411 49 4.14 31. 13.01.2012 864 46 8.64 32. 14.02.2012 350 48 3.50 33. 15.03.2012 359 48 3.59 Sub – Total 20954 1392 209.57 1. 2012–13 05.04.2012 1000 393 47 3.93 Total 21347 1439 213.50 .................." Observations made in paragraph 4.3 sub-paragraph (iii) onwards - "............. iii. In the instant matter, for ascertaining whether the Issue of RPS is a public issue or an issue on private placement basis in accordance with Section 67 of the Companies Act, 1956, the no. of subscribers is of utmost importance.

a. From the Compliance Certificate dated August 29, 2012 (which was addressed to the Members, PAFL by the Company Secretary i.e. A. K. Labh& Co.), it has been stated as follows – "The Board of Directors of PAFL duly met 40 times on 24.03.2011, 25.03.2011, 16.04.2011, 19.04.2011, 20.04.2011, 22.04.2011, 23.04.2011, 25.04.2011, 26.04.2011, 27.04.2011, 30.04.2011, 02.05.2011, 5.05.2011, 10.05.2011, 14.05.2011, 20.05.2011, 04.06.2011, 11.06.2011, 16.06.2011, 18.06.2011, 25.06.2011, 28.06.2011, 5.07.2011, 11.07.2011, 20.07.2011, 8.08.2011, 16.08.2011, 25.08.2011, 12.09.2011, 27.09.2011, 13.10.2011, 28.10.2011, 11.11.2011, 14.11.2011, 10.12.2011, 12.12.2011, 7.01.2012, 13.01.2012, 14.02.2012 and 15.03.2012. Three Extra-Ordinary General Meetings were held during the period on 17.04.2011, 07.07.2011 and 04.01.2012, respectively after giving notice to the members of the company and the resolutions passed thereat was duly recorded in Minutes book maintained for the purpose. The Company has issued 20954 preference shares for `1000 in tranches during the period for which necessary compliances were duly made."

b. Under the Issue of RPS, it is observed that during the financial year 2012–13, PAFL allotted RPS to only 47 individuals/investors, for which it collected approximately 0.03 Crores. However, for the earlier financial year i.e. 2011–12, PAFL allotted RPS to 1392 individuals/investors under the Issue of RPS and mobilized funds amounting to approximately 2.09Crores.

c. The number of allotments, the frequency alongwith the time span between such allotments during the financial year 2011–12 when viewed in light of refusal to submit information to SEBI, by PAFL and its Directors, would prima facie indicate that the Issue of RPS was a public issue of securities and the method adopted by PAFL (Issue of RPS was made in tranches) 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 Issue of RPS, therefore, have to be construed as emanating from a single offer of securities during the financial year 2011-12 and prima facie indicate that the number of persons to whom such offer was made, was above the limit of forty– nine persons as prescribed under Section 67(3) of the Companies Act, 1956.

d. PAFL is not stated to be a non-banking financial company or a public financial institution within the meaning of Section 4A of the Companies Act, 1956 and therefore, is not covered under the second proviso to Section 67(3) of the Companies Act, 1956.

………………… "

8. As mentioned in the interim order, the Company had in the financial year 2011-2012, allotted RPS to 1392 persons (investors) under its offer and allotment of RPS and had mobilized funds to the tune of Rs.2.09 crore. The allegation against the Company and its directors is that the Company had not complied with the norms regulating the public issue of securities stipulated under section 56, 60 and 73 of the Companies Act, 1956.From the table mentioned above (as reproduced from the interim order), the Company had allotted RPS to several persons on various dates during FY 2011-2012. It can seen that the allotments are made within short intervals. As an illustration, during April 2011, the Company has allotted RPS on consecutive days. Date of allotment No. of persons to whom allotted

19.04.2011 45 20.04.2011 22 22.04.2011 44 23.04.2011 49 25.04.2011 22 26.04.2011 11 27.04.2011 45 30.04.2011 49

9. The interim order has also mentioned that the Board of Directors held 40 meetings and that resolutions were passed in EGMs held on April 17, 2011, July 07, 2011 and January 04, 2012. Therefore, it can be regarded that the allotments made from April 19, 2011 to July 05, 2011 were made in pursuance of the Resolution dated April 17, 2011. Similarly, the allotments made from July 11, 2011to December 12, 2011 were done in pursuance of Resolution dated July 07, 2011 and that the allotments made from January 13, 2012 to March 15, 2012 were made pursuant to the Resolution dated January 04, 2012.

