Order in the matter of Vikdas Industries Limited

WTM/PS/166/ERO/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 the matter of Vikdas Industries Limited In respect of: 1. Vikdas Industries Limited [PAN: AADCV5860F], 2. Mr. Indranil Sinha [PAN: ATIPS7061A], 3. Mr. Debasish Das [PAN: AGWPD4747K], 4. Mr. Sandip Paul [PAN: BBAPP0971P], 5. Mr. Goutam Chatterjee [PAN: ADWPC8320Q], 6. Mr. Ramen Chatterjee [PAN: ACTPC0530E], 7. Mr. Sachin Kumar Thakur [PAN: AJUPT3341C], 8. Mr. Jadunath Jena [PAN: ANUPJ8465D] and 9. Mr. Bhabagrahi Behera [PAN: ASWPB3847N] 10. Vikdas Industries Debenture Trust (represented by its Trustee, viz. Mr. Ranadeb De) Date of Hearing: September 03, 2015 Appearances: For Noticees: Mr. Avijit Ghosal, Advocate Mr. Sujit Dutta, Advocate For SEBI: Mr. Prashanta Mahapatra, General Manager, Mr. T. Vinay Rajneesh, Assistant General Manager, Mr. N. Murugan, Assistant General Manager, Ms. Nikki Agarwal, Assistant Manager. 1. Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’), vide an ex-parte interim Order dated January 29, 2015 (hereinafter referred to as ‘the interim order’) had observed that the company, Vikdas Industries Limited (hereinafter referred to as ‘Vikdas’ or ‘the Company’) is prima facie engaged in fund mobilising activity from the public, by making offer and issuing Secured Non-Convertible Redeemable

Debentures (hereinafter referred to as ‘NCD’) and had allegedly violated the provisions of Sections 56, 60 [read with Section 2(36)], 73, 117B and 117C of the Companies Act, 1956 and the relevant provisions of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008 (hereinafter referred to as ‘the ILDS Regulations’). The interim order also alleged that Vikdas Industries Debenture Trust (represented by its Trustee, viz. Mr. Ranadeb De) had allegedly failed to meet the eligibility conditions specified under the SEBI (Debenture Trustees) Regulations, 1993 (hereinafter referred to as ‘DT Regulations’) and acted as an unregistered debenture trustee in violation of Section 12(1) of the SEBI Act, 1992 (hereinafter referred to as ‘SEBI Act’).

2. In order to protect the investors who have subscribed to the impugned offer and issue of NCD and to prevent the Company from further carrying on with its fund mobilizing activity under the offer of NCDs, SEBI had issued the following directions: “… … 7. In view of the foregoing, I, in exercise of the powers conferred upon me under Sections 11, 11(4), 11A and 11B of the SEBI Act read with the Debt Securities Regulations and the Debenture Trustee Regulations, hereby issue the following directions – i. VIL (PAN: AADCV5860F) shall not mobilize funds from investors through the Offer of NCDs or through the issuance of equity shares or any other securities, to the public and/or invite subscription, in any manner whatsoever, either directly or indirectly till further directions; ii. VIL and its present Directors, viz. Shri Indranil Sinha (DIN: 01307720; PAN: ATIPS7061A), Shri Debasish Das (DIN: 02431426; PAN: AGWPD4747K), Shri Sandip Paul (DIN: 06622058; PAN: BBAPP0971P), Shri Sachin Kumar Thakur (DIN: 06560350; PAN: AJUPT3341C), Shri Jadunath Jena (DIN: 03169961; PAN: ANUPJ8465D) and Shri Bhabagrahi Behera (DIN: 05113111, PAN: ASWPB3847N) including its past Directors, viz. Shri Goutam Chatterjee (DIN: 01095937; PAN: ADWPC8320Q) and Shri Ramen Chatterjee (DIN: 01159399; PAN: ACTPC0530E), 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. VIL and its abovementioned past and present Directors, are restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in the securities market, either directly or indirectly, till further directions; iv. VIL shall provide a full inventory of all its assets and properties; v. VIL's abovementioned past and present Directors shall provide a full inventory of all their assets and properties;

