Order in the matter of Sankalp Projects Limited

WTM/PS/14/IMD-ERO/APR/2016 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: PRASHANT SARAN, WHOLE TIME MEMBER ORDER Under Sections 11, 11(4), 11A and 11B of the Securities and Exchange Board of India Act, 1992

In respect of – 1. Sankalp Projects Limited (PAN: AAOCS4472M) and its Directors, 2. Mr. Toofan Chandra Dey (PAN: AGCPD2335D; DIN: 02854328), 3. Mr. Tapan Mondal (PAN: BFCPM9024G; DIN: 03165701), 4. Mr. Kshitish Chandra Mandal (PAN: AJUPM2448K; DIN: 03181032), 5. Mr. Triveni Prasad Baranwal (PAN: ANIPB3402G; DIN: 03191209), 6. Mr. Rakesh Chandra Mondal (PAN: BHIPM6479H; DIN: 07045496), 7. Mr. Saugata Ganguly (PAN: AHIPG2705M; DIN: 02680692) and 8. Mr. Anirudhha Bhattacharya (PAN: ATFPB1416M; DIN: 02680693); and 9. Company’s debenture trust, namely, Sankalp Debenture Trust, represented by its Trustee, Smt. Moumita Bhowmick.

Date of hearing: September 04, 2015 – none of the noticees appeared. Date of hearing: November 23, 2015 Appearance: Ms. Pampi Sanyal, Advocate appeared on behalf of noticee, Toofan Chandra Dey. Mr. Anirudhha Bhattacharya did not appear. For SEBI: Mr. Prasanta Mahapatra, General Manager, Mr. T. Vinay Rajneesh, Assistant General Manager and Ms. Nikki Agarwal, Assistant Manager.

1. Securities and Exchange Board of India (hereinafter referred to as “SEBI”), vide an ex-parte interim Order dated April 24, 2015 (hereinafter referred to as the “interim order”) observed that the company, Sankalp Projects Limited (hereinafter referred to as “SPL” or “the Company”) is prima facie engaged in fund mobilization activity from the public, through its offer and issue of Non-Convertible Redeemable Debentures (hereinafter referred to as "NCDs")

and had allegedly violated the provisions of sections 56, 60 read with section 2(36), 73, 117B and 117C of the Companies Act, 1956 read with the Companies Act, 2013 and the relevant provisions of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008 (“the ILDS Regulations”). The interim order also alleged that the debenture trustee, Sankalp Debenture Trust (represented by its Trustee, Smt. Moumita Bhowmick), allegedly failed to meet the eligibility conditions specified under regulation 7 of the SEBI (Debenture Trustees) Regulations, 1993 ("DT Regulations") and acted as an unregistered debenture trustee in violation of section 12(1) of the Securities and Exchange Board of India Act, 1992 (“SEBI Act”).

2. In order to the protect the interest of investors and to ensure that the Company does not continue with its unauthorized fund mobilization through its offer and issue of NCDs, SEBI issued the following directions vide the interim order:

i. “SPL (PAN: AAOCS4472M), shall forthwith cease to mobilize funds from investors through the Offer of NCDs or through the issuance of equity shares or any other securities, to the public and/or invite subscription, in any manner whatsoever, either directly or indirectly till further directions; ii. SPL and its present Directors, viz. Shri Toofan Chandra Dey (PAN: AGCPD2335D; DIN: 02854328), Shri Tapan Mondal (PAN: BFCPM9024G; DIN: 03165701), Shri Kshitish Chandra Mandal (PAN: AJUPM2448K; DIN: 03181032), Shri Triveni Prasad Baranwal (PAN: ANIPB3402G; DIN: 03191209), Shri Rakesh Chandra Mondal (PAN: BHIPM6479H; DIN: 07045496), 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. The past Directors of SPL, viz. Shri Saugata Ganguly (PAN: AHIPG2705M; DIN: 02680692) and Shri Anirudhha Bhattacharya (PAN: ATFPB1416M; DIN: 02680693), 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; iv. SPL and its abovementioned past and present Directors, are restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in the securities market, either directly or indirectly, till further directions; v. SPL shall provide a full inventory of all its assets and properties;

