WTM/PS/ERO/64/JAN/2015

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA

CORAM : PRASHANT SARAN, WHOLE TIME MEMBER
ORDER
Under sections 11(1), 11(4), 11A and 11B of the Securities and Exchange Board of India Act,
1992
In respect of (1) Golden Life Agro India Limited, its Directors, namely, (2) Mr. Tipu Sultan,
(3) Mr. Biswanath Mondal, (4) Mr. Subhas Sarkar, (5) Mr. Nirjal Pal, (6) Mr. Swapan
Sadhukhan, (7) Mr. Chandan Debnath and (8) Mr. Uttam Chakraborty and its Debenture
Trustees, namely, (9) Mrs. Jyotsna Sadhukhan and (10) Mrs. Jharna Sarkar
Date of hearing : July 08, 2014
Mr. Bichitra Nanda Muni, Advocate appeared on behalf of all the noticees
For Securities and Exchange Board of India : Ms. Anitha Anoop, Deputy General Manager, Mr.
Prasenjit Dey, Assistant General Manager and Mr. T. Vinay Rajneesh, Assistant General Manager
1.

Securities and Exchange Board of India ("the SEBI") had conducted an enquiry into the

business activities of the company, Golden Life Agro India Limited (hereinafter referred to as "the
Company" or "GLAIL") pursuant to the receipt of the copy of the Order dated July 15, 2013 passed
by the Hon'ble High Court of Calcutta ("the Hon'ble High Court") in the matter of Golden Life Agro
India Ltd. vs. State of West Bengal [W. P. No. 16338 (W) of 2013], wherein it was directed:
"Let the matter appear three weeks hence for independent reports to be filed by the State, the Reserve Bank of
India and the SEBI into the business conducted by the petitioner company (GLAIL) and its legitimacy."
2.

The abovementioned W. P. No. 16338 (W) of 2013 was filed by the Company challenging

the Notification issued vide Order No. 1650(19) by the Inspector General Registration, State of
West Bengal, "banning the execution and registration of Deed of Conveyance and/or any way transfer the properties
of the listed companies.".

Page 1 of 20

Brought to you by http://StockViz.biz

3.

In the course of the examination, SEBI vide its letters dated July 22, 2013 issued to the

Company and its Advocate, inter alia stated "It has come to our notice that you (GLAIL) are raising funds
from public by issuing Non-Convertible Redeemable Secured Debentures (hereinafter referred to as "NCDs")
ostensibly by way of private placement. No Prospectus or DRHP or statement in lieu of prospectus or information
memorandum (was) filed with (SEBI)", and sought the following information/documents :
i.
ii.
iii.
iv.
v.
vi.

4.

Copy
of Prospectus/Red
Herring Prospectus/Statement
in lieu of
Prospectus/Information Memorandum filed with ROC for issuance of NCDs.
Copy of the Memorandum and Articles of Association of the company;
Audited Balance Sheet and Profit & Loss Account of the company for the last 3 years;
Name, addresses and occupation of all the promoters/directors of the company;
Names and details of the Key Managerial Personnel of the company;
Other information in respect of every series of NCDs issued by the company, viz.
a.
Date of opening and closing of the subscription list;
b.
Details regarding the number of application forms circulated inviting subscription;
c.
Details regarding the number of applications received;
d.
Details regarding the number of allottees and list of such allottees;
e.
Number of NCDs allotted and value of such allotment against each allottee's
name.
f.
Details regarding subscription amount raised;
g.
Date of allotment of NCDs;
h.
Copies of the minutes of Board/Committee meeting in which the resolution has
been passed for allotment;
i.
Date of dispatch of NCDs;
j.
Details of the total number of applicants for each of GLAIL's scheme besides the
list of final allottee;
k.
Copies of application forms, pamphlets, advertisements and other promotional
material circulated for issuance of NCDs.
l.
Terms and conditions of the issue of NCDs.

Though the letter issued to the Company returned undelivered, the Advocate of the

Company, Mr. T. Talukder, vide reply dated August 6, 2013, while forwarding a copy of the Audited
Balance Sheet and Profit & Loss Account for the year ended March 31, 2012 along with a Compact
Disc containing details of NCDs issued by GLAIL, inter alia had submitted the following
i.

"Copy of Prospectus No copy filed with ROC as the issue of debenture is on Private Placement.

Page 2 of 20

Brought to you by http://StockViz.biz

ii.
iii.

5.

Date of opening and closing Date of opening 27.12.2010 and date of closing 31.03.2013.
Details regarding the number of applications No application form circulated to the general public. The
application form provided only to the intended subscribers without any right to pass on the offer to any
other person to whom the offer was not made directly."

