order in the matter of chakra infrastructure limited

8/18/2019 Order in the matter of Chakra Infrastructure Limited

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WTM/PS/07/IMD/ERO/APR/2016

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIACORAM: 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 –

S. No. Name of noticee CIN/PAN/DIN1. Chakra Infrastructure Limited CIN – U45400WB2008PLC131200

PAN - AADCC6855H2. Swapan Majumdar DIN- 06405352

PAN- AKJPM4426D3.

Pranab Kumar Roy DIN- 06623130PAN- ACDPR4876J

4. Subhas Bose DIN- 06623134PAN- BLEPB3468F

5. ParthaChakraborti DIN- 01274437PAN- ADQPC5578E

6. Soma Chakraborti DIN-01274477PAN- AEKPC9920P

7. Swapan Kumar Sen DIN- 02704406PAN- CILPS3142L

8. Prithwis Kumar Das DIN- 05268472

PAN- AFCPD3788F9. Litan Chandra Sen DIN- 05268471

PAN- CEDPS4072K10.

BiplabHalder DIN- 05268469’ PAN- AHGPH6624N

11. Santosh Kumar DIN- 06710209PAN- ALUPK5400F

12. Bijoy Das DIN- 03155078PAN- ALRPD5933D

13. Chakra Debenture Trust(represented by its trustee viz. Shri

Sunil Kumar Saha )

-


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Date of hearing: April 22, 2015

Appearance: Noticees, Parta Chakraborty, Swapan Kumar Sen and Soma Chakraborty wererepresented by Advocates, M/s.TriptimoiTalukdar and HitendraNathPramanik.

Noticee Pranab Kumar Roy was represented by ShambaChakroborty, Advocate.

Noticee Subhas Bose appeared in person.

For SEBI: Ms. Soma Majumder, General Manager, Mr. N. Murugan, Assistant General Managerand Ms. Nikki Agarwal, Assistant Manager.

Date of hearing: July 29, 2015Noticees, Prithwis Kumar Das and Santosh Kumar failed to appear.

Date of hearing: November 23, 2015

Appearance:

Noticee, Mr. Prithwis Kumar Das appeared in person.

For SEBI: Mr. PrasantaMahapatra, General Manager, Mr. T. Vinay Rajneesh, Assistant GeneralManager and Ms. Nikki Agarwal.

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

interim Order dated January 29, 2015 (hereinafter referred to as the “interim order”) observed

that the company, Chakra Infrastructure Limited (hereinafter referred to as “CIL” or “the

Company”) is prima facie engaged in fund mobilization activity from the public, through its offer and

issue of Non-Convertible Redeemable Debentures(hereinafter referred to as "NCDs") and had

allegedly violated theprovisions 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 relevant provisions of the SEBI

(Issue and Listing of Debt Securities) Regulations, 2008 (“the ILDS Regulations”). The interim

order also alleged that the debenture trustee, Chakra Debenture Trust(represented by its trustee

Mr. Sunil Kumar Saha)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”).


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2. In order to the protect the interest of investors and to ensure that the Company does not

continue with its unauthorized fund mobilization through its offer and issue of NCDs, SEBI issued

the following directions vide the interim order:

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

11A and 11B of the SEBI Act read with the Debt Securities Regulations and the Debenture Trustee

Regulations, hereby issue the following directions –

i.

CIL shall not mobilize any fresh funds from investors through the 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. CIL and its present and past Directors, viz. Shri SwapanMajumdar (DIN- 06405352, PAN-

AKJPM4426D), Shri Pranab Kumar Roy (DIN- 06623130, PAN- ACDPR4876J), ShriSubhas Bose (DIN- 06623134, PAN- BLEPB3468F), Shri ParthaChakraborti (DIN-

01274437, PAN- ADQPC5578E), Smt Soma Chakraborti (DIN-01274477, PAN-

AEKPC9920P), Shri Swapan Kumar Sen (DIN- 02704406, PAN- CILPS3142L), Shri

Prithwis Kumar Das (DIN- 05268472, PAN- AFCPD3788F), Shri Litan Chandra Sen (DIN-

05268471, PAN- CEDPS4072K), Shri BiplabHalder (DIN- 05268469, PAN-

AHGPH6624N), Shri Santosh Kumar (DIN- 06710209, PAN- ALUPK5400F) and Shri

Bijoy Das (DIN- 03155078, PAN- ALRPD5933D) 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. CIL and its abovementioned Directors, are restrained from accessing the securities market and further

prohibited from buying, selling or otherwise dealing in the securities market, either directly or indirectly,

till further directions;

iv. CIL shall provide a full inventory of all its assets and properties;

v. CIL's abovementioned Directors shall provide a full inventory of all their assets and properties;

vi. CIL and its abovementioned Directors shall not dispose of any of the properties or alienate or encumber

any of the assets owned/acquired by that company through the Offer of NCDs, without prior

permission from SEBI; vii. CIL and its abovementioned Directors shall not divert any funds raised from public at large through the

Offer of NCDs, which are kept in bank account(s) and/or in the custody of CIL;

viii. CIL and its abovementioned Directors shall furnish complete and relevant information within 21 days

from the date of receipt of this Order.


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ix. The Debenture Trustee, viz. Chakra Debenture Trust (represented by its trustee Mr. Sunil Kumar

Saha), is prohibited from continuing with his present assignment as a debenture trustee in respect of the

Offer of NCDs of CIL 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.

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

……………”.