vi. SPL's abovementioned past and present Directors shall provide a full inventory of all their assets and properties; vii. SPL and its abovementioned present Directors shall not dispose of any of the properties or alienate or encumber any of the assets owned/acquired by that company through the Offer of NCDs, without prior permission from SEBI; viii. SPL and its abovementioned present Directors shall not divert any funds raised from public at large through the Offer of NCDs, which are kept in bank account(s) and/or in the custody of SPL; ix. SPL and its abovementioned past and present Directors shall co-operate with SEBI and shall furnish all information/documents sought vide letters dated August 29, 2014; x. The Debenture Trustee, viz. Sankalp Debenture Trust (represented by its Trustee, viz. Smt. Moumita Bhowmick), are prohibited from continuing with their assignment as debenture trustee in respect of the Offer of NCDs of SPL 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”.

3. The interim order had advised the Company and its directors (present and past, as named in the interim order) to show cause as to why suitable directions under sections 11(1), 11(4), 11A and 11B of the SEBI Act including the following directions should not be passed against them:

i. Directing them jointly and severally to refund money collected through the Offer of NCDs alongwith interest, if any, promised to investors therein;

ii. Directing them to not 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;

iii. Directing them to refrain from accessing the securities market and prohibiting them from buying, selling or otherwise dealing in securities for an appropriate period.

4. The interim order advised the noticees to file their replies and to inform whether they desired to avail an opportunity of personal hearing in the matter. The interim order was forwarded vide SEBI’s letters dated April 27, 2015 to the noticees.

5. In response, Mr. Triveni Prasad Baranwal, vide letter dated May 13, 2015 inter alia submitted that he had replied to the previous letters of SEBI. As he was not keeping well, he was not able to immediately respond to the interim order. He submitted that he wished to resolve the problems of the Sankalp group and wanted to make oral submissions instead of written submissions in order to state true facts so that investors could get back their money.

6. Mr. Anirudhha Bhattacharya, vide letter received on May 25, 2015 submitted that he was a director from the date of incorporation of Company till August 16, 2012 and that the board of Company comprised of the following directors:

i. Saugata Ganguly (held 10000 shares of the Company) ii. Anirudhha Bhattacharya (this noticee) (held 9000 shares) iii. Toofan Chandra Dey (held 9000 shares) iv. Khsitish Chandra Mandal (held 5500 shares) v. Triveni Prasad Barnwal (held 5500 shares) vi. Tapan Mandal (held 5500 shares) In addition to the above, one Gopa Ghosh was also stated to hold 5500 shares of the Company.

The noticee submitted that he was busy in marketing various products of the Company and that in the long run he felt that his strategy did not match with that of the other directors. Therefore, he had decided to quit the Company. Accordingly, he had submitted his resignation and the same was accepted by the other directors. He submitted that from the date of resignation, he did not have any relation with the Company and was free from liabilities with respect to the Company. He further submitted that the shares of the Company held by him were also transferred when he resigned. The noticee stated that after his resignation, he has started his own trading business and request SEBI to give a favourable consideration so that he could freely work for his bread and butter.

7. I also note that the interim order was served on Kshitish Chandra Mandal, Triveni Prasad Baranwal and Aniruddha Bhattacharya and was not served on the Company (Postal Remark - Left) and Saugata Ganguly (Postal Remarks: Absent intimation served):

8. In accordance with the principles of natural justice, the noticees were afforded an opportunity of personal hearing on September 04, 2015. The schedule of the same was informed to the noticees vide SEBI letters dated August 12, 2015. As the interim order could not be served on few of the noticees as mentioned above, SEBI also made a public notice (in Times of India and Anand Bazar Patrika both dated September 03, 2015) regarding the proceedings and the schedule of personal hearing. On the date of personal hearing, Mr. Anirudhha Bhattarcharya (vide letter received on September 04, 2015) stated that he was out of station and requested for another opportunity of personal hearing. Mr. Toofan Chandra Dey also sought for another date of hearing on the ground of his illness. With regard to the other noticees, I note that they did not appear in the personal hearing despite issuance of SEBI hearing notices and the public notices in newspapers.