10. In order to ascertain whether an issue of securities is a 'public issue' or done on 'private placement', a reference to section 67(3) of the Companies Act, 1956 needs to be made: 67. (1) Any reference in this Act or in the articles of a company to offering shares or debentures to the public shall, subject to any provision to the contrary contained in this Act and subject also to the provisions of sub-sections (3) and (4), be construed as including a reference to offering them to any section of the public, whether selected as members or debenture holders of the company concerned or as clients of the person issuing the prospectus or in any other manner. (2) ... (3) No offer or invitation shall be treated as made to the public by virtue of sub-section (1) or sub-section (2), as the case may be, if the offer or invitation can properly be regarded, in all the circumstances- (a) as not being calculated to result, directly or indirectly, in the shares or debentures becoming available for subscription or purchase by persons other than those receiving the offer or invitation; or (b) otherwise as being a domestic concern of the persons making and receiving the offer or invitation … Provided that nothing contained in this sub-section shall apply in a case where the offer or invitation to subscribe for shares or debentures is made to fifty persons or more: Provided further that nothing contained in the first proviso shall apply to non-banking financial companies or public financial institutions specified in section 4A of the Companies Act, 1956 (1 of 1956).

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

11. The Hon'ble Supreme Court of India in the matter of Sahara India Real Estate Corporation Limited & Others vs. SEBIand another(Civil Appeal Nos. 9813 and 9833 of 2011; decided on August 31, 2012) ("the Sahara case") had inter alia held that - "Section 67(1) deals with the offer of shares and debentures to the public and Section 67(2) deals with invitation to the public to subscribe for shares and debentures and how those expressions are to be understood, when reference is made to the Act or in the articles of a company. The emphasis in Section

67(1) and (2) is on the “section of the public”. Section 67(3) states that no offer or invitation shall be treated as made to the public, by virtue of subsections (1) and (2), that is to any section of the public, if the offer or invitation is not being calculated to result, directly or indirectly, in the shares or debentures becoming available for subscription or purchase by persons other than those receiving the offer or invitation or otherwise as being a domestic concern of the persons making and receiving the offer or invitations. Section 67(3) is, therefore, an exception to Sections 67(1) and (2). If the circumstances mentioned in clauses (1) and (b) of Section 67(3) are satisfied, then the offer/invitation would not be treated as being made to the public. The first proviso to Section 67(3) was inserted by the Companies (Amendment) Act, 2000 w.e.f. 13.12.2000, which clearly indicates, nothing contained in Sub-section (3) of Section 67 shall apply in a case where the offer or invitation to subscribe for shares or debentures is made to fifty persons or more. … Resultantly, if an offer of securities is made to fifty or more persons, it would be deemed to be a public issue, even if it is of domestic concern or proved that the shares or debentures are not available for subscription or purchase by persons other than those received the offer or invitation. … I may, therefore, indicate, subject to what has been stated above, in India that any share or debenture issue beyond forty nine persons, would be a public issue attracting all the relevant provisions of the SEBI Act, regulations framed thereunder, the Companies Act, pertaining to the public issue. …"

12. In the present matter, it is noted that the Company has made multiple allotments on consecutive days or within short intervals in FY 2011-2012. It can be seen that the number of persons to whom RPS were allotted exceeded 49. This is the case, even if the allotments are grouped under the respective resolutions as mentioned above. Therefore, considering the number of persons from whom monies were mobilised by the Company by issuing RPSs, which is definitely more than 49 persons, it can be concluded that the Company had made a public issue of RPS in terms of the first proviso to section 67(3) of the Companies Act, 1956. Further, the manner of making such offer and issuance of RPS adopted by the Company (i.e., series of allotments made on consecutive days and/or within a short duration between each allotment) can be definitely held to be a ploy employed by the Company to circumvent the provisions of the first proviso to section 67(3) of the Companies Act, 1956.