3. The interim order was passed on the basis of prima facie observations that emerged from the

documents/material submitted by the Company to SEBI, the information obtained from the MCA

21 Portal,communication received from RoC, Kolkata, complaints received against the Company

along with documents contained therein.

4. The interim order advised the Company and its present and past Directors, viz.

SwapanMajumdar, Pranab Kumar Roy, Subhas Bose, ParthaChakraborti, Soma Chakraborti, Swapan

Kumar Sen, Prithwis Kumar Das, Litan Chandra Sen, BiplabHalder, Santosh Kumar and Bijoy

Dasand the debenture trustee viz. Sunil Kumar Saha(collectively referred to as “noticees”) to file

their replies and also indicate whether they desire to avail opportunity of personal hearing.

5.

The interim order was forwarded to the noticees vide SEBI letter dated January 29, 2015.

6.

Replies of the noticees:

(a) Mr. SwapanMajumdar, vide letter dated February 17, 2015, made the following

submissions:

i. He was appointed as a director of the Company on August 03, 2012 and had

resigned on December 31, 2013 due to his illness.

ii. During his tenure, the noticee did not take part in any financial activities.

Due to his prolonged illness, he was not able to participate in the day to day

working of the Company and was not in touch with the Company from

December 31, 2013.


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iii. As per the interim order, the NCDs were issued from March 31, 2012 to

June 30, 2012 and that he had joined on August 03, 2012, which was after a

month of closure of the issue of NCDs.

iv. Even after accepting his resignation and taking advantage of his illness, the

Company‟s board in order to fulfil their malafide intention has not g iven

effect to the resignation in the records of the RoC.

v. The noticee has intimated the same to the RoC and requested them to take

appropriate measures against the concerned persons.

vi. The noticee does not have any immovable property and till date is staying in

rented premises.

vii. The noticee requested SEBI to advise the concerned persons for supply of

required documents.

Copies of resignation letter dated December 31, 2013 (acknowledged by the

Company) and noticee‟s letters dated February 24, 2014 and February 19,

2014 to RoC and MCA respectively intimating his resignation in the

Company and 4 other Chakra group companies, were submitted.

(b) Mr. Swapan Kumar Sen, vide his letter (received in SEBI on March 02, 2015), inter alia

submitted that –

i. He is a senior citizen and because of various physical ailments his physical

movements were restricted. In view of the same, he was not able to collect

the interim order.

ii. He had contacted one of the ex-directors who had informed that the interim

order was received by some directors and necessary reply was already

prepared and this noticee was not required to make any correspondence with

SEBI in respect of the interim order.

iii.

He had already resigned from the directorship of the Company on April 21,

2012. Form-32 was enclosed in this regard.


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iv. The noticee was a part-time director of the Company from July 06, 2009 to

April 21, 2012. He was never engaged in any day to day activities of the

Company and hence it was not possible to comment anything on the subject.

v. The noticee requested SEBI to consider the facts and circumstances and

expunge his name and not to initiate any action.

(c) Mr. ParthaChakraborti, vide letter dated February 20, 2015, inter alia submitted the

following:

i. On the basis of Form no. 10 filed by the Company on October 13, 2011, the

RoC had granted permission to the Company to issue NCDs to the tune of

Rs.10 crore.

ii. During filing of Form 10, necessary charge was created over the

assets/properties of the Company including that of this noticee, whose value

is much higher that the issued amount of Rs.10 crore.

iii. There was therefore no illegality in respect of the issue of debentures to the

tune of Rs.10 crore.

iv. The share application money to the tune of Rs. 30 lakh as appearing in the

Balance Sheet of the Company as on March 31, 2012 was duly allotted on

June 28, 2012 for which necessary Form-2 was filed with RoC on May 08,

2013. The allotment appears in the Balance Sheet as on March 31, 2013. v. After permission from RoC, the Company proceeded by issuing NCDs to

the tune of Rs.10 crore to 48 different persons on private placement basis in

compliance with the Companies Act, 1956.

vi. After issuance of NCDs, at the instance of two allottees (Chakra Wealth

Management Advisory Limited which was allotted7,80,900NCDs and Chakra

Welfare Society which was allotted 1,27,360 NCDs), the NCDs were

transferred to a number of persons. As a result, the number of subsequent

holders may be matching with the list of 48 allottees. Such transfer was made

in compliance with the Companies Act, 1956 and therefore these transfers

cannot be questioned.


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vii. The list of investors other than the 48 allottess are mere list of transferees.

viii. The noticee resigned on July 03, 2013 and therefore would not be able to

comment on SEBI letters dated February 03, 2014 or April 11, 2014.

ix. Therefore, the noticee would be able to offer any comments only after

perusal of information in the MCA 21 portal and records available from the

Hon‟ble High Court.

x. The 24 complainants knew that they were mere transferees. Therefore, it

cannot be said that total amount raised was Rs.10,24,18,000/- as the sum of

Rs.24,18,000/- was included in the Rs.10,00,00,000/- raised through issue of

NCDs.

xi. While issuing NCDs, the Company never crossed the limits prescribed under

the various provisions of the Companies Act and do not attract SEBI rulesand regulations. The Company is neither a listed company nor intended to

get its securities listed. Therefore, section 55A of the Companies Act, 1956 is

not applicable.

xii. Section 67(1) or (2) were not applicable as the issue was made on private

placement basis.

xiii. The noticee submitted that the Company offered NCDs to only 48 persons

and not to 72 persons as alleged in the interim order. SEBI has not examined

the 24 complaints in the light of first proviso to section 67(3). Making a

general statement that the offer of NCDs was a public issue is a gross

misconception. The Company is covered under the first proviso to section

67(3). The Company was neither a NBFC nor a PFI.

xiv. The case of the Company does not match with the Sahara case.

xv. As the issue was not a public issue, the provisions of sections 56, 60 and 73

of the Companies Act, as alleged in the interim order, do not get attracted.

xvi.

