wtm/ps/66/ero/imd/oct/2015 before the · pdf filefor the sake of convenience, ... on april 14,...

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WTM/PS/66/ERO/IMD/OCT/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. Just-Reliable Projects India Limited (CIN-U45400WB2009PLC140276;PAN-

AACCJ2827P)

and its Directors, namely,

2. Mr.SwarupDutta (DIN-02498000; PAN-AGWPD2748J),

3. Mr. SumantaGorai (DIN-02946871;PAN-AGMPG1547N),

4. Mr. Susanta Ghosh (DIN-05185974;PANAEXPG6206P),

5. Mr. Sukanta Dutta (DIN-05235908; PAN-AKEPD8763F),

6. Mr. KoushikBej (DIN-05236482;PAN-APSPB6232N),

7. Mr. NajibSeikh (DIN-05241253;PAN-AYLPS8955R),

8. Mr. Anjan Jana (DIN-05247414;PAN-AHRPJ8186A),

9. Mr. Kanwal Prakash Singh (DIN-02869631; PAN-BVPPS9888H),

10. Mr. Gajender PalSingh (DIN-02869599; PAN-BESPS7926C),

11. Mr. Sandip Dutta (DIN-02647739; PANAFVPD8603A),

12. Mr. Virender Kumar (DIN-02487133; PAN-AJUPK8288M) and

13. Mr. Niladri Chakraborty (DIN-02946893; PAN-AEZPC3674D)

1. Securities and Exchange Board of India (hereinafter referred to as "SEBI"), vide an interim ex-

parte Order dated December 16, 2014 (hereinafter referred to as "the interim order") had observed

that the company, Just-Reliable Projects India Limited (hereinafter referred to as "JRPIL" or "the

Company") is prima facie engaged in fund mobilising activity from the public, by its offer and issue of

Redeemable Preference Shares (hereinafter referred to as "RPS") and had allegedly violated the

provisions of sections 56, 60 read with section 2(36), 73 of the Companies Act, 1956 read with Section

465 of the Companies Act, 2013. In order to protect the investors who have subscribed to the

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impugned offer and issue of RPS and to ensure that the Company and its directors are restrained from

carrying on with their fund mobilizing activity, SEBI had issued the following directions:

“17. In view of the foregoing, I, in exercise of powers conferred upon me under Sections 11(1), 11(4), 11A and

11B of the SEBI Act, hereby issue the following directions:

a) JRPIL shall not mobilize any further funds from investors through the issue of RPS or through the issue of

equity shares or any other securities, to the public and/or invite subscription, in any manner whatsoever, either

directly or indirectly till further orders;

b) JRPIL (CIN- U45400WB2009PLC140276; PAN-AACCJ2827P) and its Directors viz. Shri Swarup

Dutta (DIN-02498000; PAN-AGWPD2748J), Shri SumantaGorai (DIN- 02946871;PAN-

AGMPG1547N), Shri Susanta Ghosh (DIN-05185974;PANAEXPG6206P), Shri Sukanta Dutta

(DIN-05235908; PAN-AKEPD8763F), Shri KoushikBej (DIN-05236482;PAN-APSPB6232N), Shri

NajibSeikh (DIN-05241253;PANAYLPS8955R), Shri Anjan Jana (DIN-05247414;PAN-

AHRPJ8186A), Shri Kanwal Prakash Singh (DIN-02869631; PAN-BVPPS9888H), Shri Gajendra Pal

Singh (DIN-02869599; PAN-BESPS7926C), Shri Sandip Dutta (DIN-02647739; PAN-

AFVPD8603A), Shri Virendra Kumar (DIN-02487133; PAN-AJUPK8288M) and Shri Niladri

Chakraborty (DIN-02946893; PAN-AEZPC3674D) 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;

c) JRPIL 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;

d) JRPIL and its abovementioned Directors shall provide a full inventory of all its assets and properties;

e) JRPIL and its Directors shall not dispose of any of the properties or alienate or encumber any of the assets

owned/acquired by that company through the issue of RPS, without prior permission from SEBI;

f) JRPIL and its Directors shall not divert any funds raised from the public at large through the issue of RPS,

which are kept in bank account(s) and/or in the custody of JRPIL;

g) JRPIL and its Directors shall, within 21 days from the date of receipt of this Order, provide SEBI with all

relevant and necessary information, as sought vide SEBI letters dated November 01, 2013, November 28, 2013

and January 30, 2014.

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

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19. The prima facie observations contained in this Order are made on the basis of the material available on record

i.e. the complaint received by SEBI and information obtained from the 'MCA 21 Portal'. In this context, JRPIL

and its Directors may, within 21 days from the date of receipt of this Order, file their reply, if any, to this Order

and may also indicate whether they desire to avail themselves an opportunity of personal hearing on a date and time

to be fixed on a specific request made in that regard.

20. This Order is without prejudice to the right of SEBI to take any other action that may be initiated against

JRPIL and its abovementioned Directors, in accordance with law.”

2. Copies of the interim order were forwarded to the Company and above said directors vide

individual SEBI letters dated December 17, 2014. For the sake of convenience, the Company and its 12

directors named in the interim order are collectively referred to as “the noticees” and individually by their

respective names. Noticees, Mr. Gajendra Pal Singh and Mr. Virendra Kumar shall be read as Mr. Gajender Pal

Singh and Mr. Virender Kumar respectively. The above said SEBI letters were delivered on noticees- Ms.

