Order in the matter of Sun-Plant Business Limited

WTM/PS/14/ERO/JUNE/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 respect of (1) Sun-Plant Business Limited and its Directors, namely, (2) Mr. Basant Kumar Sasmal (DIN- 00274508; PAN: AWFPS4077C), (3) Mr. Amit Kumar Chowdhury (DIN- 03573202; PAN: ACQPC7087F) and (4) Mr. Mahesh Chandra Prasad (DIN- 03575955; PAN: BBEPP4127P) Date of hearing : February 27, 2015 Appearance : Mr. Basant Kumar Sasmal (one of the directors of the company and a noticee) appeared for himself and the other noticees. For SEBI : Ms. Anitha Anoop, Deputy General Manager, Mr. T. Vinay Rajneesh, Assistant General Manager and Ms. Nikki Agarwal, Assistant Manager

1. SEBI vide an ex-parte interim Order dated November 24, 2014 ("the interim order") alleged that the company, Sun-Plant Business Limited ("the Company" or "SBL") had engaged in fund mobilizing activity from the public, through the offer and issue of Redeemable Preference Shares ("RPS") without complying with sections 56, 60 read with section 2(36) and 73 of the Companies Act, 1956 and the SEBI (Disclosure and Investor Protection) Guidelines, 2000 ("the DIP Guidelines") read with the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 ("the ICDR Regulations").

2. As per the interim order, the Company had made offers and issued RPS during the financial years 2005-2006, 2006-2007 and 2007-2008. As on March 31, 2008, the Company had issued 41,74,300 shares of face value of Rs.10/- each and raised Rs.4,17,43,000 from a total of 470 investors. The interim order also mentioned the following:

"4.2 The company vide its undated letter, which was received by SEBI on August 25, 2014, has submitted under the heading 'Information in respect of issue of Redeemable Preference Shares' that the amount raised is Rs.57604000/-. As per the details mentioned in the Audited Balance Sheet of the company as on March 31, 2011, it is observed that the company has raised Share Application Money of Rs. 1,58,61,000/- in addition to the amount raised through issue of preference shares".

3. While alleging that the offer and issue of RPS, as impugned in the present proceedings, were made to the public not complying with the statutory norms associated with such issuance of securities, the interim order observed "Although the Offer of RPS is stated to have been made on a private placement basis, it is an admitted fact that SBL issued RPS to more than 49 investors in each Financial Years 2005- 06, 2006-07, 2007-08 in series of allotments and mobilized approximately Rs.4,17,43,000/- from 470 individuals/investors during these three Financial Years. The aforesaid facts clearly indicate that the number of persons to whom RPS was issued by SBL in series of allotments in each of these three years was beyond the limit of forty–nine persons as prescribed under Section 67(3) of the Companies Act, 1956. The frequency of allotments and time span between the series of allotments made prima facie, indicate that the method adopted by SBL for mobilization of funds is nothing but a device to circumvent the provisions of section 67(3) of the Companies Act, 1956."

4. In view of the allegations against the Company and its directors namely Mr. Basant Kumar Sasmal, Mr. Amit Kumar Chowdhury and Mr. Mahesh Chandra Prasad, SEBI issued the following directions against them vide the interim order :

".......... 6. In view of the foregoing, I, in exercise of the powers conferred upon me under Sections 11(1), 11(4), 11A and 11B of the SEBI Act and Clause 17 of the DIP Guidelines read with Regulation 111 of the ICDR Regulations,2009, hereby issue the following directions- i. SBL shall not mobilize any fresh funds from investors through the Offer 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. SBL and its Directors, viz. Shri Basant Kumar Sasmal (DIN- 00274508; PAN: AWFPS4077C), Shri Amit Kumar Chowdhury (DIN- 03573202; PAN: ACQPC7087F), Shri Mahesh Chandra Prasad (DIN- 03575955; PAN: BBEPP4127P) 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. SBL and the 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. SBL shall provide a full inventory of all its assets and properties; v. The abovementioned Directors of SBL shall provide a full inventory of all their assets and properties; vi. SBL 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 RPS, without prior permission from SEBI; vii. SBL and its abovementioned Directors shall not divert any funds raised from public at large through the Offer of RPS, which are kept in bank account(s) and/or in the custody of SBL. viii. SBL and its abovementioned Directors shall, within 21 days from the date of receipt of this Order, provide SEBI with all relevant and necessary information sought by SEBI vide letters dated July 10, 2014, July 14, 2014 and August 08, 2014 but not yet furnished.

