Order in the matter of Suvidha Land Developers India Limited[SAT Appeal No.:151/2016]

WTM/PS/156/IMD/WRO/ILO/FEB/2016

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. Suvidha Land Developers India Limited (CIN:U45201MP2010PLC024330; PAN: AAPCS0366M), its Directors 2. Mr. Vinod Kumar Shankhwar (DIN:02444432; PAN: ATNPS4287P); 3. Mr. Rajendra Karn Rajpoot (DIN: 02444466; PAN: AJAPR9252L) and 4. Mr. Rajneesh Dutta (DIN: 06736734; PAN: ALEPD7075R)

Date of hearing: August 21, 2015 Appearance: For the noticees: Ms. Purnima Gupta, Advocate appeared for Suvidha Land Developers India Limited, Rajendra Karn Rajpoot and Vinod Kumar Shankhwar. For SEBI: Dr. Anitha Anoop, General Manager, Dr. Deepali Dixit, Assistant General Manager and Mr. T. Vinay Rajneesh, Assistant General Manager.

1. Securities and Exchange Board of India (“SEBI”), vide an ex-parte interim order dated February 12, 2015 (“the interim order”) prima facie observed that the company, Suvidha land Developers India Limited (“the Company” or “SLDIL”) is engaged in fund mobilization activity from the public through offer and issuance of Redeemable Preference Shares (”RPS”) and violated sections 56, 60 and 73 of the Companies Act, 1956 read with the Companies Act, 2013 and ) and the SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013 (the “RPS Regulations”). In order to protect the interest of investors and to prevent the Company and its directors Vinod Kumar Shankhwar, Rajendra Karn Rajpoot and Rajneesh Dutta, from continuing to mobilize public funds in contravention of law, SEBI issued the following directions:

“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 Regulation 25 of the SEBI (Issue and Listing of Non- Convertible Redeemable Preference Shares) Regulations, 2013 hereby issue the following directions – i. SLDIL shall not mobilize any fresh funds from investors through the Offer of RPS or through any other securities, to the public and/or invite subscription, in any manner whatsoever, either directly or indirectly, till further directions; ii. SLDIL (CIN: U45201MP2010PLC024330; PAN:AAPCS0366M) and its Directors viz. Shri Vinod Kumar Shankhwar (DIN:02444432; PAN:ATNPS4287P); Shri Rajendra Karn Rajpoot (DIN: 02444466; PAN:AJAPR9252L) and Shri Rajneesh Dutta (DIN: 06736734; PAN:ALEPD7075R) 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. SLDIL and its abovementioned Directors, are restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in the securities market, either directly or indirectly, till further directions. iv. SLDIL shall provide a full inventory of all its assets and properties; v. The Directors of SLDIL shall provide a full inventory of all their assets and properties; vi. SLDIL 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. SLDIL 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 SLDIL; ……..”

2. The interim order came into force with immediate effect. The noticees (Company and its directors mentioned above) were afforded opportunity to file their response and were advised to indicate whether they wish to avail an opportunity of personal hearing in the matter.

3. The Company, vide an undated letter (received in SEBI on March 05, 2015) referred to the interim order and submitted that it had stopped the collection of money under its schemes since January 31, 2014 and further submitted that its directors were not aware of the guidelines/rules as applicable on such kind of activities. Their motto was to carry on property development in the best interest of the customer to gainfully deploy their savings in an investment which would give good returns. The Company further submitted that it never failed in paying the maturity amounts to its customers and that not even a single complaint was registered for default in payment. Its customers have full access to the Company records like project progress reports, MoA, AoA, balance sheets which are kept in its branches. The Company was in the process of preparing details of its assets and properties that would be submitted shortly. The Company represented that – (1) Presently, it is not mobilizing fresh funds from investors through RPS or any other security through the issuance of any Prospectus or any other offer document or advertisement for soliciting money from public for issue of securities; (2) It would not dispose off any property belonging to the Company and would also not divert funds raised from public through offer of RPS kept in banks and/or custody of Company. The Company sought for an opportunity of personal hearing. No response was received from the other noticees, i.e. directors.

4. SEBI, vide email dated April 23, 2015, while referring to the interim order and the above response of the Company, advised the Company to provide full inventory of the assets and properties of the Company and its directors, by April 29, 2015.