Niladrai Chakraborty, Mr. SumantaGorai, Mr. Anjan Jana, Mr. Susanta Ghosh, Mr. Virender Kumar, Mr.

Gajender Pal Singh and Mr. Kanwal Prakash Singh. However, the SEBI letters had returned undelivered

with respect to the following persons:

Noticee Remark with date

Company Left – 19.12.2014

Sukanta Dutta, Swarup Dutta,

Sandip Dutta

Door locked Intimation Served. Deposit for 7 days. – 19.12.2014

Not claimed hence return to sender – 26.12.2014

NajibSekh, KousikBej Addressee moved/Left without (informing) address - 20.12.2014

SEBI had also placed the interim order on its website and also made a Press Release regarding the

interim order.

3. Mr. Virender Kumar filed his reply dated January 08, 2015 (received on January 27, 2015). Mr.

Kanwal Prakash Singh filed his undated reply received in SEBI on January 12, 2015. Mr. Gajender Pal

Singh also filed his reply dated January 06, 2015.

4. In view of the fact that majority of the SEBI letters forwarding the copy of the interim order had

returned undelivered, SEBI made a Public Notice (in newspapers) on April 14, 2015 in „Ananda Bazar

Patrika‟ and on April 15, 2015 in „Times of India‟informing the noticees that a final opportunity of personal

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hearing was afforded to them on April 22, 2015 and advised them that failure to appear on the said date

would result in SEBI proceeding ex-parte in the matter on the basis of material available on record.

5. In the personal hearing held on April 22, 2015 –

(a) Mr. Soubhik Chakraborty and Mr. JagatCharan Ghosh, Advocates, represented the Company,

Kanwal Prakash Singh, Sandip Dutta, SwarupDatta, Gajender Pal Singh, Sukanta Dutta

and Susanta Ghosh. The advocates represented that they were engaged on short notice and

requested time of around 4 weeks to submit reply/documents. The request was allowed.

(b) Noticee,Virender Kumar appeared along with his representative, Mr. Shyamal Kumar Biswas.

The noticee filed his reply dated April 22, 2015 and reiterated the submissions made therein.

(c) Noticees,NajibSekh, Niladri Chakraborty, SumantaGorai and Anjan Jana were represented

by Mr. Padmanava Biswas, Mr. Arindam Mukherjee, Mr. DebdasDatta and Mr. Sayontan

Chowdhury respectively. Written submissions were filed on behalf of these noticees. As the

advocates requested for the copy of the complaint referred to in the interim order, SEBI was

directed to furnish the same. Liberty was granted to them for filing their submissions if any, with

respect to the complaint within a period of 15 days.

(d) All the above noticees were directed to provide the correct and complete address to SEBI for

correspondence.

The personal hearing was concluded.

6. Submissions of the noticees:

Submissions of Mr. Virender Kumar(vide reply dated January 08, 2015 and April 22, 2015):

(a) He along with Mr. Swarup Dutta and some persons from West Bengal and some persons from

Delhi arrived at a consensus to setup a business.

(b) He handed over all signed documents and Rs.2,00,000/- at Delhi as his contribution to join as

Director cum Promoter at the time of incorporation of the Company.

(c) The Company was duly incorporated on December 16, 2009.

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(d) He does not have any past business exposure and do not have any knowledge about company

law. Being influenced and motivated by Mr. Swarup Dutta to set-up their own business, he joined

in the formation of the Company.

(e) Within a few weeks, the noticee understood that his decision was wrong as it was not feasible to

co-ordinate/run the business in West Bengal while staying in Delhi. The matter was discussed

with Mr. Swarup Dutta over telephone and wrote his resignation and also asked him to repay his

contribution of Rs.2 lakh.

(f) Mr. Swarup Dutta was not ready to repay the said amount but agreed to pay a sum of Rs.1 lakh.

Due to the noticee‟s financial requirement, he agreed to his terms and received Rs. 1 lakh in his

IDBI Bank Account. On demand for a fresh resignation letter, the noticee submitted his

resignation letter with date as March 29, 2012 and the same was filed with RoC.

(g) In his tenure as a director, the noticee tried to know about the Company and called Mr. Swarup

Dutta, who informed the noticee that the Company was not functioning. The noticee never

visited the Company‟s office.

(h) The noticee never received any notice of Board Meeting, AGM, EGM nor attended any meeting

either as a shareholder or director of the Company. He did not even receive the Annual Report

of the Company.

(i) The noticee was totally ignorant about the business activity of the Company and came to know

of the issue of RPS only through the SEBI letter and is totally ignorant about the same.

(j) The noticee did not sign in any document except the document for incorporation of the

Company at Delhi.

(k) The noticee submits that he was not a signatory in any Bank account nor consented to open any

bank account.

(l) The noticee requested SEBI to remove his name from the list of defaulters.

Submissions of SumantaGorai

(a) This noticee is a director in the Company. However, he was neither a founding director nor a full

time director.

(b) The Company was incorporated on December 16, 2009 with the following directors – Swarup

Dutta, Virender Kumar, NajmulHodaNajmi, Prashant Kumar Bhatt, Sandip Dutta, Gajender Pal

Singh, Kanwal Prakash Singh.