The Hon'ble High Court vide Order dated August 06, 2013 passed in the abovementioned

matter [i.e., in W. P. No. 16338 (W) of 2013], had directed as under:

"Let the matter appear three weeks hence to establish comprehensive reports or affidavits to be filed by the
Finance Department of the Government of West Bengal, Reserve Bank of India and the SEBI on the
functioning of the petitioner company (GLAIL), the legitimacy of its business and the persons from whom
money may have been obtained by the petitioner company. The petitioner company should also indicate a
comprehensive list of all its assets and properties.
There will be an order of injunction restraining the petitioner company from dealing with or disposing or
alienating any of its fixed assets without the previous leave of Court."
6.

Thereafter, in compliance with the Order dated August 06, 2013 of the Hon'ble High Court,

SEBI submitted an 'Examination Report' on the activities of the Company, in the hearing held in the
matter on September 2, 2013. On the said date, while disposing of the W. P. No. 16338 (W) of 2013,
the Hon'ble High Court made the following observations/directions:
"SEBI has filed a report, following the representations made by the petitioner company. The report indicates
violation of several provisions including the company having resorted to obtaining funds from the public
without either applying for mandatory listing or having its offer documents vetted by the appropriate
authorities.
In view of what appears from the SEBI report, the appropriate authorities are directed to take steps in
accordance with law against the petitioner and particularly the officers of the petitioner company responsible for
the multiple defaults.
There will be an order of injunction restraining the petitioner company from dealing with or disposing of or
alienating or encumbering any of its assets without the previous leave of the SEBI and the SEBI leave should
not be granted without an Executive Director of SEBI approving the same.
It will be open to the petitioners to cause all of any of their assets or properties to be sold under the aegis of
SEBI under any asset sale committee that may be set up by SEBI for the purpose of refund of money which

Page 3 of 20

Brought to you by http://StockViz.biz

appears to have been illegally obtained from the depositors. Both the SEBI and the ROC should monitor the
activities of the petitioner company and ensure strict compliance of this order."
7.

In the meanwhile, SEBI had also sought explanations/clarification from M/s. C K Jain &

Company, Chartered Accountants (the Auditors of the Company) regarding the 'Audit Report for
the year ended March 31, 2013' and also from Neha Kedia (the Company Secretary of the Company)
regarding the 'Compliance Certificate for the year ended March 31, 2013'. Pursuant to submission
of 'Examination Report' to the Hon'ble High Court and upon receipt of the abovementioned replies
from Auditors and Company Secretary, SEBI had vide letter dated October 25, 2013, sought
clarification and also advised GLAIL to submit rectified copies of Annual Account and Annual
Report of the company for the year ended March 31, 2012 and also the annual account for the year
201213, in view of inter alia the following
"Auditor's report for the year 2011 2012, auditor has certified that the company has not issued any
debentures during the year. As per the Audited Balance Sheet of your company for the year 2011-2012, it
was noticed that the company had issued debentures for 11,90,62,085. It is observed that such issuance on more than
once occasion to more than 49 persons without following SEBI Regulations and without filing any offer document with
SEBI, prima facie, is in contravention of SEBI Act, 1992 and Regulations made thereunder.
Page 34 of the report for the same year; practicing company secretary has certified that there was no
redemption of preference shares or debentures during the financial year. But as per Audited
Balance Sheet for the year 2011-2012, there is a redemption of debentures in the same year for an amount of

`2,50,16,855.
we had taken up the matter with your auditor as well as the company secretary it was replied by your auditor
that the company did issue debentures in the year 2011 12 for an amount of `12,19,64,355 and confirmed that they
had already submitted the rectified report to the management. However it is noticed that you had not filed the
rectified report through your advocate on August 6, 2013, although the same was available with you
Further, as per debenture details given by you, it was observed that the company has also issued debentures in the year
2009 2010 for an amount of `5000 but as per the submissions made by you and MCA portal, date of
incorporation of the company is September 15, 2010. If that be so, please clarify as to how the company has issued
debentures prior to its incorporation."

8.

A copy of the abovementioned letter dated October 25, 2013, which was returned to SEBI

as undelivered, was subsequently forwarded to the Company's Advocate, Mr. T. Talukder on

Page 4 of 20

Brought to you by http://StockViz.biz

November 22, 2013, in accordance with the request made by him vide letter dated October 28, 2013.
However, the Company (through its advocate) failed to respond to this letter. Thereafter, SEBI
issued a public advisory in several leading national and regional newspapers on November 27, 2013,
cautioning investors against the illegal mobilization of funds by GLAIL. In response to the
abovementioned public advisory issued by SEBI, the Company vide letter dated December 27, 2013,
while stating that it had instructed its Advocate to challenge the Order of the Hon'ble High Court
dated September 2, 2013 [in W. P. No. 16338 (W) of 2013], inter alia requested SEBI to not make any
such further publication. SEBI vide letter dated January 10, 2014, while acknowledging the receipt of
GLAIL's letter dated December 27, 2013, advised it to the submit the following
information/documents:
i.
ii.
9.

Certified copies of Balance Sheet, P&L and Cash Flow Statement of the company for
the last three years i.e. 201011, 201112 & 201213;
Details of all the movable and immovable assets of GLAIL.