5. An opportunity of personal hearing was afforded to the noticees on July 10, 2015. The same was communicated vide SEBI letter dated June 02, 2015 to the noticees. As the status of delivery of interim order and hearing notice to all the noticees could not be ascertained from the India Post website and also as no confirmation was received from all the noticees regarding their appearance in the hearing, SEBI made a public notice in the newspapers on June 30, 2015 in Times of India and in Dainik Bhaskar regarding the proceedings and the personal hearing fixed on July 10, 2015. On the date of hearing, the Company vide its email stated that there was some confusion regarding the hearing and requested for some more time to arrange documents and requested for another date of hearing. Meanwhile, the addresses and contact details of the directors were furnished by another group company, Suvidha Farming and Allied Limited as they were directors in that entity also. As requested, another opportunity of personal hearing in the matter was fixed on August 21, 2015 for all noticees. The Company, in response, confirmed its presence in the hearing and informed that its representatives Mr. G. Kumar and Mrs. Purnima Gupta, Advocate would attend the hearing.

6. On August 21, 2015, the Company, Vinod Kumar Shankhwar and Rajendra Karn Rajpoot were represented by Ms. Purnima Gupta, Advocate, who requested for further time to make submissions on the ground that she was engaged on short notice. Liberty to file written submissions within three weeks was allowed. There was no representation from noticee, Rajneesh Dutta. The personal hearing was concluded.

7. It is noted that the Company and above noticees failed to submit written submissions for which liberty was sought during the personal hearing. The Company, vide an undated letter (received in SEBI on February 01, 2016) had stated that the interim order mentioned about a complaint received by SEBI alleging that the Suvidha group has been mobilizing money from public. The Company has requested SEBI to inform whether the complaint was on an affidavit, whether any statement of such complainant was recorded, whether he produced any evidence and whether any investigation was conducted by SEBI and any report was filed. The Company has requested for the above documents as the same would help in preparing its reply. This letter at this stage, according to me is only for delaying the proceedings for the following reasons - the documents forwarded by the complainant were forwarded to the Company vide SEBI letter dated January 23, 2014. The same is recorded in the interim order in paragraph 2.1. The Company has received such letter and has sought for time to reply to the same. The interim order has clearly mentioned that the documents that were relied are the documents submitted by the Company and the information is publicly available in the MCA portal. Accordingly, the request made vide the above letter of Company is rejected as being infructuous and without merit.

8. In view of the same, I proceed to consider the matter on merits on the basis of material available on record and the response from the Company. The interim order had alleged that the Company made a public offer of RPS and allotted such securities without complying with the provisions of the Companies Act, 1956 and the RPS Regulations of SEBI. The noticees have not disputed the observations and allegations made in the interim order. The Company merely submitted that it would abide by the directions issued in the interim order.

9. As per the interim order, the Company was incorporated on September 14, 2010. Regarding the offer and issuance of RPS as impugned in the interim order, I note that as per the Special Resolution passed at the Extra Ordinary General Meeting of the members of SLDIL held on May 15,

2013 (submitted to SEBI by SLDIL vide letter dated February 17, 2014), the Board of Directors of the Company was authorized to “to create, offer, issue and allot, on a preferential basis, upto 3,00,000 Cumulative Redeemable Preference Shares of Rs.100/- each at par aggregating to Rs.3,00,00,000/- (Rupees Three Crores only) on private placement basis to various persons as identified by the Board from time to time.....". Directors, Vinod Kumar Shankhwar and Rajendra Karn Rajpoot were severally authorized to do all such actions as may be required in this regard.

10. The Company had printed Application forms for this purpose and from such form it is noted that: i. Allotment was for Cumulative Redeemable Preference Shares of Rs.100/- each on private placement basis. ii. The allotment was pursuant to the resolution passed by the Board of Directors of the company in its meeting held on March 01, 2013 and subsequent resolution passed by the shareholders of the company in their general meeting held on March 25, 2013. (it appears that the Company has more than one resolution for its offer and issuance of RPS) iii. The application is to be for a minimum 100 Cumulative Redeemable Preference Shares and in multiples of 10 thereafter.