vi. VIL and its abovementioned present Directors shall not dispose of any of the properties or alienate or encumber any of the assets owned/acquired by that company through the Offer of NCDs, without prior permission from SEBI; vii. VIL and its abovementioned present Directors shall not divert any funds raised from public at large through the Offer of NCDs, which are kept in bank account(s) and/or in the custody of VIL; viii. VIL and its abovementioned past and present Directors shall furnish complete and relevant information (as sought by SEBI letters dated February 3, 2014 and February 11, 2014), within 21 days from the date of receipt of this Order. ix. The Debenture Trustee, viz. Vikdas Industries Debenture Trust (represented by its Trustee, viz. Shri Ranadeb De), is prohibited from continuing with its assignment as debenture trustee in respect of the Offer of NCDs of VIL and also from taking up any new assignment or involvement in any new issue of debentures, etc. in a similar capacity, from the date of this order till further directions. 8. The above directions shall take effect immediately and shall be in force until further orders. ... … 9.2 Similarly, the Debenture Trustee, viz. Vikdas Industries Debenture Trust (represented by its Trustee, viz. Shri Ranadeb De), may, within 21 days from the date of receipt of this Order, file its reply, if any, to this Order and may also indicate whether it desires to avail himself an opportunity of personal hearing on a date and time to be fixed on a specific request made in that regard. 10. This Order is without prejudice to the right of SEBI to take any other action that may be initiated against VIL and its abovementioned past and present Directors; its Debenture Trustee, viz. Vikdas Industries Debenture Trust (represented by its Trustee, viz. Shri Ranadeb De), in accordance with law.” 3. The interim order observed that the prima facie observations made therein were on the basis of the information obtained from the 'MCA 21 Portal'. The interim order advised the Company and its directors that they may file their replies within 21 days from the date of receipt of the order and also to seek an opportunity of personal hearing.

4. The copy of the interim order was forwarded to the Company and its directors namely Mr. Indranil Sinha, Mr. Debasish Das, Mr. Sandip Paul, Mr. Goutam Chatterjee, Mr. Ramen Chatterjee, Mr. Sachin Kumar Thakur, Mr. Jadunath Jena and Mr. Bhabagrahi Behera and its Debenture Trustee namely Vikdas Industries Debenture Trust (represented by its Trustee, viz. Mr. Ranadeb De) vide letter dated January 29, 2015. The said letters issued to the Company, Mr. Debasish Das and Mr. Ranadeb De had returned undelivered.

5. In the meantime, the Company vide its letter dated February 12, 2015, submitted that it had raised ₹59,63,000 through secured debentures as can be seen from the audited financials for the financial year 2012-2013. The relevant forms for charge creation were uploaded with the Registrar of Companies, Kolkata (RoC). As there was no objection/ clarification from RoC, it was assumed that the issue of secured debentures was within the purview of the norms. The Company also submitted that the issue was made inadvertently and the entire amount of ₹59,63,000 has been paid back through bank and partly in cash alongwith interest to all the debenture holders, majorly during the financial year 2013-2014 and the balance during the financial year 2014-2015. Further, the audited financials of the financial year 2014-2015, will have no outstanding on account of debentures.

Mr. Ranadeb De (the trustee of Vikdas Industries Debenture Trust) also vide his letter dated February 25, 2015 replied to the interim order and submitted that he had made several representations towards the Company for making payments to the investors. The directors of the Company had informed him that Vikdas is not raising any further funds since the year 2013. He also submitted that he is not acting as trustee in any other company and also not continuing as trustee in Vikdas.

6. Subsequently, an opportunity of personal hearing was granted to the Company, its directors and debenture trustee on September 03, 2015. The scheduled date was communicated vide SEBI letter dated July 27, 2015. The date of hearing was also communicated vide the public notice in the newspapers namely ‘Ananda Bazar Patrika’ and ‘Times of India’ both dated September 03, 2015. The Company and its directors were advised that in case they fail to appear for the personal hearing before SEBI on the aforesaid date, then the matter would be proceeded ex-parte on the basis of material available on record. On the date fixed, Mr. Sujit Dutta, Advocate appeared as authorized representative of Mr. Ranadeb De (the trustee of Vikdas Industries Debenture Trust) and made oral submissions. For the Company and its directors namely Mr. Indranil Sinha, Mr. Debashish Das, Mr. Sandip Paul, Mr. Goutam Chatterjee and Mr. Ramen Chatterjee; one Mr. Avijit Ghoshal, Advocate appeared as their authorized representative and made oral submissions based on the letter of the Company dated February 12, 2015. The advocate also sought liberty for filing the written submissions within one week, which was duly granted. However, till date no written submissions have been received by SEBI from the said persons.

