Order passed in the matter of Aapna Pariwar Agro Farming Developers India Ltd.

WTM/PS/88/CFD/ERO/NOV/2015 SECURITIES AND EXCHANGE BOARD OF INDIA, MUMBAI ORDER Under sections 11(1), 11(4), 11A and 11B of the Securities and Exchange Board of India Act, 1992 In respect of – 1. AapnaPariwar Agro Farming Developers India Limited ( CIN : U74999WB2009PLC137489 / PAN: AAHCA8718R) and its directors, 2. Mr. Rejaul Karim (DIN – 02703268), Managing Director, 3. Mr. ParthaGopeMazumder (DIN – 03065820), Additional Director, and 4. Mr. SwaminathSingha (DIN – 02703221), Director

1. Securities and Exchange Board of India (hereinafter referred to as “SEBI”) conducted an examination into the money raising activity of the company, AapnaPariwar Agro Farming Developers India Limited (“the Company”) through issue of securities and to ascertain whether the Company made any public issue of securities without complying with the Companies Act, 1956, SEBI Act, 1992 and the rules and regulations framed thereunder. The details of the Company in the website of the Ministry of Corporate Affairs (“MCA”) and the Forms filed therein were perused. It is noted that – (a) The Company (CIN - U74999WB2009PLC137489) is a public unlisted company, incorporated on August 05, 2009, having its registered office at MaheshmatiSankopara, Near Malda Merchant Chamber of Commerce, Malda,West Bengal, Pin Code – 732101. (b) The authorized capital of the Company is Rs.2,50,00,000/- and the paid-up capital is Rs.95,35,000/-. (c) The following are the directors of the Company: Sr. no. Name DIN Designation Date of appointment 1. Rejaul Karim 02703268 Managing Director 05.08.2009

2. SwaminathSingha 02703221 Director 05.08.2009 3. ParthaGopeMazumder 03065820 Additional Director 19.06.2010 (d) As per various return of Allotments (i.e. Form-2), the following are noted: Sr. Date of Date of No. of persons to No. of Amount no. return (e-allotment who allotments shares (face raised filing date) and Board made value of (Rs.) Resolution Rs.10/-) for allotment allotted 01.03.2010 15 55,000 5,50,000/- 21.06.2010 31.03.2010 13^ 1,00,000 10,00,000/- - 31.03.2010 16 50,000 5,00,000/- - 31.03.2010 33 1,00,000 10,00,000/- 10.12.2010 05.08.2010 7 57,500 5,75,000/- 10.12.2010 30.08.2010 9 52,000 5,20,000/- 10.12.2010 24.09.2010 18@ 1,83,500 18,35,000/- 10.12.2010 30.10.2010 19# 1,25,500 12,55,000/- - 18.09.2012$ 3* 35,000 3,50,000/- *Rejaul Karim (MD) was one of the allottes, having been allotted 25,000 shares. ^ParthaGopeMazumder (Director) was one of the allottes, having been allotted 25,000 shares. @Rejaul Karim (MD) was one of the allottes, having been allotted 1,20,000 shares. #Rejaul Karim (MD) was one of the allottes, having been allotted 25,000 shares. $ It appears that there is one allotment of 35,000 shares, however, two Form-2 has been filed by the company – one with Board resolution for 30,000 shares and revised board resolution for 35,000 shares. Allottees are identical.

(e) The Company has mobilized funds from 77 persons in financial year 2009-2010 and from 53 persons during financial year 2010-2011.

(f) The last filing made by the Company with the RoCwas its Balance Sheet for the year ended March 31, 2012.

2. In view of the number of investors from whom the Company has mobilized funds through issue of equity shares, it is necessary to refer to section 67 of the Companies Act, 1956 to ascertain whether such issue of equity shares could be regarded as made to the public or otherwise. The provision of section 67 of the Companies Act, 1956 is reproduced below for reference:

"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. Even if the offer and allotment of equity shares is made to less than 50 persons, it has to be shown that the issue falls either under clauses (a) or (b) of section 67(3) of the Companies Act, 1956 to conclude that the issue was not made to the public.

