Order in the matter of Suraksha Agrotech Industries Limited[SAT Appeal No.:338/2016,47/2017,316/2017,]17979/2017]Civil Appeal No.17979/2017,[Civil Appeal No.:17979/2017,[Civil Appeal No.:17979/2017]before the Hon’ble Supreme Court of India[SAT Appeal No.:139/2016]

WTM/PS/64/IMD/ERO/OCT/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. Suraksha Agrotech Industries Limited (CIN- U01400WB2008PLC130787; PAN- AAMCS7720G), 2. Mr. Ranjit Daspattanayak (DIN - 02821903; PAN - AKDPD9098A), 3. Mr. Barun Kumar Nandi (DIN - 00566937; PAN - ABFPN4182J), 4. Mr. Indranil Das (DIN- 00566904; PAN -AFTPD7822F), 5. Mr. Arunabha Mukhopadhyay (DIN-00566929; PAN- AEYPM2888J), 6. Mr. Akhil Chandra Saha (DIN-02243929; PAN- AQMPS4454N), and 7. Mr. Subrata Das (DIN-02262940; PAN-AJEPD3008L).

1. Securities and Exchange Board of India (hereinafter referred to as "SEBI"), vide an interim ex-parte Order dated December 29, 2014 (hereinafter referred to as "the interim order") had observed that the company, Suraksha Agrotech Industries Limited (hereinafter referred to as "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Companies Act, 2013 and the SEBI (Disclosure and Investor Protection) Guidelines, 2000 (“the DIP Guidelines” – since rescinded) read with SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (“the ICDR Regulations”). 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 mobilizing activity, SEBI had issued the following directions:

17. “In view of the foregoing, I, in exercise of 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:

a) SURAKSHA AGROTECH shall not mobilize any further funds from investors through the issue of RPS or through the issue of equity shares or any other securities, to the public and/or invite subscription, in any manner whatsoever, either directly or indirectly till further orders;

b) SURAKSHA AGROTECH (CIN- U01400WB2008PLC130787; PAN- AAMCS7720G) and its past and present Directors viz. Shri Ranjit Daspattanayak (DIN - 02821903; PAN - AKDPD9098A), Shri Barun Kumar Nandi (DIN - 00566937; PAN - ABFPN4182J), Shri Indranil Das (DIN- 00566904; PAN -AFTPD7822F), Shri Arunabha Mukhopadhyay (DIN-00566929; PAN- AEYPM2888J), Shri Akhil Chandra Saha (DIN-02243929; PAN- AQMPS4454N), and Shri Subrata Das (DIN-02262940; PAN-AJEPD3008L) are prohibited from issuing prospectus or any offer document or issue advertisement for soliciting money from the public for the issue of securities, in any manner whatsoever, either directly or indirectly, till further orders;

c) SURAKSHA AGROTECH 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;

d) SURAKSHA AGROTECH and its Directors shall provide a full inventory of all its assets and properties;

e) SURAKSHA AGROTECH and its 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;

f) SURAKSHA AGROTECH and its Directors shall not divert any funds raised from the public at large through the issue of RPS, which are kept in bank account(s) and/or in the custody of SURAKSHA AGROTECH;

g) SURAKSHA AGROTECH and its 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 July 26, 2013 and February 05, 2014”.

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 material available on record i.e. the complaint received by SEBI, the correspondence between SEBI and the Company and the 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 its letter dated January 18, 2015, inter alia submitted that as per the ruling of the Hon’ble Supreme Court in the matter of Sahara India Real Estate Corporation Limited, the company therein was permitted to dispose off their properties and assets and made payments to the investors. The Company requested SEBI to dispose off its properties/assets for making payment to the investors. The Company submitted that it has already started making payments to the investors and that it can submit documentary evidence of payments made to investors. Regarding submission of Annual Accounts and Balance Sheet for 2012-2013 and 2013-2014, the Company informed that the same would be sent at the earliest. The Company queried whether it should approach the Calcutta Stock Exchange (“CSE”) for listing of its shares.

