order in the matter of atm agro projects india limited

8/17/2019 Order in the matter of ATM Agro Projects India Limited

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WTM/PS/17/ERO/MAY/2016

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA

CORAM: PRASHANT SARAN, WHOLE TIME MEMBER

ORDER

Under Sections 11, 11(4), 11A and 11B of the Securities and Exchange Board of India Act, 1992

In the matter of ATM Agro Projects India Limited

In respect of:

1. ATM Agro Projects India Limited [PAN: AAHCA9909Q],2. Mr. Taimur Ali Gayen [PAN: AEBPG4001N],

3.

Mr. Yusuf Ali Gayen [PAN: AYNPG5900E],4. Mr. Indrajit Roy [PAN: BHQPR8645J],5. Mr. Sachindra Nath Bhattacharya [PAN: AAJPB4769J],6. Mr. Hasem Mirza [PAN: BAGPM1763F],7. Ms. Ashmin Khatun [PAN: BKBPK8720K],8. Mr. Mirza Dinar [PAN: BAGPM1764C],9. Ms. Nandini Chatterjee [PAN: ACEPC4432C],10. Mr. Debasish Dasgupta [PAN: APDPD8203N],11. Mr. Kamal Kishore Lodha [PAN: AAYPL5577B],12. Mr. Debabrata Ghosh [PAN: AFWPG1415L],13. Mr. Pradip Das [PAN: ACZPD8269R],

14.

Mr. Tahidur Rahaman Gayen [PAN: BDOPG6790F],15. Mr. Saiful Alam [PAN: AVFPA7748F],16. Mr. Mohammad Younus [PAN: AHJPM6572H],17. Trustees of Secured Debentures Trust of ATM Agro Projects India Limited

(represented by its Trustees, viz. Ms. Pratima Roy and Mr. Ram SunderBhattacharya) and

18. ATM Secure Debenture Trust (represented by its Trustees, viz. Mr. AmitSamanta and Mr. Jagadish Chandra Nag)

________________________________________________________________________Date of Hearing: September 03, 2015

Appearances: Mr. Sachindra Nath Bhattacharya appeared in person.

For SEBI: Mr. Prashanta Mahapatra, General Manager, Mr. T. Vinay Rajneesh, Assistant General Manager, Mr. N. Murugan, Assistant GeneralManager and Ms. Nikki Agarwal, Assistant Manager.


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Date of Hearing: November 23, 2015

Appearances: None appeared _______________________________________________________________________

1.

Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’ ), vide an ex- parte interim Order dated February 12, 2015 (hereinafter referred to as ‘the interim order’ )

had observed that the company, ATM Agro Projects India Limited (hereinafter

referred to as ‘ ATM Agro Projects’ or ‘the Company ’ ) is prima facie engaged in fund

mobilising activity from the public, through the Offer of Redeemable Preference

Shares (hereinafter referred to as ‘RPS’ ) and Secured Redeemable Non-Convertible

Debentures ( ‘NCD’ ) had allegedly violated the provisions of Sections 56, 60 (read with

Section 2(36)), 67, 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 the debenture trustee, Trustees of Secured

Debentures Trust of ATM Agro Projects India Limited (represented by its

Trustees, viz. Ms. Pratima Roy and Mr. Ram Sunder Bhattacharya) and ATM

Secure Debenture Trust (represented by its Trustees, viz. Mr. Amit Samanta

and Mr. Jagadish Chandra Nag) had acted as an unregistered debenture trustee in

violation of the provisions of Section 12(1) of the SEBI Act, 1992 (hereinafter referred

to as ‘SEBI Act’ ) and the SEBI (Debenture Trustees) Regulations, 1993 (hereinafter

referred to as ‘DT Regulations’).

2. In order to protect the interest of investors and to ensure that only legitimate fund

raising activities are carried on by the Company and its directors, SEBI had issued the

following directions:

“… …

8. 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, hereby issue the following directions –

i. AAPIL (PAN: AAHCA9909Q) shall not mobilize funds from investors throughthe Offer of Redeemable Preference Shares and Offer of NCDs or through the issuance


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of equity shares or any other securities, to the public and/or invite subscription, in anymanner whatsoever, either directly or indirectly till further directions;

ii. AAPIL and its present Directors, viz. Shri Taimur Ali Gayen (PAN: AEBPG4001N; DIN: 02108358), Shri Yusuf Ali Gayen (PAN: AYNPG5900E; DIN: 05136738) and Shri Indrajit Roy (PAN: BHQPR8645J;