3. The Hon'bleSupreme Court of India in the matter of Sahara India Real Estate Corporation Limited & Others vs. SEBIand another(Civil Appeal Nos. 9813 and 9833 of 2011; decided on August 31, 2012) ("the Sahara case") had inter alia held that - "………….. 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. … ……….., 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. …"

4. As it is noticed that the Company has offered and issued equity shares during FY 2009-2010 and 2010-2011 to more than 49 persons, it is alleged that the Company made a “public issue” of such securities in terms of section 67(3) of the Companies Act, 2013. When any company makes a public issue, it is mandated to comply with the public issue norms specified under sections 56, 60 [read with section 2(36)]and 73 of the Companies Act, 1956 and the provisions of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (“the ICDR Regulations”). The requirements of these provisions are mentioned below:

(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.

(b) Section 60 of the Companies Act read with section 2(36) thereof, mandates a company to register its 'prospectus' with the RoC, before making a public offer/ issuing the 'prospectus'. As per the aforesaid Section 2(36), “prospectus” means any document described or issued as a prospectus and includes any notice, circular, advertisement or other document inviting deposits from the public or inviting offers from the public for the subscription or purchase of any shares in, or debentures of, a body corporate. There is no record to suggest that the Company has filed a Prospectus and complied with the above provisions including provisions of section 56.

(c) By issuing equity shares to the public, the Company had to compulsorily list such securities in compliance with section 73 of the Companies Act, 1956. As per section 73(1) and (2) of the 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 and if permission has not been applied for or not granted, the company is required to forthwith repay with interest all moneys received from the applicants. The Company appears to have contravened the said provisions as there is no record to suggest that it made an application seeking listing permission or whether it refunded the amounts mobilized (under its offer and issue of equity shares) on account of such failure. Further, 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.

(d) I note that the jurisdiction of SEBI over various provisions of the Companies Act, 1956 in the case of public companies, whether listed or unlisted, when they issue and transfer securities, flows from the provisions of Section 55A of the Companies Act, 1956. While examining the scope of Section 55A of the Companies Act, 1956, the Hon'ble Supreme Court of India in Sahara India Real Estate Corporation Limited &Ors. vs. SEBI (Civil Appeal no. 9813 of 2011) (Judgment dated August 31, 2012) (hereinafter referred to as the "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."

By virtue of section 55A of the Companies Act, 1956, section 67 of that Act, so far as it relates to issue and transfer of securities, shall also be administered by SEBI in the case of companies who intend to get their securities listed. As it is alleged that the Company made a public issue of equity shares, as discussed above, the SEBI regulations framed under the SEBI Act shall also be applicable.

(e) The ICDR Regulations also govern and regulate the issuance of equity shares (specified securities). Therefore, the Company was also mandated to comply with the provisions of the ICDR Regulations including the following:

- Application for listing of specified securities on one or more recognized stock exchange (Regulation 4(2)(d)), - Appointment of merchant banker and other intermediaries (Regulation 5), - Filing of draft offer document with SEBI and the designated stock exchange and RoC (Regulation 6), - Obtaining in-principle approval from the recognized stock exchanges in which the specified securities are to be listed (Regulation 7), - Satisfy the conditions of initial public offer (Regulation 25 and 26), - Lock-in of specified securities held by promoters and persons other than promoters (Regulation 36 and 37) - Keeping the public issue open for the specified period (Regulation 46), - Pre-issue advertisement for public issue (Regulation 47) - Manner of disclosures in the offer documents (Regulation 57) - Refrain from offering any incentive to any person making application for allotment of specified securities (Regulation 59).

5. On a consideration of the aforementioned observations, I am of the view that the Company is prima facie engaged in fund mobilizing activity from the public, through the offer and issuance of equity shares and has allegedly contravened the provisions of sections 56, 60 and 73 of the Companies Act, 1956 read with Companies Act, 2013 and the aforesaid provisions of the ICDR Regulations.

6. 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, 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. The liability of the company to repay under section 73(2) read with sections 11, 11B and 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 in violation of the applicable law shall be liable for violation of sections 56, 60 and 73 of the Companies Act, 1956 read with sections, 11, 11B and 27 of the SEBI Act, including the default in making refunds as mandated in section 73 of the Companies Act, 1956. Accordingly, the Managing Director/Directors of the Company namely Mr. Rejaul Karim (DIN – 02703268), Managing Director,Mr. ParthaGopeMazumder (DIN – 03065820), Additional Director, andMr. SwaminathSingha (DIN – 02703221), Director, are alleged to be responsibleforthe alleged contraventions committed by the Company and also for failure to make refunds in terms of section 73(2) of the Companies Act, 1956 read with section 27 of the SEBI Act.