9. As requested by Mr. Toofan Chandra Dey and Mr. Anirudhha Bhattarcharya, another opportunity was afforded on November 23, 2015. In this hearing, Ms. Pampi Sanyal, Advocate appeared on behalf of noticee, Toofan Chandra Dey. Affidavit/authority letter was filed. The Advocate submitted that - (a) The noticee had received the SEBI letter dated August 29, 2014. According to the noticee, the information sought therein was available with Mr. Saugata Ganguly. Further, the noticee did not reply to the notices dated November 01, 2012 and July 23, 2013 of the RoC as he did not have any information. (b) Noticee also received another SEBI letter dated August 04, 2014. (c) The noticee was a field motivator in meeting of agents/new branch opening as directed by Saugata Ganguly. (d) Noticee requested SEBI to seek information from the said Saugata Ganguly.

10. There was no appearance by/on behalf of Mr. Anirudhha Bhattarcharya on the date of personal hearing. However, SEBI received this noticee’s letter dated November 20, 2015 on the date of hearing, wherein this noticee had submitted the following: (a) His father was seriously ill and therefore he could not appear in the hearing. He is not able to engage an Advocate.

(b) He was appointed as a director of the Company on July 03, 2010 and occupied that position till August 16, 2012. During this period, the Company had collected Rs.2.49 crore through the issue of secured redeemable debentures. He enclosed Balance Sheets of the Company for 2011-12 and 2010-11. (c) During his service, the Company made some repayments. However, he cannot provide details as the accounts remain in the custody of Mr. Saugata Ganguly, the managing director of the Company. (d) During his tenure, the Company had purchased some vacant lands at different places in the State of West Bengal and Jharkhand. The Company also purchased fishery in West Bengal. The Company entered into a Memorandum of Understanding with MPT Consultancy and made some payments to this entity. (e) The original documents were with Mr. Saugata Ganguly and the noticee only has copies, which he has enclosed to this reply. (f) He had resigned during August 2012 after noticing the activities of the Managing Director. (g) Except for salary of Rs.25,000/-, he did not take anything more from the Company. (h) As a director, he did not know anything more than that. He is not able to provide the bank statement of the Company as ICICI Bank refused as he was no more the present director. (i) Mr. Saugata Ganguly, the then managing director was the controlling authority and did not inform any major issues in the meeting of board of directors. All others were kept in dark.

11. I have considered the interim order, the submissions made by the concerned noticees, the material submitted by them and other material available on record. The interim order has alleged that the Company made a public offer and issued NCDs in violation of sections 56, 60, 73, 117B and 117C of the Companies Act, 1956 and the ILDS Regulations. The debenture trustee, Sankalp Debenture Trust (represented by its Trustee, viz. Smt. Moumita Bhowmick), was alleged to have acted as an unregistered Debenture Trustee, in violation of which amounts to violation of the SEBI Act read with the DT Regulations.

12. I note the following relevant observations from the interim order:

i. “SPL was incorporated on July 03, 2010, with the ROC, Kolkata with CIN as U45400WB2010PLC150994. Its Registered Office is at 8, Dharma Das Row, Kolkata – 700026, West Bengal, India.

ii. The present Directors of SPL are Shri Toofan Chandra Dey, Shri Tapan Mondal, Shri Kshitish Chandra Mandal, Shri Triveni Prasad Baranwal and Shri Rakesh Chandra Mondal.

iii. Shri Saugata Ganguly and Shri Anirudhha Bhattacharya, who were earlier Directors in SPL, have since resigned.