DIN: 06754713) including its past Directors, viz. Shri Sachindra NathBhattacharya (DIN: 00559781), Shri Hasem Mirza (PAN: BAGPM1763F;DIN: 02763820), Smt. Ashmin Khatun (PAN: BKBPK8720K; DIN:02762776), Shri Mirza Dinar (DIN: 02761080), Smt. Nandini Chatterjee(PAN: ACEPC4432C; DIN: 02985377), Shri Debashish Dasgupta (PAN: APDPD8203N; DIN: 03544876), Shri Kamal Kishore Lodha (PAN: AAYPL5577B; DIN: 05106473), Shri Debabrata Ghosh (PAN: AFWPG1415L; DIN: 05159545), Shri Pradip Das (PAN: ACZPD8269R;DIN: 05166308), Shri Tahidur Rahaman Gayen (PAN: BDOPG6790F; DIN:05256592), Shri Saiful Alam (PAN: AVFPA7748F; DIN: 06773537) andShri Mohammad Younus (PAN: AHJPM6572H; DIN: 06773530), 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. AAPIL and its abovementioned past and present Directors, are restrained from

accessing the securities market and further prohibited from buying, selling or otherwisedealing in the securities market, either directly or indirectly, till further directions;

iv. AAPIL shall provide a full inventory of all its assets and properties;v. AAPIL's abovementioned past and present Directors shall provide a full inventory of

all their assets and properties;vi. AAPIL 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 companythrough the Offer of NCDs, without prior permission from SEBI;

vii.

AAPIL and its abovementioned present Directors shall not divert any funds raised from public at large through the Offer of Redeemable Preference Shares and Offer of NCDs, which are kept in bank account(s) and/or in the custody of AAPIL;

viii. AAPIL and its abovementioned past and present Directors shall furnish complete andrelevant information (as sought by SEBI letters dated September 17, 2014 and October27, 2014), within 21 days from the date of receipt of this Order.

ix. The Debenture Trustees, viz. Trustees of Secured Debentures Trust of ATM AgroProjects India Limited (represented by its Trustees, viz. Smt. Pratima Roy and ShriRam Sunder Bhattacharya) and ATM Secure Debenture Trust (represented by itsTrustees, viz. Shri Amit Samanta and Shri Jagadish Chandra Nag), are prohibited from continuing with their assignment as debenture trustee in respect of the Offer of

NCDs of AAPIL and also from taking up any new assignment or involvement in anynew issue of debentures, etc. in a similar capacity, from the date of this order till furtherdirections.

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


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11. This Order is without prejudice to the right of SEBI to take any other action that maybe initiated against AAPIL and its abovementioned Directors; its Debenture Trustees, viz.Trustees of Secured Debentures Trust of ATM Agro Projects India Limited (representedby its Trustees, viz. Smt. Pratima Roy and Shri Ram Sunder Bhattacharya) and ATMSecure Debenture Trust (represented by its Trustees, viz. Shri Amit Samanta and Shri

Jagadish Chandra Nag), in accordance with law.”

3. The interim order observed that the prima facie observations made therein were on the

basis of the correspondences exchanged between SEBI and the Company, complaint

received by SEBI and the information/ documents obtained from the ‘MCA-21’

portal. The interim order advised the Company, its directors and the debenture trustee

to file their replies within 21 days from the date of its receipt and also seek an

opportunity of personal hearing.

4.

The interim order was forwarded to the Company and its directors namely Mr. Taimur

Ali Gayen, Mr. Yusuf Ali Gayen, Mr. Indrajit Roy, Mr. Sachindra Nath Bhattacharya,

Mr. Hasem Mirza, Ms. Ashmin Khatun, Mr. Mirza Dinar, Ms. Nandini Chatterjee, Mr.

Debasish Dasgupta, Mr. Kamal Kishore Lodha, Mr. Debabrata Ghosh, Mr. Pradip

Das, Mr. Tahidur Rahaman Gayen, Mr. Saiful Alam, Mr. Mohammad Younus and the

debenture trustees namely Trustees of Secured Debentures Trust of ATM Agro

Projects India Limited (represented by its Trustees, viz. Ms. Pratima Roy and Mr. Ram

Sunder Bhattacharya) and ATM Secure Debenture Trust (represented by its Trustees,

viz. Mr. Amit Samanta and Mr. Jagadish Chandra Nag) vide letters dated February 13,

2015. The letters issued to the Company, Mr. Taimur Ali Gayen, Mr. Indrajit Roy, Mr.

Hasem Mirza, Ms. Ashmin Khatun, Mr. Mirza Dinar, Mr. Pradip Das, Mr. Tahidur

Rahaman Gayen, Mr. Debasish Dasgupta, Mr. Amit Samanta, Mr. Ram Sunder

Bhattacharya, Mr. Pratima Roy, Mr. Jagadish Chandra Nag, Trustees of Secured

Debentures Trust of ATM Agro Projects India Limited and ATM Secure Debenture

Trust had returned undelivered. The letter of Mr. Kamal Kishore Lodha had returned

undelivered with the remark ‘deceased’.