4. One of the noticees, Mr. Akhil Chandra Saha, vide his undated letter (received in SEBI on January 12, 2015) inter alia submitted that – (a) He was associated with a leading public sector insurance company for over 27 years and relinquished office in 2005. (b) In the year 2007, he was approached by Late P.C. Das and Mr. Arunabha Mukhopadhyay of ‘Suraksha Family Services’ to promote mediclaim insurance and became associated with them for the said assignment. In view of the then prevailing IRDA regulations, the promotion of mediclaim insurance was discontinued. (c) Thereafter, Mr. Arunabha Mukhopadhyay, the Managing Director of the Company advised the noticee to take care and oversee their dairy projects. The noticee took initiative in holding discussions with the Govt. of West Bengal for taking over their dairy plants located at Purulia and Haringhata on long term lease basis. Under this pretext, the Managing Director invited the noticee to join the Board as Independent Director of the Company and look after the dairy and agricultural projects undertaken by the Company. (d) The noticee had no role in the day to day functioning including financial matters and the same were looked after by Mr. Indranil Das (Whole Time Director) and Mr. Arunabha Mukhopadhyay. (e) When the noticee observed that there was no financial discipline in the organization, he submitted his resignation on May 06, 2013 (copy was enclosed). (f) To his utter surprise, he observed that the Company had re-inducted him to the Board of Directors on August 05, 2013 without obtaining his consent and forging his signature. The noticee had formally lodged a complaint with the Company and the RoC. (g) The noticee was totally unaware of any mischievous fund raising activity by the Company. He was told to sign by Arunabha Mukhopadhyay in certain papers prepared and checked by other directors and that in full faith had signed such papers. (h) He was solely looking after the dairy and agro projects of the Company and was inducted on the Board only because of his ‘agri’ background. He is an ex-public servant and a citizen of good social standing. The noticee requested for a personal hearing.

5. As it was noticed that the interim order was not served on few noticees, SEBI made a public notice dated March 31, 2015 in the newspapers (in Times of India dated April 15, 2015 and Ananda Bazar Patrika dated April 14, 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, i.e. the date of personal hearing - (a) Noticee, Ranjit Das Pattanayak, appeared and filed his letter dated April 20, 2015 enclosing copies of Form-32 and resignation letter dated August 18, 2010. Vide this letter, the noticee submitted that he was associated with the Company for 7 months from January 2010 to August 2010 and hardly knew anything that they were working as a share trading and corporate agent of Birla Sun Life. The noticee tendered his resignation on August 18, 2010, however, the Company sent Form-32 to RoC only on September 01, 2010. He stated “I shall be obliged to delete my name as a director from the above company considering the fact stated above”.

(b) Noticee, Barun Kumar Nandi appeared and filed his letter dated April 21, 2015 enclosing copies of his resignation letter and Form-32. The noticee submitted that he has no connection with the above stated company since March 2009 as he had resigned. However, the Company accepted his resignation only after a year of his resignation. The noticee had not taken any remuneration, perks or any financial benefit from the Company as a director. The noticee alleged that his name was used only as a director of the Company. He did not attend any Board meetings/EGMs. He had accepted to be a director due to his friendship with Late Paresh Chandra Das, father of Indranil Das (Director). The noticee had resigned after the death of Mr. Paresh Chandra Das. The noticee has also enclosed copies of his letters addressed to the Company regarding his resignation.

(c) Noticee, Akhil Chandra Saha, a director, appeared and reiterated his earlier submissions and filed further documents. He enclosed copies of his resignation letters – one dated May 06, 2013 said to be drafted by himself and another letter dated July 01, 2013 said to be drafted by the Managing Director of the Company. The letter said to be drafted by the noticee himself alleged that there was no transparency, suspicious mode of transaction of business of Company, misuse of public money etc. as the reasons for resigning from the Company. The letter said to be drafted by the M.D. does not contain these allegations.

(d) The Company was represented by Lt. Col. (Rtd.) T. K. Chattopadhyay and filed letter dated April 21, 2015 and copy of Balance Sheet for 2012-2013. Vide letter dated April 21, 2015, the Company inter alia submitted that it has paid Rs.5,49,97,418/- till date, which was nearly 50% of the total amount of Rs.11,45,97,600/-. Copy of Company’s letter dated January 18, 2015 and Balance sheet for 2012-2013 were also submitted.

(e) The other noticees/directors - Indranil Das, Arunabha Mukhopadhyay and Subrata Das, did not appear in the personal hearing.