iv. From the material available on record, it is observed that SPL issued "Secured Non – Convertible Redeemable Debentures" ("Offer of NCDs") to investors during the Financial Years 2010–11, 2011–12, 2012–13 and 2013–14, details of which are provided below –

Type of Security Year No. of persons to whom Total Amount allotted (₹ in Lakhs) 2010–11 19 2.05 Secured Non – 2011–12 68 6.04 Convertible Redeemable 2012–13 22 2.13 Debentures 2013–14 2 0.30 Total *133 ^10.52 *^No. of allottees and amount raised are taken from the documents submitted with the complaints received by SEBI, however actual no. of allottees and amount mobilized could be more than the above indicated figures.

….” 13. The interim order had also observed the following: “a. ………. The number of investors to whom allotments were made under the Offer of NCDs during the Financial Year 2011–12 alongwith the amount mobilized therein, would 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 the first proviso to Section 67(3) of the Companies Act, 1956. b. However, it is noted that the number of allottees and amount raised under the Offer of NCDs for the Financial Years 2010–11, 2011–12, 2012–13 and 2013–14, have only been taken from the documents submitted with the complaints received by SEBI, against SPL (since no details were available in respect of such Offer on the MCA21 Portal). Therefore, the actual number of allottees and amount mobilized by SPL could be many more times than the figures indicated in the Table at paragraph 3(iv) of page 4”.

14. In order to ascertain whether an issue is a public issue or not, reference needs to be made to section 67(3) of the Companies Act. This provision, as amended by the Companies (Amendment) Act, 2000, with effect from December 13, 2000, states that 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 first proviso to the aforesaid section, the provisions of section 67(3) shall not apply in a case where the offer or invitation to subscribe for shares or debentures is made to fifty persons or more. Therefore, the number of subscribers becomes relevant to 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. NBFCs or PFIs are exempted only from the first proviso to section 67(3). Therefore, NBFC or PFI do not have any restriction on the number of allottees as imposed on a company which is not an NBFC or PFI. However, such companies also need to prove that its offer falls either under clause (a) or (b) of section 67(3) to claim such issuance to be a private placement.

15. In the present case, on an examination of the material submitted by the complainants, SEBI observed in the interim order that the Company had issued NCDs to atleast 133 persons and raised Rs.10.52 lakh during FY 2010-11, 2011-12, 2012-13 and 2013-14. There are no filings with respect to the issue and allotment of NCDs in the MCA portal also. The actual number of investors could be more as the Company failed to provide complete information regarding its offer and issue of NCDs. I also note that noticee, Mr. Anirudhha Bhattarcharya (former director of the Company) in his submissions has stated that the Company had raised Rs.2.49 crore through issue of NCDs. This noticee has referred to the Balance Sheets of the Company for FY 2010-11 and 2011-12. I have perused the Balance Sheet as on March 31, 2012 and note that Rs.2,49,00,000/- is mentioned as “short term borrowings”. In the notes of such accounts, this money is stated to be “Advance for different projects”. Considering that the Company has not come forth with complete information, the absence of information in the MCA portal and the admission made by one of the former directors of the Company, I am inclined to accept that the Company has made offer and issued NCDs to a large number of persons thereby mobilizing atleast Rs.2.49 crore. From the same, it becomes clear that the Company has made offer and issued NCDs to more than 49 persons. From the conduct of the Company and other directors in not providing information regarding the issue of NCDs, I am constrained to infer that the same was only to evade the regulatory authority.

16. Considering the above said facts and circumstances, I hereby conclude that the Company made a public issue of NCDs during the FY 2010-11, 2011-12, 2012-2013 and 2013-14, as alleged in the interim order. In terms of section 55A of the Companies Act, 1956, SEBI shall administer various provisions (as mentioned therein) of the said Act with respect to issue and transfer of securities by listed companies, companies that intend to list and also those companies that are required to list its securities while making offer and issue of securities to the public. While examining the scope of Section 55A of the Companies Act, 1956, the Hon'ble Supreme Court of India in Sahara Case, had observed that:

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

17. Under section 11A of the SEBI Act, SEBI is also empowered to regulate, by regulations/general or special orders, the matters pertaining to issue of capital, transfer of securities and matters related thereto. Accordingly, the Company, having made a public offer and issue of securities, as observed above, is under the jurisdiction of SEBI. By making a public issue of NCDs, 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 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. …".