The Trustee of Chakra Debenture Trust cannot be said to have failed tomeet the eligibility criteria specified under the provisions of the DT

Regulations. The Company never issued Prospectus or letter of offer to the

public for subscription of its debentures. However, the Company appointed


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a trustee after registering the Trust Deed and has complied with the

provisions of section 117B of the Companies Act. The Company did not

make a public issue. Therefore, the Debenture trust along with the trustee

were not required to get themselves registered with SEBI as alleged.

xvii.

As per the Balance Sheet as on March 31, 2012, a provision of Rs.71,525/-

was made towards Debenture Redemption Reserve (DRR) out of the profits

of Rs.2,86,098.06/- earned by the Company during the year. Due to losses

sustained by the Company during the year ended March 31, 2013, it was not

possible for the Company to book any amount towards DRR. The Company

had successfully and properly utilized the monies collected through issuance

of NCDs towards the business proposition.

xviii.

The monies received by issue of NCDs were started to be refunded by theCompany phase-wise though redemption rate were much later on. However,

due to scandal of various money marketing companies and restrictions laid

down by the Government, the Company could not continue with its refund

process.

xix. The Company cannot be treated as a fund mobilizing company as NCDs

issued by it were for legitimate purpose as per the object clause of the

Company. The whole of the NCD proceeds were invested in various

projects or properties of the Company and are secured.

xx. The noticee submitted that he would comply with the restrictions imposed

on him vide the interim order.

xxi. As the notice is not a director in the Company presently, he is not able to

provide full inventory of assets of the Company or ensure that funds are not

diverted. Further, according to the noticee, providing inventory of his assets

do not arise as none of his assets were purchased from the Company‟s funds

at any time.xxii. The Government of West Bengal had imposed an embargo over the sale of

assets of the Company. The Company was left with no other option except

moving the Hon‟ble Court. The Company had preferred as writ petition


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on the assets and properties of the Company as well as of Mr.

ParthaChakraborti, whose value was much more than the amount of NCDs.

iii. The RoC, on the basis of such application, was kind enough to grant

permission to the Company for issue of NCDs. Therefore, the permission to

issue NCDs and creation of charge was legal and in accordance with the

Companies Act, 1956.

iv. As per information obtained from MCA portal, the application money of

Rs.30 lakh received by the Company as on March 31, 2012 was duly allotted

as per Form-2 filed with RoC.

v. All the letters/correspondence of SEBI were duly addressed by the Company

especially during her tenure as a director.

vi.

During her tenure as a director (i.e. upto April 21, 2012, when she resignedfrom the directorship), the Company had received only 8 applications for

issue of 10,500 NCDs to the tune of Rs.10,50,000/-.

vii. The noticee does not possess any information regarding application and

allotment of any NCDs after her resignation.

viii. Further, she is also not able to comment on letters dated February 03, 2014

and April 11, 2014, received by the Company after April 21, 2012.

ix. The noticee is also not able to comment on allotment of NCDs to 72

persons as she resigned on April 21, 2012.

x. During her tenure, she did not find the Company committing or doing

anything which is either illegal or bad in law.

xi. The noticee enclosed copy of Form-32 indicating her resignation. As per this

document, the noticee had resigned on April 21, 2012.

xii. The noticee also submitted that she was not involved in the day to day affairs

of the Company during her tenure as a non-executive director till April 21,

2012.

(e) Mr. Pranab Kumar Roy, vide letter dated March 09, 2015 (sent by his wife Ms. Nabanita

Roy) read with letter dated September 16, 2014 submitted as follows:


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i. He joined Chakra Group in January 2013 as Advisor to look after their B.Ed.

college and agriculture business for a monthly remuneration of Rs.20,000/-.

ii. During August 2013, at the request of Mr. Partha Chakraborty, he was

inducted as a director in three companies of the Chakra Group, namely,

Chakra Infrastructure Limited, Chakra Wealth Management Advisory

Limited and Chakra Agrotech (P) Limited.

iii. During November 2013, in the general meeting of the members, two

directors including the noticee were released from directorship and two new

directors were inducted. The noticee had submitted his resignation to Mr.

Partha Chakraborty from all three companies and left the company on

November 30, 2013.

iv.

The noticee now understands that Mr. Partha Chakraborty did not removehis name from RoC records for reasons best known to him.

v. During his tenure, the Company did not pay any remuneration/fees to him.

vi. Further, during his tenure of four months, the Company did not mobilize

funds through issuance of bonds and did not convene any meeting.

vii. In view of the above, he is not in a position to provide information as sought

by SEBI.

viii. He does not have any connection with the Company since November 2013.

The noticee further submitted that the Company‟s registered office was

closed and indicated that Mr. Partha Chakraborty was the key person cum

promoter of the Chakra group who would be able to provide information.

(f) Mr. Prithwis Kumar Das, vide letter dated March 17, 2015, filed his reply and inter alia

submitted the following:

i. He was an employee of Chakra Wealth Management Advisory Limited as a

Business Development Head against a meagre monthly salary of Rs.12,000/-from September 01, 2011.