13. By making a public issue of RPS, as discussed above, the Company was mandated to comply with all the legal provisions that govern and regulate public issue of such securities, including the Companies Act, 1956 and the SEBI Act and regulations. In this context, I refer and rely on the below mentioned observation made by the Hon'ble Supreme Court of India in the matter of Sahara:

... ... that any share or debenture issue beyond forty nine persons, would be a public issue attracting all the relevant provisions of the SEBI Act, regulations framed thereunder, the Companies Act, pertaining to the public issue. …"

14. In view of the above observations, by virtue of section 55A(a) and (b), the SEBI has jurisdiction and would govern the issue of RPS as the same was made to more than 49 persons. 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 RPS. 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'.

15. The interim order has alleged that the Company failed to comply with section 73 of the Companies Act, 1956 in respect of its issuance of RPS. By issuing RPS to more than 49 persons, the Company had to compulsorily list such securities in compliance with section 73(1) of the Companies Act, 1956. As per section 73(1) Companies Act, 1956, a company is required to make an application to one or more recognized stock exchanges for permission for the shares or debentures to be offered to be dealt with in the stock exchange. The Company has not disputedthat this allegation is incorrect. Further, there is no material to say that the Company has filed an application with a recognised stock exchange to enable the RPS to be dealt with in such exchange. Therefore, the Company has failed to comply with this requirement.

Section 73(2) states that "Where the permission has not been applied under subsection (1) or such permission having been applied for, has not been granted as aforesaid, the company shall forthwith repay without interest all moneys received from applicants in pursuance of the prospectus, and, if any such money is not repaid within eight days after the company becomes liable to repay it, the company and every director of the company who is an officer in default shall, on and from the expiry of the eighth day, be jointly and severally liable to repay that money with interest at such rate, not less than four per cent and not more than fifteen per cent, as may be prescribed, having regard to the length of the period of delay in making the repayment of such money". As the Company failed to make an application for listing such RPS, the Company had to forthwith repay such money collected from investors. If such repayments are not made within 8 days after the Company becomes liable to repay, the Company and every director of the Company, who is an officer in default, is jointly and severally liable to repay with interest. Considering that the mobilization was done during 2011-2012, it would be appropriate to levy an interest of 15% as provided for under the above section. Further, the liability of the Company to refund the public funds collected through offer and allotment of the impugned RPS is a continuing liability and such liability would continue till repayments are made by the Company and the officers in default.

The Company has also not complied with the provisions of section 73(3) as it has not kept the amounts received from investors in a separate bank account and failed to repay the same in accordance with section 73(2) as observed above.

16. As mentioned above, the Company has mobilized Rs.2.09 crore from the public investors under its offer and issue of RPS and in doing so has not complied with the provisions of the Companies Act, 1956. The Company or its directors have not disputed the allegations. The Company (signed by Mr. Abdul Malek, director) has only submitted that they have taken all steps to pay-off any amount received by the erstwhile directors and that from the available papers they were not able to find out any such debenture/preference shares. In this regard, I note that the documents that substantiate the charges are taken from the MCA portal and the correspondence from the Company. Further, the documents submitted vide Company's letter dated August 21, 2014 donot support the case of the Company rather substantiate the findings made in this Order.

17. Liability of directors: (a) The interim order was issued to the following persons stated to be the Company's directors: 1. Mr. Anjan Das (DIN: 02611879), 2. Mr. SankarSaha (DIN: 03053658), 3. Mr. SatyaCharanMondal (DIN: 03065451), 4. Ms. Mita Mukherjee (DIN: 05330663), 5. Mr. SanjoyBiswas (DIN: 06619539),

6. Mr. Abdul Malek (DIN: 06792696), 7. Mr. Krishna Dakuya (DIN: 06792698), 8. Mr. MabudHossain (DIN: 06792700), 9. Mr. RejaulSeikh (DIN: 06793785) and 10. Mr. SudipBala (DIN: 06815979)