18. Accordingly, sections 56, 60, 73, 117B and 117C of the Companies Act, 1956 and the provisions of the ILDS Regulations are required to be complied by a company making a public issue of securities. These provisions have been allegedly not adhered to by the Company. I observe the following in respect of the alleged violations:

(i) 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'. There is no record to suggest that the Company has complied with the above provisions. Accordingly, I hold that the Company has not adhered with the provisions of sections 56 and 60 of the Companies Act, 1956 in respect of its offer and issue of NCDs.

(ii) By making a public issue of NCDs, the Company had to compulsorily list such securities in compliance with section 73(1) of the Companies Act, 1956. A Company making a public issue of securities cannot choose whether to list its securities or not as listing is a mandatory requirement under law. 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. Further, there is no material to say that the Company has filed an application with a recognized stock exchange to enable the NCDs to be dealt with in such stock 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 of such securities, 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 is liable to repay with interest at such rate. The liability of the Company to refund the public funds collected through offer and allotment of the impugned securities is continuing and such liability would continue till repayments are made. There is no record to suggest that the Company made the refunds as per law. The Hon'ble Supreme Court of India in the Sahara case has examined section 73 and made the following observations: "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."

As the amounts mobilized through the issue of securities have not been refunded within the time period as mandated under law, it would therefore be appropriate to levy an interest @ 15% p.a. as provided for under the above section read with rule 4D (which prescribes that the rates of interest, for the purposes of sub-sections (2) and (2A) of section 73, shall be 15 per cent per annum) of the Companies (Central Government’s) General Rules and Forms, 1956 on the amounts mobilized by the Company through its offer and issue of NCDs, from the date when the same was liable to be repaid till the date of actual payment to the investors.

(iii) Section 117B of the Companies Act, 1956, prescribes that no company shall issue a prospectus or a letter of offer to the public for subscription of its debentures, unless it has, before such issue, appointed one or more debenture trustees for such debentures and the company has, on the face of the prospectus or the letter of offer, stated that the debenture trustee or trustees have given their consent to the company to be so appointed. The Company is found to have not filed its Prospectus with respect to the impugned offer and issue of NCDs. Therefore, the said provision has not been fully complied with. Further, appointment of debenture trustee shall be in terms of all applicable law.

(iv) Section 117C stipulates that, where a company issues debentures, it shall create a debenture redemption reserve for the redemption of such debentures, to which adequate amounts shall be credited, from out of its profits every year until such debentures are redeemed. There is no record to suggest that the Company had created a debenture redemption reserve and has therefore violated section 117C of the Companies Act, 1956.

(v) As NCDs are ‘debt securities’ in terms of the ILDS Regulations, the Company was also mandated to comply with the provisions of the ILDS Regulations in respect of its public issue of NCDs. However, the Company failed to comply with the following provisions of the ILDS Regulations. i. Regulation 4(2)(a) – Application for listing of debt securities ii. Regulation 4(2)(b) – In-principle approval for listing of debt securities iii. Regulation 4(2)(c) – Credit rating has been obtained iv. Regulation 4(2)(d) – Dematerialization of debt securities v. Regulation 4(4) – Appointment of Debenture Trustee vi. Regulation 5(2)(b) – Disclosure requirements in the Offer Document vii. Regulation 6 – Filing of draft Offer Document viii. Regulation 7 – Mode of disclosure of Offer Document ix. Regulation 8 – Advertisements for Public Issues x. Regulation 9 – Abridged Prospectus and application forms xi. Regulation 12 – Minimum subscription xii. Regulation 14 – Prohibition of mis-statements in the Offer Document xiii. Regulation 15 – Trust Deed xiv. Regulation 16 – Debenture Redemption Reserve xv. Regulation 17 – Creation of security xvi. Regulation 19 – Mandatory Listing xvii. Regulation 26 – Obligations of the Issuer, etc.