5. Mr. Debabrata Ghosh vide his letter dated March 10, 2015, replied to the interim order.

Thereafter, SEBI proceeded further and granted an opportunity of personal hearing


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to the Company, its directors and the debenture trustee on September 03, 2015. The

scheduled date was communicated vide SEBI letter dated July 28, 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 the material available on record.

6. On the date fixed for personal hearing i.e. September 03, 2015, Mr. Sachindra Nath

Bhattacharya appeared in person and made submissions. He also requested liberty for

filing written submissions. Considering the request, he was granted fifteen days’ time

for making written submissions. The other directors of the Company and the

debenture trustee remained absent.

Later, Mr. Sachindra Nath Bhattacharya vide his letter dated September 15, 2015, filed

the written submissions. As the annexures to the letter were not attached, SEBI vide

its letter dated September 29, 2015 asked Mr. Sachindra Nath Bhattacharya to file the

same again. Mr. Sachindra Nath Bhattacharya vide his letter dated October 07, 2015

submitted the annexures, which were taken on record.

7.

In the meantime, Mr. Debabrata Ghosh, one of the directors vide a fax dated

September 03, 2015, intimated that due to sudden health problem, he was unable to

attend the personal hearing on the scheduled date and requested for another date of

hearing for making submissions. Thereafter, Ms. Nandini Chatterjee, another director

visited the SEBI office on September 10, 2015 and requested for another date of

personal hearing. Considering the request, another date of personal hearing was

granted to these on November 23, 2015. On the date fixed no one turned up for the

personal hearing. Mr. Debabrata Ghosh vide his letter dated November 23, 2015,reiterated his earlier submissions made vide letter dated March 10, 2015 and expressed

his inability to appear for the personal hearing due to heart ailment and advice of the

doctor to take bed rest.


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Considering the reasonable opportunities already afforded for making submissions in

the matter, I am inclined to proceed further with the matter.

8.

The submissions in brief, are as under:a. Mr. Debabrata Ghosh vide his letter dated March 10, 2015 and November 23, 2015

submitted as under:

- He had no connection with the business of the Company or its day to day working,

during his tenure as additional director.

- He had joined the Company as an additional director on January 02, 2012 and had

resigned on March 31, 2012.

- He became the director of the Company on the request of Mr. Taimur Ali Gayen

for implementation of a project in IIT Kharagpore area (a proposed joint biscuit

factory, which was supposed to start in February 2012). Even after 15/20 days of

his inclusion, no progress in the said project was made and therefore, he had

immediately resigned from the Company and had handed over his resignation to

Mr. Taimur Ali Gayen. The resignation was later submitted to the Registrar of

Companies (RoC) by Mr. Taimur Ali Gayen on March 31, 2012, for the reasons

best known to him. He does not have any relation with the Company after his

resignation.

- He had not taken any advantage/ director’s remuneration from the Company or

attended any meeting of the Company. No documents of the Company were

signed by him.

- After resigning, he had demanded for return of his investment, however, the same

were not returned. He has filed a criminal case against the Company for refund of

his investment at Mindapore Court. Consequent to this, one of the directors

namely Mr. Dinar Mirza was arrested and the case is pending.

b. Mr. Sachindra Nath Bhattacharya vide his letter dated September 15, 2015 while

submitting the following, requested for discharge from all accusations:


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- He had resigned from the Company on and from February 02, 2010 and the

resignation was officially accepted by the Registrar of Companies (RoC) on June

01, 2010.

- He was not physically, directly or indirectly involved in the Company.

-

He was not an Executive Director, Managing Director or even a Whole Time

Director of the Company.

- He was neither entrusted with any financial/ administrative functions of the

Company nor participated in any decision making process of the Company at any

point of time.