The other directors of the Company had failed to appear for the personal hearing. Considering that reasonable opportunities to the Company and its directors had already been afforded for making submissions in the matter, I am inclined to proceed further with the matter, on the basis of material available on record.

7. I have considered the interim order, the submissions of the Company and Mr. Ranadeb De and the material available on record. The interim order had observed/ alleged the following: a. Vikdas was incorporated on February 24, 2011, with the ROC, Kolkata, West Bengal with CIN No. as U74900WB2011PLC159745. b. Vikdas had made an offer and issued NCDs, as detailed in the table below: Year Security Amount Raised No. of Allottees (₹ in Lakhs) (Approx) 2011 – 12 Secured Non – Convertible 11.75 19 **2012 – 13 Redeemable Debentures 59.63 187 Total 71.38 206 **VIL had issued NCDs in tranches during the Financial Year 2012 – 13 on various dates i.e. 12.12.2012; 21.12.2012; 3.01.2013; 18.01.2013; 22.02.2013 and 8.03.2013. c. Vikdas had issued NCDs under different plans for different tenures with different rates of redemption, as detailed hereunder:

SCHEME – I Term Plan Min. Interest Interest M onthly Quarterly Half Yearly (Months) Name Amount (₹) Rate (%) Amount Yearly 24 A 12 1200 100 300 600 1200 36 B 10000 15 1500 125 375 750 1500 60 C 18 1800 150 450 900 1800 120 D 21 2100 175 525 1050 2100 SCHEME – II Term Plan Min. Interest Refund (Months) Name Amount (₹) (₹) Amount 12 E 123 1123 24 F 271 1271 36 G 491 1491 60 H 1078 2078

84 I 1000 2037 3037 120 J 4256 5256 168 K 9268 10268 8. Having considered the above, it is now necessary to determine whether the Company had made a public issue as alleged in the interim order and if so, whether the Company had complied with the public issue norms. The liability of the directors of the Company also needs to be determined as they have also been alleged in the interim order.

9. For ascertaining whether an issue of securities is a ‘public issue’ or done on ‘private placement’ basis it is necessary to make a reference to Section 67(3) of the Companies Act, 1956, which reads as under: “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).” As per 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 decide whether an issue of shares are made for public or done on a private placement basis, in the light of the above said provision. In view of the same, if an offer of securities are made to fifty or more persons, it would be deemed to be a public issue.

10. 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. …” 11. In the present case, I note that the Company had offered and allotted NCDs during the financial years 2011-12 and 2012-13 to about 206 allottees and collected about ₹71.38 lakh.

From the interim order, it is observed that the Company had allotted

NCDs to 187 persons on various dates i.e. December 12, 2012; December 21, 2012; January 03, 2013; January 18, 2013; February 22, 2013 and March 08, 2013 and had raised ₹59.63 lakh. Such continuous allotment of NCDs in a series of transactions which were in close proximity of each other indicates that the Company had issued NCDs to more than 49 persons. The reply submitted by the Company is silent on this count. In view of the same, the tranches can be considered to be part of the same offer. The Company has submitted that the issue was made inadvertently and it was not aware that it was against the existing guidelines. In view of the same, it is held that the Company had made an offer and allotted NCDs to more than 49 persons, thereby making a public issue of NCDs (in terms of the first proviso to Section 67(3) of the Companies Act, 1956) during the period alleged in the interim order.

12. By making a public issue of NCDs, 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 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. …” 13. In view of the above observations, by virtue of Section 55A(a) and (b), the SEBI has jurisdiction and would govern the issue of NCDs as the same was made to more than 49 persons. 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.

14. Sections 56, 60, 73, 117B and 117C of the Companies Act, 1956 and the provisions of the ILDS Regulations are required to be complied by a company making a public issue of securities. In terms of Section 56(1) of the Companies Act, 1956, every prospectus issued by or on behalf of a company, shall state the matters specified in Part I and set out the reports specified in Part II of Schedule II of that Act. Further, as per Section 56(3) of the Companies Act, 1956, no one shall issue any form of application for shares in a company, unless the form is accompanied by abridged prospectus, contain disclosures as specified. Section 2(36) of the Companies Act read with Section 60 thereof, mandates a company to register its ‘prospectus’ with the RoC, before making a public offer/ issuing the ‘prospectus’.

15. The interim order has alleged that the Company had failed to comply with Section 73 of the Companies Act, 1956, in respect of its issuance of NCDs. By issuing NCDs 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. There is no material on record to say that the Company has filed an application with a recognised stock exchange to enable the NCDs to be dealt with in such exchange. Therefore, the Company has failed to comply with this requirement.

