Sri Manoranjan Roy vs Sebi

Date of Decision : 30.08.2021

Appeal No. 559 of 2021

Sri Manoranjan Roy 2/233/B/3 Sree Colony, Netaji Nagar, Kolkata - 700 092. ...Appellant

Versus

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

Mr. Bishwajit Bhattacharyya, Senior Advocate with Ms. Narayani Bhattacharyya, Advocate for the Appellant.

Mr. Abhiraj Arora, Advocate with Mr. Rashi Dalmia and Mr. Karthik Narayan, Advocate i/b ELP for the Respondent.

CORAM : Justice Tarun Agarwala, Presiding Officer Justice M.T. Joshi, Judicial Member

Per : Justice Tarun Agarwala, Presiding Officer (Oral)

1.

By means of this appeal the appellant has challenged the

order dated February 12, 2021 passed by the Whole Time

Member ('WTM' for short) of the Securities and Exchange of 2

India ('SEBI' for short) restraining him from mobilizing any

fresh funds from investors through the offer and allotment of

any securities either directly or indirectly and has further

prohibited him from accessing the securities market for a

period of four years from the date of completion of refund to

all the allottees of debentures of the Company.

2. The facts leading to the filing of the present appeal is,

that the WTM passed an ad interim ex parte order cum show

cause notice dated July 25, 2018 in respect of the issuance of

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

issued by LRN Finance Limited ('the Company' for short) in

violation of the Securities and Exchange Board of India Act,

1992 ('SEBI Act' for short), Companies Act, 1956 and SEBI

(Issue and Listing of Debit Securities) Regulations, 2008. The

interim order further directed the Company and its directors

not to mobilize any funds from the investors through offer of

allotment of any security and were further restraining from

accessing the securities market.

3. Subsequently, the interim order was confirmed by an

order dated August 13, 2020. The appellant filed Appeal no.

336 of 2020 which was allowed by this Tribunal by an order 3

dated October 16, 2020 holding that the appellant was not

granted a reasonable opportunity and therefore permitted the

appellant to file a recall application before the WTM which

would be considered. Based on our order, a recall application

was filed and the impugned order was passed thereafter.

4. We have heard Shri Bishwajit Bhattacharyya, the

learned senior counsel and Shri Abhiraj Arora, the learned

counsel for the respondent.

5. The contention of the appellant is, that he admits that

the debentures were issued in violation of the Companies Act

and that before the Calcutta High Court the appellant had

filed an affidavit offering to pay the amount to the investors.

On this basis, the learned counsel contended that he should be

given parity as given to noticee nos. 3, 6 and 11 and that the

direction imposed by the WTM should be modified

accordingly. It was further contended that the appellant had

resigned from the Company on August 27, 2013 and therefore

the direction to restrain him from accessing the securities

market for four years from the date of completion of refund

for the allottees of the debentures of the Company was wholly

harsh and arbitrary and should be modified accordingly. 4

6. Having heard the learned counsel for the parties, we find

that the appellant was the Managing Director of the Company

and had offered through an affidavit before the Calcutta High

Court to refund the amount. This affidavit was filed in the

year 2016 and, till date, no steps have been taken to refund

the amount to the investors. Further, the appellant admits that

the issuance of the NCDs was issued in violation of the

Companies Act. Consequently, the mere fact that the

appellant had resigned in the year 2013 would not make any

difference in as much as the appellant, being the Managing

Director and, having offered to refund the money should have

refunded the amount by now but the same has not been done

and therefore the restraint order issued by the WTM does not

suffer from any manifest error of law.

7. Appeal lacks merit and is dismissed with no order as to

costs.

8. The present matter was heard through video conference

due to Covid-19 pandemic. At this stage it is not possible to

sign a copy of this order nor a certified copy of this order

could be issued by the registry. In these circumstances, this

order will be digitally signed by the Private Secretary on 5

behalf of the bench and all concerned parties are directed to

act on the digitally signed copy of this order. Parties will act

on production of a digitally signed copy sent by fax and/or

email.

Justice Tarun Agarwala Presiding Officer

Justice M.T. Joshi Judicial Member 30.08.2021 RAJALA Digitally by signed

KSHMI RAJALAKSHMI NAIR H

msb Date: 2021.09.01 H NAIR 15:44:10 +05'30'