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

8. ............ 9. This Order is without prejudice to the right of SEBI to take any other action that may be initiated against SBL and its abovementioned Directors in accordance with law."

5. The Company, vide its letter dated December 15, 2014, while acknowledging the receipt of the interim order, informed that it was collecting relevant papers pertaining to the case and requested for a period of 30 days for filing its reply. The Company also made a request for an opportunity of personal hearing. Subsequently, vide letter dated January 14, 2015, the Company filed its reply to the interim order, inter alia submitting the following: o SEBI had proceeded to pass the interim order without issuing any show cause notice to the Company. o The Company had replied only to those questions as asked by SEBI and that the previous letters of SEBI did not ask about redemption/refund of the amount with respect to the preference shareholders.

o The Company had redeemed/refunded Rs.2,28,24,400/- out of Rs.5,76,04,000/-, to the preference shareholders. The Company informed the following year-wise data on the amount redeemed : Year Amount (Rs.) 2011-2012 50,00,000/- 2012-2013 89,58,400/- 2013-2014 32,66,000/- 2014-2015 56,00,000/-

The Company had enclosed information with respect to the following: a) Total allotments - According to the Company, it had allotted 41,74,300 shares to 470 investors and raised Rs.4,17,43,000/-. b) Details of application money (money mobilized and pending allotment) - an aggregate amount of Rs.1,58,61,000/- mobilized from 229 investors. c) Details of redemption of preference shares - Redemption of shares for Rs.17609400/- in respect of 115 investors. d) Refund of application money - total Rs.52,15,000/- in respect of 27 investors.

o All the material relied upon while passing the order has not been disclosed by the Company to SEBI as SEBI did not require the Company to provide the same. o The Company requested for an opportunity of personal hearing.

6. The Company and its directors were afforded an opportunity of personal hearing on February 27, 2015, when noticee Mr. Basanta Kumar Sasmal appeared for himself, the Company, Mr. Amit Kumar Chowdhury and Mr. Mahesh Chandra Prasad. In the personal hearing, Mr. Basanta Kumar Sasmal inter alia submitted that - (1) The Company had mobilized around Rs.5.7 crore and that 40% of the money was repaid by the Company. (2) The Company has property worth Rs.13 crore and that further time was required to repay investors in full. They intend to wind-up the Company after repayments are made. (4) The chartered accountant was not co-operating with the Company and therefore the Balance Sheet could not be filed.

As requested by this noticee, liberty was granted to the noticees to file written submissions with supporting documents within a period of one week.

7. Thereafter, the Company vide an undated letter (received in SEBI on March 02, 2015) requested for permission to sell its assets for redeeming the balance preference shares. The Company further stated that it had enclosed the list of the lands (immovable property) purchased by the Company and the details of such properties. The Company also forwarded the (a) the Resolution dated January 2, 2015 of the Board of Directors of the Company authorising Mr. Basanta Kumar Sasmal to represent the Company before SEBI and (b) the authority letter from Mr. Amit Kumar Chowdhury authorizing Mr. Basanta Kumar Sasmal to represent him before SEBI.

8. Mr. Mahesh Chandra Prasad, one among the noticees, vide his letter dated March 10, 2015 inter alia stated that he has authorised Mr. Basant Kumar Sasmal to attend to and deal with matters before SEBI on his behalf. He also enclosed his letter dated March 04, 2015 addressed to Mr. Basant Kumar Sasmal requesting him to represent the noticee before SEBI. However, no submissions on merits were made in the above letters by Mr. Mahesh Chandra Prasad.

9. I have considered the interim order (which is also the show cause notice in the matter), the submissions and the material furnished by the Company before me and other material available on record. The Company had not made any contentions with respect to the merits of the case. The Company had not disputed any of the observations and allegations made against it and its directors in the interim order. The interim order alleged that the Company had made offer and issued RPS to public investors during the financial years 2005-2006, 2006-2007 and 2007-2008, not complying with the 'public issue' norms stipulated under sections 56, 60 read with section 2(36) and 73 of the Companies Act, 1956 and the DIP Guidelines read with the ICDR Regulations. The interim order had alleged that the Company, by issuing shares to more than 49 persons, had made a public issue of RPS in terms of the first proviso to section 67(3) of the Companies Act, 1956. In this regard, I note the following observations made in the interim order. "............ iv. As per details obtained from Annual Return of SBL for the year ended 31.03.2012 filed by SBL with RoC and the details of the allotees of RPS provided by SBL along with its undated letter, which was received by SEBI on August 25, 2014, it is observed that SBL has allotted "Redeemable Preference