16. Section 73(2) of the Companies Act, 1956 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 NCDs, the Company had to forthwith repay such money collected from the 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, become jointly and severally liable to repay with interest at such rate.

There is no material on record to say that the Company has complied with such provision. 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.” 17. Section 117B of the Companies Act, 1956, prescribes that no company shall issue a prospectus or a letter of offer to the public for subscription of its debentures, unless it has, before such issue, appointed one or more debenture trustees for such debentures and the company has, on the face of the prospectus or the letter of offer, stated that the ‘debenture trustee’ or trustees have given their consent to the company to be so appointed. The Company has admittedly not filed any prospectus. Therefore, the said provision has not been fully complied with. Further, appointment of ‘debenture trustee’ shall be in terms of all applicable law. Section 117C of the Companies Act, 1956, stipulates that, where a company issues debentures, it shall create a debenture redemption reserve for the redemption of such debentures, to which adequate amounts shall be credited, from out of its profits every year until such debentures are redeemed. There is no record to suggest that this provision was complied with by the Company.

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

From the foregoing, it is concluded that the Company has failed to comply with the provisions of Sections 56, 60 (read with Section 2(36), 73, 117B and 117C of the Companies Act, 1956 read with Companies Act, 2013 and the aforesaid provisions of the ILDS Regulations, in respect of its offer and issuance of NCDs, as discussed in this Order and liable for suitable action under the Companies Act, 1956, the SEBI Act and the ILDS Regulations.

19. The interim order has alleged that the debenture trustee namely Vikdas Industries Debenture Trust (represented by its Trustee, viz. Mr. Ranadeb De) had acted without registration from SEBI as required under Section 12(1) of the SEBI Act. In this regard, I note that Vikdas Industries Debenture Trust is not registered with SEBI to perform the functions of a ‘debenture trustee’ in the capital market. Further, it does not satisfy the following conditions under Regulation 7 of the DT Regulations: "no person should act as a debenture trustee unless he is either – i. a scheduled bank carrying on commercial activity; or ii. a public financial institution within the meaning of section 4A of the Companies Act, 1956; or iii. an insurance company; or iv. body corporate." From the above, it is seen that Vikdas Industries Debenture Trust does not satisfy the eligibility conditions stipulated under Regulation 7 of the DT Regulations. The debenture trustee has not disputed these allegations. Mr. Ranadeb De, the trustee of Vikdas Industries Debenture Trust in his reply to the interim order has only submitted that he had made several representations to the Company for making payments to the investors. Having considered the above, I am inclined to conclude that Vikdas Industries Debenture Trust has violated Section 12(1) of the SEBI Act and Regulation 7 of the DT Regulations. In view of these observations, it can be said that the provisions of Section 117B of the Companies Act, 1956, have not been completely complied with.

20. Liability of directors: I note that the interim order was issued against the directors of the Company namely Mr. Indranil Sinha, Mr. Debasish Das, Mr. Sandip Paul, Mr. Goutam Chatterjee, Mr. Ramen Chatterjee, Mr. Sachin Kumar Thakur, Mr. Jadunath Jena and Mr. Bhabagrahi Behera.

a. The details of the appointment and resignations of the directors of the Company are as under:

Name Date of Appointment Date of Cession Mr. Indranil Sinha 24/02/2011 Continuing as director Mr. Debasish Das 24/02/2011 Continuing as director Mr. Sandip Paul 03/07/2013 Continuing as director Mr. Sachin Kumar Thakur 01/08/2014 Continuing as director Mr. Ram Kumar Sinha 05/08/2015 Continuing as director Mr. Goutam Chatterjee 24/02/2011 10/07/2013 Mr. Ramen Chatterjee 02/04/2012 02/04/2013 Mr. Jadunath Jena 05/12/2014 16/03/2015 Mr. Bhabagrahi Behera 05/12/2014 16/03/2015

I note that the Company had commenced the offer and issuance of NCDs from 2011- 2012 and continued with its money mobilization activity in the financial year 2012-13. Section 56 of the Companies Act, 1956 imposes the liability for the compliance, on the company, every director, and persons responsible for the issuance of the prospectus. The liability of the Company to repay under Section 73(2) of the Companies Act, 1956 read with Section 27 of the SEBI Act, is continuing and the same continues till all the repayments are made to the investors/ public. Therefore, the directors who were present during the period when the Company had made the offer and allotted NCDs shall be liable for violation of Sections 56, 60 and 73 of the Companies Act, 1956 including the default in making refunds as mandated therein. As the liability to make repayments under Section 73(2) of the Companies Act read with Section 27 of the SEBI Act is continuing, the persons who joined the Company’s Board pursuant to the offer and allotment of NCDs shall also be liable if the Company and the concerned directors have failed to make refunds, as mandated under the discussed provisions of law.