19. From the foregoing, I conclude that the Company failed to comply with the provisions of sections 56, 60, 73, 117B and 117C of the Companies Act, 1956 read with Companies Act, 2013 and the aforesaid provisions of the ILDS Regulations, in respect of its offer and issuance of NCDs as discussed in this Order and liable for suitable action under the Companies Act, 1956, the SEBI Act and the ILDS Regulations including action for default under section 73(2) of the Companies Act, 1956.

20. The interim order was issued against the following persons (the dates of appointment and resignation, if any are also indicated). The details of appointment and cessation from directorship have been taken from the ‘Register of Directors, managing directors, manager, secretary, etc’ obtained from RoC, Kolkata and the details available in the MCA-21 portal:

Name Date of appointment Date of resignation, if applicable Mr. Toofan Chandra Dey 03.07.2010 Continues as director Mr. Tapan Mondal 01.09.2010 Continues as director Mr. Kshitish Chandra Mandal 01.09.2010 Continues as director Mr. Triveni Prasad Baranwal 01.09.2010 Continues as director Mr. Rakesh Chandra Mondal 20.12.2014 01.09.2015 Mr. Saugata Ganguly 03.07.2010 12.04.2013 Mr. Anirudhha Bhattacharya 03.07.2010 16.08.2012

It is also noted (from the Balance Sheet as on 31.03.2012) that Saugata Ganguly, Anirudhha Bhatarcharya, Toofan Chandra Dey, Kshitish Chandra Mondal and Triveni Prasad Baranwal are equity shareholders and promoters (holding almost the entire Rs.5 lakh equity capital) of the Company. Though Mr. Anirudhha Bhattacharya stated that he transferred shares when he resigned, he has not submitted any proof for the same.

Regarding their responsibility and liability, I make the following observations:

(a) In terms of section 291 of the Companies Act, 1956, the board of directors of a company shall be entitled to exercise all such powers and do all such acts and things as the company is authorized to exercise and do. Therefore, the board of directors shall be responsible for the conduct of the business of a company and liable for any non-compliance of law and such liability shall be upon the individual directors also.

(b) With respect to the culpability of a director for breach of law by a company, I refer to and rely on the following observations made by the Hon’ble High Court of Madras in Madhavan Nambiar vs Registrar Of Companies (2002 108 Comp Cas 1 Mad): “13. It may be that the petitioner may not be a whole-time director, but that does not mean he is exonerated of the statutory obligations which are imposed under the Act and the rules and he cannot contend that he is an ex officio director and, therefore, he cannot be held responsible. There is substance in the contention advanced by Mr. Sridhar, learned counsel since the petitioner a member of the Indian Administrative Service and in the cadre of Secretary to Government when appointed as a director on the orders of the Government to a Government company or a joint venture company, he is expected not only to discharge his usual functions, but also take such diligent care as a director of the company as it is expected of him not only to take care of the interest of the Government, but also to see that the company complies with the provisions of the Companies Act and the rules framed thereunder.

Therefore, the second contention that the petitioner cannot be proceeded against at all as he is only a nominee or appointed director by the State Government, cannot be sustained in law. A director either full time or part time, either elected or appointed or nominated is bound to discharge the functions of a director and should have taken all the diligent steps and taken care in the affairs of the company. 14. In the matter of proceedings for negligence, default, breach of duty, misfeasance or breach of trust or violation of the statutory provisions of the Act and the rules, there is no difference or distinction between the whole-time or part time director or nominated or co-opted director and the liability for such acts or commission or omission is equal. So also the treatment for such violations as stipulated in the Companies Act, 1956. 15. Section 5 of the Companies Act defines the expression "officer who is in default". The expression means either (a) the managing director or managing directors; (b) the whole-time director or whole-time directors; (c) the manager; (d) the secretary; (e) any person in accordance with whose directions or instructions the board of directors of the company is accustomed to act; (f) any person charged by the board with the responsibility of complying with that provision; (g) any director or directors who may be specified by the board in this behalf or where no director is so specified, all the directors.