7. I have considered the interim order cum SCN, the submissions and documents submitted by the aforesaid noticees and other material on record. The interim order has alleged that the Company did not comply with the public issue norms mandated under the Companies Act, 1956 and the DIP Guidelines in respect of the issue of Redeemable Preference Shares (RPS) issued by the Company during 2009-2010, 2010-2011 and 2011-2012. As per the interim order, the Company had issued and allotted RPSs to 13612 persons/investors and raised Rs.11,45,97,600/- during the aforesaid years. The Company has not disputed the allegations and has merely stated that it has already commenced making the refunds. The details of allotment such as number of allottees and amount raised etc. as noted from Form 2 (Form for Return of Allotment filed by the Company with RoC) obtained from 'MCA21 portal' are as under:

Year Date of Type of Security No of No. of persons Total Amount allotment securities to whom (Rs) issued(approx) 01/04/2009 Preference shares 32420 125 16,21,000.00 of Rs. 10/ with premium Rs. 40/- 30/04/2009 -Do- 5200 7 2,60,000.00 02/05/2009 -Do- 30590 158 15,29,500.00 01/06/2009 -Do- 39930 193 19,96,500.00 01/07/2009 -Do- 35965 193 17,98,250.00 2009-10 01/08/2009 -Do- 48110 217 24,05,500.00 01/09/2009 -Do- 43292 221 21,64,600.00 01/10/2009 -Do- 34150 221 17,07,500.00 01/11/2009 -Do- 72313 372 36,15,650.00 01/12/2009 -Do- 48738 253 24,36,900.00 01/01/2010 -Do- 52330 269 26,16,500.00 01/02/2010 -Do- 53044 305 26,52,200.00 Total in 2009-10 496082 2534 2,48,04,100.00

Year Date of Type of Security No of No. of persons Total Amount allotment securities to whom (Rs) issued(approx) 01/04/2010 Preference shares 109078 561 54,53,900.00 of Rs. 10/ with premium Rs. 40/- 02/05/2010 -Do- 58864 331 29,43,200.00 01/06/2010 -Do- 79024 432 39,51,200.00 01/07/2010 -Do- 96751 547 48,37,550.00 01/08/2010 -Do- 108374 590 54,18,700.00

01/09/2010 -Do- 108834 590 54,41,700.00 01/10/2010 -Do- 118812 639 59,40,600.00 2010-11 01/11/2010 -Do- 144702 843 72,35,100.00 01/12/2010 -Do- 104840 701 52,42,000.00 01/01/2011 -Do- 101355 675 50,67,750.00 01/02/2011 -Do- 90852 523 45,42,600.00 Total in 2010-11 1121486 6432 5,60,74,300.00 01/04/2011 -Do- 208286 1994 1,04,14,300.00 02/05/2011 -Do- 128574 877 64,28,700.00 2011-12 01/06/2011 -Do- 124605 773 62,30,250.00 11/08/2011 -Do- 212919 1002 1,06,45,950.00 Total in 2011-12 674384 4646 3,37,19,200.00 Grand Total 2291952 13612 11,45,97,600.00

8. In order to ascertain whether the issue of RPS made by the Company, as mentioned above, was a public issue as alleged in the interim order, it is necessary to refer to section 67(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 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 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.

9. The Hon'ble Supreme Court of India in the matter of Sahara India Real Estate Corporation Limited & Others vs. SEBI and 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. …"

{Emphasis supplied}

10. In the present matter, it is noted that the Company has made multiple allotments on a monthly basis during the financial years 2009-2010, 2010-2011 and 2011-2012. It can be seen that on every allotment (excluding the solitary allotment made on 30.04.2009), the number of persons to whom RPS were allotted always exceeded 49. The Company is not an NBFC or a Public Financial Institution within the meaning of Section 4A of the Companies Act, 1956 to be covered under the second proviso to section 67(3) of the Companies Act, 1956. Therefore, considering the number of persons from whom monies were mobilized 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 consistently every month) 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.

11. 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. …"

12. 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 read with Companies Act, 2013 and the DIP Guidelines read with the ICDR Regulations, in respect of its offer and issue of RPS. The Company has not disputed these allegations. In this regard, I note that - (a) 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'. The Company has contravened the above provisions.

(b) 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 recognized 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 is liable to repay with interest. Considering that the mobilization commenced during 2009-2010, it would be appropriate to levy an interest @ 15% p.a. as provided for under the above section. Further, the liability of the Company to refund the public funds collected through the offer and allotment of the impugned RPS is a continuing liability and such liability would continue till repayments are made.

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.

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

In view of the above, I find that the Company has contravened the provisions of section 73 of the Companies Act, 1956.

(c) The Company has merely stated that it has commenced making refunds. The Company also sought to know whether it could approach CSE for listing of its shares. As already stated, the Company was mandated to list its shares (when issued to the public) on a stock exchange and in case it failed to do so, it was mandated to make refunds under section 73(2) of the Companies Act. Therefore, regularizing a public issue (made in contravention of public issue norms) by now seeking to list on a stock exchange is not allowed under applicable law.