b. From the table above and as per the available records, it is noted that Mr. Indranil Sinha, Mr. Debasish Das, Mr. Goutam Chatterjee and Mr. Ramen Chatterjee were the directors of the Company at the time of impugned issues and allotment of NCDs and were responsible for the affairs of the Company, at the relevant point of time. Mr. Indranil Sinha and Mr. Debasish Das continue to be the directors of the Company. Mr. Goutam Chatterjee and Mr. Ramen Chatterjee had resigned from the Company on July 10, 2013 and April 02, 2013 respectively. Taking note of the same and the above discussion, it can be concluded that the directors namely Mr. Indranil Sinha, Mr. Debasish Das, Mr. Goutam Chatterjee and Mr. Ramen Chatterjee are liable, jointly and severally, for violations and making refunds along with interest to the investors as mandated under Section 73(2) of the Companies Act, 1956 read with Section 27 of the SEBI Act.

c. I note that Mr. Sandip Paul, Mr. Sachin Kumar Thakur, Mr. Jadunath Jena and Mr. Bhabagrahi Behera were appointed as director of the Company after the last available date of allotment of NCDs. From the ‘MCA-21 portal’ accessed on February 23, 2016, it is noted that the name of one Mr. Ram Kumar Sinha is also appearing in the list of signatories. I note that he became the director of the Company on August 05, 2015.

Mr. Sandip Paul, Mr. Sachin Kumar Thakur and Mr. Ram Kumar Sinha are also the present directors of the Company. It is observed that Mr. Sandip Paul, Mr. Sachin Kumar Thakur, Mr. Jadunath Jena and Mr. Bhabagrahi Behera have not exercised necessary diligence after becoming the directors in the Company. The inaction by these against the management (for violating the public issue norms as stipulated under the Companies Act, 1956 while making the offer and issuing the NCDs), leads one to conclude on a possible collusion with the Company and its management. Further, Mr. Sandip Paul, Mr. Sachin Kumar Thakur, Mr. Jadunath Jena and Mr. Bhabagrahi Behera have also not taken any steps to remedy the violations committed. Accordingly, I hold these persons to be responsible for the same.

I also hold that Mr. Ram Kumar Sinha being the present director of the Company, he is are also under liability to make repayments to investors in terms of Section 73 of the Companies Act, 1956. In view of the same, SEBI is advised to issue a show cause notice to him for any further appropriate directions in case the Company and its directors fail to refund the amounts collected from investors against offer and/ or allotment of NCDs.

21. The Company in its submissions dated February 12, 2015, had submitted that it had raised ₹59,63,000 through secured debentures and the entire amount of ₹59,63,000 has been paid back ‘through bank and in cash’ alongwith interest to all the debenture holders majorly during the financial year 2013-14 and 2014-15. The Company has also submitted that the audited financials for the financial year 2014-15, will have no outstanding on account of debentures.

The Company vide its letter dated May 22, 2015, has submitted a list with the heading ‘Debenture Redeemption for F.Y. 2013-14’ to show the payments made by it during the period of April 02, 2013 to March 29, 2014 to 145 persons for a total amount of ₹58,45,495. While proceeding further, I note that the Company has not filed the financial statement for the financial year 2013-14. A perusal of the financial statement of the Company for 2014-15 as filed with the RoC on January 29, 2016 revealed that under the head ‘secured debenture’, the Company has shown ₹1,17,505 (including interest of ₹17,505) as outstanding. Further, I note that the Company in its submissions has claimed to have repaid only ₹59,63,000, when the total amount due as per the interim order was ₹71.38 lakh. I note that the submission of ‘no outstanding’ is not in line with the material available on record. It is seen that the Company in its submissions has not replied to the allegation made in the interim order regarding the receipt of investor complaints for non-payment of the amount invested. I also note that even after passing of the interim order, SEBI has received investor complaint regarding the non-receipt of the funds. The same raises serious doubt on the repayment claims of the Company.