Shares" ("RPS") to 470 investors in the Financial Years 2005-06, 2006-07 and 2007-08. The details are given below :

Financial Date of No. of shares Amount per Total Amount (in Total no/ of Year allotment alloted share (in Rs.) Rs.) allottees 28/02/2006 508100 10 5081000 65 31/03/2006 201100 10 2011000 12 2005-2006 Total 709200 10 7092000 77 2006-2007 30/04/2006 59800 10 598000 12 31/05/2006 55000 10 550000 3 30/06/2006 35500 10 355000 4 31/07/2006 30950 10 309500 3 31/08/2006 242300 10 2423000 10 30/09/2006 140900 10 1409000 21 03/10/2006 127000 10 1270000 1 20/10/2006 10000 10 100000 1 26/10/2006 1300 10 13000 3 28/10/2006 16000 10 160000 2 30/10/2006 15000 10 150000 2 01/11/2006 20000 10 200000 1 10/11/2006 5000 10 50000 1 13/11/2006 5000 10 50000 1 22/11/2006 6500 10 65000 3 27/11/2006 10000 10 100000 1 28/11/2006 70000 10 700000 1 29/11/2006 30000 10 300000 1 30/11/2006 144200 10 1442000 12 03/12/2006 20000 10 200000 2 05/12/2006 1050 10 10500 1 12/12/2006 2500 10 25000 2 19/12/2006 17000 10 170000 4 20/12/2006 5600 10 56000 3 02/01/2007 10000 10 100000 1 18/01/2007 5000 10 50000 1 19/01/2007 5000 10 50000 1 20/01/2007 1000 10 10000 1 31/01/2007 37500 10 375000 6 10/02/2007 10100 10 101000 3 13/02/2007 20000 10 200000 2 15/02/2007 100000 10 1000000 1 19/02/2007 10000 10 100000 1 22/02/2007 1000 10 10000 1 26/02/2007 2500 10 25000 1 28/02/2007 40000 10 400000 7 13/03/2007 4000 10 40000 1 19/03/2007 31000 10 310000 3 20/03/2007 2500 10 25000 1

21/03/2007 10000 10 100000 1 22/03/2007 9300 10 93000 4 23/03/2007 2000 10 20000 1 27/03/2007 22500 10 225000 2 30/03/2007 9600 10 96000 2 31/03/2007 74100 10 741000 6 Total 1477700 14777000 142 2007-08 09/04/2007 9000 10 90000 1 14/04/2007 16000 10 160000 2 17/04/2007 10000 10 100000 1 18/04/2007 5000 10 50000 1 25/04/2007 12300 10 123000 4 27/04/2007 30000 10 300000 2 28/04/2007 5000 10 50000 1 30/04/2007 127600 10 1276000 17 08/05/2007 4100 10 41000 4 14/05/2007 1000 10 10000 1 15/05/2007 6000 10 60000 1 21/05/2007 17500 10 175000 1 25/05/2007 2500 10 25000 1 28/05/2007 4100 10 41000 1 30/05/2007 10000 10 100000 2 31/05/2007 6000 10 60000 1 13/06/2007 20000 10 200000 2 14/06/2007 1200 10 12000 2 21/06/2007 7000 10 70000 1 22/06/2007 2500 10 25000 1 28/06/2007 1000 10 10000 1 30/06/2007 112500 10 1125000 6 17/07/2007 4500 10 45000 1 18/07/2007 9000 10 90000 2 19/07/2007 5000 10 50000 1 20/07/2007 45000 10 450000 4 27/07/2007 7000 10 70000 2 30/07/2007 50000 10 500000 4 31/07/2007 15500 10 155000 3 09/08/2007 5000 10 50000 1 14/08/2007 5500 10 55000 2 20/08/2007 10000 10 100000 1 21/08/2007 10000 10 100000 1 28/08/2007 1000 10 10000 1 31/08/2007 43000 10 430000 4 15/09/2007 11000 10 110000 2 29/09/2007 183500 10 1835000 14 31/10/2007 112500 10 1125000 12 30/11/2007 463500 10 4635000 62 31/12/2007 107800 10 1078000 13 31/01/2008 55000 10 550000 8

29/02/2008 176400 10 1764000 24 31/03/2008 256900 10 2569000 35 Total 1987400 19874000 251 Total 4174300 41743000 470 v. SBL has also provided the copies of Board Resolutions passed by its Board of Directors and Copies of Form-2 filed with RoC in the FY 2007-08 for issuance of RPS. The details of the same are mentioned in the table below:

Date of No. of RPS issued Face Value of each Total Amount Resolution/Allotment Share (in Rs.) ( in Rs.) 18/04/2007 1782000 10 17820000 25/04/2007 12300 10 123000 27/04/2007 20000 10 200000 28/04/2007 5000 10 50000 30/04/2007 130600 10 1306000 08/05/2007 7600 10 76000 14/05/2007 1000 10 10000 15/05/2007 6000 10 60000 16/05/2007 10000 10 100000 21/05/2007 12500 10 125000 25/05/2007 2500 10 25000 28/05/2007 4100 10 41000 30/05/2007 15000 10 150000 31/05/2007 112000 10 1120000 13/06/2007 20000 10 200000 14/06/2007 1200 10 12000 21/06/2007 7000 10 70000 22/06/2007 2500 10 25000 28/06/2007 1000 10 10000 30/06/2007 49500 10 495000 17/07/2007 4500 10 45000 18/07/2007 9000 10 90000 19/07/2007 5000 10 50000 20/07/2007 85000 10 850000 27/07/2007 7000 10 70000 30/07/2007 105000 10 1050000 31/07/2007 53500 10 535000 09/08/2007 5000 10 50000 14/08/2007 5500 10 55000 20/08/2007 10000 10 100000 21/08/2007 10000 10 100000 28/08/2007 1000 10 10000

31/08/2007 33300 10 333000 15/09/2007 16600 10 166000 29/09/2007 176000 10 1760000 31/10/2007 142000 10 1420000 30/11/2007 510000 10 5100000 31/12/2007 117800 10 1178000 31/01/2008 98000 10 980000 29/02/2008 233400 10 2334000 31/03/2008 445900 10 4459000

4.1 From the details available, it is prima facie noted that funds to the tune of Rs. 4,17,43,000/- have been mobilized till March 31, 2008 through issuance of 4174300 Redeemable preference shares of face value Rs.10 each. ..........."

10. From the above, it can be noticed that the Company had made a series of allotments during the financial years 2005-2006, 2006-2007 and 2007-2008. The Company admitted to have issued 41,74,300 RPS to 470 persons and that it also mobilized Rs.1,58,61,000/- (pending allotment) from 229 persons.

(a) I have perused the Annual Return (referred in the interim order) of the Company with respect to the allotment of shares and the information (Annexure E) provided by the Company to SEBI vide its letter (received on August 25, 2014) regarding the allotment of RPS. On perusal, I note that there appears to be discrepancies with respect to the date of allotment and the number of RPS allotted as per information shown in both the above said documents. For example, as per Annual Return filed by the Company, one Satyajit Dey (Ledger Folio No. 1) is shown to have been allotted 10000 RPS on September 30, 2006. However, as per Annexure E of Company's letter (received in SEBI on August 25, 2014) it is stated that Satyajit Dey was allotted 10000 RPS on April 18, 2007. Similarly, for one Hazarilal Biswas (Folio 63), the date of allotment is shown as 'March 04, 1900' (which is an error), whereas as per the information from Company, the date of allotment is April 18, 2007 for 5000 RPS.

(b) Though table 1 mentions the allotment of RPS from 2005-2006 till 2007-2008 and table 2 mentions RPS allotted from April 18, 2007 till March 31, 2008, it is noted that amount mobilised through offer and issue of RPS to the public, as per both the tables reproduced from the interim order, are the same at Rs.4,17,43,000/-. It is also noted that as per the information from Company (resolutions in BoD meetings), 11,000 RPS was allotted on May 31, 2007 instead of 1,12,000 RPS as inadvertently mentioned in the second table of the interim order.

(c) Further, I note that as per the Balance Sheet of the Company as at March 31, 2011, the issued, subscribed and paid-up capital through RPS is shown as '4174300 Cum. Preference Share @10/-each fully paid-up' for an amount of Rs.4,17,43,000/-.

11. With the above factual background, it is necessary to test whether the Company made a public issue of RPS as alleged in the interim order. Section 67 of the Companies Act, 1956, lays down the criteria to test whether the offer of securities is made on a private basis or made to the public at large. Accordingly, it would be important to refer to the provisions of section 67(1) and (3) of the Companies Act, 1956.