(d) During the personal hearing, the Company’s representative submitted that the Company has paid Rs.5,49,97,418/-out of the total amount of Rs.11,45,97,600/-. However, the Company did not submit any proof for such claimed payments.

(e) The interim order has also alleged that the Company failed to comply with the DIP Guidelines. In this regard, the following provisions of the DIP Guidelines are supposed to be complied with by any company making a public issue of securities: 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)

As regards the statutory force of the DIP Guidelines, the Hon'ble Supreme Court in the Sahara Case, had observed that the "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".

Though the DIP Guidelines were rescinded vide the ICDR Regulations, regulation 111(2) of the ICDR Regulations provided that - "(2)Notwithstanding the repeal under sub-section (1) of the repealed enactments,— (a) anything done or any action taken or purported to have been done or taken including observation made in respect of any draft offer document, any enquiry or investigation commenced or show cause notice issued in respect of the said Guidelines shall be deemed to have been done or taken under the corresponding provisions of these regulations; (b) any offer document, whether draft or otherwise, filed or application made to the Board under the said Guidelines and pending before it shall be deemed to have been filed or made under the corresponding provisions of these regulations." The Company has not denied such allegation. There is also no material to suggest compliance with such provisions of law. The Company is therefore found to have contravened the aforesaid provisions of the DIP Guidelines read with ICDR Regulations in respect of its offer and issue of RPS during the relevant period.

In view of the foregoing reasons and observations, I conclude that the Company did not comply with the public issue norms mandated under sections 56, 60 and 73 of the Companies Act, 1956 read with the Companies Act, 2013 and the DIP Guidelines read with the ICDR Regulations in respect of its offer and issue of RPS made during the financial years 2009-2010, 2010-2011 and 2011-2012. The Company is therefore liable for appropriate regulatory action.

13. The interim order had issued directions with respect to the following present and past directors of the Company – a) Mr. Ranjit Daspattanayak, b) Mr. Barun Kumar Nandi, c) Mr. Indranil Das, d) Mr. Arunabha Mukhopadhyay, e) Mr. Akhil Chandra Saha, and f) Mr. Subrata Das.

My observations and findings in this regard are as below: (a) The Company has violated the public issue norms mandated under sections 56, 60 and 73 of the Companies Act, 1956 read with the Companies Act, 2013 and the DIP Guidelines read with the ICDR Regulations in respect of its offer and issue of RPS made during the financial years 2009- 2010, 2010-2011 and 2011-2012.

(b) Section 56(1) and 56(3) read with section 56(4) imposes 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, 1956 is on the company, and every person who is a party to the non-compliance of issuing the prospectus as per the said section.

(c) The liability of the company and directors to repay under section 73(2) of the Companies Act, 1956 read with 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 RPS 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 RPS shall also be liable if the Company and the concerned directors have failed to make refunds as mandated under law.

(d) For the violation of the DIP Guidelines read with the ICDR Regulations, SEBI, in terms of Clause 17 of the DIP Guidelines, may in the interest of securities market and in the interest of investors, inter alia direct the persons concerned to refund the money collected under an issue to the investors with or without requisite interest (as the case may be) and direct the persons concerned not to access the capital market for a particular period.

(e) As per the information available in the website of MCA (accessed on October 06, 2015), Indranil Das, Arunabha Mukhopadhyay, Akhil Chandra Saha and Subrata Das are the present directors of the Company.

(f) It is noted that Arunabha Mukhopadhyay, Indranil Das and Subrata Das were appointed as directors of the Company on November 24, 2008 and continue to occupy such position till date. Few noticees have stated that Arunabha Mukhopadhyay is the Managing Director of the Company. Though SEBI issued public notices in newspaper, the aforesaid three noticees have neither filed replies to the interim order nor appeared in the personal hearing.

Therefore, for the reasons and observations made in sub-paragraph (b) above, the aforesaid directors of the Company are liable for the violations and are also responsible, jointly and severally, for making refunds to investors as mandated under section 73(2) of the Companies Act, 1956 read with section 27 of the SEBI Act and the DIP Guidelines.

(g) Mr. Ranjit Daspattanayak had submitted that he was director in the Company from January 18, 2010 to August 18, 2010. However, as per Form-32 and information from the RoC (i.e. Register of directors, managing directors, manager and secretary etc.), the date of his cessation as director was on September 01, 2010. As this noticee was a director during FY 2009-2010 and 2010-2011 when the RPSs were offered and issued without complying with the public issue norms, he also becomes liable for the violations committed by the Company. This noticee is also liable, jointly and severally, for making refunds to investors as mandated under section 73(2) of the Companies Act, 1956 and section 27 of the SEBI Act and the DIP Guidelines. The submission that he was not aware of the Company’s business would not absolve this noticee of the responsibility and liability.