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ii. During the time when he joined and even after joining, he had no idea about

the nature of business. However, after being aware of the business, he had

immediately resigned from the assignment in the month of July 2012.

iii. During his short tenure of employment with the company, the promoter of

the Group, Mr. ParthaChakraborti forcibly compelled him to sign in some

papers which he could not understand due to lack of knowledge and

ignorance.

iv. He was not given copies of such documents.

v. The noticee had lodged a complaint during November 2012 with the

Ministry of Corporate Affairs against the reluctance in accepting his

resignation.

vi.

Finally, the company had informed him vide letter dated January 25, 2013that his resignation was accepted on and from August 08, 2012.

vii. The noticee submitted that he does not have any knowledge about any

decision taken by the board of directors of the company during his short

tenure. He further stated that he did not receive any agenda for board

meeting and did not sign in any attendance register.

viii. The noticee submitted that he is no more associated with the Chakra group

and that his personal assets owned or acquired were not out of the money

raised by the Company from public.

ix. The noticee enclosed copies of his appointment letter, letter sent to MCA

and his termination letter.

The noticee had stated the following in his letter to the MCA:

(i) He joined Chakra Wealth Management Advisory Limited on

September 01, 2011 as Business Development Head.

(ii) Subsequently, he was approached by the management for being

inducted as one of the directors of the company in the month of April 2012. Due to repeated requests, he had eventually expressed his

consent for the position of directorship of the group of

companies.


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(iii) As the Business Head, he was not privy to the internal affairs of the

company. Due to the bad state of affairs, the noticee had lost

confidence in the Chakra group of companies and tendered his

resignation in the month of August 2012. Instead of accepting the

resignation, the noticee was issued a termination letter.

(iv) The noticee was issued separate termination letters by Chakra Wealth

management Advisory Limited, Chakra Infrastructure Limited and

Chakra Hotel and Leisure Limited on August 08, 2012.

(v) After having severed all ties with the Chakra group companies, the

noticee cannot be held responsible in any manner for any of the acts

committed and or contracts entered into by the companies after he

resigned.

7. The noticees were afforded an opportunity of personal hearing on April 22, 2015. As the

interim order could not be served on the Company and other directors, SEBI made public

noticesdated April 14, 2015 and April 15, 2015 in Ananda Bazar Patrika and Times of India respectively

regarding the proceedings initiated against the noticees and the personal hearing fixed on April 22,

2015.

8.

On April 22, 2015 i.e. the date of personal hearing, noticees, Partha Chakraborty, Swapan

Kumar Sen and Soma Chakraborty were represented by Advocates, M/s. TriptimoiTalukdar and

HitendraNathPramanik. Noticee,Pranab Kumar Roy was represented by Advocate, Mr.

ShambaChakroborty. The Advocates made submissions reiterating the reply filed earlier by the

respective noticees.The Advocates requested for the copy of the complaint referred to in the interim

order. SEBI was directed to provide the same. Noticee,Subhas Bose appeared and made oral

submissions and was advised to submit written submission along with supporting documents within

a period of 15 days.Noticee, Mr. Prithwis Kumar Das vide letter received in SEBI on April 17, 2015requested for another opportunity of hearing on the ground of his daughter‟s ill health and medical

treatment.


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9. Mr. Santosh Kumar, through his advocate Mr. Subhasis Chakraborty, vide letter dated

April 23, 2015, made the following submissions:

i. The noticee came to know that his name was appearing in the public notice

issued in respect of the Company.

ii. The noticee had initially deposited Rs.1,00,000/- (NCD certificate dated

January 10, 2012 issued by Company was enclosed) and thereafter became an

agent of the Company.

iii. The directors of the Company particularly Mr. ParthaChakraborti had by way

of misrepresentation inducted him as a director in the Company.

iv. Immediately on coming to know about the same, the noticee resigned from

the directorship in the Company by submitting Form-32. A copy of such

Form and Agency card ere enclosed. As per Form-32, this noticee has ceased

to be a director w.e.f. February 26, 2014. Noticee had also enclosed Form-32

regarding his resignation from three other Chakra group companies.

v. The noticee was not able to appear on April 22, 2015 and requested for

another opportunity of hearing.

10. Subhas Bose, vide letter dated April 27, 2015, filed his written statement, wherein he had

inter alia submitted as under:

(a) He had joined the Company on October 09, 2011 as „site in-charge‟. During July 2013, Mr.

Partha Chakraborty, the CMD of the Company had requested him to become a director for

three months as he was going out of India. The noticee was assured that he would be

relieved of the directorship position after return of Mr. Partha Chakraborty.

(b) The noticee was forced to take up the position as otherwise he would be sacked from his

employment.

(c)

At the age of 54 years, the noticee did not want to lose his job and so accepted the offer.However, he realized that Mr. Partha Chakraborty did not go anywhere. The noticee, in

December 2013, requested Mr. Partha Chakraborty to release him from the directorship

position. Though the CMD promised to do so, he never kept the promise.


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(d) Thereafter, he had submitted his resignation letter to Mr. Partha Chakraborty who had told

him that he was no longer the CMD and told him to tender the same to the Mr. Santhosh

Kumar said to be the new CMD. When the noticee tendered the resignation letter to Mr.

Santhosh Kumar, he too did not accept stating that he wanted to discuss with Mr. Partha

Chakraborty.

(e) The noticee sent his resignation letter through speed post and e-mail and the same was

received by the Company.

(f) The noticee had received a letter from the liquidator of the Hon‟bleHigh Court with respect

to the affairs of the Company. After going through the details, he was declared “dummy

director”.

