PRASHANT SARAN, WHOLE TIME MEMBER ORDER - SEBI

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WTM/PS/35/IMD/ERO-RLO/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 respect of –

1. Bishal Abasan India Limited (PAN: AADCB4465A),

its Directors, viz.

2. Mr. Madhab Chandra Purkait (PAN: AKZPP8185C; DIN: 07004248),

3. Mr. Gautam Kumar Halder (PAN: ADPPH2520Q; DIN: 07004250),

4. Mr. Mohd Kalimullah Baidya (PAN: ASPPB9723J; DIN: 07004251),

5. Mr. Tushar Kanti Nandi(PAN: ACTPN4128K; DIN: 07109702),

6. Mr. Santosh Kumar Paul (PAN: AMBPP4567C; DIN: 07109838),

7. Mr. Swapan Kumar Bose(PAN: AEEPB0756L; DIN: 07109850),

8. Mr. Ram Kumar Sinha (PAN: APYPS1402F; DIN: 02460975),

9. Mr. Himadri Bag (PAN: AJXPB3796L; DIN: 02729318),

10. Mr. Sachin Kumar Thakur (PAN: AJUPT3341C; DIN: 06560350),

11. Mr. Kuntal Bhattacharjee (PAN: AQMPB2700Q; DIN: 06584522),

12. Mr. Benukar Banerjee (PAN: BRMPB8677A; DIN: 06701788),

13. Mr. Chandan Shah (PAN: AVNPS3170R; DIN: 02093399),

14. Mr. Ratan Chowdhury (PAN: ADIPC9989M; DIN: 00360241) and

15. Smt. Shima Chowdhury (PAN: ADIPC9990N; DIN: 00360423)

and its Debenture Trustee, viz.

16. Bishal Abasan Debenture Trust (represented by its Trustee, viz. Mr. Tapas Das).

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Date of personal hearing: September 03, 2015

Appearance:

(a) Mr. Aniruddha Dasgupta, Advocate appeared for Chandan Shah.

(b) Benukar Banerjee appeared in-person.

(c) Tushar Kanti Nandi and Mohd. Kalimullah Baidya appeared through their Advocate Mr.

Kamal Das.

(d) Mr. Sumantra Sarathi Mahata appeared for Sachin Kumar Thakur and Himadri Bag.

For SEBI: Mr. Prasanta Mahapatra, General Manager, Mr. N. Murugan, Assistant General

Manager, Mr. T. Vinay Rajneesh, Assistant General Manager, Mr. Mohammad Shahid, Assistant

Manager and Ms. Nikki Agarwal, Assistant Manager.

Date of personal hearing: November 23, 2015

Appearance: Mr. Kamal Das, Advocate appeared on behalf of Madhab Chandra Purkait, Tushar

Kanti Nandi, Swapan Kumar Bose, Santosh Kumar Paul, Gautam Kumar Halder and

Mohd. Kalimullah Baidya.

For SEBI: Mr. Prasanta Mahapatra, General Manager, Mr. T. Vinay Rajneesh, Assistant General

Manager, Mr. Rajeev Kumar, Assistant General Manager and Ms. Nikki Agarwal, Assistant

Manager.

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

parte interim Order dated May 06, 2015 (hereinafter referred to as "the interim order") had

observed that the company, Bishal Abasan India Limited (hereinafter referred to as "BAIL" or

"the Company") was prima facie engaged in fund mobilizing activity from the public through its

offer and issue of Redeemable Preference Shares (hereinafter referred to as "RPSs") and Non-

Convertible Debentures (NCDs) and had allegedly violated the provisions of sections 56, 60 read

with section 2(36), 73, 117B and 117C of the Companies Act, 1956 read with the Companies Act,

2013 and the SEBI (Issue and Listing of Debt Securities) Regulations, 2008 (“ILDS

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Regulations”). The interim order also alleged that the debenture trustee, Bishal Abasan

Debenture Trust, represented by its trustee, Mr. Tapas Das, had allegedly failed to meet the

eligibility conditions specified under regulation 7 of the SEBI (Debenture Trustees) Regulations,

1993 ("DT Regulations") and acted as an unregistered debenture trustee in violation of section

12(1) of the Securities and Exchange Board of India Act, 1992 (“SEBI Act”).

2. In order to protect the investors who have subscribed to the 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:

i. “BAIL (PAN: AADCB4465A) shall not mobilize funds from investors through the Offer of

Redeemable Preference Shares and Offer of NCDs or through the issuance of equity shares or any other

securities, to the public and/or invite subscription, in any manner whatsoever, either directly or indirectly

till further directions;

ii. BAIL and its present Directors, viz. Shri Madhab Chandra Purkait (PAN: AKZPP8185C;

DIN: 07004248), Shri Gautam Kumar Halder (PAN: ADPPH2520Q; DIN: 07004250),

Shri MohdKalimullahBaidya (PAN: ASPPB9723J; DIN: 07004251), Shri Tushar Kanti

Nandi (PAN: ACTPN4128K; DIN: 07109702), Shri Santosh Kumar Paul (PAN:

AMBPP4567C; DIN: 07109838), and Shri Swapan Kumar Bose (PAN: AEEPB0756L;

DIN: 07109850), 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. The past Directors of BAIL, viz. Shri Ram Kumar Sinha (PAN: APYPS1402F; DIN:

02460975), Shri Himadri Bag (PAN: AJXPB3796L; DIN: 02729318), Shri Sachin Kumar

Thakur (PAN: AJUPT3341C; DIN: 06560350), Shri KuntalBhattacharjee (PAN:

AQMPB2700Q; DIN: 06584522), Shri Benukar Banerjee (PAN: BRMPB8677A; DIN:

06701788), Shri Chandan Shah (PAN: AVNPS3170R; DIN: 02093399), Shri Ratan

Chowdhury (PAN: ADIPC9989M; DIN: 00360241) and Smt. Shima Chowdhury (PAN:

ADIPC9990N; DIN: 00360423), are prohibited from issuing prospectus or any offer document or

issue advertisement for soliciting money from the public for the issue of securities, in any manner

whatsoever, either directly or indirectly, till further orders;

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iv. BAIL and its abovementioned past and present 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;

v. BAIL shall provide a full inventory of all its assets and properties;

vi. BAIL's abovementioned past and present Directors shall provide a full inventory of all their assets

and properties;

vii. BAIL 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 company through the Offer of Redeemable

Preference Shares and Offer of NCDs, without prior permission from SEBI;

viii. BAIL 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 BAIL;

ix. BAIL and its abovementioned past and present Directors shall furnish complete and relevant

information (as sought by SEBI letter dated October 9, 2014), within 14 days from the date of receipt

of this Order;

x. The Debenture Trustee, viz. BishalAbasan Debenture Trust (represented by its Trustee, viz. Shri

Tapas Das), is prohibited from continuing with its assignment as debenture trustee in respect of the

Offer of NCDs of BAIL and also from taking up any new assignment or involvement in any new

issue of debentures, etc. in a similar capacity, from the date of this order till further directions.”