11. The brochure issued by the company indicates four plans viz. Plan SLD3 for 3 years with indicative yield of 11.60%, Plan SLD6 for 6 years with indicative yield of 12.72%, Plan SLD8 for 8 years with indicative yield of 14.75% and Plan SLD11 for 11 years with indicative yield of 14.25%. The number of shares indicated in the plan are in the range of 100 to 500 shares and it is also indicated "Effective from 01.05.2013". The table for one such plan is given below: -

Plan SLD3 No. of Investment Indicative Yield Expected shares Amount in (Rs.) (P.A.) Redemption Value in (Rs.) 100 10000 11.60% 13899 150 15000 11.60% 20849 200 20000 11.60% 27799 250 25000 11.60% 34748 300 30000 11.60% 41697 350 35000 11.60% 48647

400 40000 11.60% 55596 450 45000 11.60% 62546 500 50000 11.60% 69495

12. The interim order has also mentioned the following: As per the information submitted by SLDIL, the details of preference shares issued are as under:

(i) Plan-wise mobilization (as per information from Company): Plan Code Number of Investors Amount Mobilized (Rs.) SLD11 56 12,20,000 SLD3 15 5,85,000 SLD6 152 26,35,000 SLD8 914 1,71,25,000 Total 1137 2,15,65,000 (ii) Date-wise allotments:

S. No. Date of Allotment Number of investors 1. 29/6/2013 83 2. 15/7/2013 87 3. 31/7/2013 73 4. 14/8/2013 41 5. 31/8/2013 115 6. 30/9/2013 115 7. 18/10/2013 41 8. 25/10/2013 45 9. 31/10/2013 55 10. 20/11/2013 48 11. 30/11/2013 97 12. 20/12/2013 44 13. 31/12/2013 80

14. 25/1/2014 109 15. 10/2/2014 104 Total 1137 a. As per the investor data provided by SLDIL, applications were received from June 2013 onwards and the investors were largely people of various villages from the states of Madhya Pradesh, Uttar Pradesh & Chhattisgarh.

b. As per the unaudited provisional balance sheet as on January 31, 2014 provided by SLDIL vide their letter dated February 27, 2014, SLDIL had mobilised an amount of `2,15,65,000/- through issuance of preference shares during 2013-14.

c. As per the details of allotment mentioned above, SLDIL had issued and allotted Cumulative Redeemable Preference Shares ("Offer of RPS") in series of allotments to 1137 investors and raised an amount of `.2,15,65,000/- during the financial year 2013-14. 13. To ascertain whether an issue of securities is a 'public issue' or done on 'private placement', a reference to section 67(3) of the Companies Act, 1956 needs to be made: 67. (1) Any reference in this Act or in the articles of a company to offering shares or debentures to the public shall, subject to any provision to the contrary contained in this Act and subject also to the provisions of sub-sections (3) and (4), be construed as including a reference to offering them to any section of the public, whether selected as members or debenture holders of the company concerned or as clients of the person issuing the prospectus or in any other manner. (2) ... (3) No offer or invitation shall be treated as made to the public by virtue of sub-section (1) or sub-section (2), as the case may be, if the offer or invitation can properly be regarded, in all the circumstances- (a) as not being calculated to result, directly or indirectly, in the shares or debentures becoming available for subscription or purchase by persons other than those receiving the offer or invitation; or (b) otherwise as being a domestic concern of the persons making and receiving the offer or invitation … Provided that nothing contained in this sub-section shall apply in a case where the offer or invitation to subscribe for shares or debentures is made to fifty persons or more: Provided further that nothing contained in the first proviso shall apply to non-banking financial companies or public financial institutions specified in section 4A of the Companies Act, 1956 (1 of 1956).

In terms of section 67(3), as amended by the Companies (Amendment) Act, 2000, with effect from December 13, 2000, no offer or invitation shall be treated as made to the public by virtue of sub-sections (1) or (2), as the case may be, if the offer or invitation can properly be regarded, in all circumstances – (a) as not being calculated to result, directly or indirectly, in the shares or debentures becoming available for subscription or purchase by persons other than those receiving the offer or invitation; or (b) otherwise as being a domestic concern of the persons making and receiving the offer or invitation. More importantly, in terms of the 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. Non-Banking Financial Companies (NBFCs) and Public Financial Institutions (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. The Company is not an NBFC or PFI.