9. I have considered the interim order and the material available on record. The following

are the observations from the interim order:

“… i. AAPIL was incorporated on September 30, 2009, with the ROC, Kolkata with CIN

No. as U01400WB2009PLC138634. Its Registered Office is at Judges Court Road,Circuit House More, Medinipur, Kolkata – 721101, West Bengal, India.

ii. The present Directors in AAPIL are Shri Taimur Ali Gayen, Shri Yusuf Ali Gayen andShri Indrajit Roy.

iii. Shri Sachindra Nath Bhattacharya, Shri Hasem Mirza, Smt. Ashmin Khatun, Shri Mirza Dinar, Smt. Nandini Chatterjee, Shri Debashish Dasgupta, Shri Kamal KishoreLodha, Shri Debabrata Ghosh, Shri Pradip Das, Shri Tahidur Rahaman Gayen, ShriSaiful Alam and Shri Mohammad Younus, who were earlier Directors in AAPIL, havesince resigned.

iv.

Form 2 (Form for Return of Allotment – filed by AAPIL with the ROC in accordancewith the provisions of the Companies Act, 1956) for the Financial Years 2010 – 11 and2011 – 12, reveals that AAPIL issued "Redeemable Preference Shares" ("Offer ofRedeemable Preference Shares") to investors, details of which are provided below – Type of Security Year No. of persons to whom

preference shares were allotted

Total Amount

( ₹ in Crores)

RedeemablePreference Shares

2010 – 11 446 ** 0.292011 – 12 777 ##1.57

TOTAL 1223 1.86

v. From the material available on record, it is noted that AAPIL also issued Secured Redeemable Non – Convertible Debentures (" Offer of NCDs "), details of which are provided below –

Year Type of Security Amount Raised

( ₹ in Crores)

Number of Allottees

2010 – 11 Secured RedeemableDebentures

3.98 Details not available2011 – 12 3.41*2012 – 13 Details not available


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Total 7.39

* The complainant vide letter dated July 8, 2014, has submitted a copy of debenture certificate on whichDate of Certificate printed is December 20, 2012. SEBI has also received another complaint where thecomplainant submitted a copy of debenture certificate on which Date of Certificate printed is January 31,2013. It appears therefore, that AAPIL continued to issue Secured Redeemable Debentures in the year2012 – 13.

…”

10. 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.

11. In order to ascertain whether an issue of securities is a ‘public issue’ or done on ‘private

placement’, 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 ordebentures to the public shall, subject to any provision to the contrary contained in this Actand subject also to the provisions of sub-sections (3) and (4), be construed as including areference to offering them to any section of the public, whether selected as members or debentureholders of the company concerned or as clients of the person issuing the prospectus or in anyother manner.(2) ...(3) No offer or invitation shall be treated as made to the public by virtue of subsection (1)or subsection (2), as the case may be, if the offer or invitation can properly be regarded, inall the circumstances-(a) as not being calculated to result, directly or indirectly, in the shares or debentures becomingavailable for subscription or purchase by persons other than those receiving the offer orinvitation; or(b) otherwise as being a domestic concern of the persons making and receiving the offer orinvitation …Provided that nothing contained in this sub-section shall apply in a case where the offer orinvitation 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).”

12. 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


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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. 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 conclude whether an issue of shares are for public or

on a private placement basis. 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.

13. I now place my reliance on the order of 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 thoseexpressions are to be understood, when reference is made to the Act or in the articles of acompany. The emphasis in Section 67(1) and (2) is on the “section of the public”. Section67(3) states that no offer or invitation shall be treated as made to the public, by virtue ofsubsections (1) and (2), that is to any section of the public, if the offer or invitation is notbeing 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 orotherwise as being a domestic concern of the persons making and receiving the offer orinvitations. Section 67(3) is, therefore, an exception to Sections 67(1) and (2). If thecircumstances mentioned in clauses (1) and (b) of Section 67(3) are satisfied, then theoffer/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, 2000w.e.f. 13.12.2000, which clearly indicates, nothing contained in Sub-section (3) of Section67 shall apply in a case where the offer or invitation to subscribe for shares or debentures ismade to fifty persons or more. …

Resultantly, if an offer of securities is made to fifty or more persons, it would be deemed to bea public issue, even if it is of domestic concern or proved that the shares or debentures are notavailable for subscription or purchase by persons other than those received the offer orinvitation. …


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I may, therefore, indicate, subject to what has been stated above, in India that any share ordebenture 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, pertainingto the public issue. …”

14.

In the present case, I note that the Company had offered and allotted RPSs to 1,223persons during the financial years 2010-11 and 2011-12 and had raised about ₹1.86

crore. The Company had also issued NCDs during the financial years 2010-11, 2011-

12 and 2012-13 and had raised about ₹7.39 crore.