(g) The noticee enclosed copies of appointment letter, resignation letter dated February 22,

2014, resignation sent through email on March 09, 2014, letter of Liquidator ( in the matter ofChakraborty Estates Pvt. Ltd. – in liquidation – C.P. No. 22/2013 ) of Hon‟ble High Court and

receipt of speed post.

11. Pursuant to the personal hearing, noticee, Santosh Kumar had sought for an opportunity of

personal hearing. He was afforded another opportunity of personal hearing on July 16, 2015, which

was rescheduled to July 29, 2015. However, he failed to appear in the said personal hearing.

Another noticee, Prithwis Kumar Das was also afforded an opportunity of personal hearing on July

29, 2015. However, vide letter dated July 27, 2015, the said noticee citing his financial condition andage requested that the personal hearing may be held in SEBI‟s office at Kolkata. His request was

accepted and his personal hearing was scheduled in SEBI‟s office at Kolkata on September 04, 2015,

when hearings were scheduled in various other matters also. However, he did not appear in the

hearing. Thereafter, vide letter dated September 14, 2015, Prithwis Kumar Das informed that he

could not appear in the hearing scheduled on September 04, 2015 as he was out of station for his

daughter‟s medical treatment and requested for another hearing. Considering the grounds and

material submitted by him, he was granted another hearing on November 23, 2015 when he

appeared in person and stated that he already filed his reply along with documents. He reiterated his

submissions made in his reply.


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

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

that the Company made a public offer and issued NCDs in violation of sections 56, 60, 73, 117B

and 117C of the Companies Act, 1956 and the ILDS Regulations. In this regard, I note the

following from the interim order:

i. The Company was incorporated on December 12, 2008 with the RoC, Kolkata.

ii. From the e-Form 10 filed by the Company with RoC, it was noted that the Company

passed a Resolution on October 07, 2011 to issue debentures amounting to Rs.10 crore.

iii. The debenture trust was “Chakra Debenture Trust” managed by trustee Mr. Sunil

Kumar Saha. It was also observed that the Company had offered 18% rate of interest on

debentures.

iv. The copy of the brochure cum application form submitted by CIL for the said issue of

debentures inter alia mentions that CIL had issued NCDs on following terms and

conditions:

Scheme I: Non-Convertible Secured Redeemable Debenture

Particulars Plan A Plan B

Period (Year) 3 5 7 10

Min. App. Valueper 10 debentures

(Rs.)

1000 1000 1000 1000

Simple rate of

interest payable

12.5% 12.5% 12.5% 12.5%

Bonus 4.5% 2.5% 4.5% 7%

Scheme II: Regular Income Non-Convertible Secured Redeemable debenture

Particulars Plan C Plan D Period (Year) 3 5 7 10

Min. App. Value

(Rs.)

50000 50000 50000 50000


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Monthly income

per Lakh (Rs.)

1250 1250 1300 1300

Bonus 2% 3% 4% 5%

v.

The Company, vide its letter dated October 09, 2013, provided the details of 48 alloteesto whom it issued NCDs of face value Rs. 100/-each and mobilised funds aggregating

to Rs.10 crore during FY 2012-13.

vi. It was noted from the list of 48 allottes provided by CIL that all the allottees were

individuals except for Chakra Wealth Management Advisory Limited and Chakra

Welfare Society.

vii. SEBI had also received complaints from the debenture holders. From the copies of the

debenture certificates enclosed with the complaints received by SEBI on December 02,

2013, February 27, 2014, March 06, 2014and March 27, 2014, it was noted that such

debentures were also issued during FY 2012-13. The names of the complainants were

not mentioned in the list provided by the company.

viii. The interim order had summarized the details of the NCDs submitted by the Company

and those in the complaints as under:

Year Source of information Amount Raised

(inRs.)

No. of

Allottees

Information provided by CIL 10,00,00,000 48

2012-13 Complaints received and the copies of

debenture certificates enclosed therein

24,18,000 24

Total 10,24,18,000 72

13. The interim order has also made the following observation:

a. “CIL stated that the Offer of NCDs has been made on a private placement basis and provided a

list of 48 investors to whom NCDs aggregating to Rs.10 Crores were issued during FY 2012-13.

However, SEBI received several more complaints wherein the complainants enclosed copies ofdebenture certificates issued to a total of 24 investors. On verification, we find that none of these 24

investors is mentioned in the list of 48 investors provided by CIL. This indicates that CIL issued

NCDs to at least 72 (48+24) investors during FY 2012-13. The NCDs have thus been issued


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to more than 49 persons. SEBI also did not receive any reply from CIL and its directors to our

letters seeking clarifications (further information), despite several reminders. Considering the above

mentioned facts and considering the fact that CIL failed to provide the clarifications sought by SEBI

with regard to the discrepancy in the total number of investors, I am left with no alternative but to

prima facie conclude that the Offer of NCDs was nothing but a public issue of securities under

Section 67(3) of the Companies Act, 1956. It is clear that CIL has deliberately submitted a

truncated list of 48 investors, a mere one less than the threshold of 49, with the sole intention to

depict the issue as a private placemen t”.

14. In order to ascertain whether an issue is a public issue or not, reference needs to be made to

section 67(3) of the Companies Act. This provision, as amended by the Companies (Amendment) Act,

2000, with effect from December 13, 2000, states that no offer or invitation shall be treated as made tothe 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. 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.