14. 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. …"

15. As indicated above, the Company had made a series of allotments commencing from June 29, 2013 till February 10, 2014 to a total of 1137 persons. Except for three allotments, all the other allotments were made to more than 49 persons. Considering the pattern of allotments, the three allotments made to less than 49 persons should be seen along with the total allotments. Further, it can be said that the allotments made to less than 49 persons on such three occasions can be 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. For the said reasons, I agree with the following observation made in the interim order: “Further, although the Offer of RPS is stated to have been made on a private placement basis by SLDIL, from the terms and conditions indicated in the application form, it is observed that "Application shall be in the names of Individuals, Partnership Firm, Companies, Statutory Societies or Statutory Institutions AND NOT in the names of minors, non-residents or their nominees or a trust/societies (unless the trust/ societies is registered under the Societies Registration Act,1860.... ". Such a generalized category of investor(s) cannot be said to satisfy the condition of specificity as required under Section 67(3) of the Companies Act. From the investor data details provided by SLDIL, it is observed that the investors were from various villages of the states of Madhya Pradesh, Uttar Pradesh and Chhattisgarh. In view of the above stated facts, the Offer of RPS by SLDIL prima facie qualifies as a public issue of securities under the first proviso to Section 67(3)of the Companies Act, 1956, which has been elucidated by the Hon'ble Supreme Court of India in the Sahara Case”.

16. I therefore hold that the Company made its offer and allotted RPS to more than 49 persons, thereby making a public issue of RPS (in terms of the first proviso to section 67(3) of the Companies Act, 1956) during FY 2013-14 as alleged in the interim order. 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. …".

17. By making a public issue of RPSs, 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 regard, I note that 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".

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.

18. The interim order has alleged that the Company failed to comply with sections 56, 60 and 73 of the Companies Act, 1956 and the RPS Regulations. In this regard, I observe the following: 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'. There is no Prospectus produced by the Company with respect to its offer of RPS. Accordingly, I find that the Company has failed to comply with sections 56 and 60. Section 33 (1) of the Companies Act, 2013 (stipulates that no form of application for the purchase of any of the securities of a company shall be issued unless such form is accompanied by an abridged prospectus. It is noted that this provision was notified with effect from September 12, 2013. The Company had issued securities after this date also as can be seen from the Table in page 6/paragraph 12.

b. By making a public issue of RPS, as discussed above, 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 RPSs to be dealt with in such stock exchange. Therefore, the Company has failed to comply with this requirement. Section 40 of the Companies Act, 2013 (provision corresponding to section 73 of the Companies Act, 1956 (since repealed)), applicable with effect from September 12, 2013, states that every company making public offer shall, before making such offer, make an application to one or more recognized stock exchange or exchanges and obtain permission for the securities to be dealt with in such stock exchange or exchanges.

c. 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 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 RPSs 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."

d. Section 73(3) states that - All moneys received as aforesaid shall be kept in a separate bank account maintained with a Scheduled Bank 1 [until the permission has been granted, or where an appeal has been preferred against the refusal to grant such. permission, until the disposal of the appeal, and the money standing in such separate account shall, where the permission has not been applied for as aforesaid or has not been granted, be repaid within the time and in the manner specified in sub-section (2)]; and if default is made in complying with this sub-section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty thousand rupees.”. As found above, the Company had not applied and obtained listing permission. The Company is therefore in non-compliance with this provision also.

e. The mobilization was done during FY 2013-2014. 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 section 73(2) of the Companies Act, 1956 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 `2,15,65,000/- (raised by the Company through its offer and issuance of RPS in 2013-14) due to be repaid by the Company. As stated above, the liability of the Company to refund the public funds collected through offer and allotment of the impugned RPSs is continuing and such liability would cease only if the repayments are made in accordance with the relevant provisions of law.

f. The Company having made a public offer of RPS was also supposed to comply with the following provisions of the RPS Regulations framed by SEBI in exercise of powers under the SEBI Act, 1992. This regulation governs non-convertible redeemable preference shares.