3. The interim order was passed on the basis of the information available from the complaint

and MCA-21 portal. The interim order advised the Company and its past and present directors,

namely, Mr. Madhab Chandra Purkait, Mr. Gautam Kumar Halder, Mr. Mohd Kalimullah Baidya,

Mr. Tushar Kanti Nandi, Mr. Santosh Kumar Paul, Mr. Swapan Kumar Bose, Mr. Ram Kumar

Sinha, Mr. Himadri Bag, Mr. Sachin Kumar Thakur, Mr. Kuntal Bhattacharjee, Mr. Benukar

Banerjee, Mr. Chandan Shah, Mr. Ratan Chowdhury and Smt. Shima Chowdhury (the company and

aforesaid directors are collectively referred to as “noticees”) to show cause as to why suitable

directions/prohibitions under sections 11(1), 11(4), 11A and 11B of the SEBI Act, 1992 including

the following, should not be passed against them:

i. Directing them jointly and severally to refund money collected through the offer of

RPS and NCDs alongwith interest, if any, promised to investors therein;

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ii. Directing them to not issue 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, for an appropriate period;

iii. Directing them to refrain from accessing the securities market and prohibiting them

from buying, selling or otherwise dealing in securities for an appropriate period.

The interim order had also advised the noticees to file their replies and also seek opportunity of

personal hearing, if they desire.

4. The interim order was forwarded to the noticees vide SEBI letters dated May 08, 2015.

Interim order was delivered on Mohd Kalimullah Baidya, Tushar Kanti Nandi, Santosh Kumar

Paul, Ram Kumar Sinha, Benukar Banerjee, Chandan Shah and Tapas Das. However, interim order

sent to BAIL, Madhab Chandra Purkait, Gautam Kumar Halder, Swapan Kumar Bose, Himadri

Bag, Sachin Kumar Thakur, Kuntal Bhattacharjee, Ratan Chowdhury, Smt. Shima Chowdhury and

Bishal Abasan Debenture Trust were returned undelivered.

5. In response, Mr. Chandan Shah, vide his letter dated May 28, 2015, while acknowledging

the receipt of interim order submitted the following:

(a) He was appointed as a director in the Company during June 2013 whereas the impugned

offer and issue of RPS were made by the Company during FY 2011-12 i.e. the period when

he was not connected with the said company.

(b) The noticee submitted that he joined the Company to look after its business on agreed

professional terms with the promoter director Mr. Ratan Chowdhury and had resigned

within 6 months of assuming the position.

(c) He further submitted that he is not a custodian of any documents of the Company and had

not attended any board meeting during the period and was also not involved in the day to

day affairs of the Company.

(d) With respect to the issuance of NCDs during FY 2012-2013 was concerned, the noticee

submitted that he was not present in the Company during such period and was not aware

of the issuance of NCDs during FY 2013-14.

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(e) He requested SEBI to absolve him from the charges and to set-aside the interim order.

6. Mr. Ram Kumar Sinha, vide his letter (received in SEBI on July 06, 2015), while

acknowledging the receipt of the interim order had stated that –

(a) He did not receive the earlier letter of SEBI and was therefore not able to reply to the same.

(b) As per the interim order, several documents were required by SEBI and that he is not in a

position to send the copies as he could not gather them. He further submitted that after

his resignation from the Company, he has no relation with them.

(c) He was working part-time for the Company. During June 2014, he along with Himadri Bag

and Sachin Kumar Thakur came to know that they were made additional directors without

prior information or salary.

(d) Thereafter, within three months, he had resigned from the Company.

(e) He enclosed copy of a purported agreement dated October 27, 2014 between the Bishal

group of companies (12 companies), represented by Himadri Bag and Bishal Group

Welfare Trust (transferee) represented by Madhab Purkait, Gautam Kumar Halder and Md.

Kalimullah Baidya, whereby the share capital, assets and liabilities of the companies would

be taken over by the transferee. According to the noticee, the aforesaid document was the

only document available with him.

(f) The noticee submitted that he remained (as a director) only for a short span of three months

and no debenture/share or any kind of paper was issued under his signature.

(g) The noticee assured to co-operate with SEBI.

7. The other noticees did not file any reply. In accordance with the principles of natural justice,

the noticees were afforded an opportunity of personal hearing on September 03, 2015. The

schedule of the personal hearing was informed to the noticees vide SEBI’s letter dated August 10,

2015. As many of the noticees did not file their replies and considering that they may not have

received the interim orders, SEBI made a public notice in newspapers (in Times of India and

Hindustan both dated August 31, 2015) regarding the proceedings pursuant to the interim order

passed in the matter and the schedule of personal hearing. In response to the hearing notice,

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Benukar Banerjee, Himadri Bag and Sachin Kumar Thakur informed that they would be present

in the personal hearing.

8. In the personal hearing held on September 03, 2015 –

(a) Benukar Banerjee appeared in person and submitted written submissions dated

September 03, 2015 and made oral submissions on the lines of such written submissions.

The following were the submissions made in the written submissions:

i. He is a legal practitioner by profession.

ii. In the course of his practice, he was acquainted with Mr. Ratan Chowdhury

who was in need of an advocate having knowledge and experience in

investigation of marketable title of immovable properties, to prepare and

register conveyance deed for purchase and sale of properties on behalf of

companies of which he was the managing director. The noticee assured him

that he has the necessary knowledge and experience.

iii. Thereafter, he was entrusted the job related to purchase of premises.

iv. Apart from doing the said job, the noticee was to take up various other

matters namely investigation of title, preparation of sale deeds and various

other civil matters.

v. The noticee was called to the office of the company as and when his

services were required.

vi. The noticee was paid for his services against his bills.

vii. Considering the volume of work, Ratan Chowdhury requested the noticee

to attend office of the Company atleast for 2 hours every day for which a

letter to that effect was issued.

viii. Sometime in the month of January 2014, Ratan Chowdhury told the noticee

that for smooth running of the business, he intended to appoint the noticee

as a director in BAIL and Bishal Distillers Limited (another group

company) with effect from February 05, 2014. A letter dated February 07,

2014 was given as ‘provisional appointment letter’. He was informed that a

formal letter would be issued soon. However, such letter was never issued.

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ix. The noticee had tendered his resignation dated June 10, 2014 expressing

his inability to act as the director of the Company with immediate effect.

The resignation letter was accepted and duly acted upon with effect from

June 10, 2014.

x. The noticee did not have any opportunity or occasion to act as the director

of the Company and did not have any personal knowledge about the

dealings/activities of the Company.

The noticee had enclosed copies of his identity card, bills for his services,

provisional appointment letter and resignation letter and acceptance of the

resignation issued by the Company.

(b) Mr. Kamal Das, Advocate represented Tushar Kanti Nandi and Mohd. Kalimullah

Baidya and requested for adjournment. The request was not allowed. On request of the

counsel, time of two weeks was granted for filing written submissions.

(c) Mr. Sumantra Sarathi Mahata, Practising Company Secretary, appeared for Sachin Kumar

Thakur and Himadri Bag and sought time of two weeks for filing submissions. The

request was allowed.

(d) Mr. AniruddhaDasgupta, Advocate appeared on behalf of Chandan Shah and submitted

that his client had already submitted his resignation to the company and that the board

resolution accepting the resignation was available. On request, time was granted for filing

written submissions.

9. Thereafter, vide letter dated September 08, 2015, Sachin Kumar Thakur inter alia made

the following submissions:

(a) The Company was incorporated on May 01, 2008.

(b) The Company registered its trust deed on January 21, 2012 signed by Ratan Chowdhury,

Shima Chowdhury and Priti Rani Chowdhury. It had permission to raise Rs.50 crore by

issuing NCDs.

(c) The Company had raised money from public by issuing NCDs.

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(d) After the Sahara dispute, it was clear that fund raising was illegal if not done through proper

compliance.

(e) After the Saradha incident, operations of companies who were mobilizing money from

public had stopped.

(f) In order to save themselves, the promoter directors who have siphoned off the funds have

resigned from the Company and appointed new people like this noticee who do not have

the basic knowledge of the rules.

(g) The noticee was an unemployed youth taken as a employee of the Company and were made

directors.

(h) Though he was promised remuneration by the Company, he was not paid. On advice from

a professional, he had resigned from all the companies in which he became a director.

(i) He is not a promoter director or a shareholder in the Company.

(j) He did not sign any papers of the Company.

(k) He did not receive any remuneration from the Company.

(l) He did not conduct meetings for raising funds from the public.

(m) He was a director from June 10, 2014 to October 24, 2014, i.e. for only 137 days. He has

worked as a mere employee.

(n) No proper board meetings were held in the Company. He does not know how much money

was mobilized by the Company.

(o) The promoters have not provided him annual accounts, balance sheet and other papers.

(p) The noticee requested that he may be discharged from the proceedings.

He had enclosed a document from the MCA supporting his tenure as a director in the

Company.

Noticee, Himadri Bag, vide his letter dated September 08, 2015 also made submissions as

that of Sachin Thakur.

10. Thereafter, vide letter dated September 11, 2015, the following documents were submitted

on behalf of Chandan Shah:

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(a) Form No. DIR-11 (notice of resignation of a director to the Registrar) – this document

mentions that Chandan Shah was appointed on December 19, 2012 as ‘Managing Director’

in ‘Professional’ category and filed his resignation with the Company on June 10, 2014.

(b) Resignation letter dated December 10, 2013 of the noticee.

11. Written submissions dated September 21, 2015 were filed by Tushar Kanti Nandi through

Advocate Mr. Kamal Das for himself and also on behalf of Madhab Chandra Purkait, Gautam

Kumar Halder, Mohd. Kalimullah Baidya, Santosh Kumar Paul and Swapan Kumar Bose, wherein

the following submissions were filed:

(a) Tushar Kanti Nandi was authorized by the other noticees to file the present written

submissions.

(b) No further collection of money from the market or depositors were made after October

10, 2014 by any means including issuance of preference shares/debentures.

(c) Only one property in Coochbehar was sold by Madhab Chandra Purkait (managing

director) with the consent of other directors and the proceeds were distributed to the

investors of the Company.

(d) In the year 2005, Ratan Chowdhury, his wife Shima Chowdhury, his mother Priti

Chowdhury along with Prabir Chowdhury, Ashima Chowdhury, Sumanta Modak and

Mithun Chakraborty being the promoters incorporated Bishal Horticulture and Animal

Projects Limited.

(e) Tushar Kanti Nandi, Santosh Kumar Paul and Swapan Kumar Bose with others joined the

Company as agents in the year 2005. Except Tushar Kanti Nandi, all others had previous

relationship with Ratan Chowdhury.

(f) Ratan Chowdhury was the CMD of the Company and under his instructions and planning,

the Company flourished in business.

(g) The present directors Gautam Kumar Halder and Mohd. Kalimullah Baidya were

appointed as agents.

(h) The agents used to abide by the instructions of the management and did not have any say

in the business.

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(i) The Company started to collect money from the market by issuing preference shares,

debentures, ponzi schemes and loans. The Company’s management especially Mr. Ratan

Chowdhury represented that the Company was doing legal business and the noticees never

thought that the collection of money from the market was illegal or unauthorized.

(j) The CMD started new businesses and incorporated various new companies namely Bishal

Distillers Limited, Bishal Agri-Bio Industries Limited, Bishal Abasan India Limited. All

these companies constituted ‘Bishal group of companies’ and purchased a lot of properties.

(k) Being allured, the agents started working with full energy and tried their level best to

accumulate huge capital to fulfill the dreams of the Company.

(l) The Company had website and issued advertisements in popular newspapers, TV channels

regarding its products. Ratan Chowdhury received prizes from various authorities.

(m) Ratan Chowdhury was all in all of the Company and the same would be clear from the

advertisements and brochures. All the companies were incorporated by him and his family

members.

(n) The maturity process of the Company including payments were going on very smoothly till

the ‘Sarada scam’ and the arrest of the directors of Sarada in April 2013. From September

2013, the Company stopped the payments.

(o) The agents met Ratan Chowdhury who assured that the situation was under control and

the Company had sufficient funds. Gautam Kumar Halder and Mohd. Kalimullah Baidya

also met Ratan Chowdhury who stated that due to a special enquiry, payments were stopped

for a few days.

(p) In February 2014, all payments on maturity were stopped. During the period, it was

announced that Kuntal Bhattacharya and Sumanta Modak would be added as directors and

that Ratan Chowdhury would remain as Chairman and Litan Saha would be the marketing

manager. However, it was not informed that Ratan Chowdhury would be leaving the

Company and G. R. Agro Projects Limited would take charge of the Bishal group

companies. Ratan Chowdhury announced that he would clear all dues within March 31,

2014.

(q) It published in the newspapers that G.R. Agro Projects Limited would take charge of the

Bishal group of companies. One official of G.R. group namely Raju Ghosh affirmed that

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GR group would arrange for the total payments of the Bishal group. In this regard, a

document was also shown by Kuntal Bhattarcharya and other directors. The previous

directors resigned and new directors namely Himadri Bag, Ram Kumar Sinha, Sachin

Thakur, Sekhar Koley, Susant Kumar became directors in the Bishal group of companies

and Raju Ghosh represented the GR group.

(r) Thereafter, the agents decided to stop collection from the market. Raju Ghosh and Sachin

Thakur requested the agents to transfer all the certificates and policies issued by the Bishal

group of companies in the name of the GR group. However, as the GR group delayed in

paying the maturity amounts, the agents decided not to transfer the certificates as they have

to ultimately face the depositors and investors. Then they understood that the GR group

is not a genuine entity and did not have enough funds. The agents demanded the

management of the Company to hand over the assets of the Company to the agents so that

they can repay the depositors.

(s) In such a situation, GR group represented by Raju Ghosh proposed that if three agents

become directors in the companies, they can hand over the properties.

(t) Thereafter, with the confirmation of all agents and with advice of Sujit Acharya, son-in-law

of Ratan Chowdhury, Sumanta Modak (relative of Ratan Chowdhury)and Kuntal

Bhattarcharya (brother in law of Ratan Chowdhury), three agents – Gautam Kumar Halder,

Mohd. Kalimullah Baidya and Madhab Chandra Purkait became directors in few companies

of the Bishal group.

(u) Thereafter, on demand from depositors, Tushar Kanti Nandi, Santosh Paul and Swapan

Kumar Bose became directors on February 26, 2015 in order to repay the monies of the

investors. GR group then transferred the management to the agents and the related

document was annexed.

(v) Ratan Chowdhury assured the agents that he would arrange for funds for the depositors

and send them to the trustee board which was created to repay the depositors. Ratan

Chowdhury sent approximately Rs.60 lakh through RTGS. The same were paid to the

investors.

(w) Thereafter, Ratan Chowdhury and the GR Group had absconded. However, the agents

took initiative to trace them and a group led by Litan Saha, Santosh Kumar Paul, Swapan

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Kumar Paul found the whereabouts of Ratan Chowdhury, who was arrested by the Police

in Nagpur and cash was seized.

(x) The agents are now homeless as they had collected huge money from the market and

money was deposited with the Company.

(y) The local depositors took possession of some of the assets as their deposits could not be

returned.

(z) The noticees were bound to become directors to save the lives of their family members

and to repay the monies of the investors. ID cards (proof of being agents) were enclosed.

(aa) The noticees filed copies of MoA and AoA and stated that they do not have the Annual

Accounts and that the same may be in the custody of Ratan Chowdhury or his relatives,

Smt. Shima Chowdhury, Kuntal Bhattacharjee or with the GR group personnel namely

Ram Kumar Singa, Himadri Bag or Sachin Kumar Thakur.

(bb) They key person or mastermind of the Company was Ratan Chowdhury and

besides him there were Subhojit Saha (Gour Saha) and Sumanta Modak.

(cc) All documents/deeds required by SEBI were lying with the past directors except for some

properties which were kept for selling and distributing the proceeds to the investors.

(dd) The preference shares/debentures were allotted by the past directors and the

present directors never issued a single preference share nor collected a single rupee from

investors by issuing securities.

(ee) The present directors became the directors of the Company as per request and decision of

agents in order to repay the investors.

(ff) The noticees assured to comply with directions of SEBI and wished that investors are

refunded as much as possible by selling the assets of the Company. They also requested

SEBI to allow them to operate their demat accounts which has no nexus with the Bishal

group.

(gg) They sought permission to file details of their personal assets and requested for another

opportunity of personal hearing.

The following documents were inter alia annexed with the written submissions:

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(a) ID cards of Md. Kalimullah Baidya, Santosh Kumar Paul, Gautam Halder and Tushar

Nandi;

(b) Agent allowance statement of Swapan Kumar Bose;

(c) News clippings regarding the Company/Bishal group;

(d) MoA and AoA;

(e) Certificate of incorporation of Company and certificate for commencement of business;

(f) Agreement dated June 05, 2014 between Bishal Group of companies represented by Kuntal

Bhattarcharya and GR Agro Projects Limited;

(g) Resolution of the BoD of the Company approving the aforesaid draft agreement.

(h) Form-1 – application and declaration for incorporation of a company – the initial directors

were Ratan Chowdhury including his family members.

(i) Form DIR-12–appointment of Gautam Halder, Madhab Chandra Purkait, Mohd.

Kallimullah Baidya as directors in the Company on October 10, 2014 and Form DIR-12–

appointment of Tushar Kanti Nandi, Santosh Kumar Paul and Swapan Kumar Bose as

directors in the Company on February 27, 2015.

12. Mr. Ram Kumar Sinha, vide letter dated September 04, 2015 (received in SEBI on

September 30, 2015) through his Advocate Mr. Umesh Kumar Choubey, requested for another

date of hearing as he was not able to attend the previous hearing. This request was considered and

hearing was afforded on November 16, 2015. The hearing opportunity for Madhab Chandra

Purkait, Gautam Kumar Halder, Mohammad Kalimullah Baidya, Tushar Kanti Nandi, Santosh

Kumar Paul and Swapan Kumar Bose was also fixed on November 16, 2015. However, due to

administrative exigency, the hearings were rescheduled and fixed on November 23, 2015.

13. Thereafter, vide affidavit dated October 14, 2015, Mohd. Kallimullah Baidya submitted

copies of a few documents/deeds stating that the same pertain to the properties of the Bishal group

and handed over to them by the GR group.

14. In the hearing held on November 23, 2015, Mr. Umesh Kumar Choubey represented Mr.

Ram Kumar Sinha and requested for time as he was collecting documents. The request was

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considered and liberty was granted to file documents and written submissions within a period of

45 days.

Mr. Kamal Das, Advocate appeared on behalf of Madhab Chandra Purkait, Gautam Kumar Halder,

Mohammad Kalimullah Baidya, Tushar Kanti Nandi, Santosh Kumar Paul and Swapan Kumar

Bose and filed further written submissions (signed by Mohd. Kalimullah Baidya for himself and on

behalf of aforesaid other 5 noticees). While reiterating the submissions in their previous written

submissions, it was further stated that Mr. Swapan Kumar Bose, Mr. Tushar Kanti Nandi and Mr.

Santosh Kumar Paul were in the custody of CID and referred to the properties of the Company

and stated that they have custody of original deeds of only few properties of the Company. They

stated that their intention is to dispose of the properties under supervision of Court or authority

or by themselves and use the proceeds to pay the investors. They requested that the deeds may be

retained by the Advocate as they fear that the same may be forcibly seized by the anti-social

elements. The noticees also requested SEBI to place an embargo on the sale of properties

pertaining to Ratan Chowdhury and his family members, Shima Chowdhury, Kuntal Bhattacharya,

Sumanta Modak, Sujit Acharya, Prabir Chowdhury. They further requested SEBI to pass orders

permitting the present directors to sell the properties under supervision and to refund the monies

to investors.

15. Subsequently, Mr. Kamal Das, vide letter dated November 26, 2015, stated that he is

submitting copies of 13 property deeds which may relate to fresh properties (in addition to the

deeds submitted earlier to SEBI) or with respect to those deeds already submitted earlier. It was

noted by SEBI that the deeds/agreements forwarded earlier by the Advocate had copies of 53

deeds in Bengali.

16. Thereafter, Mr. Kamal Das, Advocate vide letter received in SEBI on January 08, 2016

referred to the previous hearings availed by him for his clients and stated that they have submitted

list of 55 properties and requested for permission to sell the properties to pay the investors. He

further stated that few of his clients were in jail along with Mr. Ratan Chowdhury, who wished to

make submissions and requested for hearing. The Advocate was advised to furnish written

submissions, if any.

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17. Noticee, Mr. Ram Kumar Sinha, vide letter dated February 08, 2016 filed his written

submissions and inter alia submitted the following:

(a) He is alleged in the capacity of being a past director in the Company with respect to the

issuance of RPS to 293 persons in the year 2011-12 and for the issue of NCDs in the years

2012-13 and 2013-14 by the Company.

(b) The charges levelled against him were frivolous and vague as he was a director for a period

of approx.. 4.5 months i.e. from June 10, 2014 till October 24, 2014. He was neither a

director at the time of issuance of RPS nor at any time after his resignation.

(c) He was made an additional director on June 10, 2014. At the outset, the Company appeared

to be a decent company and he was not aware of the internal working of the Company.

(d) After joining, he realized that there was a very casual approach towards the work. He was

not satisfied with the working style and after working for approximately 5 months, he

tendered his resignation with effect from October 24, 2014.

(e) He was not related to the Company in any manner and was not associated with the

Company prior to his appointment.

(f) He was also not aware of the issuance of RPS and NCDs as he was appointed during 2014-

15. Therefore, he is not able to furnish any documents related to the same.

(g) He had tried to contact the Company to furnish the details as sought in the interim order.

However, the efforts taken by him went in vain.

(h) He stated that he is not the person-in charge of and responsible to the Company for the

conduct of the business.

(i) He requested for inspection of documents on the basis of which SEBI had made allegations

and that he may make further submissions after the inspection.

(j) He contended that he did not indulge in any manipulative activities directly or indirectly

and has not violated the provisions of law as alleged. He further stated that he is a bonafide

and genuine individual having no nexus with any activities of the Company after tendering

his resignation on October 24, 2014.

(k) The noticee requested SEBI to –

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i. Withdraw the interim order subject to any condition;

ii. Expunge his name from the proceedings; and

iii. Allow inspection of documents and to add/modify his submissions based

on such inspection.

iv. He requested for a personal hearing in New Delhi as he is residing and

working there.

18. Thereafter, Mr. Kamal Das, Advocate, on behalf of his client Mr. Ratan Chowdhury, vide

letter received on May 07, 2016 read with letter dated May 02, 2016 inter alia made the following

common submissions in the instant matter and also in the matters of Bishal Horticulture and Bishal

Distillers:

(a) He is under custody (under trial) in connection with various cases since the last 11 months.

Most of the present directors are arrested by C.I.D (EOW), West Bengal and by other

Police authorities. Most of them are released on bail and have decided to refund the money

collected from investors through the offer of RPS.

(b) Due to old age he had decided to retire from all the companies though he was the

promoting director of most of the companies.

(c) All complications were after his retirement.

(d) Bishal group is capable of refunding monies collected through the offer of RPS through

sale proceeds from properties.

(e) However, the problem was that whenever steps were taken to sell the properties, the local

investors used to gather and create pressure.

(f) They now wish to come out of the said problem by selling properties under the supervision

of Govt. authority or any Court.

(g) They have also decided to appoint an arbitrator with the permission of the Hon’ble High

Court of Calcutta. In this regard, two writ petitions are pending before the Hon’ble High

Court.

(h) No money was collected from the public through any means after the present directors

were appointed. The present directors have also agreed to hand over the properties of the

Bishal group of companies to SEBI or to the Hon’ble Court so that steps could be taken

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for making refunds. These properties were handed over to the present management by the

GR Group (previous management).

(i) Though he had retired, his wish is that the investors should be repaid their monies.

The noticee also requested to send further notices to his Advocate, Mr. Kamal Das.

19. Common Written submissions (received on May 12, 2016) were also filed by Mohd.

Kallimullah Baidya (through Mr. Kamal Das, Advocate) for himself and also on behalf of

Madhab Chandra Purkait, Gautam Kumar Halder, Tushar Kanti Nandi, Santosh Kumar

Paul and Swapan Kumar Bose in the present matter and in the maters of Bishal Horticulture

and Bishal Distillers. These persons reiterated the submissions made by Ratan Chowdhury as

mentioned in the previous paragraph and stated that Bishal group of companies would be able to

refund the amounts raised through offer and issue of securities through the sale of properties

purchased by the companies. It was also stated that Bishal group of companies had purchased

properties and the noticees have submitted photocopies of property deeds (set of 55 deeds)

pertaining to the Bishal group.

20. I have considered the interim order, the submissions made by the concerned noticees,

documents submitted by them and other material available on record. The interim order had alleged

that the Company, in pursuance of its fund mobilizing activity from the general public, had made

a public issue of RPS and NCDs without complying with the provisions of sections 56, 60, 73,

117B and 117C of the Companies Act, 1956 and the ILDS Regulations. In this regard, the following

observations from the interim order are relevant:

i. “BAIL was incorporated on May 1, 2008, with CIN as U70100WB2008PLC125349. Its

Registered Office is at 3rd Floor, 56 Central Road, Jadavpur, Kolkata –700032, West Bengal,

India.

ii. The present Directors in BAIL are Shri Madhab Chandra Purkait, Shri Gautam Kumar Halder,

Shri MohdKalimullahBaidya, Shri Tushar Kanti Nandi, Shri Santosh Kumar Paul and Shri

Swapan Kumar Bose.

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iii. Shri Ram Kumar Sinha, Shri Himadri Bag, Shri Sachin Kumar Thakur, Shri

KuntalBhattacharjee, Shri Benukar Banerjee, Shri Chandan Shah, Shri Ratan Chowdhury and

Smt. Shima Chowdhury, who were earlier Directors in BAIL, have since resigned.

iv. From the material on record, it is observed that BAIL issued "Non–Convertible Redeemable

Preference Shares" ("Offer of Redeemable Preference Shares") to investors during the

Financial Year 2011–12, details of which are provided below –

v. From the material on record, it is also noted that BAIL issued Non–Convertible Debentures ("Offer

of NCDs") during the Financial Years 2012–13 and 2013–14, details of which are provided

below –

Year Type of Security Number of Allottees Amount Raised

(` in Crores)

2012 – 13

Non–Convertible Debentures Details not available 0.87

2013 – 14

Details not available 0.02

Total 0.89

21. The above factual information has not been disputed. It is now to be considered whether

the Company made a public issue of RPSs and NCDs during the relevant period. In order to

determine whether an issue of securities is a 'public issue' or done on 'private placement', a reference

to section 67(3) of the Companies Act, 1956 needs to be made:

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) ...

Type of Security Year No. of persons to whom preference shares were allotted

Total Amount (` in Crores)

Redeemable Preference Shares

2011–12 293 2.75

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(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).

22. 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 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. More importantly, 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 judge whether an issue of shares are for public or on a private

placement basis, in the light of the above said provision. Therefore, if an offer of securities are

made to fifty or more persons, it would be deemed to be a public issue. Non-Banking Financial

Companies (NBFCs) and Public Financial Institutions (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. The Company is not an NBFC or PFI.

23. The Company had made an offer and issued –

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(a) RPS – during FY 2011-12 to 293 persons and had mobilized Rs.2.75 crore;

(b) NCDs during-

i. FY 2012-13 and raised 0.87 crore; and

ii. FY 2013-14 and raised 0.02 crore.

In aggregate, as per the interim order, the Company had issued RPS and NCD and raised Rs.3.64

crore. Considering the number of persons to whom RPSs were issued i.e. 293 persons, it can be

concluded that the Company made a public issue of RPS during the relevant period in terms of

first proviso to section 67(3) of the Companies Act, 1956.

With respect to NCDs, though the number of investors are not available, the interim order has

observed “Although details regarding the number of investors under the Offer of NCDs is not available for the

aforesaid Financial Years, nonetheless, the quantum of funds mobilized under the Offer of NCDs during the

aforesaid Financial Years (details provided in Table at paragraph 3(v) of page 4) when viewed in light of the amount

mobilized under the Offer of Redeemable Preference Shares during the Financial Year 2011–12 alongwith the

number of investors therein, would prima facie lead to the reasonable conclusion that such Offer was also a public

issue of securities, as prescribed under the first proviso to Section 67(3) of the Companies Act, 1956.”. The

Company has not disputed this observation and has not provided complete information as sought

by SEBI vide letter dated October 09, 2014. The same is a breach of the direction issued vide the

interim order.

Considering the above and the conduct of the Company in issuing RPS to the public without

complying with the public issue norms, and the amounts mobilized through NCDs, I conclude that

the NCDs were also offered and issued in a public offer in terms of the first proviso to section 67(3)

of the Companies Act, 1956.

24. By making a public issue of RPSs and NCDs, 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 regard, I note that in terms of

section 55A of the Companies Act, 1956, SEBI shall administer various provisions (as mentioned

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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 of Section 55A of the Companies

Act, so far as they relate to issue and transfer of securities and non-payment of dividend is concerned, SEBI has the

power to administer in the case of listed public companies and in the case of those public companies which intend to

get their securities listed on a recognized stock exchange in India."

" SEBI can exercise its jurisdiction under Sections 11(1), 11(4), 11A(1)(b) and 11B of SEBI Act and Regulation

107 of ICDR 2009 over public companies who have issued shares 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.

25. The interim order has alleged that the Company failed to comply with sections 56, 60, 73,

117B and 117C of the Companies Act, 1956. In this regard, I observe the following:

a. In terms of section 56(1) of the Companies Act, 1956, every prospectus issued by

or on behalf of a company, shall state the matters specified in Part I and set out the

reports specified in Part II of Schedule II of that Act. Further, as per section 56(3)

of the Companies Act, 1956, no one shall issue any form of application for shares

in a company, unless the form is accompanied by abridged prospectus, contain

disclosures as specified. Section 2(36) of the Companies Act read with section 60

thereof, mandates a company to register its 'prospectus' with the RoC, before

making a public offer/ issuing the 'prospectus'. There is no Prospectus issued by

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the Company with respect to its offer of RPSs and NCDs. Accordingly, I find that

the Company has failed to comply with sections 56 and 60.

b. By making a public issue of RPSs and NCDs, the Company had to compulsorily

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

As per section 73(1) Companies Act, 1956, a company is required to make an

application to one or more recognized stock exchanges for permission for the

shares or debentures to be offered to be dealt with in the stock exchange. There is

no material to say that the Company has filed an application with a recognized stock

exchange to enable the securities to be dealt with in such stock exchange.

Therefore, the Company has failed to comply with this requirement.

c. 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 securities, the

Company had to forthwith repay such money collected from investors, through

allotment of RPS and also those kept in the Company’s possession pending

allotment. 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. The liability of the Company to refund the public funds

collected through offer and allotment of the impugned RPSs and NCDs is

continuing and such liability would continue till repayments are made. There is no

record to suggest that the Company made the refunds as per law. Further, SEBI is

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in receipt of complaints from investors alleging default by the Company in making

repayments.

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."

In view of the above observations, I find that the Company has not complied with

the mandate under section 73(2) of the Companies Act, 1956.

d. Section 73(3) states that - All moneys received as aforesaid shall be kept in a separate bank

account maintained with a Scheduled Bank 1 [until the permission has been granted, or where an

appeal has been preferred against the refusal to grant such. permission, until the disposal of the

appeal, and the money standing in such separate account shall, where the permission has not been

applied for as aforesaid or has not been granted, be repaid within the time and in the manner

specified in sub- section (2)]; and if default is made in complying with this sub- section, the

company, and every officer of the company who is in default, shall be punishable with fine which

may extend to fifty thousand rupees.” . As found above, the Company had not applied

and obtained listing permission. The Company is therefore in non-compliance with

this provision also.

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e. As the amounts mobilized through the issue of securities have not been refunded

within the time period as mandated under law, it would therefore be appropriate to

levy an interest @ 15% p.a. as provided for under section 73(2) of the Companies

Act, 1956 read with rule 4D (which prescribes that the rates of interest, for the purposes of

sub-sections (2) and (2A) of section 73, shall be 15 per cent per annum) of the Companies

(Central Government’s) General Rules and Forms, 1956, on the amounts (i.e.

Rs.3.64 crore) raised by the Company through its offer and issuance of RPS

including preference share application money pending allotment collected by the

Company, due to be repaid by the Company. As stated above, the liability of the

Company to refund the public funds collected through offer and allotment of the

impugned RPSs and NCDs is continuing and such liability would cease only if the

repayments are made in accordance with the relevant provisions of law.

f. 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.

Further, section 117C 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. There is no record to suggest that this provision

was complied with.

(i) As 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

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its public issue of NCDs. However, the Company failed to comply with the following

provisions of the ILDS Regulations.

(a) Regulation 4(2)(a) – Application for listing of debt securities

(b) Regulation 4(2)(b) – In-principle approval for listing of debt securities

(c) Regulation 4(2)(c) – Credit rating has been obtained

(d) Regulation 4(2)(d) – Dematerialization of debt securities

(e) Regulation 4(4) – Appointment of Debenture Trustee

(f) Regulation 5(2)(b) – Disclosure requirements in the Offer Document

(g) Regulation 6 – Filing of draft Offer Document

(h) Regulation 7 – Mode of disclosure of Offer Document

(i) Regulation 8 – Advertisements for Public Issues

(j) Regulation 9 – Abridged Prospectus and application forms

(k) Regulation 12 – Minimum subscription

(l) Regulation 14 – Prohibition of mis-statements in the Offer Document

(m) Regulation 15 – Trust Deed

(n) Regulation 16 – Debenture Redemption Reserve

(o) Regulation 17 – Creation of security

(p) Regulation 19 – Mandatory Listing

(q) Regulation 26 – Obligations of the Issuer, etc.

26. From the foregoing, I conclude that the Company failed to comply with the requirements

mandated under sections 56, 60, 73 of the Companies Act, 1956 in respect of its offer and issue of

RPSs and NCDs and the provisions of 117B and 117C of the Companies Act, 1956 and the

aforesaid provisions of the ILDS Regulations, in respect of its offer and issuance of NCDs as

discussed in this Order and mobilized Rs.3.64 crore (RPSs for Rs.2.75 crore and NCDs for 0.89

crore). The Company therefore becomes liable for suitable action under the Companies Act, 1956,

the SEBI Act and the ILDS Regulations.

27. I note that the interim order had passed prohibitory directions against the Company’s past

and present directors, namely, Mr. Madhab Chandra Purkait, Mr. Gautam Kumar Halder, Mr.

Mohd Kalimullah Baidya, Mr. Tushar Kanti Nandi, Mr. Santosh Kumar Paul, Mr. Swapan Kumar

Bose, Mr. Ram Kumar Sinha, Mr. Himadri Bag, Mr. Sachin Kumar Thakur, Mr. Kuntal

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Bhattacharjee, Mr. Benukar Banerjee, Mr. Chandan Shah, Mr. Ratan Chowdhury and Smt. Shima

Chowdhury, who are said to be either the present or past directors of the Company.

The following table provides the period of directorship (source: Register of directors, managing directors

etc from RoC as on January 07, 2015 and Company master date from MCA website accessed on May 12, 2016)

of the aforesaid persons in the Company:

Noticee Date of appointment

Date of resignation if any

Madhab Chandra Purkait

10.10.2014 Continues, present director

Gautam Kumar Halder


Mohd Kalimullah Baidya


Tushar Kanti Nandi


Santosh Kumar Paul


Swapan Kumar Bose


Ram Kumar Sinha 10.06.2014 24.10.2014

Himadri Bag 10.06.2014 24.10.2014

Sachin Kumar Thakur

10.06.2014 24.10.2014

Kuntal Bhattacharjee

10.02.2014 10.06.2014

Benukar Banerjee 30.09.2013 10.06.2014

Chandan Shah 19.12.2012 10.06.2014

Ratan Chowdhury 01.05.2008 18.02.2014

Shima Chowdhury 01.05.2008 19.12.2012

Priti Rani Chowdhury*

01.05.2008 19.12.2012

Prabir Chowdhury* 01.06.2012 19.12.2012

Sujit Acharjee* 01.06.2012 10.10.2013

Ajoy Paul* 09.10.2013 26.03.2014

Litan Saha*# 18.02.2014 26.03.2014

*persons not covered under the interim order

# Litan Saha is one of the present directors in the Company, re-appointed on April 27, 2015

In the light of the above facts, I observe the following:

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(i) In terms of 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 shall

be responsible for the conduct of the business of a company and liable for any non-

compliance of law and such liability shall be upon the individual directors also.

(ii) With respect to the culpability of a director for breach of law by a company, I refer to

and rely on the following observations made by the Hon’ble High Court of Madras in

Madhavan Nambiar vs Registrar Of Companies (2002 108 Comp Cas 1 Mad):

“13. It may be that the petitioner may not be a whole-time director, but that does not mean he is exonerated of the statutory obligations which are imposed under the Act and the rules and he cannot contend that he is an ex officio director and, therefore, he cannot be held responsible. There is substance in the contention advanced by Mr. Sridhar, learned counsel since the petitioner a member of the Indian Administrative Service and in the cadre of Secretary to Government when appointed as a director on the orders of the Government to a Government company or a joint venture company, he is expected not only to discharge his usual functions, but also take such diligent care as a director of the company as it is expected of him not only to take care of the interest of the Government, but also to see that the company complies with the provisions of the Companies Act and the rules framed thereunder. Therefore, the second contention that the petitioner cannot be proceeded against at all as he is only a nominee or appointed director by the State Government, cannot be sustained in law. 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 acts or commission or omission is equal. So also the treatment for such violations as stipulated in the Companies Act, 1956.

15. Section 5 of the Companies Act defines the expression "officer who is in default". The expression means either (a) the managing director or managing directors ; (b) the whole-time director or whole-time directors ; (c) the manager ; (d) the secretary ; (e) any person in accordance with whose directions or instructions the board of directors of the company is accustomed to act; (f) any person charged by the board with the responsibility of complying with that provision ; (g) any director or directors who may be specified by the board in this behalf or where no director is so specified, all the directors.

16. Section 29 of the Companies Act provides the general power of the board and …………... Therefore it follows there cannot be a blanket direction or a blanket indemnity in favour of the petitioner or other directors who have been nominated by the Government either ex officio or otherwise. Hence the second point deserves to be answered against the petitioner.

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17. As regards the first contention, it is contended by Mr. Arvind P. Datar, learned senior counsel appearing for the petitioner that the company or its board had resolved that Thiagaraj S. Chettiar shall be the director in charge of the company of all its day-to-day affairs and, therefore, the petitioner, an ex officio chairman and director, cannot be expected to attend to the affairs on a day-to-day basis. This contention though attractive cannot be sustained as a whole. There may be a delegation, but ultimately it comes before the board and it is the board and the general body of the company which are responsible.”

{Emphasis supplied}

(iii) A person cannot assume the role of a director in a company in a casual manner. The

position of a ‘director’ in a public company/listed company comes along with

responsibilities and compliances under law associated with such position, which have

to be fulfilled by such director or face the consequences for any violation or default

thereof.

(iv) The Company has been found to have violated sections 56, 60, 73, 117B and 117C of

the Companies Act, 1956 and the ILDS Regulations in respect of its public offer and

issue of RPSs and NCDs during the relevant period as discussed in this Order.

(v) 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.

(vi) 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 NCDs 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

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Company’s Board pursuant to the offer and allotment of securities shall also be liable

if the Company and the concerned directors have failed to make refunds as mandated

under law.

(vii) The Company and its directors during the period when the offer and issue of RPS was

made are responsible for complying with the mandatory requirements under the ILDS

Regulations.

(viii) In view of the above reasons and observations, noticees, Mr. Ratan Chowdhury and

Smt. Shima Chowdhury are liable, as directors of the Company during the period of

offer and issue of RPS, for the violation of sections 56, 60 and 73 of the Companies

Act, 1956 and the ILDS Regulations as found in this Order and would also be liable to

make refunds in terms of section 73(2) of the Companies Act read with section 27 of

the SEBI Act, as ordered herein. These noticees, despite public notice and adequate

opportunities have not filed their submissions.

(ix) The other noticees having joined the Company after the offer and issuance was made

and therefore in view of the default in making refunds, were also under the statutory

liability to make refunds in terms of section 73(2) of the Companies Act read with

section 27 of the SEBI Act. These persons have not taken steps in this regard. Few of

the noticees (Madhab Chandra Purkait, Gautam Halder, Tushar Nandi, Santosh Paul

and Swapan Bose) have submitted that they were agents and became directors to ensure

payments to the investors. However, these submissions would not afford them any

concession or benefit with respect to their afore-stated liability. The purported taking

over of liabilities by GR Group would also not alter/absolve the liability of the noticees.

Chandan Shah had contended that he was appointed as a director pursuant to the

offer of RPS and resigned within 6 months. However, as per the records of

MCA/ROC, he was a director from December 19, 2012 to June 10, 2014. This noticee,

himself, has produced documents with respect to his appointment and resignation as a

director in the Company. It is important to note that as per Form No. DIR-11 (notice

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of resignation of a director to the Registrar), Chandan Shah was appointed on

December 19, 2012 as ‘Managing Director’ of the Company. Therefore, in view of the

observations made above, he too would be liable for making repayments and for

consequential enforcement action for default.

Benukar Banerjee had represented that he was assisting the Company/Ratan

Chowdhury in the investigation of title of immovable properties and preparation of

deeds for purchase and sale. He had admitted that he was made a director in the

Company. He has not resisted such appointment. Therefore, in view of the

observations made in the paragraphs above, I find him liable for the allotments of

NCDs during FY 2013-14 in contravention of law and for default in making refunds.

Ram Kumar Sinha has not disputed his tenure as a director in the Company. He had

requested for availing inspection and stated that he may make further submissions

pursuant to the same. This request was not made in his first reply and is made only

after the personal hearing. The interim order had provided the basis for alleging that

the Company made a public issue of RPS. Further, this noticee has been stated to be

a past director. This noticee, himself, has admitted that he was a director from

10.06.2014 to 24.10.2014 in the Company. Further, the liability to make repayment is

under section 73 of the Companies Act, 1956. The noticee cannot plead ignorance of

law. The interim order has also advised the noticee to show cause as to why he should

not be directed inter alia to make refunds of the monies collected under the offer and

issue of RPS and NCDs and prohibiting him from dealing in the securities/securities

market. In view of the above, I find that these requests of the noticee is for delaying

the proceedings. He has submitted a copy of the purported agreement between the

Bishal group of companies and the Bishal Welfare Trust. However, such documents

cannot absolve this noticee of the statutory responsibility and liability under section

73(2) of the Companies Act, 1956 and action for such default.

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Himadri Bag and Sachin Kumar Thakur have submitted that they were mere

employees and were made directors in a fraudulent manner. They have also submitted

that they were director only for few days i.e. from 10.06.2014 to 24.10.2014. They

would also be liable as records indicate that they were directors. However, they may

take steps available under law regarding their claim that they were fraudulently

appointed as directors in the Company.

28. I also note that Litan Saha is a present director having been appointed on April 27, 2015.

He was in the board of directors earlier also. Further, Priti Rani Chowdhury, Prabir Chowdhury,

Sujit Acharjee and Ajoy Paul are the past directors. These persons allegedly were responsible to

comply with the public issue norms including section 73(2) of the Companies Act, 1956 read with

section 27 of the SEBI Act in making refunds to the investors. Few of the noticees have also alleged

that Sujit Acharjee and the ‘Chowdhury’ family were responsible for the violations and

unauthorized money collection. SEBI is advised to examine the role of the aforesaid persons and

initiate appropriate action against them, in accordance with law, including issuance of a show cause

notice calling upon them to show cause as to why, suitable directions including the following should

not be imposed upon them:

a. directing them jointly and severally to refund the money collected through

the issue of RPS (as found to be unauthorisedly issued in this Order), along

with interest at 15% per annum from the date when the refunds became

due to the investors till the date of repayment;

b. directing them not to issue 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, for an

appropriate period;

c. directions restraining them from accessing the securities market and

prohibiting them from buying, selling or otherwise dealing in securities for

an appropriate period;

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d. directing them and other companies in which they are directors/promoters

holding substantial or controlling interest, to not access the capital market

for an appropriate period.

29. The interim order has alleged that Bishal Abasan Debenture Trust represented by its

trustee Mr. Tapas Das has acted as a debenture trustee without registration from SEBI as

required under section 12(1) of the SEBI Act and has also not satisfied the eligibility condition

stipulated under regulation 7 of the DT Regulations. The debenture trust/its trustee have not filed

any submissions despite affording adequate opportunity. I note that the Trust/Tapas Das are not

registered with SEBI to perform the functions of a ‘debenture trustee’ in the capital market.

Further, they do not satisfy the following conditions under regulation 7 of the DT Regulations:

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

i. a scheduled bank carrying on commercial activity; or

ii. a public financial institution within the meaning of section 4A of the Companies Act, 1956; or

iii. an insurance company; or

iv. body corporate."

Accordingly, Bishal Abasan Debenture Trust represented by its trustee Mr. Tapas Dasis

found to have violated 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.

30. In view of the foregoing, I, in exercise of the powers conferred upon me under section 19

of the Securities and Exchange Board of India Act, 1992 read with sections 11(1), 11(4), 11A and

11B thereof and regulation 28 of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008,

hereby issue the following directions:

(a) Bishal Abasan India Limited, Mr. Madhab Chandra Purkait, Mr. Gautam Kumar

Halder, Mr. Mohd. Kalimullah Baidya, Mr. Tushar Kanti Nandi, Mr. Santosh

Kumar Paul, Mr. Swapan Kumar Bose, Mr. Ram Kumar Sinha, Mr. Himadri Bag,

Mr. Sachin Kumar Thakur, Mr. Kuntal Bhattacharjee, Mr. Benukar Banerjee, Mr.

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Chandan Shah, Mr. Ratan Chowdhury and Smt. Shima Chowdhury, 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 SEBI

regulations), 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 and its directors 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 of 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) Bishal Abasan India Limited, Mr. Madhab Chandra Purkait, Mr. Gautam Kumar

Halder, Mr. Mohd Kalimullah Baidya, Mr. Tushar Kanti Nandi, Mr. Santosh Kumar

Paul, Mr. Swapan Kumar Bose, Mr. Ram Kumar Sinha, Mr. Himadri Bag, Mr.

Sachin Kumar Thakur, Mr. Kuntal Bhattacharjee, Mr. Benukar Banerjee, Mr.

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Chandan Shah, Mr. Ratan Chowdhury and Smt. Shima Chowdhury 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 Bishal Abasan India Limited, Mr. Madhab Chandra Purkait, Mr.

Gautam Kumar Halder, Mr. Mohd Kalimullah Baidya, Mr. Tushar Kanti Nandi,

Mr. Santosh Kumar Paul, Mr. Swapan Kumar Bose, Mr. Ram Kumar Sinha, Mr.

Himadri Bag, Mr. Sachin Kumar Thakur, Mr. Kuntal Bhattacharjee, Mr. Benukar

Banerjee, Mr. Chandan Shah, Mr. Ratan Chowdhury and Smt. Shima Chowdhury

in complying with the aforesaid directions, SEBI, on the expiry of the three months period

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 action

against the Company and directors as deemed fit.

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

of notice directors in its database so that information may be perused by RoC or

any other regulatory authority.

(h) Bishal Abasan 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

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Order till the expiry of 4 years from the date of completion of refunds to investors as

directed above.

(i) Mr. Madhab Chandra Purkait, Mr. Gautam Kumar Halder, Mr. Mohd Kalimullah

Baidya, Mr. Tushar Kanti Nandi, Mr. Santosh Kumar Paul, Mr. Swapan Kumar

Bose, Mr. Ram Kumar Sinha, Mr. Himadri Bag, Mr. Sachin Kumar Thakur, Mr.

Kuntal Bhattacharjee, Mr. Benukar Banerjee, Mr. Chandan Shah, Mr. Ratan

Chowdhury and Smt. Shima Chowdhury 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 years from the date of

completion of refunds to investors, as directed above.

(j) For the violations (i.e. acted as debenture trustee when they were not eligible to act as debenture trustees

and acted so without registration from SEBI) committed by Bishal Abasan Debenture Trust

represented by its trustee Mr. Tapas Das, they are hereby restrained from acting as an

intermediary, accessing the securities market and further restrained from buying, selling or

dealing in securities, in any manner whatsoever, for a period of 4 years.

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

31. ThisOrder 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.

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

for information and necessary action.

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33. 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.

34. As mentioned in paragraph 28, SEBI may examine the role of the concerned persons and

initiate action as appropriate under law.

PRASHANT SARAN WHOLE TIME MEMBER

SECURITIES AND EXCHANGE BOARD OF INDIA Date: May 16th, 2016 Place: Mumbai

PRASHANT SARAN, WHOLE TIME MEMBER ORDER - SEBI

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