The Company has not replied to the allegations made in the interim order. As per the

balance sheet of the Company as on March 31, 2012, it had raised ₹7.39 crore through

its issue of debentures. I note that the Company has failed to provide such details

inspite of repeated reminders. The interim order has also alleged that the Company hadcontinued issuing NCDs in the financial year 2012-13. Considering the quantum of

funds and that no reply was received from the Company, it is reasonable to infer that

the Company had offered and allotted NCDs during the said financial years to more

than 49 persons.

In view of the same, it is held that the Company had made its offer and allotted RPSs

and NCDs to more than 49 persons, thereby making a public issue of RPS and NCD

(in terms of the first proviso to Section 67(3) of the Companies Act, 1956) during the

period alleged in the interim order. Further, the Company has failed to produce any

evidence to show that the issue was a domestic concern of the members of the

Company. Thus on the face of it, the issue made by the Company cannot be considered

as a private placement.

15. By making a public issue of RPSs and 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 :


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“ ... ... that any share or debenture issue beyond forty nine persons, would be a public issueattracting all the relevant provisions of the SEBI Act, regulations framed thereunder, theCompanies Act, pertaining to the public issue . …”

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

jurisdiction to regulate the issue of RPS and NCD, as the same was clearly 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 ofSection 55A of the Companies Act, so far as they relate to issue and transfer of securitiesand non-payment of dividend is concerned, SEBI has the power to administer in the caseof listed public companies and in the case of those public companies which intend to gettheir securities listed on a recognized stock exchange in India ."" SEBI can exercise its jurisdiction under Sections 11(1), 11(4), 11A(1)(b) and 11Bof SEBI Act and Regulation 107 of ICDR 2009 over public companies who have issuedshares 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.

17. As alleged in the interim order, the Company was mandated to comply with the

provisions of Sections 56, 60, 73, 117B and 117C of the Companies Act, 1956 and the

provisions of the ILDS Regulations is required to be complied by the Company in

respect of its offer and issue of RPSs and NCDs. 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


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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’.

18. The interim order further alleged that the Company had failed to comply with Section

73 of the Companies Act, 1956, in respect of its issuance of RPSs and NCDs. By

issuing RPSs and 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) 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. There is no material

on record to say that the Company has filed an application with a recognised stock

exchange to enable the RPSs and NCDs to be dealt with in such exchange. Therefore,

the Company has failed to comply with this requirement.

19. 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 RPSs and NCDs, 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, would be 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 the provisions of Section 73(3).


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20. 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. The interim order has observed “From the Balance Sheet filed by

AAPIL with the ROC for the Financial Year 2011-12, it is observed that the company has created

Debenture Redemption Reserve for an amount of ₹ 6.18 Lakhs. However, AAPIL has not filed any

Balance Sheets with the ROC thereafter .” I have perused the balance sheet of the Company

as on March 31, 2012 and note that ₹6,18,292.41 were transferred to the ‘debenture

redemption reserve’.

21.

The interim order has noted that the Company had created a charge for an amount of₹15.22 crore as on June 11, 2010 and had appointed Trustees of Secured

Debentures Trust of ATM Agro Projects India Limited (represented by its

Trustees, viz. Ms. Pratima Roy and Mr. Ram Sunder Bhattacharya) as

Debenture Trustee for its offer of NCDs. Later, the Company had created another

charge for an amount of ₹50 crore on December 26, 2011 and had appointed ATM

Secure Debenture Trust (represented by its Trustees, viz. Mr. Amit Samanta

and Mr. Jagadish Chandra Nag) as Debenture Trustee for its offer of NCDs.

I note that Trustees of Secured Debentures Trust of ATM Agro Projects India

Limited and ATM Secure Debenture Trust had acted without registration from

SEBI as required under Section 12(1) of the SEBI Act. In this regard, I note that the


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said trust is not registered with SEBI to perform the functions of a ‘debenture trustee’

in the capital market. Further, the following conditions under Regulation 7 of the DT

Regulations are also not satisfied by the said trust:

"no person should act as a debenture trustee unless he is either –

i. a scheduled bank carrying on commercial activity; orii. a public financial institution within the meaning of section 4A of the Companies Act,

1956; oriii. an insurance company; oriv.

body corporate."

From the above, it is seen that Trustees of Secured Debentures Trust of ATM

Agro Projects India Limited and ATM Secure Debenture Trust do not satisfy the

eligibility conditions stipulated under Regulation 7 of the DT Regulations. The

debenture trustee has not disputed the allegations.