16. Section 29 of the Companies Act provides the general power of the board and …………... Therefore it follows there cannot be a blanket direction or a blanket indemnity in favour of the petitioner or other directors who have been nominated by the Government either ex officio or otherwise. Hence the second point deserves to be answered against the petitioner. 17. As regards the first contention, it is contended by Mr. Arvind P. Datar, learned senior counsel appearing for the petitioner that the company or its board had resolved that Thiagaraj S. Chettiar shall be the director in charge of the company of all its day-to-day affairs and, therefore, the petitioner, an ex officio chairman and director, cannot be expected to attend to the affairs on a day-to-day basis. This contention though attractive cannot be sustained as a whole. There may be a delegation, but ultimately it comes before the board and it is the board and the general body of the company which are responsible.” {Emphasis supplied} (c) A person cannot assume the role of a director in a company in a casual manner. The position of a ‘director’ in a public company/listed company comes along with responsibilities and compliances under law associated with such position, which have to be fulfilled by such director or face the consequences for any violation or default thereof.

(d) The allotment of NCDs were made during FY 2010-11, 2011-12, 2012-2013 and 2013-14. The Company was incorporated on July 03, 2010 and has commenced its money mobilization activity immediately thereafter. In this Order, the Company is found to have contravened the provisions of sections 56, 60, 73, 117B and 117C of the Companies Act, 1956 and the ILDS Regulations.

(e) Section 56(1) and 56(3) read with section 56(4) imposes the liability for the compliance of the said provisions, on the company, every director, and other persons responsible for the issuance of the prospectus. The liability for non-compliance of section 60 of the Companies Act is on the Company, and every person who is a party to the non-compliance of issuing the prospectus as per the said section. Further, the directors of a company would also be responsible for complying with the provisions of the ILDS Regulations.

(f) The liability of the company and directors to repay under section 73(2) of the Companies Act, 1956 and section 27 of the SEBI Act, is a continuing liability and the same continues till all the repayments are made. Therefore, the directors (irrespective of whether they continue or resign) who were present during the period when the Company made the offer and allotted NCDs shall be liable for violation of sections 56, 60 and 73 of the Companies Act, including the default in making refunds as mandated therein. As the liability to make repayments under sections 73(2) of the Companies Act read with section 27 of the SEBI Act is a continuing liability, the persons who join the Company’s Board pursuant to the offer and allotment of NCDs shall also be liable if the Company and the concerned directors have failed to make refunds as mandated under law.

(g) In view of the above observations, the submissions made by Mr. Toofan Chandra Dey and Mr. Anirudhha Bhatarcharya that they were not involved in the affairs of the Company or has resigned from the Company do not absolve them of their liability.

(h) Accordingly, I find that the noticees, Mr. Toofan Chandra Dey, Mr. Tapan Mondal, Mr. Kshitish Chandra Mandal, Mr. Triveni Prasad Baranwal, Mr. Saugata Ganguly and Mr. Anirudhha Bhattacharya are liable for the violations as found against the Company in this Order as well as for default in making refunds to the investors with applicable interest. They shall therefore be liable for necessary enforcement action.

Mr. Rakesh Chandra Mondal was a director from 20.12.2014 to 01.09.2015. Though he was not present during the offer and issuance of the RPS, he has not reported the irregularities to the regulator. In view of the observations made above with respect to liability of a director, this noticee is also liable in terms of section 73(2) of the Companies Act, 1956 read with section 27 of the SEBI Act to make the refunds to investors. However, he has not taken steps for making refunds in terms of section 73(2) of the Companies Act, 1956. He is also therefore liable for enforcement action.