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

In terms of the first proviso to section 67(3), any offer or invitation to subscribe for shares or debentures made to 50 persons or more is construed to be an offer made to the public. In the present case, the Company had, in pursuance of its offer and issuance of securities and collection of money, made a series of allotments on a regular basis during the above said three financial years and had mobilised a total of Rs.5.76crores(=Rs.4.17crore + Rs. 1.59 crore, i.e., amount raised against issue of RPS and the amount raised pending allotment). The interim order had also mentioned the various dates (during FY 2007-2008) on which resolutions were passed by the Company's Board of Directors for issuance of RPS. Considering the number of persons from whom monies were mobilised by the Company, 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 and the manner of making such offer and issuance of RPS adopted by the Company (i.e., series of allotments made 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. It is also noted that on one occasion i.e., on November 30, 2007, the Company has allotted 463500 RPSs to 62 investors.

In view of the above observations, I agree with the prima facie view taken by SEBI in the interim order that the offer and issuance of RPS made by the Company during the aforesaid financial years is a 'public issue' of such securities.

12. The Hon'ble Courts have always disregarded persons/entities who employ a colourable scheme to evade the provisions of law. In this regard, I refer to the following observations made by the Hon'ble Courts:

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

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

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

In view of the above observations, it can be concluded that the Company in its effort to mobilize money from the public through its issue of RPS had devised a means to make multiple allotments in order to stay away from the regulatory purview and evade the liability of complying with the public issue norms as alleged in the interim order.

13. By making a public issue of RPS, 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. …"

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.

15. 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'. As recorded in the SEBI Order, the Company has admitted that it did not issue any Prospectus, Advertisement or other promotional material for issuing RPS.

16. 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 disputed that 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 at such rate. Considering that the mobilisation was done till March 31, 2008 and the claimed repayments commenced only 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.

17. The interim order had also alleged that the Company did not comply with the following provisions of the DIP Guidelines: a. Clause 2.1.1. – (Filing of offer document) b. Clause 2.1.4 – (Application for listing) c. Clause 2.1.5 – (Issue of securities in dematerialized form), d. Clause 2.8 – (Means of finance), e. Clause 4.1 – (Promoters contribution in a public issue by unlisted companies), f. Clause 4.11 – (Lock-in of minimum specified promoters contribution in public issues), g. Clause 4.14 – (Lock-In of pre-issue share capital of an unlisted company) h. Clause 5.3.1 – (Memorandum of understanding), i. Clause 5.3.3 – (Due Diligence Certificate) j. Clause 5.3.5 – (Undertaking), k. Clause 5.3.6 – (List Of Promoters Group And Other Details), l. Clause 5.4 – (Appointment of intermediaries) m. Clause 5.6 – (Offer document to be made public) n. Clause 5.6A – (Pre-issue Advertisement) o. Clause 5.7 – (Despatch of issue material) p. Clause 5.8 – (No complaints certificate) q. Clause 5.9 – (Mandatory collection centres including Clause 5.9.1 (Minimum number of collection centres) r. Clause 5.10 – (Authorised Collection Agents) s. Clause 5.12.1 – (Appointment of compliance officer) t. Clause 5.13 – (Abridged prospectus) u. Clause 6.0 – (Contents of offer documents) v. Clause 8.3 – (Rule 19(2)(b) of SC(R) Rules, 1957) w. Clause 8.8.1 – (Opening & closing date of subscription of securities) x. Clause 9 – (Guidelines on advertisements by Issuer Company) y. Clause 10.1 – (Requirement of credit rating) z. Clause 10.5 – (Redemption)

The above Guidelines were framed by SEBI in exercise of the powers conferred under the SEBI Act. The Hon'ble Supreme Court in the Sahara Case had observed "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". There is no record to state that the Company had complied with the above provisions. Accordingly, I hold the Company liable for non-compliance with the DIP Guidelines in respect of its 'public issue' of RPS.