I note that a person who accepts a position which carries certain responsibilities,

compliances and eligibility criteria under law, then the same ought to have been

satisfied under full compliance of applicable law. In the present case, Trustees of

Secured Debentures Trust of ATM Agro Projects India Limited and ATM

Secure Debenture Trust are not registered as ‘debenture trustees’ with SEBI as

required under Section 12(1) of the SEBI Act. Further, it does not satisfy the

conditions under Regulation 7 of the DT Regulations, which prescribes that only a

scheduled bank carrying on commercial activity or a public financial institution within

the meaning of Section 4A of the Companies Act, 1956 or an insurance company or a

body corporate should act as a debenture trustee.

In view of the same, I find Trustees of Secured Debentures Trust of ATM Agro

Projects India Limited (represented by its Trustees, viz. Ms. Pratima Roy and

Mr. Ram Sunder Bhattacharya) and ATM Secure Debenture Trust (represented

by its Trustees, viz. Mr. Amit Samanta and Mr. Jagadish Chandra Nag) guilty

of violating the provisions of 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.


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22. 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 17 – Creation of security

xv. Regulation 19 – Mandatory Listing

xvi. Regulation 26 – Obligations of the Issuer, etc.

23. From the foregoing, it is concluded that the Company has failed to comply with the

provisions of Sections 56, 60, 2(36), 73, 117B and 117C of the Companies Act, 1956

and the respective provisions of the ILDS Regulations, in respect of its offer and

issuance of RPSs and NCDs and is liable for suitable action under the Companies Act,

1956, the SEBI Act and the ILDS Regulations. The Company shall therefore be liable

to make refunds as per the mandate under Section 73(2) of the Companies Act, 1956

and also for regulatory action for committing the above violations.

24. Liability of Directors: The interim order was issued against the directors of the

Company namely Mr. Taimur Ali Gayen, Mr. Yusuf Ali Gayen, Mr. Indrajit Roy, Mr.

Sachindra Nath Bhattacharya, Mr. Hasem Mirza, Ms. Ashmin Khatun, Mr. Mirza


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Dinar, Ms. Nandini Chatterjee, Mr. Debasish Dasgupta, Mr. Kamal Kishore Lodha,

Mr. Debabrata Ghosh, Mr. Pradip Das, Mr. Tahidur Rahaman Gayen, Mr. Saiful Alam

and Mr. Mohammad Younus.

a.

The details of their appointment and resignations are as under:

Name Date of Appointment Date of Cessation

Mr. Taimur Ali Gayen 30/09/2009 Continuing as director

Mr. Yusuf Ali Gayen 03/12/2011 Continuing as directorMr. Indrajit Roy 19/03/2014 Continuing as directorMr. Sachindra Nath Bhattacharya 30/09/2009 01/06/2010Mr. Hasem Mirza 30/09/2009 02/12/2013Ms. Ashmin Khatun 30/09/2009 02/12/2013Mr. Mirza Dinar 30/09/2009 25/07/2013Ms. Nandini Chatterjee 02/06/2010 01/06/2011Mr. Debasish Dasgupta 01/06/2011 04/09/2011Mr. Kamal Kishore Lodha 24/10/2011 01/02/2013Mr. Debabrata Ghosh 02/01/2012 31/03/2012Mr. Pradip Das 15/02/2012 27/04/2013Mr. Tahidur Rahaman Gayen 17/04/2012 26/04/2013Mr. Saiful Alam 16/12/2013 19/03/2014Mr. Mohammad Younus 16/12/2013 20/06/2014

b. As per Section 291 of the Companies Act, 1956, the board of directors of a company

shall be entitled to exercise all such powers and do all such acts and things as the

company is authorized to exercise and do. Therefore, the board of directors being

responsible for the conduct of the business of a company will be held liable for any

non-compliance of law and such liability is also on the individual directors. In this

regard, refer to the order of Hon’ble High Court of Madras in the matter of Madhavan

Nambiar Vs. Registrar of Companies [2002 108 Comp Cas 1 Mad] wherein it was observed

that “13. … A director either full time or part time, either elected or appointed or nominated is

bound to discharge the functions of a director and should have taken all the diligent steps and taken

care in the affairs of the company.

14. In the matter of proceedings for negligence, default, breach of duty, misfeasance or breach of trust

or violation of the statutory provisions of the Act and the rules, there is no difference or distinction

between the whole-time or part time director or nominated or co-opted director and the liability for such


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acts or commission or omission is equal. So also the treatment for such violations as stipulated in the

Companies Act, 1956.”.