15. In the present case, the Company has admitted raising Rs.10 crore through issue of NCDs to

48 investors. As per the information submitted by the Company, allotments to such 48 persons were

done on April 10, 2012 (for 8 persons), June 30, 2012 (for 14 persons) and November 15, 2012 (for


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26 persons). Noticee, Mr. ParthaChakraborti, an ex-director has stated that the Company had issued

debentures to 48 investors and that two of its allottees viz., Chakra Wealth Management Advisory

Limited and Chakra Welfare Society had transferred the NCDs allotted to them to others. I have

perused the submissions of the Company and the list of 48 allottees provided by it. From the same,

I note that 1,27,360 NCDs were allotted to Chakra Welfare Society on November 15, 2012and

780,900 NCDs on June 30, 2012to Chakra Wealth Management Advisory Limited, out of the total

10,00,000 NCDs that were admittedly issued by the Company. From the above, it can be noted that

around 91% of the NCDs were issued to these two entities. It is important to note that these two

entities appear to be part of the Chakra group of companies. Further, as per the details available on

record, it is noted that the 24 complainants had received NCDs on dates (deposit date as per the

NCD certificate issued by the Company) which were in close proximity (allotments starting from

November 30, 2012) with the claimed allotment date for these two entities. The Company hasconsciously kept the number of investors at 48 in order to evade the provision of section 67(3).

Further, it is noted from the submissions of Mr. ParthaChakraborti that the Company had

commenced repayments. The same further fortifies the finding that the contention regarding

„transfer of shares by Chakra Wealth and Chakra Welfare Society to other persons ‟ is only a sham

and for evading compliances required under law.

16. In his submissions, Mr. ParthaChakraborti, while admitting that the Company issued NCDs

for Rs.10 crore contended that Rs.24,18,000/- (amounts as per NCD certificates from 24

complainants) should not be added as the said amount was part of the mobilized Rs.10 crore. In this

regard, I have perused the share certificates forwarded by the complainants and note that such

certificates are issued by the Company directly to such investors and there is no mention of transfer

from Chakra Wealth or Chakra Society. If it was really a case of transfer, the share certificates would

have necessary endorsement regarding transfer. In view of the same, it becomes difficult to accept

the submission of this noticee.

17. Considering the above said facts and circumstances, I find that the Company had engaged an

artifice by first allotting the NCDs to 48 investors and thereafter transfer/allot the same to a number

of investors. Therefore, it is clear that the debentures were meant to be subscribed by the public and


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in order to avoid the provision of section 67(3) and comply with the legal requirements associated

with a public issue of securities, the Company has adopted this ploy to first allot the same to the two

group companies and thereafter transfer securities to numerous investors as alleged in the interim

order. The Company has also not shown, with documents, as to whether the payment was made by

Chakra Wealth or Chakra Society directly to the Company against allotment of debentures.

18. From the above, I hereby conclude that the manner of allotting securities to Chakra Wealth

and Chakra Society and thereafter transferring the same to numerous individuals was a façade and

sham in order to circumvent the provisions of section 67(3) and avoid compliance with the public

issue norms mandated for a public issue under the Companies Act, 1956 and the SEBI Act and

regulations framed thereunder. I therefore find that the Company made a public issue of NCDs

during 2012-2013.

19. In terms of section 55A of the Companies Act, 1956, SEBI shall administer various

provisions (as mentioned therein) of the said Act with respect to issue and transfer of securities by

listed companies, companies that intend to list and also those companies that are required to list its

securities while making offer and issue of securities to the public. While examining the scope of

Section 55A of the Companies Act, 1956, the Hon'ble Supreme Court of India in Sahara Case, had

observed that:

"We, therefore, hold that, so far as the provisions enumerated in the opening portion 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 ".


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20. 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.By making a public issue of 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 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 . …" .

In view of the above, the contention that RoC permitted the Company in issuing the NCDs for

Rs.10 crore put forth by two of the noticees does not have merit.

21. Accordingly, sections 56, 60, 73, 117B and 117C of the Companies Act, 1956 and the

provisions of the ILDS Regulations are required to be complied by a company making a public issue

of securities. These provisions have been allegedly not adhered to by the Company. My observation,

in this regard, are as below:

(i) 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'. Mr. ParthaChakraborti has admitted that the Company did not

circulate any Prospectus or offer document. The Company has therefore not complied

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


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(ii) By making a public issue, 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 choose 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. Further, there is no material to say that the Company has filed an application

with a recognized stock exchange to enable the NCDs to be dealt with in such stock

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

Section 73(2) states that "Where the permission has not been applied under subsection (1) or such

permission having been applied for, has not been granted as aforesaid, the company shall forthwith repay

without interest all moneys received from applicants in pursuance of the prospectus, and, if any such

money is not repaid within eight days after the company becomes liable to repay it, the company and

every director of the company who is an officer in default shall, on and from the expiry of the eighth day,

be jointly and severally liable to repay that money with interest at such rate, not less than four per cent

and not more than fifteen per cent, as may be prescribed, having regard to the length of the period of

delay in making the repayment of such money" .

As the Company failed to make an application for listing of such securities, 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. The liability of

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

impugned securities 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.

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


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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."

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 the above section 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 mobilized by the Company through its offer and issue of

NCDs as alleged in the interim order, from the date when the same was liable to be

repaid till date of actual payment to the investor.

(iii) 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.


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(iv) 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. The interim order has alleged “There is no evidence on record to

indicate that CIL has created a debenture reserve as per the aforesaid provision for NCDs issued

during FY 2012-13. Therefore, I find that CIL has not complied with the provisions of Sections

117C of the Companies Act, 1956 …”

Mr. ParthaChakraborti in his submissions had stated that as per the Balance Sheet as on

March 31, 2012, a provision of Rs.71,525/- was made towards Debenture Redemption

Reserve (DRR) out of the profits of Rs.2,86,098.06/- earned by the Company during

the year and that due to losses sustained by the Company during the year ended March

31, 2013, it was not possible for the Company to book any amount towards DRR. I

have perused the Balance Sheet of the Company as on March 31, 2012 and note that

Rs.71,525/- wasmentioned as “Transfer to Debenture Redemption Reserve ”.