7. In view of the foregoing, it becomes necessary for SEBI to intervene in the interest of the investors and the securities market to issue appropriate orders to restrain the Company and its aforesaid directors from continuing to mobilizemoney through the issue of equity shares/other securities to the public and also for other remedial and consequential directions.

8. Accordingly, I, in exercise of the powers conferred upon me under section 19 of the Securities and Exchange Board of India Act, 1992 and sections 11(1), 11(4), 11A and 11B thereof read with regulations 107 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, hereby issue the following directions :

(a) The Company, namely, AapnaPariwar Agro Farming Developers India Limited (CIN: U74999WB2009PLC137489 / PAN: AAHCA8718R) and its directors, Mr. Rejaul Karim (DIN – 02703268/ PAN –AOFPK0532A), Mr. ParthaGopeMazumder (DIN – 03065820)andMr. SwaminathSingha (DIN – 02703221), are restrained from mobilizing funds through the issue of equity shares or through the issuance of equity shares or through any other form of securities, to the public and/ or invite subscription, in any manner whatsoever, either directly or indirectly till further directions.

(b) AapnaPariwar Agro Farming Developers India Limited and its directors, Mr. Rejaul Karim, Mr. ParthaGopeMazumder and Mr. SwaminathSinghaare 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) AapnaPariwar Agro Farming Developers India Limited and its directors, Mr. Rejaul Karim, Mr. ParthaGopeMazumder and Mr. SwaminathSinghashall not dispose of any of the properties or alienate the assets of the Company or dispose off any of their properties or alienate their assets.

(d) AapnaPariwar Agro Farming Developers India Limited and its directors, Mr. Rejaul Karim, Mr. ParthaGopeMazumder and Mr. SwaminathSinghashall not divert any funds raised from public at large through the issuance of the impugned equity shares, kept in its bank accounts and/or in the custody of the company without prior permission of SEBI until further orders.

(e) AapnaPariwar Agro Farming Developers India Limited and its directors, Mr. Rejaul Karim, Mr. ParthaGopeMazumder and Mr. SwaminathSinghaare restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities in any manner whatsoever, either directly or indirectly, till further directions.

(f) AapnaPariwar Agro Farming Developers India Limited and its directors, Mr. Rejaul Karim, Mr. ParthaGopeMazumder and Mr. SwaminathSinghashall co-operate with SEBI and shall furnish documents, as may be required.

(g) AapnaPariwar Agro Farming Developers India Limited and its directors, Mr. Rejaul Karim, Mr. ParthaGopeMazumder and Mr. SwaminathSinghaare 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) The above directions shall come into force with immediate effect and shall continue to be in force till further directions.

9. AapnaPariwar Agro Farming Developers India Limited and its directors, Mr. Rejaul Karim, Mr. ParthaGopeMazumder and Mr. SwaminathSingha are advised to show cause as to why suitable directions/prohibitions, under the sections 11(1), 11(4), 11A and 11B of the SEBI Act read with the ICDR Regulations, including the following, should not be taken/imposed against them : a) directing them jointly and severally to refund the money collected through the issue of equity shares that are impugned in this Order, along with interest at 15% per annum from the date when the refunds became due to the investors till the date of repayment; b) directing them to not to issue prospectus or any offer document or issue advertisement for soliciting money from the public for the issue of securities, in any manner whatsoever, either directly or indirectly, for an appropriate period; c) directions restraining them from accessing the securities market and prohibiting them from buying, selling or otherwise dealing in securities for an appropriate period;

d) directing them and other companies in which their directors hold substantial or controlling interest, to not to access the capital market for an appropriate period.

10. AapnaPariwar Agro Farming Developers India Limited and its directors, Mr. Rejaul Karim, Mr. ParthaGopeMazumder and Mr. SwaminathSinghamay file their replies/submissions within a period of 21 days from the date of receipt of this Order and may also indicate whether they desire to avail an opportunity of personal hearing in the matter.

11. This Order is without prejudice to the right of SEBI to take any other action including prosecution proceedings under section 24 of the SEBI Act and section 621 of the Companies Act, 1956 read with the relevant provisions of the Companies Act, 2013 and adjudication proceedings under the SEBI Act, against AapnaPariwar Agro Farming Developers India Limited and its directors, Mr. Rejaul Karim, Mr. ParthaGopeMazumder and Mr. SwaminathSingha, in accordance with law.

PRASHANT SARAN WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA Date: November 09, 2015 Place: Mumbai