I note that the position of a ‘director’ in a public company/ listed company comes

along with responsibilities and compliances under law, which have to be fulfilled by

such director or face the consequences for any violation or default thereof.

c. I note that the Company had offered and issued RPSs during the financial years 2010-

11 and 2011-12. Further, it had also offered and issued NCDs during the financial

years 2010-11, 2011-12 and 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 RPSs and 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 a continuing liability,

the persons who joined the Company’s Board pursuant to the offer and allotment of

RPS and NCD shall also be liable if the Company and the concerned directors havefailed to make refunds, as mandated under the discussed provisions of law.

d. From the table above, it is noted that Mr. Taimur Ali Gayen, Mr. Yusuf Ali Gayen,

Mr. Sachindra Nath Bhattacharya, Mr. Hasem Mirza, Ms. Ashmin Khatun, Mr.

Mirza Dinar, Ms. Nandini Chatterjee, Mr. Debasish Dasgupta, Mr. Kamal

Kishore Lodha, Mr. Debabrata Ghosh, Mr. Pradip Das and Mr. Tahidur

Rahaman Gayen were the directors of the Company at the time of impugned issues

and allotment of RPSs and NCDs and were responsible for the affairs of the Company

at the relevant point of time. Mr. Taimur Ali Gayen and Mr. Yusuf Ali Gayen continue

to be the directors of the Company.


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Mr. Sachindra Nath Bhattacharya, Mr. Hasem Mirza, Ms. Ashmin Khatun, Mr. Mirza

Dinar, Ms. Nandini Chatterjee, Mr. Debasish Dasgupta, Mr. Kamal Kishore Lodha,

Mr. Debabrata Ghosh, Mr. Pradip Das and Mr. Tahidur Rahaman Gayen had resigned

from the Company on the dates as mentioned in para 24(a) above.

Mr. Debabrata Ghosh and Sachindra Nath Bhattacharya vide respective letters have

submitted that they were not involved in the day to day working of the Company

during the respective tenures. The submissions made by these persons are of no help

in the light of the discussed order of Hon’ble High Court of Madras in the matter of

Madhavan Nambiar Vs. Registrar of Companies ( supra ).

In view of the same, it can be concluded that Mr. Taimur Ali Gayen, Mr. Yusuf Ali

Gayen, Mr. Sachindra Nath Bhattacharya, Mr. Hasem Mirza, Ms. Ashmin Khatun, Mr.

Mirza Dinar, Ms. Nandini Chatterjee, Mr. Debasish Dasgupta, Mr. Kamal Kishore

Lodha, Mr. Debabrata Ghosh, Mr. Pradip Das and Mr. Tahidur Rahaman Gayen

responsible for the violations committed by the Company and liable, jointly and

severally, for 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.

e. I note that Mr. Saiful Alam and Mr. Mohammad Younus were appointed as directors

of the Company on December 16, 2013 and Mr. Indrajit Roy was appointed as director

of the Company on March 19, 2014. These dates are after the available dates of

impugned issues.

Mr. Indrajit Roy is also one of the present directors of the Company. Mr. Saiful Alam

and Mr. Mohammad Younus have resigned from the Company on March 19, 2014

and June 20, 2014 respectively. It is observed that they had not exercised necessary

diligence after becoming directors in the Company. The inaction by them against the

management (for violating the public issue norms as stipulated under the Companies Act, 1956), even after the receipt of the interim order, leads one to conclude on a

possible collusion with the Company and its management. None of these had taken

any steps to remedy the violations committed. As discussed earlier, the liability to


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refund is a continuous liability and would be discharged only when the repayments are

done. Therefore, I hold Mr. Indrajit Roy, Mr. Saiful Alam and Mr. Mohammad Younus

liable for the same.

25.

At this stage, I note that the Company and its directors namely Mr. Taimur Ali

Gayen, Mr. Yusuf Ali Gayen, Mr. Indrajit Roy, Mr. Sachindra Nath

Bhattacharya, Mr. Hasem Mirza, Ms. Ashmin Khatun, Mr. Mirza Dinar, Ms.

Nandini Chatterjee, Mr. Debasish Dasgupta, Mr. Kamal Kishore Lodha, Mr.

Debabrata Ghosh, Mr. Pradip Das, Mr. Tahidur Rahaman Gayen, Mr. Saiful

Alam, Mr. Mohammad Younus were required to provide full inventory of the assets

and properties within 21 days from the date of receipt of the interim order. However,

no such details have been filed till date.

26. 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.