22. I note that Vikdas Industries Limited, Mr. Indranil Sinha, Mr. Debasish Das, Mr. Sandip Paul, Mr. Goutam Chatterjee, Mr. Ramen Chatterjee, Mr. Sachin Kumar Thakur, Mr. Jadunath Jena and Mr. Bhabagrahi Behera were required to provide full inventory of the assets and properties and furnish complete and relevant information in respect of the Offer of NCDs for compliance with the direction in the interim order. However, no details have been submitted by these, till date.

23. In view of the discussion above, appropriate action in accordance with law needs to be initiated against the Company and the directors/ promoters in charge of the affairs of the Company during the relevant period.

24. 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 and 11B thereof hereby issue the following directions:

a. The Company, Vikdas Industries Limited [PAN: AADCV5860F], Mr. Indranil Sinha [PAN: ATIPS7061A], Mr. Debasish Das [PAN: AGWPD4747K], Mr. Sandip Paul [PAN: BBAPP0971P], Mr. Goutam Chatterjee [PAN: ADWPC8320Q], Mr. Ramen Chatterjee [PAN: ACTPC0530E], Mr. Sachin Kumar Thakur [PAN: AJUPT3341C], Mr. Jadunath Jena [PAN: ANUPJ8465D], Mr. Bhabagrahi Behera [PAN: ASWPB3847N] and Mr. Ram Kumar Sinha [DIN: 02460975] jointly and severally, shall forthwith refund the money collected by the Company through the issuance of Secured Non-Convertible Redeemable Debentures (which have been found to be issued in contravention of the public issue norms stipulated under the Companies Act, 1956), to the investors including the money collected from investors, till date, pending allotment of NCD, 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 is 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 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 on contact persons including names, addresses and contact details, within fifteen days of this Order coming into effect.

e. If the Company, Vikdas Industries Limited has repaid the investors as claimed by it, the Company may include such repayment in the report to be submitted under para 24(f), provided the Company had met with the criteria laid down under para 24(b) and provided further that the Company pays 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.

f. After completing the aforesaid repayments, the Company shall file a report of such completion of repayment with SEBI, within a period of three months from the date of this order, certified by 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. Vikdas Industries Limited, Mr. Indranil Sinha, Mr. Debasish Das, Mr. Sandip Paul, Mr. Goutam Chatterjee, Mr. Ramen Chatterjee, Mr. Sachin Kumar Thakur, Mr. Jadunath Jena and Mr. Bhabagrahi Behera 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.

h. In case of failure of Vikdas Industries Limited, Mr. Indranil Sinha, Mr. Debasish Das, Mr. Sandip Paul, Mr. Goutam Chatterjee, Mr. Ramen Chatterjee, Mr. Sachin Kumar Thakur, Mr. Jadunath Jena, Mr. Bhabagrahi Behera and Mr. Ram Kumar Sinha to comply with the aforesaid directions SEBI, on the expiry of the three months period from the date of this order,- i. shall recover such amounts in accordance with Section 28A of the SEBI Act including such other provisions contained in securities laws.

ii. 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. iii. 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 iv. would also make a reference to the Ministry of Corporate Affairs, to initiate the process of winding up of the Company. v. shall issue a show cause notice to Mr. Ram Kumar Sinha for any further appropriate directions including restraining him from accessing the securities market.

i. Vikdas Industries 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 is 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 four (4) years from the date of completion of refunds to investors, made to the satisfaction of SEBI, as directed above. The Company is restrained from accessing the securities market for the purposes of raising funds with immediate effect.

j. The directors namely Mr. Indranil Sinha, Mr. Debasish Das, Mr. Sandip Paul, Mr. Goutam Chatterjee, Mr. Ramen Chatterjee, Mr. Sachin Kumar Thakur, Mr. Jadunath Jena and Mr. Bhabagrahi Behera are restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, 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, with immediate effect. This restraint shall continue to be in force for a further period of four (4) years on completion of the repayments, as directed above.

k. Vikdas Industries Debenture Trust and Mr. Ranadeb De shall not offer themselves to be engaged as debenture trustees or in any capacity as an intermediary in the securities market, without obtaining a certificate of registration to undertake that assignment as required under law. Further, they are restrained from accessing the securities market and are further restrained from buying, selling or dealing in securities, in any manner whatsoever, for a period of four (4) years.

l. The above directions shall come into force with immediate effect.

25. 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.

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

27. 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.

DATE : February 24th, 2016 PRASHANT SARAN PLACE : Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA