WTM/PS/14/ERO/JUNE/2015

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) Sun-Plant Business Limited and its Directors, namely, (2) Mr. Basant Kumar
Sasmal (DIN- 00274508; PAN: AWFPS4077C), (3) Mr. Amit Kumar Chowdhury (DIN03573202; PAN: ACQPC7087F) and (4) Mr. Mahesh Chandra Prasad (DIN- 03575955; PAN:
BBEPP4127P)
Date of hearing : February 27, 2015
Appearance : Mr. Basant Kumar Sasmal (one of the directors of the company and a noticee) appeared for himself and
the other noticees.
For SEBI : Ms. Anitha Anoop, Deputy General Manager, Mr. T. Vinay Rajneesh, Assistant General Manager
and Ms. Nikki Agarwal, Assistant Manager

1.

SEBI vide an ex-parte interim Order dated November 24, 2014 ("the interim order")

alleged that the company, Sun-Plant Business Limited ("the Company" or "SBL") had engaged in
fund mobilizing activity from the public, through the offer and issue of Redeemable Preference
Shares ("RPS") without complying with sections 56, 60 read with section 2(36) and 73 of the
Companies Act, 1956 and the SEBI (Disclosure and Investor Protection) Guidelines, 2000 ("the DIP
Guidelines") read with the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009
("the ICDR Regulations").
2.

As per the interim order, the Company had made offers and issued RPS during the financial

years 2005-2006, 2006-2007 and 2007-2008. As on March 31, 2008, the Company had issued
41,74,300 shares of face value of Rs.10/- each and raised Rs.4,17,43,000 from a total of 470
investors. The interim order also mentioned the following:
"4.2

The company vide its undated letter, which was received by SEBI on August 25, 2014, has submitted under

the heading 'Information in respect of issue of Redeemable Preference Shares' that the amount raised is
Rs.57604000/-. As per the details mentioned in the Audited Balance Sheet of the company as on March 31, 2011,

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it is observed that the company has raised Share Application Money of Rs. 1,58,61,000/- in addition to the amount
raised through issue of preference shares".
3.

While alleging that the offer and issue of RPS, as impugned in the present proceedings, were

made to the public not complying with the statutory norms associated with such issuance of
securities, the interim order observed "Although the Offer of RPS is stated to have been made on a private
placement basis, it is an admitted fact that SBL issued RPS to more than 49 investors in each Financial Years 200506, 2006-07, 2007-08 in series of allotments and mobilized approximately Rs.4,17,43,000/- from 470
individuals/investors during these three Financial Years. The aforesaid facts clearly indicate that the number of persons
to whom RPS was issued by SBL in series of allotments in each of these three years was beyond the limit of fortynine
persons as prescribed under Section 67(3) of the Companies Act, 1956. The frequency of allotments and time span
between the series of allotments made prima facie, indicate that the method adopted by SBL for mobilization of funds is
nothing but a device to circumvent the provisions of section 67(3) of the Companies Act, 1956."
4.

In view of the allegations against the Company and its directors namely Mr. Basant Kumar

Sasmal, Mr. Amit Kumar Chowdhury and Mr. Mahesh Chandra Prasad, SEBI issued the
following directions against them vide the interim order :

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 Clause 17 of the DIP Guidelines read with Regulation 111 of the ICDR
Regulations,2009, hereby issue the following directionsi.

SBL shall not mobilize any fresh funds from investors through the Offer of RPS 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.

SBL and its Directors, viz. Shri Basant Kumar Sasmal (DIN- 00274508; PAN:
AWFPS4077C), Shri Amit Kumar Chowdhury (DIN- 03573202; PAN: ACQPC7087F), Shri
Mahesh Chandra Prasad (DIN- 03575955; PAN: BBEPP4127P) 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;

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iii. SBL and the 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. SBL shall provide a full inventory of all its assets and properties;
v.

The abovementioned Directors of SBL shall provide a full inventory of all their assets and properties;

vi. SBL 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. SBL 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 SBL.
viii. SBL and its abovementioned Directors shall, within 21 days from the date of receipt of this Order,
provide SEBI with all relevant and necessary information sought by SEBI vide letters dated July 10,
2014, July 14, 2014 and August 08, 2014 but not yet furnished.
7.

The above directions shall take effect immediately and shall be in force until further orders.

8.

............

9.

This Order is without prejudice to the right of SEBI to take any other action that may be initiated against
SBL and its abovementioned Directors in accordance with law."

5.

The Company, vide its letter dated December 15, 2014, while acknowledging the receipt of

the interim order, informed that it was collecting relevant papers pertaining to the case and requested
for a period of 30 days for filing its reply. The Company also made a request for an opportunity of
personal hearing.

Subsequently, vide letter dated January 14, 2015, the Company filed its reply to

the interim order, inter alia submitting the following:

o SEBI had proceeded to pass the interim order without issuing any show cause notice to the
Company.
o The Company had replied only to those questions as asked by SEBI and that the previous
letters of SEBI did not ask about redemption/refund of the amount with respect to the
preference shareholders.

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o The Company had redeemed/refunded Rs.2,28,24,400/- out of Rs.5,76,04,000/-, to the

preference shareholders. The Company informed the following year-wise data on the amount
redeemed :
Year

Amount (Rs.)

2011-2012

50,00,000/-

2012-2013

89,58,400/-

2013-2014

32,66,000/-

2014-2015

56,00,000/-

The Company had enclosed information with respect to the following:

a) Total allotments - According to the Company, it had allotted 41,74,300 shares to 470
investors and raised Rs.4,17,43,000/-.
b) Details of application money (money mobilized and pending allotment) - an aggregate amount of
Rs.1,58,61,000/- mobilized from 229 investors.
c) Details of redemption of preference shares - Redemption of shares for Rs.17609400/- in
respect of 115 investors.
d) Refund of application money - total Rs.52,15,000/- in respect of 27 investors.
o All the material relied upon while passing the order has not been disclosed by the Company
to SEBI as SEBI did not require the Company to provide the same.
o The Company requested for an opportunity of personal hearing.
6.

The Company and its directors were afforded an opportunity of personal hearing on

February 27, 2015, when noticee Mr. Basanta Kumar Sasmal appeared for himself, the Company,
Mr. Amit Kumar Chowdhury and Mr. Mahesh Chandra Prasad. In the personal hearing, Mr. Basanta
Kumar Sasmal inter alia submitted that (1) The Company had mobilized around Rs.5.7 crore and that 40% of the money was repaid by the
Company.
(2) The Company has property worth Rs.13 crore and that further time was required to repay
investors in full. They intend to wind-up the Company after repayments are made.
(4) The chartered accountant was not co-operating with the Company and therefore the Balance
Sheet could not be filed.

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As requested by this noticee, liberty was granted to the noticees to file written submissions with
supporting documents within a period of one week.
7.

Thereafter, the Company vide an undated letter (received in SEBI on March 02, 2015)

requested for permission to sell its assets for redeeming the balance preference shares.

The

Company further stated that it had enclosed the list of the lands (immovable property) purchased by
the Company and the details of such properties. The Company also forwarded the (a) the Resolution
dated January 2, 2015 of the Board of Directors of the Company authorising Mr. Basanta Kumar Sasmal to
represent the Company before SEBI and (b) the authority letter from Mr. Amit Kumar Chowdhury authorizing Mr.
Basanta Kumar Sasmal to represent him before SEBI.
8.

Mr. Mahesh Chandra Prasad, one among the noticees, vide his letter dated March 10, 2015

inter alia stated that he has authorised Mr. Basant Kumar Sasmal to attend to and deal with matters
before SEBI on his behalf. He also enclosed his letter dated March 04, 2015 addressed to Mr. Basant
Kumar Sasmal requesting him to represent the noticee before SEBI. However, no submissions on
merits were made in the above letters by Mr. Mahesh Chandra Prasad.
9.

I have considered the interim order (which is also the show cause notice in the matter), the

submissions and the material furnished by the Company before me and other material available on
record. The Company had not made any contentions with respect to the merits of the case. The
Company had not disputed any of the observations and allegations made against it and its directors
in the interim order. The interim order alleged that the Company had made offer and issued RPS to
public investors during the financial years 2005-2006, 2006-2007 and 2007-2008, not complying with
the 'public issue' norms stipulated under sections 56, 60 read with section 2(36) and 73 of the
Companies Act, 1956 and the DIP Guidelines read with the ICDR Regulations. The interim order
had alleged that the Company, by issuing shares to more than 49 persons, had made a public issue of
RPS in terms of the first proviso to section 67(3) of the Companies Act, 1956. In this regard, I note
the following observations made in the interim order.
"............
iv. As per details obtained from Annual Return of SBL for the year ended 31.03.2012 filed by SBL with
RoC and the details of the allotees of RPS provided by SBL along with its undated letter, which was
received by SEBI on August 25, 2014, it is observed that SBL has allotted "Redeemable Preference

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Shares" ("RPS") to 470 investors in the Financial Years 2005-06, 2006-07 and 2007-08. The
details are given below :
Financial
Year

2005-2006
2006-2007

Date of
No. of shares Amount per
Total Amount (in Total no/ of
allotment
alloted
share (in Rs.) Rs.)
allottees
10
28/02/2006
508100
5081000
10
31/03/2006
201100
2011000
10
Total
709200
7092000
30/04/2006
59800
10
598000
31/05/2006
55000
10
550000
30/06/2006
35500
10
355000
31/07/2006
30950
10
309500
31/08/2006
242300
10
2423000
30/09/2006
140900
10
1409000
03/10/2006
127000
10
1270000
20/10/2006
10000
10
100000
26/10/2006
1300
10
13000
28/10/2006
16000
10
160000
30/10/2006
15000
10
150000
01/11/2006
20000
10
200000
10/11/2006
5000
10
50000
13/11/2006
5000
10
50000
22/11/2006
6500
10
65000
27/11/2006
10000
10
100000
28/11/2006
70000
10
700000
29/11/2006
30000
10
300000
30/11/2006
144200
10
1442000
03/12/2006
20000
10
200000
05/12/2006
1050
10
10500
12/12/2006
2500
10
25000
19/12/2006
17000
10
170000
20/12/2006
5600
10
56000
02/01/2007
10000
10
100000
18/01/2007
5000
10
50000
19/01/2007
5000
10
50000
20/01/2007
1000
10
10000
31/01/2007
37500
10
375000
10/02/2007
10100
10
101000
13/02/2007
20000
10
200000
15/02/2007
100000
10
1000000
19/02/2007
10000
10
100000
22/02/2007
1000
10
10000
26/02/2007
2500
10
25000
28/02/2007
40000
10
400000
13/03/2007
4000
10
40000
19/03/2007
31000
10
310000
20/03/2007
2500
10
25000

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65
12
77
12
3
4
3
10
21
1
1
3
2
2
1
1
1
3
1
1
1
12
2
1
2
4
3
1
1
1
1
6
3
2
1
1
1
1
7
1
3
1

21/03/2007
22/03/2007
23/03/2007
27/03/2007
30/03/2007
31/03/2007
Total
2007-08

09/04/2007
14/04/2007
17/04/2007
18/04/2007
25/04/2007
27/04/2007
28/04/2007
30/04/2007
08/05/2007
14/05/2007
15/05/2007
21/05/2007
25/05/2007
28/05/2007
30/05/2007
31/05/2007
13/06/2007
14/06/2007
21/06/2007
22/06/2007
28/06/2007
30/06/2007
17/07/2007
18/07/2007
19/07/2007
20/07/2007
27/07/2007
30/07/2007
31/07/2007
09/08/2007
14/08/2007
20/08/2007
21/08/2007
28/08/2007
31/08/2007
15/09/2007
29/09/2007
31/10/2007
30/11/2007
31/12/2007
31/01/2008

10000
9300
2000
22500
9600
74100
1477700
9000
16000
10000
5000
12300
30000
5000
127600
4100
1000
6000
17500
2500
4100
10000
6000
20000
1200
7000
2500
1000
112500
4500
9000
5000
45000
7000
50000
15500
5000
5500
10000
10000
1000
43000
11000
183500
112500
463500
107800
55000

10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10

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100000
93000
20000
225000
96000
741000
14777000
90000
160000
100000
50000
123000
300000
50000
1276000
41000
10000
60000
175000
25000
41000
100000
60000
200000
12000
70000
25000
10000
1125000
45000
90000
50000
450000
70000
500000
155000
50000
55000
100000
100000
10000
430000
110000
1835000
1125000
4635000
1078000
550000

1
4
1
2
2
6
142
1
2
1
1
4
2
1
17
4
1
1
1
1
1
2
1
2
2
1
1
1
6
1
2
1
4
2
4
3
1
2
1
1
1
4
2
14
12
62
13
8

29/02/2008
31/03/2008
Total
Total

v.

176400
256900
1987400
4174300

10
10

1764000
2569000
19874000
41743000

24
35
251
470

SBL has also provided the copies of Board Resolutions passed by its Board of Directors and Copies of
Form-2 filed with RoC in the FY 2007-08 for issuance of RPS. The details of the same are mentioned
in the table below:
Date of
Resolution/Allotment
18/04/2007
25/04/2007
27/04/2007
28/04/2007
30/04/2007
08/05/2007
14/05/2007
15/05/2007
16/05/2007
21/05/2007
25/05/2007
28/05/2007
30/05/2007
31/05/2007
13/06/2007
14/06/2007
21/06/2007
22/06/2007
28/06/2007
30/06/2007
17/07/2007
18/07/2007
19/07/2007
20/07/2007
27/07/2007
30/07/2007
31/07/2007
09/08/2007
14/08/2007
20/08/2007
21/08/2007
28/08/2007

No. of RPS issued

1782000
12300
20000
5000
130600
7600
1000
6000
10000
12500
2500
4100
15000
112000
20000
1200
7000
2500
1000
49500
4500
9000
5000
85000
7000
105000
53500
5000
5500
10000
10000
1000

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Face Value of each

Share (in Rs.)
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10

Total Amount
( in Rs.)
17820000
123000
200000
50000
1306000
76000
10000
60000
100000
125000
25000
41000
150000
1120000
200000
12000
70000
25000
10000
495000
45000
90000
50000
850000
70000
1050000
535000
50000
55000
100000
100000
10000

31/08/2007
15/09/2007
29/09/2007
31/10/2007
30/11/2007
31/12/2007
31/01/2008
29/02/2008
31/03/2008

33300
16600
176000
142000
510000
117800
98000
233400
445900

10
10
10
10
10
10
10
10
10

333000
166000
1760000
1420000
5100000
1178000
980000
2334000
4459000

4.1
From the details available, it is prima facie noted that funds to the tune of Rs. 4,17,43,000/- have been
mobilized till March 31, 2008 through issuance of 4174300 Redeemable preference shares of face value Rs.10 each.
..........."

10.

From the above, it can be noticed that the Company had made a series of allotments during

the financial years 2005-2006, 2006-2007 and 2007-2008. The Company admitted to have issued
41,74,300 RPS to 470 persons and that it also mobilized Rs.1,58,61,000/- (pending allotment) from
229 persons.
(a)

I have perused the Annual Return (referred in the interim order) of the Company with

respect to the allotment of shares and the information (Annexure E) provided by the Company to
SEBI vide its letter (received on August 25, 2014) regarding the allotment of RPS. On perusal, I
note that there appears to be discrepancies with respect to the date of allotment and the number of
RPS allotted as per information shown in both the above said documents. For example, as per
Annual Return filed by the Company, one Satyajit Dey (Ledger Folio No. 1) is shown to have been
allotted 10000 RPS on September 30, 2006. However, as per Annexure E of Company's letter
(received in SEBI on August 25, 2014) it is stated that Satyajit Dey was allotted 10000 RPS on April
18, 2007. Similarly, for one Hazarilal Biswas (Folio 63), the date of allotment is shown as 'March 04,
1900' (which is an error), whereas as per the information from Company, the date of allotment is
April 18, 2007 for 5000 RPS.
(b)

Though table 1 mentions the allotment of RPS from 2005-2006 till 2007-2008 and table 2

mentions RPS allotted from April 18, 2007 till March 31, 2008, it is noted that amount mobilised
through offer and issue of RPS to the public, as per both the tables reproduced from the interim

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order, are the same at Rs.4,17,43,000/-. It is also noted that as per the information from Company
(resolutions in BoD meetings), 11,000 RPS was allotted on May 31, 2007 instead of 1,12,000 RPS as
inadvertently mentioned in the second table of the interim order.
(c)

Further, I note that as per the Balance Sheet of the Company as at March 31, 2011, the

issued, subscribed and paid-up capital through RPS is shown as '4174300 Cum. Preference Share @10/each fully paid-up' for an amount of Rs.4,17,43,000/-.
11.

With the above factual background, it is necessary to test whether the Company made a

public issue of RPS as alleged in the interim order. Section 67 of the Companies Act, 1956, lays
down the criteria to test whether the offer of securities is made on a private basis or made to the
public at large. Accordingly, it would be important to refer to the provisions of section 67(1) and (3)
of the Companies Act, 1956.
"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 the first proviso to section 67(3), any offer or invitation to subscribe for shares or
debentures made to 50 persons or more is construed to be an offer made to the public. In the
present case, the Company had, in pursuance of its offer and issuance of securities and collection of

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money, made a series of allotments on a regular basis during the above said three financial years and
had mobilised a total of Rs.5.76crores(=Rs.4.17crore + Rs. 1.59 crore, i.e., amount raised against issue of
RPS and the amount raised pending allotment). The interim order had also mentioned the various dates
(during FY 2007-2008) on which resolutions were passed by the Company's Board of Directors for
issuance of RPS. Considering the number of persons from whom monies were mobilised by the
Company, which is definitely more than 49 persons, it can be concluded that the Company had made
a public issue of RPS in terms of the first proviso to section 67(3) of the Companies Act, 1956 and the
manner of making such offer and issuance of RPS adopted by the Company (i.e., series of allotments
made within a short duration between each allotment) can be definitely 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. It is also noted that on one occasion i.e., on November 30, 2007, the Company has
allotted 463500 RPSs to 62 investors.
In view of the above observations, I agree with the prima facie view taken by SEBI in the interim
order that the offer and issuance of RPS made by the Company during the aforesaid financial years is
a 'public issue' of such securities.
12.

The Hon'ble Courts have always disregarded persons/entities who employ a colourable

scheme to evade the provisions of law. In this regard, I refer to the following observations made by
the Hon'ble Courts:
(a) The Hon'ble Supreme Court of India in the matter of Hindustan Lever & Anr vs State Of
Maharashtra & Anr decided on November 18, 2003 had observed "In Hindustan Lever Employees Union
case (supra) it has been held by this Court that Section 394 casts an obligation on the Court to be satisfied that the
scheme of amalgamation or merger was not contrary to the public interest; the basic principle of such satisfaction is none
other than the broad and general principle inherent in any compromise or settlement entered between the parties that it
should not be unfair or contrary to public policy or unconscionable or that the scheme should not be a device to evade the
law."
(b) The Hon'ble Gujarat High Court in Patel Ratilal Maganbhai [2003 (1) GLR 562] had observed
that "...Equity is always known to defend the law from crafty evasions and new subtleties invented to evade law...".

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(c) Hon'ble Courts/Tribunal have considered whether a 'scheme' was a colourable device to evade
the payment of tax by an assessee and have held that tax could be avoided within the four corners of
law but colourable device shall not be allowed for evading tax.
In view of the above observations, it can be concluded that the Company in its effort to mobilize
money from the public through its issue of RPS had devised a means to make multiple allotments in
order to stay away from the regulatory purview and evade the liability of complying with the public
issue norms as alleged in the interim order.
13.

By making a public issue of RPS, 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 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. "
14.

In view of the above observations, by virtue of section 55A(a) and (b), the SEBI has

jurisdiction and would govern the issue of RPS as the same was made to more than 49 persons.
15.

As alleged in the SEBI Order, the Company was mandated to comply with the provisions of

sections 56, 60 and 73 of the Companies Act, 1956 in respect of its offer and issue of RPS. 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'. As recorded in the SEBI Order, the Company has admitted that it did not issue any
Prospectus, Advertisement or other promotional material for issuing RPS.

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16.

The interim order has alleged that the Company failed to comply with section 73 of the

Companies Act, 1956 in respect of its issuance of RPS. By issuing RPS 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. The Company has not disputed that this allegation is
incorrect. Further, there is no material to say that the Company has filed an application with a
recognised stock exchange to enable the RPS to be dealt with in such exchange. Therefore, the
Company has failed to comply with this requirement.
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 RPS, 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 of the Company, who is an officer in default, is jointly and severally
liable to repay with interest at such rate. Considering that the mobilisation was done till March 31,
2008 and the claimed repayments commenced only during 2011-2012, it would be appropriate to
levy an interest of 15% as provided for under the above section. Further, the liability of the
Company to refund the public funds collected through offer and allotment of the impugned RPS is a
continuing liability and such liability would continue till repayments are made by the Company and
the officers in default.
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.

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17.

The interim order had also alleged that the Company did not comply with the following

provisions of the DIP Guidelines:

a.

Clause 2.1.1. (Filing of offer document)

b.

Clause 2.1.4 (Application for listing)

c.

Clause 2.1.5 (Issue of securities in dematerialized form),

d.

Clause 2.8 (Means of finance),

e.

Clause 4.1 (Promoters contribution in a public issue by unlisted companies),

f.

Clause 4.11 (Lock-in of minimum specified promoters contribution in public issues),

g.

Clause 4.14 (Lock-In of pre-issue share capital of an unlisted company)

h.

Clause 5.3.1 (Memorandum of understanding),

i.

Clause 5.3.3 (Due Diligence Certificate)

j.

Clause 5.3.5 (Undertaking),

k.

Clause 5.3.6 (List Of Promoters Group And Other Details),

l.

Clause 5.4 (Appointment of intermediaries)

m. Clause 5.6 (Offer document to be made public)

n.

Clause 5.6A (Pre-issue Advertisement)

o.

Clause 5.7 (Despatch of issue material)

p.

Clause 5.8 (No complaints certificate)

q.

Clause 5.9 (Mandatory collection centres including Clause 5.9.1 (Minimum number of collection centres)

r.

Clause 5.10 (Authorised Collection Agents)

s.

Clause 5.12.1 (Appointment of compliance officer)

t.

Clause 5.13 (Abridged prospectus)

u.

Clause 6.0 (Contents of offer documents)

v.

Clause 8.3 (Rule 19(2)(b) of SC(R) Rules, 1957)

w.

Clause 8.8.1 (Opening & closing date of subscription of securities)

x.

Clause 9 (Guidelines on advertisements by Issuer Company)

y.

Clause 10.1 (Requirement of credit rating)

z.

Clause 10.5 (Redemption)

The above Guidelines were framed by SEBI in exercise of the powers conferred under the SEBI
Act. The Hon'ble Supreme Court in the Sahara Case had observed "DIP Guidelines had statutory force
since they were framed by SEBI in exercise of its powers conferred on it under Sections 11 and 11A of the SEBI Act.
Powers have been conferred on SEBI to protect the interests of the investors in securities and regulate the issue of
prospectus, offer documents or advertisement soliciting money through the issue of prospectus. Section 11 of the Act, it

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may be noted has been incorporated, evidently to protect the interests of investors whose securities are legally required to
be listed. DIP Guidelines were implemented by SEBI with regard to the listed and unlisted companies, which made
public offer, until it was replaced by ICDR 2009". There is no record to state that the Company had
complied with the above provisions. Accordingly, I hold the Company liable for non-compliance
with the DIP Guidelines in respect of its 'public issue' of RPS.
18.

Liability of directors:

(a)

I note that the interim order was also issued to the Company's directors Mr. Basant Kumar

Sasmal, Mr. Amit Kumar Chowdhury and Mr. Mahesh Chandra Prasad. The following data
accessed from the website of the Ministry of Corporate Affairs (MCA) gives information with
respect to the signatories of the Company and the date of their appointment as directors in the
Company:
List of Signatories
DIN/DPIN/PAN

Full Name

Present residential address

Designation

Date of
Appointment

00274508

BASANT
KUMAR
SASMAL

RTC HOUSE, 3RD FLOOR, 4 DR. SURESH SARKAR

ROAD, KOLKATA, 700014, West Bengal, INDIA

Director

26/07/2004

03573202

AMIT KUMAR 60/1 ARUNACHAL, RAHARA, KOLKATA, 700118,

CHOWDHURY West Bengal, INDIA

Director

29/04/2011

03575955

MAHESH
CHANDRA
PRASAD

Director

29/04/2011

(b)

706F, DUMRI KHAL, T.V. CENTRE, TOWN/VILLKATIHAR,, ANCHAL- KATIHAR, DISTT- KATIHAT,
KATIHAR, 854106, Bihar, INDIA

From the above, it can be seen that Mr. Basant Kumar Sasmal became a director of the

Company on July 26, 2004 and continues to be the director. He was the director when the
impugned offer and allotments of RPS were made to the public without complying with the public
issue norms and appears to be part of the Board which approved such allotment of RPS. It can
therefore be concluded that Mr. Basant Kumar Sasmal is the 'officer in default' and liable for the
violations committed by the Company while issuing RPS to the public, failure to repay in terms of
section 73(2) of the Companies Act, 1956 and the consequences of such inaction.
(c)

It is noted that the other two directors Mr. Amit Kumar Chowdhury and Mr. Mahesh

Chandra Prasad became the directors of the Company on April 29, 2011. The above directors have
not submitted any replies in their defence. Though they became directors after the period when the

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impugned offer and allotment of RPS was made by the Company, they were also cast with the
statutory responsibility to make repayments to the investors as 'officers in default' by virtue of their
position as directors in the Company. I note that the liability to refund the public funds collected
through offer and allotment of the impugned RPS is a continuing liability and such liability would
continue till repayments are made by the Company and the officers in default. These directors have
also not taken any steps to remedy the violations committed by the Company by taking steps for
making repayments. The very inaction by these directors against the previous management (for
violating the public issue norms as stipulated under the Companies Act, 1956 and the DIP Guidelines while making
the offer and issuing the RPS), even after the receipt of the SEBI Order, leads one to conclude on a
possible collusion at their end with the Company and its previous management. Therefore, I hold
Mr. Amit Kumar Chowdhury and Mr. Mahesh Chandra Prasad to be 'officers in default' in
terms of section 73(2) of the Companies Act, 1956 and hence liable for the contraventions found
against the Company and also for the consequences of such violations.
19.

The Company has stated that it made repayments to the tune of Rs.2,28,24,400/- out of

Rs.5,76,04,000/-. It has provided a list of investors to whom it had claimed to repaid. However, it
has not produced any proof for such claim like bank statements, proper receipts issued by such
investors, trail of funds etc. In view of the same, the veracity of such claim is doubtful. Further, as
observed above, considering the delay in making the repayments, it is appropriate that the Company
and the above directors are directed to make the repayments along with interest at 15% from the
date when the repayments became due till the date of actual payment.
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) The

Company,

Sun-Plant

Business

Limited

(PAN-AAHCS6738F;

CIN

U51900WB2002PLC094568), its promoters and directors including Mr. Basant Kumar

Sasmal (DIN- 00274508; PAN: AWFPS4077C), Mr. Amit Kumar Chowdhury (DIN03573202; PAN: ACQPC7087F)and Mr. Mahesh Chandra Prasad (DIN- 03575955; PAN:
BBEPP4127P), 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

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issued in contravention of the public issue norms stipulated under the Companies Act, 1956 and the SEBI
(Issue and Listing of Debt Securities) Regulations, 2008), 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) As noted above, the Company has claimed to have repaid a sum of Rs.2,28,24,400/- to its
investors. If the Company has actually made any repayments to its investors of the amounts
collected from them along with promised returns, the above directions shall be applicable for
the amounts due to be returned to remaining investors. However, such repayments as
claimed to have been already made by the Company, shall be certified by Chartered
Accountants, as directed in sub-paragraph (f) below.

(c) The repayments to investors shall be effected only in cash through Bank Demand Draft or
Pay Order.
(d) Sun-Plant Business Limited /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.
(e) Sun-Plant Business Limited and its promoters and directors 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 of contact
persons including names, addresses and contact details, within fifteen days of this Order
coming into effect.
(f) After completing the aforesaid repayments, the Company shall file a certificate of such
completion with SEBI 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").

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(g) Sun-Plant Business 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.
(h) The directors Mr. Basant Kumar Sasmal, Mr. Amit Kumar Chowdhury and Mr.
Mahesh Chandra Prasad 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
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.
(i) The above directions shall come into force with immediate effect.
21.

In case of failure of the company, Sun-Plant Business Limited, its promoters and directors

including Mr. Basant Kumar Sasmal, Mr. Amit Kumar Chowdhury and Mr. Mahesh Chandra
Prasad in complying with the aforesaid directions, SEBI 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

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d) would also make a reference to the Ministry of Corporate Affairs, to initiate the process of
winding up of the Company.
22.

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.
23.

Copy of this Order shall be forwarded to the recognised stock exchanges and depositories

for information and necessary action.

24.

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 : June 03, 2015
Place : Mumbai

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