(v) 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 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


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(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.

From the foregoing, I conclude that the Company failed to comply with the stipulation under

sections 56, 60, 73 and 117B of the Companies Act, 1956 read with Companies Act, 2013 and the

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

discussed in this Order and liable for suitable action under the Companies Act, 1956, the SEBI Act

and the ILDS Regulations.

22.

The interim order was issued against SwapanMajumdar, Pranab Kumar Roy, Subhas Bose,

ParthaChakraborti, Soma Chakraborti, Swapan Kumar Sen, Prithwis Kumar Das, Litan Chandra

Sen, BiplabHalder, Santosh Kumar and Bijoy Das. These persons are either the present or former

directors of the Company. Despite affording opportunities, Litan Chandra Sen, BiplabHalder and

Bijoy Das have not filed their submissions. The following table presents (information from

RoC/MCA) the date when the noticees were appointed as directors and also the date of resignation,

if applicable:

Name Date of appointment Date of resignation, ifapplicable

SwapanMajumdar 03/08/2012* Continues as directorPranab Kumar Roy 03/07/2013 Continues as directorSubhas Bose 03/07/2013 Continues as directorParthaChakraborti 12/12/2008* 03/07/2013Soma Chakraborti 12/12/2008 21/04/2012Swapan Kumar Sen 06/07/2009 21/04/2012Prithwis Kumar Das 21/04/2012 08/08/2012Litan Chandra Sen 21/04/2012 01/07/2012BiplabHalder 21/04/2012 03/07/2013Santosh Kumar 22/11/2013 26/02/2014Bijoy Das 22/11/2013 26/02/2014* Date of original appointment

Regarding their culpability in this matter, I observe the following:


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(a) 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 being responsible for the

conduct of the business of a company will be liable for any non-compliance of law and such

liability shall be upon the individual directors also.

(b) 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

MadhavanNambiar 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 isexonerated of the statutory obligations which are imposed under the Act and the rules and he cannotcontend 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 memberof the Indian Administrative Service and in the cadre of Secretary to Government when appointed asa director on the orders of the Government to a Government company or a joint venture company, heis expected not only to discharge his usual functions, but also take such diligent care as a director ofthe company as it is expected of him not only to take care of the interest of the Government, but alsoto see that the company complies with the provisions of the Companies Act and the rules framedthereunder. Therefore, the second contention that the petitioner cannot be proceeded against at all ashe is only a nominee or appointed director by the State Government, cannot be sustained in law. Adirector either full time or part time, either elected or appointed or nominated is bound to dischargethe functions of a director and should have taken all the diligent steps and taken care in the affairsof the company.

14. In the matter of proceedings for negligence, default, breach of duty, misfeasance or breach of trustor violation of the statutory provisions of the Act and the rules, there is no difference or distinctionbetween the whole-time or part time director or nominated or co-opted director and the liability forsuch acts or commission or omission is equal. So also the treatment for such violations as stipulatedin the Companies Act, 1956.

15. Section 5 of the Companies Act defines the expression "officer who is in default". Theexpression means either (a) the managing director or managing directors ; (b) the whole-time directoror whole-time directors ; (c) the manager ; (d) the secretary ; (e) any person in accordance with whosedirections or instructions the board of directors of the company is accustomed to act; (f) any personcharged 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 thedirectors.

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


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petitioner or other directors who have been nominated by the Government either ex officio orotherwise. Hence the second point deserves to be answered against the petitioner.

17. As regards the first contention, it is contended by Mr. Arvind P. Datar, learned senior counselappearing 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 adelegation, but ultimately it comes before the board and it is the board and the general body of thecompany which are responsible.”

{Emphasis supplied}

(c) 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.

(d) The allotment of NCDs were made during FY 2012-2013 on various dates as seen from the

information submitted by the Company and the date of the certificates submitted by the

complainants. The Company is found to have contravened the provisions of sections 56, 60,

73 and 117Bof the Companies Act, 1956 and the ILDS Regulations.

(e) From the details pertaining to the tenure of the directors, as mentioned in the table above, it

can be inferred that –

a. ParthaChakraborti, Soma Chakraborti, Swapan Kumar Sen, BiplabHalder, Litan

Chandra Sen, Prithwis Kumar Das and SwapanMajumdar were the directors of the

Company when the Company made the offer and allotment of NCDs during 2012-

2013 in violation of the law.

b.

Bijoy Das, Pranab Kumar Roy, Subhas Bose and Santosh Kumar had joined the

board pursuant to the allotment of NCDs.

(f) 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


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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. Further, the directors of a company would also be

responsible for complying with the provisions of the ILDS Regulations.

(g) 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 liabilityand 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 continuingliability,the persons who join the Company‟s Board pursuant to the offer and allotment of

NCDs shall also be liable if the Company and the concerned directors have failed to make

refunds as mandated under law.

(h) In view of the above observations, the submissions made by the noticees (arrayed as

present/past directors in the interim order) that they were the past directors; they did not

have any role in the affairs of the Company; they were inducted by misrepresentation and

did not give effect to their resignation do not have merit. However, such persons are atliberty to pursue remedies available under law.