18. Liability of directors: (a) I note that the interim order was also issued to the Company's directors Mr. Basant Kumar Sasmal, Mr. Amit Kumar Chowdhury and Mr. Mahesh Chandra Prasad. The following data accessed from the website of the Ministry of Corporate Affairs (MCA) gives information with respect to the signatories of the Company and the date of their appointment as directors in the Company: List of Signatories Date of DIN/DPIN/PAN Full Name Present residential address Designation Appointment BASANT RTC HOUSE, 3RD FLOOR, 4 DR. SURESH SARKAR 00274508 KUMAR Director 26/07/2004 ROAD, KOLKATA, 700014, West Bengal, INDIA SASMAL AMIT KUMAR 60/1 ARUNACHAL, RAHARA, KOLKATA, 700118, 03573202 Director 29/04/2011 CHOWDHURY West Bengal, INDIA MAHESH 706F, DUMRI KHAL, T.V. CENTRE, TOWN/VILL- 03575955 CHANDRA KATIHAR, ANCHAL- KATIHAR, DISTT- KATIHAT, Director 29/04/2011 PRASAD KATIHAR, 854106, Bihar, INDIA (b) From the above, it can be seen that Mr. Basant Kumar Sasmal became a director of the Company on July 26, 2004 and continues to be the director. He was the director when the impugned offer and allotments of RPS were made to the public without complying with the public issue norms and appears to be part of the Board which approved such allotment of RPS. It can therefore be concluded that Mr. Basant Kumar Sasmal is the 'officer in default' and liable for the violations committed by the Company while issuing RPS to the public, failure to repay in terms of section 73(2) of the Companies Act, 1956 and the consequences of such inaction.

(c) It is noted that the other two directors Mr. Amit Kumar Chowdhury and Mr. Mahesh Chandra Prasad became the directors of the Company on April 29, 2011. The above directors have not submitted any replies in their defence. Though they became directors after the period when the impugned offer and allotment of RPS was made by the Company, they were also cast with the statutory responsibility to make repayments to the investors as 'officers in default' by virtue of their position as directors in the Company. I note that the liability 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. These directors have also not taken any steps to remedy the violations committed by the Company by taking steps for making repayments. The very inaction by these directors against the previous management (for violating the public issue norms as stipulated under the Companies Act, 1956 and the DIP Guidelines while making the offer and issuing the RPS), even after the receipt of the SEBI Order, leads one to conclude on a possible collusion at their end with the Company and its previous management. Therefore, I hold Mr. Amit Kumar Chowdhury and Mr. Mahesh Chandra Prasad to be 'officers in default' in terms of section 73(2) of the Companies Act, 1956 and hence liable for the contraventions found against the Company and also for the consequences of such violations.

19. The Company has stated that it made repayments to the tune of Rs.2,28,24,400/- out of Rs.5,76,04,000/-. It has provided a list of investors to whom it had claimed to repaid. However, it has not produced any proof for such claim like bank statements, proper receipts issued by such investors, trail of funds etc. In view of the same, the veracity of such claim is doubtful. Further, as observed above, considering the delay in making the repayments, it is appropriate that the Company and the above directors are directed to make the repayments along with interest at 15% from the date when the repayments became due till the date of actual payment.

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

(a) The Company, Sun-Plant Business Limited (PAN-AAHCS6738F; CIN - U51900WB2002PLC094568), its promoters and directors including Mr. Basant Kumar Sasmal (DIN- 00274508; PAN: AWFPS4077C), Mr. Amit Kumar Chowdhury (DIN- 03573202; PAN: ACQPC7087F)and Mr. Mahesh Chandra Prasad (DIN- 03575955; PAN: BBEPP4127P), 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 and the SEBI (Issue and Listing of Debt Securities) Regulations, 2008), 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) As noted above, the Company has claimed to have repaid a sum of Rs.2,28,24,400/- to its investors. If the Company has actually made any repayments to its investors of the amounts collected from them along with promised returns, the above directions shall be applicable for the amounts due to be returned to remaining investors. However, such repayments as claimed to have been already made by the Company, shall be certified by Chartered Accountants, as directed in sub-paragraph (f) below.

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

(d) Sun-Plant Business Limited /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.

(e) Sun-Plant Business Limited and its promoters and directors 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.

(f) After completing the aforesaid repayments, the Company shall file a certificate of such completion with SEBI from two independent peer reviewed Chartered Accountants who are in the panel of any public authority or public institution. For the purpose of this Order, a peer reviewed Chartered Accountant shall mean a Chartered Accountant, who has been categorized so by the Institute of Chartered Accountants of India ("ICAI").

(g) Sun-Plant Business 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.

(h) The directors Mr. Basant Kumar Sasmal, Mr. Amit Kumar Chowdhury and Mr. Mahesh Chandra Prasad 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 of 4 years from the date of completion of refunds to investors as directed above.

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

21. In case of failure of the company, Sun-Plant Business Limited, its promoters and directors including Mr. Basant Kumar Sasmal, Mr. Amit Kumar Chowdhury and Mr. Mahesh Chandra Prasad in complying with the aforesaid directions, SEBI - 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.

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 : June 03, 2015 Place : Mumbai