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(c) The noticee joined the Company as an agent in October 2010 and that during such time, Mr.

Swarup Dutta and Sandip Dutta made a representation to the noticee that if he invests Rs.10 lakh

in the Company, his investment would double in forty months and that he would be elevated to

the position of a director. Based on such representationand being convinced by Mr. Swarup

Dutta, the noticee approached his father, Mr. GurudasGorai, who invested Rs.10 lakh in the

Company. No receipt was given for such investment. However, an agreement was made on a

stamp paper which was subsequently notarized on July 16, 2011 at Bankura. Subsequently, on

May 05, 2012, Mr. Swarup Dutta appointed this noticee as a director in the Company with DIN-

02946871, without digital signature on monthly payment basis.

(d) The noticee was working in the Company and was given the work of issuing cheques (as

signatory) as per the instructions of Swarup Dutta and Sandip Dutta.

(e) Subsequently, Swarup Dutta defaulted in making repayment to the noticee‟s father and as

disputes arose, the noticee stopped working for the Company on September 02, 2013 and gave

his resignation to Swarup Dutta. Though the said resignation was accepted, he did not give any

receipt and did not update the same till now as gathered from the SEBI Order.

(f) The noticee was never aware about the affairs of the Company and was merely a „sleeping paid

director of the Company‟.

(g) Mr. Swarup Dutta and Sandip Dutta were „all in all‟ in the Company from its incorporation and

never revealed any information regarding the financial affairs, assets and properties of the

Company as well as mobilization of the funds of the Company. Therefore, the noticee is not able

to furnish information regarding the related queries of SEBI.

(h) During the tenure of directorship of the noticee, Mr. Swarup Dutta had taken signatures of the

noticee in many papers without furnishing copies of those papers.

(i) The noticee does not know of any legitimate and illegitimate fund raising activities of the

Company and has no knowledge whether any investors were defrauded. It is a fact that Mr.

Swarup Dutta/Company did not return a single rupee to the noticee‟s father and that in good

faith that the money would be returned, the noticee or his father did not file any case against

Swarup Dutta or the Company.

(j) The noticee tried several times to correspond with Swarup Dutta and his brother, Sandip Dutta.

Meanwhile, they had closed the office situated at Durgapur. They also failed to provide their

exact address to the noticee.

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(k) Given the above facts and circumstances, the noticee is not in a position as a director. However,

he is willing to abide by the directions whichever is applicable to him.

(l) The noticee is ready to co-operate/assist SEBI in future also if such assistance is required. In view of his submissions and the nature of his involvement with the Company, the noticee

requested SEBI to discharge him from liability and set-aside the interim order.

Submissions of Niladri Chakraborty:

(a) The noticee admitted that he was a director in the Company. He however contended that he was

neither the founding director nor a full time director.

(b) He had initially joined the Company as an agent on April 20, 2010. After a year of his joining,

Swarup Dutta and Sandip Dutta (who were the founding directors of the Company as per his

information) informed the noticee that there was a requirement of director in the Company and

the remuneration for the same was Rs.16,000/- per month. Subsequently, Swarup Dutta

appointed the noticee as a director with DIN-02946893, without any digital signature on monthly

payment basis.

(c) The noticee was given the work of issuing certificates on behalf of the Company as per

instructions of Swarup Dutta and Sandip Dutta.

(d) Though the noticee requested Swarup Dutta and Sandip Dutta to show him the details of the

Company‟s business, such details were not divulged. When the noticee had pressurized them to

share the details, they suggested him to resign from the position of director. Thereafter, the

noticee handed over his resignation to Swarup Dutta and since then the noticee had no relation

with the affairs of the Company.

(e) The noticee submitted that he was never aware of the affairs of the Company and that Swarup

Dutta and Sandip Dutta were in-charge of all affairs of the Company. They did not reveal any

information regarding the financial affairs, assets and properties of the Company. Therefore, the

noticee was unable to furnish information regarding the queries of SEBI.

(f) During his tenure as a director, Swarup Dutta used to take signatures of the noticee in many

documents without furnishing any copies.

(g) The noticee does not have any idea regarding the legitimate and illegitimate fund raising activities

of the Company and has no knowledge whether any of its investors were defrauded or not.

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(h) The noticee is ready to co-operate/assist SEBI in future also if such assistance is required. In view of his submissions and the nature of his involvement with the Company, the noticee

requested SEBI to discharge him from liability and set-aside the interim order.

Submissions of NajibSeikh

(a) This noticee made submissions similar to that of noticee, Niladri Chakraborty.

(b) The noticee was appointed as a director in the Company on March 29, 2012, having been

appointed by Swarup Dutta with DIN-05241253 without any digital signature, on monthly

payment basis.

(c) The noticee resigned during the middle of 2013 and that Swarup Dutta did not co-operate with

respect to processing the resignation as per rules and regulations under the Companies Act. The

noticee submitted his resignation letter to the RoC on April 18, 2014 (a copy was enclosed with

reply) which was duly received by the said authority.

(d) It is contention of the noticee that since middle of 2013, he has no relation with the affairs of the

Company.

Submissions of Anjan Jana: This noticee made submissions on the line of submissions made by

noticee, NajibSeikh. He submitted that he was appointed a director in the Company by Swarup Dutta on

April 05, 2012 with DIN-052474114. He also submitted that he resigned during the middle of 2013 and

since then has no connection with the Company.

Submissions of Gajender Pal Singh and Kanwal Prakash Singh:

The above noticees vide separate letters received in January 2015 inter alia made the following

submissions:

(a) Noticee,GajenderPal Singh was a friend of Virender Kumar. The said Virender Kumar

represented that he was a good friend of Swarup Dutta and that he would introduce them to

Swarup Dutta and that they can come together and open a Company and mobilize money from

investors and make them shareholders and on becoming shareholders, they would receive good

interest.

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(b) On stating that they do not know about the functioning of a company due to lack of

experience, Virender Kumar and Swarup Dutta assured the noticees (i.e. Gajender Pal Singh

and Kanwal Prakash Singh) that they knew how to run a company as they operate other

companies.

(c) Noticees were advised to pay Rs.5.5 lakh and become directors of the Company. The noticees

were assured by Virender Kumar and Swarup Dutta that like the noticees there were other

persons who were also investing in the Company.

(d) On demanding receipts for the Rs.11 lakh invested in cash by the noticees, Swarup Dutta and

Virender Kumar did not issue receipts stating that receipts are not required as the noticees have

become directors/shareholders in the company.

(e) Thereafter, the Company was incorporated during 2009-2010. CIN and PAN of the Company

was mentioned along with the registered office (at C-13, Tagore Park, Naskarhat, Kolkata-

700039).

(f) Swarup Dutta, Virender Kumar, NajmulHodaNajmi, Sandip Dutta, Prasun Kumar, Prashant

Kumar Bhat,Gajender Pal Singh, Kanwal Prakash Singhand Manish Kumr became directors in

the Company.

(g) Though Swarup Dutta represented that all directors would be consulted regarding business of

the Company, he did not do so. He had opened bank account and increased the share capital of

the Company without discussing the same with the other directors. These noticees became

aware of these details from the MCA-21 portal.

(h) Though the noticees tried contacting Swarup Dutta, there was no response. The letter dated

June 18, 2010 issued by the noticees to Swarup Dutta informing the lapses returned

undelivered as Swarup Dutta refused to accept.

(i) The noticees also came to know that other directors – NajmalHodaNajmi and Prashant Kumar

Dutta were also upset with the manner of functioning of Swarup Dutta and also wanted to

issue letters to Swarup Dutta informing that the company was being operated without their

consent. Therefore, the noticees added the names of Najmul Huda Najmi and Prashant Kumar

Bhatt and issued another letter dated June 22, 2010 (contents similar to previous letter dated

June 18, 2010) to Swarup Dutta. This letter too returned undelivered as refused by Swarup

Dutta.

(j) As information regarding the Company was not forthcoming, the noticees reached Kolkata and

resigned from their position as directors and asked Swarup Dutta to return their investment of

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Rs.11 lakh. While accepting resignation, Swarup Dutta took their signatures in a few pre-

printed forms, stamp papers and blank papers stating that the resignations would be accepted

after fulfilling the requirements. As regards their money, the noticees were told to contact

Virender Kumar. The noticees reached Delhi and were told by Virender Kumar that he did

not receive money from Swarup Dutta. Though they visited Kolkata again, they did not get

their money back.

(k) With respect to the SEBI letter dated December 17, 2014, the noticees submitted that Swarup

Dutta did not inform them regarding the activities carried out by the Company and that on

finding the activities of the Company were suspicious, the noticees had resigned.

(l) The noticees also contended that they have no relation with the Company as all information

and affairs were managed by Swarup Dutta and therefore SEBI should seek information only

from Swarup Dutta and Virender Kumar.

(m) The noticees also submitted that the present directors – Swarup Dutta, SumantaGorai,

Sushanta Ghosh, Sukanta Dutta, KousikBej, NajibSeikh and Anjan Jana were managing the

affairs of the Company and therefore may provide information.

(n) The noticees requested the refund of the sum of Rs.11 lakh by the Company and the matter

may be referred to the Station Officer of Shakarpur Police Station.

7. It is noted from records that noticees, namely, Company, Sandip Dutta, SwarupDatta,

Sukanta Dutta and Susanta Ghosh, did not file any submissions till date, though they were allowed to

submit their reply/documents in the personal hearing held on April 22, 2015. Though SEBI furnished

copies of the complaint to the Advocates for the noticees, Anjan Jana, NiladriCharaborty, NajibSeikh

and SumantaGorai, as per directions given in the personal hearing on April 22, 2015, they did not file any

additional submissions.

8. In view of the above, I proceed to consider the allegations levelled in the interim order against

the Company and other noticees in the light of the material available on record and submissions made by

them. The charge against the Company, as per the interim order, is that the Company made a public

issue of RPS and issued such securities to 3558 persons and raised an amount of Rs.11,42,63,000/-

during Financial Years (FY) 2010-2011, 2011-2012 and 2012-2013, without complying with the „public

issue‟ norms as mandated under section 56, 60 and 73 of the Companies Act, 1956 read with the

Companies Act, 2013.

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9. The interim order, on the basis of Form-2 (Return of Allotment) as available in the MCA-21

portal, has summarized the details of allotment of RPS made by the Company. Such details are

reproduced herein below:

2010-11 2011-12 2012-13

Date of allotment

Total amount (Rs.)

No of allottees

Date of allotment

Total amount (Rs.)

No of allottees

Date of allotment

Total amount No of allottees

29/05/2010 40,000.00 5 31/05/2011 3,78,900.00 31 10/04/2012 20,13,000.00 47

24/06/2010 54,000.00 6 28/06/2011 3,74,000.00 40 26/04/2012 4,12,500.00 43

31/07/2010 8,05,000.00 24 29/07/2011 2,87,500.00 32 30/04/2012 5,50,000.00 27

16/08/2010 2,40,000.00 4 02/09/2011 5,47,500.00 46 20/05/2012 52,91,000.00 47

31/08/2010 3,87,000.00 16 05/09/2011 47,000.00 47 26/05/2012 4,39,000.00 42

01/10/2010 8,72,000.00 23 12/09/2011 44,000.00 44 28/05/2012 8,07,900.00 48

31/10/2010 9,57,000.00 23 17/09/2011 5,17,100.00 44 29/05/2012 5,34,200.00 49

30/11/2010 15,85,000.00 29 24/09/2011 2,61,000.00 48 30/05/2012 3,75,000.00 28

31/12/2010 20,11,000.00 49 05/10/2011 48,06,000.00 47 20/06/2012 58,54,500.00 48

31/01/2011 10,53,000.00 48 25/11/2011 19,20,000.00 44 26/06/2012 13,80,300.00 46

26/02/2011 11,62,000.00 40 20/12/2011 29,64,000.00 43 27/06/2012 10,63,500.00 48

28/02/2011 1,87,700.00 20 26/12/2011 5,03,000.00 26 27/06/2012 10,63,500.00 48

28/03/2011 5,72,000.00 45 31/12/2011 2,77,500.00 31 28/06/2012 9,85,500.00 48

20/01/2012 13,80,500.00 35 29/06/2012 7,55,400.00 49

27/01/2012 4,95,500.00 38 30/06/2012 30,000.00 Not clear

31/01/2012 5,87,500.00 38 18/07/2012 39,49,000.00 48

21/02/2012 35,46,500.00 47 20/07/2012 10,67,000.00 48

24/02/2012 4,56,300.00 48 22/07/2012 9,20,800.00 48

27/02/2012 6,62,000.00 19 24/07/2012 47,22,000.00 Not clear

28/02/2012 6,12,000.00 37 26/07/2012 20,40,000.00 48

20/03/2012 2,54,500.00 10 26/07/2012 15,90,000.00 48

28/03/2012 4,82,100.00 45 28/07/2012 18,79,400.00 49

29/03/2012 7,52,200.00 47 16/08/2012 47,67,000.00 49

30/03/2012 7,52,200.00 47 17/08/2012 32,26,500.00 47

31/03/2012 4,13,000.00 45 18/08/2012 6,87,500.00 45

31/03/2012 27,62,200.00 45 20/08/2012 6,56,500.00 35

31/03/2012 27,62,200.00 45 22/08/2012 5,08,000.00 26

31/03/2012 27,62,200.00 45 29/09/2012 11,93,700.00 48

29/09/2012 7,68,700.00 47

29/09/2012 13,66,200.00 40

29/09/2012 4,16,000.00 18

29/09/2012 4,16,000.00 18

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08/10/2012 4,18,000.00 46

15/10/2012 7,73,800.00 44

22/10/2012 5,18,100.00 44

30/10/2012 15,41,500.00 41

30/10/2012 15,41,500.00 41

05/11/2012 4,55,000.00 44

12/11/2012 7,19,900.00 42

19/11/2012 5,54,000.00 44

22/11/2012 4,40,000.00 45

28/11/2012 1,64,800.00 25

30/11/2012 24,99,000.00 36

30/11/2012 24,99,000.00 36

15/12/2012 19,68,000.00 44

15/12/2012 19,68,000.00 44

17/12/2012 16,90,000.00 45

18/12/2012 6,82,200.00 46

24/12/2012 9,81,200.00 45

28/12/2012 4,47,300.00 24

12/01/2013 5,69,000.00 48

12/01/2013 5,69,000.00 48

99,25,700.00 332 3,16,08,400.00 1114 7,27,28,900.00 *2112

Grand Total 11,42,63,000.00 *3558

*Details in respect of certain allotments under the issue of RPSfor the Financial Year 2012–13, is not clear. The number

of allottees apparently amounts to at least 2112 on account of available information.

10. The interim order has observed that -

“10. …………….

Under the issue of RPS, it is observed that JRPIL issued and allotted RPS to more than 49 persons in each

of the financial year 2010-11, 2011-12 and 2012-13 in series of allotments and raised an amount of

Rs.11,42,63,000/-from 3558 persons during these three financial years. It is also pertinent to mention that

on many occasions more than one allotment was made on a single day. For instance, on 29/09/2012 there

were as many as five issues. Similarly, there were four issues on 31/03/2012 and two issues on six days,

viz. 27/06/2012, 26/07/2012, 30/10/2012, 30/11/2012, 15/12/2012 and 12/01/2013. The

frequency of allotments and the manner in which the allotments were made by JRPIL clearly indicate that

these multiple allotments were made only to circumvent the requirements of Section 67(3) of the Companies

Act, 1956. These facts, when viewed in light of failure on the part of JRPIL and its Directors to submit

relevant information to SEBI despite being given sufficient opportunities to do so, would prima facie indicate

that the issue of RPS was a public issue of securities under the first proviso to Section 67(3) of the Companies

Act, 1956, which has been elucidated by the Hon'ble Supreme Court of India in the Sahara Case.”

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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).”

From the reading of section 67 of the Companies Act, 1956, especially the sub-section 3 and the two

provisos thereafter, the following can be deduced:

a) an offer or invitation shall not be treated as made to the public if such offer or invitation can be

regarded in all circumstances as not being calculated to result, directly or indirectly, in the securities

becoming available for subscription or purchase by persons other than those receiving the offer or

invitation;

b) an offer or invitation shall not be treated as made to the public if such offer or invitation can be

regarded in all circumstances if the same is a domestic concern of the persons making and receiving the

offer or invitation; and

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c) an offer or invitation made to more than 49 persons is a public issue notwithstanding anything

contained in sub-section (3) of section 67;

d) Even if an offer is made to 49 persons or less, the company, to state that it made a private

placement, has to prove that its case falls either under clause (a) or (b) of section 67(3).

e) NBFCs or PFIs are exempted only from the first proviso to section 67(3). Therefore, NBFC or

PFI do not have any restriction on the number of allottees as imposed on a company which is not an

NBFC or PFI. However, such companies also need to prove that its offer falls either under clause (a) or

(b) of section 67(3) to claim such issuance to be a private placement.

12. In the present case, the Company had, in pursuance of its offer and issuance of securities and

mobilization of money, made a series of allotments on a regular basis during the three financial years –

2010-2011, 2011-2012 and 2012-2013 to atleast3,558 persons and had mobilized a total of Rs.11.43 crore.

Considering the series of allotments that too made within a very short span between two consecutive

allotments, the number of allottes were either equal to or less than 49, it can be concluded that the

Company had devised a ploy or artifice to circumvent the first proviso to section 67(3) of the Companies

Act, 1956. The Company has not contested the allegations and observations made in the interim order. I

also note that such ploy or colourable scheme have always been disregarded by the Hon'ble Courts made

for evading 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 &Anrdecided 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 RatilalMaganbhai [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.

13. It is also noted that the details regarding the number of allottes with respect to the allotments

made on June 30, 2012 and July 24, 2012 is not available with SEBI. The Company/or its directors have

not provided details of the same. Therefore, the number of allottes in the offer and issue of RPS during

2012-2013 would atleastbe 2112 persons, as indicated in the interim order.

14. 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 an artifice to make multiple allotments in

order to stay out of the regulatory purview and evade the liability of complying with the public issue

norms as alleged in the interim order. Therefore, I hereby conclude that the Company made a “public

issue” of RPS during the aforesaid financial years, in terms of section 67(3) of the Companies Act, 1956.

15. 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. …".

Therefore, by virtue of section 55A(a) and (b) of the Companies Act, 1956 and section 11A of the SEBI

Act, SEBI has jurisdiction on the public issue of RPS made by the Company.

16. 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 read with the Companies Act, 2013, 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/

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issuing the 'prospectus'. As there is no document on record to suggest that the Company has filed a

Prospectus and mentioned the particulars as required under law, the Company has violated the

provisions of sections 56 and 60 of the Companies Act, 1956.

17. 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. In this regard, I observe the following:

(a) By making a public issue of RPS, as discussed above, the Company had to compulsorily list

such securities in compliance with section 73(1) of the Companies Act, 1956. A Company

making a public issue of securities cannot chose whether to list its securities or not as listing

is a mandatory requirement under law. 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 recognized stock exchange to enable

the RPS to be dealt with in such exchange. Therefore, the Company has failed to comply

with this requirement.

(b) 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 is liable to repay with interest at such rate. Considering that the

mobilization was done during FY 2010 till 2013, it would be appropriate to levy an interest

@ 15% p.a. 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

continuing and such liability would continue till repayments are made.

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(c) The Company has also not complied with the provisions of section 73(3) as it has not kept

the amounts received from investors in a separate bank account and failed to repay the same

in accordance with section 73(2) as observed above.

(d) The Hon'ble Supreme Court of India in the Sahara case has examined section 73 and made

the following observations:

"Section 73(1) of the Act casts an obligation on every company intending to offer shares or debentures to the

public to apply on a stock exchange for listing of its securities. Such companies have no option or choice but to

list their securities on a recognized stock exchange, once they invite subscription from over forty nine investors

from the public. If an unlisted company expresses its intention, by conduct or otherwise, to offer its securities to

the public by the issue of a prospectus, the legal obligation to make an application on a recognized stock

exchange for listing starts. Sub-section (1A) of Section 73 gives indication of what are the particulars to be

stated in such a prospectus. The consequences of not applying for the permission under sub-section (1) of

Section 73 or not granting of permission is clearly stipulated in sub-section (3) of Section 73. Obligation to

refund the amount collected from the public with interest is also mandatory as per Section 73(2) of the Act.

Listing is, therefore, a legal responsibility of the company which offers securities to the public, provided offers

are made to more than 50 persons."

(e) Accordingly, it is concluded that the Company failed to comply with section 73 of the

Companies Act, 1956 in respect of its offer and issuance of RPS as discussed in this Order.

18. Liability of directors:

(a) The interim order was issued to the following persons stated to be the Company's directors and

former directors along with the period of their directorship (as per the information obtained from RoC,

Kolkata) in the Company:

S. No.

Name

Period of directorship

From To

1. Swarup Dutta 16.12.2009 Still continues

2. Kanwal Prakash Singh 16.12.2009 29.07.2011

3. Gajender Pal Singh 16.12.2009 29.07.2011

4. Sandip Dutta 16.12.2009 15.03.2012

5. Virender Kumar 16.12.2009 29.03.2012

6. SumantaGorai 06.04.2010 Still continues

7. Susanta Ghosh 03.10.2012 Still continues

8. Sukanta Dutta 29.03.2012 Still continues

9. KoushikBej 29.03.2012 Still continues

10. NajibSeikh 29.03.2012 Still continues

11. Anjan Jana 05.04.2012 Still continues

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12. Niladri Chakraborty 06.04.2010 15.03.2012

(b) The impugned offer and allotment of RPS was made from FY 2010-2011 to 2012-2013. As per

the interim order, the date of first allotment was on May 29, 2010 and the date of the last

allotment was on January 12, 2013. It is also noted that the Company was incorporated on

December 16, 2009.

(c) The Company has contravened sections 56, 60 and 73 of the Companies Act, 1956 read with the

Companies Act, 2013 with respect to its public offer and issuance of RPS during the aforesaid

financial years.

(d) Section 56(1) and 56(3) read with section 56(4) imposes the liability for the compliance of the

said provisions, on the company, every director, and other persons responsible for the issuance

of the prospectus. The liability for non-compliance of section 60 of the Companies Act is on the

Company, and every person who is a party to the non-compliance of issuing the prospectus as

per the said section.

(e) The liability of the company and directors to repay under section 73(2) of the Companies Act,

1956 and section 27 of the SEBI Act, is a continuing liability and the same continues till all the

repayments are made. Therefore, the directors (irrespective of whether they continue or resign) who were

present during the period when the Company made the offer and allotted RPS shall be liable for

violation of sections 56, 60 and 73 of the Companies Act, including the default in making refunds

as mandated therein. As the liability to make repayments under sections 73(2) of the Companies

Act read with section 27 of the SEBI Act is a continuing liability,the persons who join the

Company‟s Board pursuant to the offer and allotment of RPS shall also be liable if the Company

and the concerned directors have failed to make refunds as mandated under law.

(f) Therefore,in terms of section 73(2) of the Companies Act and section 27 of the SEBI Act, a

director (irrespective of whether he continues or not)who was in the Company‟s Board, when the

impugned offer and issue of RPS by the Company during FY 2010-2011 to 2012-2013, as well as

directors who joined the Board of Directors of the Company subsequent to such issue of

securities are liable to make the repayments and would continue to be liable for the same till such

time the liability (to make refunds) is discharged by them.

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(g) Noticees, Virender Kumar, SumantaGorai, Niladri Chakraborty, NajibSeikh, Anjan Jana,

Gajender Pal Singh and Kanwal Prakash Singh have contended that they never managed the

affairs of the Company. However, having assumed position as directors of the Company during

the relevant period, they are under legal mandate to comply with the applicable law. They cannot

claim ignorance and the manner in which the Company was operated and the mobilization of

public funds by it. They have stated that it was Swarup Dutta who was in-charge of the affairs of

the Company and responsible for the same. However, it appears that they have not taken action

against the said person/s for mis-management and misrepresentation.

(h) I also note that Virender Kumar, Gajender Pal Singh, Kanwal Prakash Singh, Sandip Dutta

and Swarup Dutta were the directors of the Company from the date of its incorporation.

(i) SumantaGorai has contended that he was appointed as a director on May 05, 2012 and resigned

during September 2013. However, as per the information contained in „Register of Directors,

Managing Director, Manager and Secretary, etc.‟ as obtained from RoC, Kolkata, this noticee was

originally appointed on April 06, 2010 and appointed in the present designation (director) on May

05, 2012. This noticee also continues as a director in the Company.

(j) NajibSeikh has contended that he resigned during the middle of year 2013and as Swarup Dutta

did not co-operate with him for processing the same, he sent his resignation letter to the RoC on

April 18, 2014. A copy of the letter was enclosed. I have perused this letter. A seal of the ROC

was found affixed on the reverse of the first page with date – April 21, 2014. However, as noted

from the MCA documents {as mentioned in the sub-para (a) above}, this noticee still continues

as a director. If he is aggrieved, he may make his representation before the concerned authorities.

(k) As per the information contained in „Register of Directors, Managing Director, Manager and

Secretary, etc‟, obtained from RoC, Kolkata, Anjan Janawas originally appointed on April 05,

2012 as a director and continues till date. Accordingly, the contention of this noticee that he

resigned during the middle of 2013 and has no connection with the Company since then, is not

tenable.However, if he is aggrieved, he may make his representation before the concerned

authorities.

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(l) As regards Gajender Pal Singh and Kanwal Prakash Singh, it is their contention that though

they along with Virender Singh and Swarup Dutta promoted the Company, they were not

consulted with respect to any of the functioning of the Company. They also contend that they

have sent two representations June 18 & 22, 2010 to Swarup Dutta regarding the unilateral

decision taken to open Company‟s bank account, increase share capital from rupees one crore to

three crore without AGMand change in the registered office address. However, except for such

representations which have admittedly returned undelivered due to the refusal of Swarup Dutta,

they seem to have not initiated any action. This conduct of not taking action even when their

claimed investment of Rs.11 lakh was not returned, does not allow me to take credence of their

submissions. It is also noted that Virender Kumar and SumantaGorai have also claimed to have

invested Rs.2 lakh and Rs.10 lakh respectively and have not initiated action for default in

returning the same and the alleged misrepresentation.

(m) These directors seem to have not taken action against Swarup Dutta/Company even after the

receipt of the SEBI Order. Therefore, such conduct leads one to conclude on a possible

collusion at their end with the Company/the others concerned.

(n) Considering the above observations, all the aforesaid persons (past as well as present directors and

made noticees in the interim order) are liable for the non-compliance by the Company of the

provisions of the Companies Act, 1956, as discussed in this Order, including the default in

making refunds to the investors under section 73(2) of the Companies Actread with section 27 of

the SEBI Act.

19. For the above reasons, 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, Just-Reliable Projects India Limited (CINU45400WB2009PLC140276;

PAN-AACCJ2827P) and its Directors, namely, Mr. Swarup Dutta (DIN-02498000; PAN-

AGWPD2748J), Mr. SumantaGorai (DIN-02946871;PAN-AGMPG1547N), Mr. Susanta

Ghosh (DIN-05185974;PAN-AEXPG6206P), Mr. Sukanta Dutta (DIN-05235908; PAN-

AKEPD8763F), Mr. KoushikBej (DIN-05236482;PAN-APSPB6232N), Mr. NajibSeikh

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(DIN-05241253;PAN-AYLPS8955R), Mr. Anjan Jana (DIN-05247414;PAN-AHRPJ8186A),

Mr. Kanwal Prakash Singh (DIN-02869631; PAN-BVPPS9888H), Mr. Gajender Pal Singh

(DIN-02869599; PAN-BESPS7926C), Mr. Sandip Dutta (DIN-02647739; PAN-

AFVPD8603A), Mr. Virender Kumar (DIN-02487133; PAN-AJUPK8288M) and Mr.

Niladri Chakraborty (DIN-02946893; PAN-AEZPC3674D), 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 issued in contravention of the public issue norms stipulated

under the Companies Act, 1956), 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) The repayments to investors shall be effected only in cash through Bank Demand Draft or Pay

Order.

(c) The Company/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, itsdirectorsand other persons named above, shall issue public notice, in all

editions of two NationalDailies (one English and one Hindi) and in one local daily (in Bengali)

with wide circulation, detailing themodalities for refund, including details of contact persons

including names,addresses and contact details, within fifteen days of this Order coming

intoeffect.

(e) After completing the aforesaid repayments, the Companyshall file acertificate of such

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

independent peer reviewedChartered Accountants who are in the panel of any public authority or

publicinstitution. For the purpose of this Order, a peer reviewed Chartered Accountantshall

mean a Chartered Accountant, who has been categorized so by the Institute ofChartered

Accountants of India ("ICAI").

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(f) The Company, its directors and former directors 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, Just-Reliable Projects India Limited and its directors

(including former directors), namely, Mr. Swarup Dutta, Mr. SumantaGorai, Mr. Susanta

Ghosh, Mr. Sukanta Dutta, Mr. KoushikBej, Mr. NajibSeikh, Mr. Anjan Jana, Mr. Kanwal

Prakash Singh, Mr. Gajender Pal Singh, Mr. Sandip Dutta, Mr. Virender Kumar and Mr.

Niladri Chakraborty, in complying with the aforesaid directions, SEBI, on the expiry of the

three months period from the date of this order, -

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

d) would also make a reference to the Ministry of Corporate Affairs, to initiate the process

of winding up of the Company.

(h) Just-Reliable 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 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.

(i) The directors including former directors, namely,Mr. Swarup Dutta (DIN-02498000; PAN-

AGWPD2748J), Mr. SumantaGorai (DIN-02946871;PAN-AGMPG1547N), Mr. Susanta

Ghosh (DIN-05185974;PAN-AEXPG6206P), Mr. Sukanta Dutta (DIN-05235908; PAN-

AKEPD8763F), Mr. KoushikBej (DIN-05236482;PAN-APSPB6232N), Mr. NajibSeikh

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(DIN-05241253;PAN-AYLPS8955R), Mr. Anjan Jana (DIN-05247414;PAN-AHRPJ8186A),

Mr. Kanwal Prakash Singh (DIN-02869631; PAN-BVPPS9888H), Mr. Gajender Pal Singh

(DIN-02869599; PAN-BESPS7926C),Mr. Sandip Dutta (DIN-02647739; PAN-

AFVPD8603A), Mr. Virender Kumar (DIN-02487133; PAN-AJUPK8288M) and Mr.

Niladri Chakraborty (DIN-02946893; PAN-AEZPC3674D),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 issuing prospectus, offer document or advertisement soliciting money from the

public and 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 yearsfrom the date of completion of refunds to investors, as

directed above.

(j) The above directions shall come into force with immediate effect.

20. 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 including former directors and other key persons.

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

information and necessary action.

22. 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:October 13th, 2015 Place: Mumbai

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