i. Regulation 4(2)(a) and 16(1) - SLDIL has not made applications to recognized stock exchange for listing of preference shares. ii. Regulation 4(2)(b)- SLDIL failed to obtain in-principle approval for listing of its preference shares on recognized stock exchanges. iii. Regulation 4(2)(c)- SLDIL failed to obtain credit rating from at least one credit rating agency registered with SEBI. iv. Regulation 4(2)(d)- SLDIL failed to enter into an arrangement with a depository registered with SEBI. v. Regulation 4(3)-SLDIL has not created capital redemption reserve in accordance with the provisions of the Companies Act, 1956. vi. Regulation 4(5)- SLDIL failed to appoint one or more merchant bankers registered with SEBI.

vii. Regulation 5(1) - The offer document does not contain all material disclosure, which are necessary for subscribers of preference shares to take an informed investment decision. viii. Regulation 6(1), 6(2), 6(3) and 7- SLDIL made public issue of preference shares despite its offer document not being filed with designated stock exchange. The said offer document has not been posted on the website of stock exchange. ix. Regulation 6(6) - The copy of draft and final offer document has not been forwarded to SEBI. x. Regulation 8(1)- No advertisement has been made in national daily on or before the issue opening date. xi. Regulation 9(1)- SLDIL has not issued an abridged prospectus with its application form. xii. Regulation 13(1), 13(2)-SLDIL has not complied with minimum subscription requirement and refund of application money in respect of issue of preference shares. xiii. Regulation 14- SLDIL has not appointed an underwriter registered with SEBI. xiv. Regulation 15 -SLDIL has made misstatements by omitting disclosure of material facts and had given false / misleading statement in the advertising brochure cum application form that the issue is privately placed.

g. In view of the above, I hereby find that the Company has not complied with the provisions of sections 56, 60 and 73 of the Companies Act, 1956 read with the Companies Act, 2013 and the above said provisions of the RPS Regulations.

19. The interim order has been issued against the directors – Vinod Kumar Shankhwar, Rajendra Karn Rajpoot and Rajneesh Dutta of the Company. As per the information available in the MCA portal, the above persons are the present directors of the Company. It is noted that Vinod Kumar Shankhwar and Rajendra Karn Rajpoot were appointed on September 14, 2010 (i.e. from date of incorporation of the Company) and Rajneesh Dutta was appointed on December 01, 2013. As mentioned above, the Company had commenced its offer and allotted shares from June 29, 2013 till February 10, 2014. The above persons were present in the Company’s Board during the offer and allotment of RPS. Therefore, they are liable for the violations committed by the Company as found above. I also observe the following:

(a) 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.

(b) The Company and directors are also liable for non-compliance with section 73 (mandatory listing of securities issued in a public issue) of the Companies Act, 1956 and section 40 of the Companies Act, 2013.

(c) 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. Such liability is a joint and several liability on them. Therefore, the directors (irrespective of whether they continue or resign) who were present during the period when the Company made the offer and allotted RPSs 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 RPSs shall also be liable if the Company and the concerned directors have failed to make refunds as mandated under law.

(d) Vinod Kumar Shankhwar, Rajendra Karn Rajpoot and Rajneesh Dutta shall therefore be liable, as directors of the Company, for the violation of sections 56, 60 and 73 of the Companies Act, 1956 as found in this Order and would also be liable to make refunds in terms of section 73(2) of the Companies Act read with section 27 of the SEBI Act, as ordered herein.

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) Suvidha Land Developers India Limited and its directors, Vinod Kumar Shankhwar, Rajendra Karn Rajpoot and Rajneesh Dutta, 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 Non-Convertible Redeemable Preference Shares) Regulations, 2013), 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) Suvidha Land Developers India Limited and its directors, Vinod Kumar Shankhwar, Rajendra Karn Rajpoot and Rajneesh Dutta, shall issue public notice, in all editions of two National Dailies (one English and one Hindi) and in one local daily 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) Suvidha Land Developers India Limited and its directors, Vinod Kumar Shankhwar, Rajendra Karn Rajpoot and Rajneesh Dutta 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 Suvidha Land Developers India Limited and its directors, Vinod Kumar Shankhwar, Rajendra Karn Rajpoot and Rajneesh Dutta 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. e) would also make a reference to the Ministry of Corporate Affairs to flag the names of notice directors in its database so that information may be perused by RoC or any other regulatory authority.

(h) Suvidha Land Developers India 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) Vinod Kumar Shankhwar, Rajendra Karn Rajpoot and Rajneesh Dutta 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.

21. 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.

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

23. 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: February 16th, 2016 Place: Mumbai