(i) Accordingly, ParthaChakraborti, Soma Chakraborti, Swapan Kumar Sen, BiplabHalder,

Litan Chandra Sen, Prithwis Kumar Das and SwapanMajumdarshall be liable for the

violations as found against the Company in this Order as well as for default in making

refunds to the investors with attendant interest. They shall therefore be liable for necessary

enforcement action.

(j) Though Bijoy Das, Pranab Kumar Roy, Subhas Bose and Santosh Kumar joined the

Company‟s board pursuant to the allotments, they were also jointly and severally liable

(along with Company and others as found in the above sub-paragraph) to make refunds (as


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such liability is not yet discharged) in terms of section 73(2) of the Companies Act read with

section 27 of the SEBI Act along with interest. As they have not remedied the violations by

making refunds and have also not taken steps to report the violations to the regulator, they

shall also be liable to make refunds along with other enforcement action.

23. Theinterim order has alleged that the Chakra Debenture Trust(represented by its trustee Mr.

Sunil Kumar Saha) acted as the debenture trustee with respect to the NCDs issued by the Company,

without registration from SEBI as required under section 12(1) of the SEBI Act and have also not

satisfied the eligibility condition stipulated under regulation 7 of the DT Regulations. As per the

trust deed, it is seen that Mr. Sunil Kumar Saha is the trustee of the Chakra Debenture Trust, the

debenture trust. This noticee has not filed any response despite affording opportunities. In this

regard, I note that the noticee is not registered with SEBI to perform the functions of a „debenturetrustee‟ in the securities 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."

Mr. ParthaChakraborti, in his submissions, had contended that the Trustee of Chakra Debenture

Trust cannot be said to have failed to meet the eligibility criteria specified under the provisions of

the DT Regulations. According to him, the Company never issued Prospectus or letter of offer to

the public for subscription of its debentures and that the Company appointed a trustee after

registering the Trust Deed and has complied with the provisions of section 117B of the Companies

Act. His contention is that the debenture trust along with the trustee were not required to get

themselves registered with SEBI as the Company did not make a public issue of NCDs. I have

considered such submissions. It is already held in this Order that the Company made a public issue

of NCDs. The Company was therefore required to comply with the mandatory public issue norms

stipulated under the Companies Act, 1956 and the ILDS Regulations. Though, the Company may

have engaged the services of Mr. Sunil Kumar Saha as the trustee of the Debenture Trust, such


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person ought to be eligible to act as a „debenture trustee‟ in accordance with the eligibility conditions

prescribed under the SEBI Act and the DT Regulations. Accordingly, the contentions of Mr.

ParthaChakraborti made above do not have merit.

Accordingly, Chakra Debenture Trust(represented by its trustee Mr. Sunil Kumar Saha) is found

to have violated section 12(1) of the SEBI Act and regulation 7 of the DT Regulations for which

they are liable for necessary enforcement action. Further, in view of these observations, it can also

be said that the provisions of section 117B of the Companies Act, 1956 have not been completely

complied with.

24. 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 11Bthereof and regulation 28 of the SEBI (Issue and Listing of Debt Securities) Regulation, 2008 hereby

issue the following directions:

(a) Chakra Infrastructure Limited, ParthaChakraborti, Soma Chakraborti, Swapan Kumar Sen,

BiplabHalder, Litan Chandra Sen, Prithwis Kumar Das, SwapanMajumdar, Bijoy Das,

Pranab Kumar Roy, Subhas Bose and Santosh Kumar, jointly and severally, shall forthwith

refund the money collected by the Company through the issuance of Non-Convertible

Debentures ( which have been found to be issued in contravention of the public issue norms stipulated under

the Companies Act, 1956 and the ILDS 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 orPay Order.


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(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.

However, in view of the writ petition pending before the Hon‟ble High Court against the

action of the State of West Bengal, the above direction shall be harmoniously read with the

Orders of the Hon‟bleHigh Court/State Govt.

(d) The Company andits directorsshall 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").

(f) Chakra Infrastructure Limited, ParthaChakraborti, Soma Chakraborti, Swapan Kumar Sen,

BiplabHalder, Litan Chandra Sen, Prithwis Kumar Das, SwapanMajumdar, Bijoy Das,

Pranab Kumar Roy, Subhas Bose and Santosh Kumar 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, Chakra Infrastructure Limited, ParthaChakraborti, Soma

Chakraborti, Swapan Kumar Sen, BiplabHalder, Litan Chandra Sen, Prithwis Kumar Das,

SwapanMajumdar, Bijoy Das, Pranab Kumar Roy, Subhas Bose and Santosh Kumar, in


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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 initiateappropriate action as deemed fit.

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

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

any other regulatory authority.

(h) Chakra Infrastructure 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 inthe securities market, directly or indirectly in whatsoever manner, from the date of this

Order till the expiry of4 yearsfrom the date of completion of refunds to investors as directed

above.

(i) ParthaChakraborti, Soma Chakraborti, Swapan Kumar Sen, BiplabHalder, Litan Chandra

Sen, Prithwis Kumar Das, SwapanMajumdar, Bijoy Das, Pranab Kumar Roy, Subhas Bose

and Santosh Kumarare 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


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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 of4 yearsfrom the date of completion of

refunds to investors, as directed above.

(j) Chakra Debenture Trust and its trustee Mr. Sunil Kumar Sahaare 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.

25. 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.

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

for information and necessary action.

27.

A copy of this Order shall also be forwarded to the Ministry of Corporate Affairs/concernedRegistrar 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: April 20, 2016Place: Mumbai


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order in the matter of chakra infrastructure limited

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