Sachindra Nath Bhattacharya vs Sebi

Date of Decision : 26.09.2017

Misc. Application No. 25 of 2017 And Appeal No. 27 of 2017

Sachindra Nath Bhattacharya Palpara, Jharhat, Sankrail, Howrah, West Bengal, Pin - 711 309. ...Appellant

Versus

1.

Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051.

2. Whole Time Member Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051.

3. Assistant Manager, Securities and Exchange Board of India L&T Chamber, 3rd Floor, 16, Camac Street, Kolkata - 700 017.

4. ATM Agro Projects India Ltd. Judges Court Road, Circuit House More, Midnapore Town, Pin - 721 101.

5. Tamur Ali Gayen GP - Bally, P.S. Bally, Bl. - Bally, District - Howrah, Pin - 711 209. ...Respondents

Mr. Upendra Mahadik, Advocate i/b Fast Track Legal for the Appellant.

Mr. M.P. Rao, Senior Advocate with Mr. Chirag Bhavsar, Advocate i/b MDP & Partners for the Respondent.

CORAM : Justice J.P. Devadhar, Presiding Officer Dr. C.K.G. Nair, Member 2

Per : Dr. C.K.G. Nair, Member (Oral)

Misc. Application No. 25 of 2017:

By this Misc. Application appellant seeks condonation of 5 days

delay in filing this appeal. For the reasons stated in the Misc. Application,

delay is condoned. Misc. Application stands disposed of accordingly.

Appeal No. 27 of 2017:

1. This appeal is preferred by the appellant aggrieved by the impugned

order dated May 2, 2016 passed by the Whole Time Member ('WTM' for

short) of Securities and Exchange Board of India ('SEBI' for short). By the

said order, among others, the appellant herein has been restrained from

accessing the securities market and prohibited from buying, selling or

otherwise dealing in securities, directly or indirectly from May 2, 2016 and

also restrained from associating themselves with any listed public company

and any public company which intends to raise money from the public with

effect from May 2, 2016 and shall continue to be in force for a further

period of four years on completion of the repayments of the amounts

collected by ATM Agro Projects India Ltd. ('Company' for short) through

Non-Convertible Debentures ('NCDs' for short) and Redeemable

Preference Shares ('RPS' for short).

2. Facts relevant to the matter are the following:-

During the financial years 2010-11 and 2011-12 the Company

collected a total amount of ` 1.86 crore by way of issuing RPS to 1223

allottees. Similarly, during the same period the Company collected an 3

amount of ` 7.39 crore by issuing NCDs. Details regarding the number of

allottees and full amount of collection etc. through NCDs are not available

since the Company did not cooperate with SEBI in providing full details.

However, SEBI has received evidence that the Company continued issuing

NCDs in the year 2012-13 as well. Since number of allottees far exceeded

49, allotment of RPS is a deemed public issue. Since no details have been

furnished by the Company to SEBI despite giving sufficient opportunity to

them, the issue of NCDs also has been presumed to be a public issue.

Accordingly, it is held in the impugned order that the Company has violated

various sections of the Companies Act, 1956 and SEBI Regulations relating

to public issue of securities and directed the Company and its Directors to

jointly and severally refund the amount of money collected by means of the

RPS / NCDs and restrained them from dealing in the securities market for a

period of 4 years beyond the date of completing the refund.

3. We have heard Shri Upendra Mahadik, Learned Counsel and Shri.

M.P. Rao, Learned Senior Counsel appearing on behalf of the appellant and

respondent SEBI respectively. We have also perused the records produced

before us. It is also on record that neither the Company nor any other

Director nor the Debenture Trustee has appealed against the impugned

order.

4. We note that the appellant joined the Company w.e.f. January 30,

2009 as a Director and resigned on February 2, 2010. The resignation was

officially accepted by the Registrar of Companies (RoC) on June 1, 2010.

Further, there is nothing on record to show that actual issue of RPS and

NCDs was done before he resigned from the Board of the Company as the

impugned order states only the financial year 2010-11 as the first year in

which RPS / NCDs were issued. Since the contention of the appellant is that 4

he actually resigned on February 2, 2010 and in the absence of any records

to show his continued association with the Company and any evidence to

the effect that the money was actually collected on or before June 1, 2010

when his resignation was accepted by the RoC, it would be just to conclude

that the appellant had no role in the actual collection of money by issue of

RPS / NCDs.

5. In the result the appellant deserves to be given the benefit of doubt in

the facts and circumstances of the case. Accordingly, without prejudice to

the merit of the impugned order, we set aside the impugned order qua the

appellant with no order as to costs.

Sd/-

Justice J.P. Devadhar Presiding Officer

Sd/-

Dr. C.K.G. Nair Member

26.09.2017 Prepared and compared by: msb