(h) Noticee, Barun Kumar Nandi has also contended that he has no connection with the Company since March 2009. Though the noticee has contended that the Company did not promptly act on his resignation letter dated March 10, 2009, there is on record another resignation letter submitted by the noticee wherein he requested that he intends to discontinue as a director with effect from May 15, 2010. As per records forwarded by the RoC (i.e. Register of directors, managing directors, manager and secretary etc.) including Form-32, this noticee was appointed as a director in the Company on November 24, 2008 and had resigned with effect from May 12, 2010. This noticee was a director in the Company during the financial years 2009-2010 and 2010-2011 when the RPSs were offered and issued without complying with the public issue norms. Therefore, he becomes liable for the violations committed by the Company and also liable, jointly and severally, for making refunds to investors as mandated under section 73(2) of the Companies Act, 1956 read with section 27 of the SEBI Act and the DIP Guidelines.

(i) Akhil Chandra Saha has contended that he had resigned on May 06, 2013 and that without his consent the Company has re-inducted him as a director w.e.f August 05, 2013. He has also alleged his signature was forged. Though this noticee has made allegations against the Company/management in his submissions/resignation letter dated May 06, 2013, he has not informed of any action taken by him in this regard except for forwarding a copy of his resignation letter to the Commissioner of Police, Kolkata. However, the noticee is at liberty to take appropriate steps for the alleged forgery of signature and retention of his name as the director in the Company.

As per records forwarded by the RoC (i.e. Register of directors, managing directors, manager and secretary etc.), this noticee was originally appointed as a director on November 24, 2008 and thereafter on August 05, 2013. As per the MCA website/RoC records, this noticee is one of the present directors of the Company. As this noticee was present as a director in the Company during the financial years when the RPSs were offered and issued without complying with the public issue norms, he also becomes liable for the violations committed by the Company. This noticee is also responsible, jointly and severally, for making refunds to investors as mandated under section 73(2) of the Companies Act, 1956 read with section 27 of the SEBI Act and the DIP Guidelines.

In view of the above observations, I hereby conclude that the aforesaid 6 persons (present and past directors) are liable for the violations committed by the Company as found in this Order and also liable for making refunds under section 73(2) of the Companies Act, 1956 read with section 27 of the SEBI Act and the DIP Guidelines.

14. 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 July 26, 2013 and February 05, 2014. Though the Company, vide letter dated August 14, 2013, sought extension of twenty days to furnish the information/ documents, it failed to do so. Thereafter, a reminder was sent vide SEBI letter dated February 05, 2014 to the registered office as well as the head office of the Company. However, these letters were returned undelivered. As on date, the Company failed to submit information/documents as directed in the interim order.

15. 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. 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, Suraksha Agrotech Industries Limited (CIN- U01400WB2008PLC130787; PAN- AAMCS7720G) and its promoters and directors including Mr. Ranjit Daspattanayak (DIN - 02821903; PAN - AKDPD9098A), Mr. Barun Kumar Nandi (DIN - 00566937; PAN - ABFPN4182J), Mr. Indranil Das (DIN- 00566904; PAN - AFTPD7822F), Mr. Arunabha Mukhopadhyay (DIN-00566929; PAN- AEYPM2888J), Mr. Akhil Chandra Saha (DIN-02243929; PAN- AQMPS4454N) and Mr. Subrata Das (DIN- 02262940; PAN-AJEPD3008L) 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 DIP Guidelines), 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 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) The Company 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.

(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) 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 and persons mentioned in sub-paragraph (a) above 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) The Company 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) The directors including former directors, namely, Mr. Ranjit Daspattanayak (DIN - 02821903; PAN - AKDPD9098A), Mr. Barun Kumar Nandi (DIN - 00566937; PAN - ABFPN4182J), Mr. Indranil Das (DIN- 00566904; PAN -AFTPD7822F), Mr. Arunabha Mukhopadhyay (DIN-00566929; PAN- AEYPM2888J), Mr. Akhil Chandra Saha (DIN-02243929; PAN- AQMPS4454N) and Mr. Subrata Das (DIN-02262940; PAN-AJEPD3008L), 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) The above directions shall come into force with immediate effect.

16. 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.

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

18. 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: October 12th, 2015 Place: Mumbai