21. The interim order also alleged that the debenture trustee, Sankalp Debenture Trust (represented by its Trustee, Smt. Moumita Bhowmick), allegedly failed to meet the eligibility conditions specified under regulation 7 of the DT Regulations and acted as an unregistered debenture trustee in violation of section 12(1) of the SEBI Act. I note that this noticee is not registered with SEBI to perform the functions of a ‘debenture trustee’ in the securities market. Further, they do not satisfy the following conditions under regulation 7 of the DT Regulations: "no person should act as a debenture trustee unless he is either – i. a scheduled bank carrying on commercial activity; or ii. a public financial institution within the meaning of section 4A of the Companies Act, 1956; or iii. an insurance company; or iv. body corporate."

Accordingly, Sankalp Debenture Trust, represented by its Trustee, Smt. Moumita Bhowmick, is found to have violated section 12(1) of the SEBI Act and regulation 7 of the DT Regulations for which they are liable for necessary enforcement action. Further, in view of these observations, it can also be said that the provisions of section 117B of the Companies Act, 1956 have not been completely complied with.

22. 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 and regulation 28 of the SEBI (Issue and Listing of Debt Securities) Regulation, 2008 hereby issue the following directions:

(a) Sankalp Projects Limited, Mr. Toofan Chandra Dey, Mr. Tapan Mondal, Mr. Kshitish Chandra Mandal, Mr. Triveni Prasad Baranwal, Mr. Rakesh Chandra Mondal, Mr. Saugata Ganguly and Mr. Anirudhha Bhattacharya, jointly and severally, shall forthwith refund the money collected by the Company through the issuance of Non-Convertible Debentures (which have been found to be issued in contravention of the public issue norms stipulated under the Companies Act, 1956 and the ILDS Regulations), 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) The Company/its present management are permitted to sell the assets of the Company only for the sole purpose of making the refunds as directed above and deposit the proceeds in an Escrow Account opened with a nationalised Bank.

(d) The Company and others named above 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, within a period of three months from the date of this Order, from two independent peer reviewed Chartered Accountants who are in the panel of any public authority or public institution. For the purpose of this Order, a peer reviewed Chartered Accountant shall mean a Chartered Accountant, who has been categorized so by the Institute of Chartered Accountants of India ("ICAI").

(f) Sankalp Projects Limited, Mr. Toofan Chandra Dey, Mr. Tapan Mondal, Mr. Kshitish Chandra Mandal, Mr. Triveni Prasad Baranwal, Mr. Rakesh Chandra Mondal, Mr. Saugata Ganguly and Mr. Anirudhha Bhattacharya 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, Sankalp Projects Limited, Mr. Toofan Chandra Dey, Mr. Tapan Mondal, Mr. Kshitish Chandra Mandal, Mr. Triveni Prasad Baranwal, Mr. Rakesh Chandra Mondal, Mr. Saugata Ganguly and Mr. Anirudhha Bhattacharya, 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 appropriate action as deemed fit. e) would also make a reference to the Ministry of Corporate Affairs to flag the names of noticee directors in its database so that information may be perused by RoC or any other regulatory authority.

(h) Sankalp Projects 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 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 years from the date of completion of refunds to investors as directed above.

(i) Mr. Toofan Chandra Dey, Mr. Tapan Mondal, Mr. Kshitish Chandra Mandal, Mr. Triveni Prasad Baranwal, Mr. Rakesh Chandra Mondal, Mr. Saugata Ganguly and Mr. Anirudhha Bhattacharya 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 issuing prospectus, offer document or advertisement soliciting money from the public and 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 of 4 years from the date of completion of refunds to investors, as directed above.

(j) Sankalp Debenture Trust and its Trustee, Smt. Moumita Bhowmick are hereby restrained from acting as an intermediary, accessing the securities market and further restrained from buying, selling or dealing in securities, in any manner whatsoever, for a period of 4 years.

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

23. 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 including former directors and other key persons.

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

25. 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: April 28th, 2016 Place: Mumbai