As per the information available from the MCA website (accessed on July 14, 2015), the above persons are shown as the directors of the Company. The details regarding their designation and date of appointment is mentioned below: List of Signatories DIN/DPIN/PAN Full Name a P d r d e r s e e s n s t residential Designation A D p a p t o e i n o t f m ent THAKURANAGAR MASHTAR PARA,CHIKANPARA 06815979 SUDIP BALA CT,GAIGHATA, NORTH 24 Director 01/02/2014 PARGANAS, KOLKATA, 743287, West Bengal, INDIA VILL. DHAKURIA,P.O.DHAKURIA SATYA CHARAN KALIBARI, P.S-GAIGHATA, 03065451 Director 01/01/2014 MONDAL 24 PGS (N), GAIGHATA, 743246, West Bengal, INDIA SINHATI PURBAPARA,(MAUJA SINHATI,J.L NO-20), 06792696 ABDUL MALEK Director 01/01/2014 NAOPARA-1 DHUBULIA NADIA, Nadia, 741140, West Bengal, INDIA LAKSHIPUR,NAKPUL(CT), KRISHNA, NORTH 24 PARGANAS, 06792698 Director 01/01/2014 DAKUYA Parganas North, 743252, West Bengal, INDIA SAHARA,J.H.NO.-145, CHALUN GANGARAMPUR, 06792700 MABUD HOSSAIN Director 01/01/2014 DakshinDinajpur, 733140, West Bengal, INDIA KAYEMBA, MARGRAM, BIRBHUM, BIRBHUM, 06793785 REJAUL SEIKH Director 01/01/2014 731241, West Bengal, INDIA 80/2, SHARMA PARA LANE, NADIA, RANAGHAT, 03053658 SANKAR SAHA Director 23/03/2011 741201, West Bengal, INDIA 162 SEBAGRAM PASCHIM, 11 NOWPARA 02611879 ANJAN DAS NORTH 24 PARAGANAS., Director 23/03/2011 KOLKATA, 743122, West Bengal, INDIA D.T.S HILL COLONY P.O. LUMDING, DIST - MITA 05330663 NAGOWAN, ASSAM, Director 20/07/2012 MUKHERJEE LUMDING, 782447, Assam, INDIA

DEBINAGAR, MOUJA- KASBA, J.L. NO. 145, 10 NO. MARAIKURA, 06619539 SANJOY BISWAS RAYGANJ, UTTAR Director 01/06/2013 DINAJPUR, RAIGUNJ, 733154, West Bengal, INDIA

The period during which the RPS were issued without complying with the public issue norms is from April 19, 2011 to March 15, 2012. Noticees, Shankar Saha and Anjan Das were appointed on March 23, 2011 and still continue as directors of the Company. The directors are 'officers in default' andliable, during the relevant period, for the violations found against the Company and also for committing default in returning the monies due to the investors who have subscribed to the RPS in accordance with section 73. The other directors including Mr. SudipBalaare noticed to have joined the Company's Board pursuant to the above said period. However, they are also responsible as 'officers in default in terms of section 73(2) of the Companies Act, 1956 for returning the monies with applicable interest. They have failed to do so. Though Mr. SudipBala has stated that he was an agent and not a director, the above information accessed from the MCA portal proves otherwise.

18. As mentioned above, the liability to refund the public funds collected through offer and allotment of the impugned RPS is continuing and such liability would continue till repayments are made by the Company and the officers in default. Mr. Abdul Malek has stated that the Company is making refunds to the investors of the money collected by the previous management. These directors seem to have not taken action against the previous management (for violating the public issue norms as stipulated under the Companies Act, 1956 while making the offer and issuing the RPS), even after the receipt of the SEBI Order and such conduct leads one to conclude on a possible collusion at their end with the Company and its previous management.

19. I also note that the interim order had inter alia directed the noticees to provide relevant and necessary information, as sought vide SEBI letters dated November 5, 2012 and April 30, 2013 and also a full inventory of all their assets and properties. These directions have not been complied with.

20. In view of the above findings and observations, it becomes necessary to issue directions for refund against the Company and its directors and other directions in the interest of investors and the securities market.