27. Therefore, 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, ATM Agro Projects India Limited [PAN: AAHCA9909Q], Mr.

Taimur Ali Gayen [PAN: AEBPG4001N], Mr. Yusuf Ali Gayen [PAN:

AYNPG5900E], Mr. Indrajit Roy [PAN: BHQPR8645J], Mr. Sachindra Nath

Bhattacharya [PAN: AAJPB4769J], Mr. Hasem Mirza [PAN: BAGPM1763F],

Ms. Ashmin Khatun [PAN: BKBPK8720K], Mr. Mirza Dinar [PAN:

BAGPM1764C], Ms. Nandini Chatterjee [PAN: ACEPC4432C], Mr. Debasish

Dasgupta [PAN: APDPD8203N], Mr. Kamal Kishore Lodha [PAN:

AAYPL5577B], Mr. Debabrata Ghosh [PAN: AFWPG1415L], Mr. Pradip Das

[PAN: ACZPD8269R], Mr. Tahidur Rahaman Gayen [PAN: BDOPG6790F],

Mr. Saiful Alam [PAN: AVFPA7748F] and Mr. Mohammad Younus [PAN:


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AHJPM6572H] jointly and severally, shall forthwith refund the money collected by

the Company through the issuance of Redeemable Preference Shares and Non-

Convertible Debentures (which have been found to be issued in contravention of the

public issue norms stipulated under the Companies Act, 1956 and ), to the investors

including the money collected from investors, till date, pending allotment of RPS and

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 and/or 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.

d. The Company and its present management shall issue public notice, in all editions of

two National Dailies (one English and one Hindi) and in one local daily 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. After completing the aforesaid repayments, the Company shall file a certificate of such

completion with SEBI, within a period of three months from the date of this Order,

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’).

f.

ATM Agro Projects India Limited, Mr. Taimur Ali Gayen, Mr. Yusuf Ali Gayen,

Mr. Indrajit Roy, Mr. Sachindra Nath Bhattacharya, Mr. Hasem Mirza, Ms.

Ashmin Khatun, Mr. Mirza Dinar, Ms. Nandini Chatterjee, Mr. Debasish


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Dasgupta, Mr. Kamal Kishore Lodha, Mr. Debabrata Ghosh, Mr. Pradip Das,

Mr. Tahidur Rahaman Gayen, Mr. Saiful Alam, Mr. Mohammad Younus 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.

g. In case of failure of the Company, ATM Agro Projects India Limited, its directors

including Mr. Taimur Ali Gayen, Mr. Yusuf Ali Gayen, Mr. Indrajit Roy, Mr.

Sachindra Nath Bhattacharya, Mr. Hasem Mirza, Ms. Ashmin Khatun, Mr.

Mirza Dinar, Ms. Nandini Chatterjee, Mr. Debasish Dasgupta, Mr. Kamal

Kishore Lodha, Mr. Debabrata Ghosh, Mr. Pradip Das, Mr. Tahidur Rahaman

Gayen, Mr. Saiful Alam, Mr. Mohammad Younus in complying with the aforesaid

directions, SEBI, on expiry of three months 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

appropriate action as deemed fit.

v.

would also make a reference to the Ministry of Corporate Affairs to flag the names

of noticee directors in its database so that information may be per used by RoC or

any other regulatory authority.

h. The Company namely ATM Agro Projects India 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


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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.

i. The directors of the Company namely Mr. Taimur Ali Gayen, Mr. Yusuf Ali

Gayen, Mr. Indrajit Roy, Mr. Sachindra Nath Bhattacharya, Mr. Hasem Mirza,

Ms. Ashmin Khatun, Mr. Mirza Dinar, Ms. Nandini Chatterjee, Mr. Debasish

Dasgupta, Mr. Kamal Kishore Lodha, Mr. Debabrata Ghosh, Mr. Pradip Das,

Mr. Tahidur Rahaman Gayen, Mr. Saiful Alam, Mr. Mohammad Younus 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.

j. Trustees of Secured Debentures Trust of ATM Agro Projects India Limited,

Ms. Pratima Roy, Mr. Ram Sunder Bhattacharya; ATM Secure Debenture

Trust, Mr. Amit Samanta and Mr. Jagadish Chandra Nag 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.

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

28.

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.


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

depositories for information and necessary action.

30.

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 : May 02, 2016 PRASHANT SARANPLACE : Mumbai WHOLE TIME MEMBER

SECURITIES AND EXCHANGE BOARD OF INDIA

order in the matter of atm agro projects india limited

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