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

(a) The Company, PAFL Industries Limited (CIN : U29253WB2011PLC161075; PAN AAFCP9552J) and and its promoters and directors including Mr. Anjan Das (DIN: 02611879; PAN :AGAPD6510E), Mr. SankarSaha (DIN: 03053658; PAN : AKUPS5629M), Mr. SatyaCharanMondal (DIN: 03065451: PAN: AWZPM0095L), Ms. Mita Mukherjee (DIN: 05330663: PAN: AJNPM7974K), Mr. SanjoyBiswas (DIN: 06619539: PAN : APVPB0765K), Mr. Abdul Malek (DIN: 06792696; PAN : APYPM6292D), Mr. Krishna Dakuya (DIN: 06792698; PAN : AWUPD0139P), Mr. MabudHossain (DIN: 06792700; PAN : AELPH0259M), Mr. RejaulSeikh (DIN: 06793785; PAN :EPXPS8288L) and Mr. SudipBala (DIN: 06815979), jointly and severally, shall forthwith refund the money collected by the Company through the issuance of Redeemable Preference Shares (which have been found to be issued in contravention of the public issue norms stipulated under the Companies Act, 1956), to the investors including the money collected from investors, till date, pending allotment of securities, if any, with an interest of 15% per annum compounded at half yearly intervals, from the date when the repayments became due (in terms of Section 73(2) of the Companies Act, 1956) to the investors till the date of actual payment.

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

(c) PAFL Industries Limitedand the above persons/directors are permitted to sell the assets of the Company only for the sole purpose of making the refunds as directed above and deposit the proceeds in an Escrow Account opened with a nationalised Bank.

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

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

(f) The Company, its directors and former directors are also directed to provide a full inventory of all their assets and properties and details of all their bank accounts, demat accounts and holdings of shares/securities, if held in physical form.

(g) In case of failure of the company, PAFL Industries Limited and its promoters and directors including Mr.Anjan Das, Mr.SankarSaha, Mr.SatyaCharanMondal, Ms.Mita Mukherjee, Mr.SanjoyBiswas, Mr. Abdul Malek, Mr. Krishna Dakuya, Mr.MabudHossain, Mr.RejaulSeikh and Mr.SudipBala, in complying with the aforesaid directions, SEBI, on the expiry of the three months period from the date of this order, - a) shall recover such amounts in accordance with section 28A of the SEBI Act including such other provisions contained in securities laws. b) may initiate appropriate action against the Company, its promoters/ directors and the persons/ officers who are in default, including adjudication proceedings against them, in accordance with law. c) would make a reference to the State Government/ Local Police to register a civil/ criminal case against the Company, its promoters, directors and its managers/ persons in-charge of the business and its schemes, for offences of fraud, cheating, criminal breach of trust and misappropriation of public funds; and d) would also make a reference to the Ministry of Corporate Affairs, to initiate the process of winding up of the Company.

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

(i) The directors including former directors, namely,Mr. Anjan Das (DIN: 02611879; PAN :AGAPD6510E), Mr. SankarSaha (DIN: 03053658; PAN : AKUPS5629M), Mr. SatyaCharanMondal (DIN: 03065451: PAN: AWZPM0095L), Ms. Mita Mukherjee (DIN: 05330663: PAN: AJNPM7974K), Mr. SanjoyBiswas (DIN: 06619539: PAN : APVPB0765K), Mr. Abdul Malek (DIN: 06792696; PAN : APYPM6292D), Mr. Krishna Dakuya (DIN: 06792698; PAN : AWUPD0139P), Mr. MabudHossain (DIN: 06792700; PAN : AELPH0259M), Mr. RejaulSeikh (DIN: 06793785; PAN :EPXPS8288L) and Mr. SudipBala (DIN: 06815979),are restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in the securities market, directly or indirectly in whatsoever manner, with immediate effect. They are also restrained from associating themselves with any listed public company and any public company which intends to raise money from the public, or any intermediary registered with SEBI.

The above directions shall come into force with immediate effect and shall continue to be in force from the date of this Order till the expiry of4 yearsfrom the date of completion of refunds to investors as directed above.

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

22. 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.

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

24. A copy of this Order shall also be forwarded to the Ministry of Corporate Affairs/concerned Registrar of Companies, for their information and necessary action with respect to the directions/restraint imposed above against the Company and the individuals.

PRASHANT SARAN WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA Date : August 05, 2015 Place: Mumbai