A copy of the abovementioned letter dated January 10, 2014, which returned undelivered,

was subsequently forwarded to the Mr. B. N. Muni, Advocate on February 10, 2014, in accordance
with the request made by the Company vide letter dated December 27, 2013. However, GLAIL
(through its advocate) has not responded to the abovementioned letter.
10.

Thereafter, SEBI on considering the material available on record i.e. correspondences

exchanged between SEBI and the Company, the documents contained therein; information obtained
from the 'MCA 21 Portal'; the Examination Report submitted to the Hon'ble High Court; replies
received from the Company's Auditors and the Company Secretary, the documents available on
record, SEBI came to a prima facie observation that the Company is engaged in fund mobilizing
activity from the public through its offer of Non-Convertible Redeemable Secured Debentures
("NCDs") which were done in contravention of the provisions of sections 56, 2(36) read with 60,
73, 117B and 117C of the Companies Act, 1956 read with the Companies Act, 2013 and the various
provisions of the SEBI (Issue and Listing of Debt Securities), Regulations, 2008 ("the Debt
Securities Regulations"). In view of such prima facie violations committed by the Company, its
directors and debenture trustees, and in order to protect the interest of investors and to ensure only
legitimate fund raising activities are carried on by the Company, SEBI vide an ex-parte interim

Page 5 of 20

Brought to you by http://StockViz.biz

Order dated May 15, 2014 ("the SEBI Order") had issued the following directions against the
Company and its directors :

14.

"..........
In view of the foregoing, I, in exercise of the powers conferred upon me under Sections 11, 11(4), 11A and
11B of the SEBI Act read with the Debt Securities Regulations and the Debenture Trustee Regulations,
hereby issue the following directions
i.

GLAIL shall not mobilize funds from investors through the issue of NonConvertible Redeemable
Secured Debentures 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. GLAIL and its Directors, viz. Shri Tipu Sultan, Shri Biswanath Mondal, Shri Subhas Sarkar,
Shri Nirjal Pal, Shri Swapan Sadhukhan, Shri Chandan Debnath and Shri Uttam Chakraborty,
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. GLAIL 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 issue of NonConvertible
Redeemable Secured Debentures, without prior permission from SEBI, in consonance with the Order of
the Hon'ble Kolkata High Court passed on September 2, 2013 in W. P. No. 16338(W) of 2013;
iv. GLAIL and its abovementioned Directors shall not divert any funds raised from public at large
through the issue of NonConvertible Redeemable Secured Debentures, which are kept in bank
account(s) and/or in the custody of GLAIL;
v. Smt. Jyotsna Sadhukhan and Smt. Jharna Sarkar are prohibited from continuing with their present
assignment as debenture trustees in respect of the issue of NonConvertible Redeemable Secured
Debentures of GLAIL 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."
11.

The SEBI Order has also observed that the Company was incorporated on September 15,

2010 with the Registrar of Companies, Kolkata, West Bengal. The Directors of the Company are
Mr. Tipu Sultan, Mr. Biswanath Mondal, Mr. Subhas Sarkar, Mr. Nirjal Pal, Mr. Swapan Sadhukhan,
Mr. Chandan Debnath and Mr. Uttam Chakraborty. The Company had invited subscription for
NCDs of `2546 lakhs in accordance with its schemes/plans.

Page 6 of 20

Brought to you by http://StockViz.biz

(i) As per Scheme I (Multiplier Non-Convertible Redeemable Secured Debenture) under Plan A, 36
debentures are issued for a price of Rs.3600/- and the redemption value is Rs.4230/- after a period
of 15 months+ 1 day. Similarly, under this Plan, the Company has solicited subscriptions for issue
of 48 debentures (issue price: Rs.4800/-; redemption value - Rs.6315/- ; and redemption period - 27
months + 1 day), 36 debentures (issue price - Rs.3600/-; redemption value - Rs.5238/- ; and
redemption period : 39 months + 1 day) and 60 debentures (issue price - Rs.6000/- ; redemption
value - Rs.10410/- ; and redemption period - 63 months + 1 day).
(ii) As per Scheme II, the Company has three plans - Plan B, C and D. The issue price (for minimum
10 debentures) under such plans is Rs.1000/- and the redemption value changes as per the
redemption period. For example, under Plan B, the redemption value is Rs.1500/- for a 3 years
redemption period; and Rs.2000/- for a 4.5 years redemption period. Under Plan C, the redemption
value is Rs.3000/- for 7 years redemption period and Rs.6000/- for a 10 years redemption period.
For plan C, the redemption periods are 12 years (Rs.10000/-) and 15 years (Rs.14000/-).
(iii) Under Scheme III and Plan E, the Company solicits a minimum subscription of Rs.50,000/with 'Dividend payable monthly' and the rate of such 'dividend' varies as per the redemption period.
For redemption period of 1 year +1 day, the rate is 12%; for 3 years it is 13%; for 5 years it is 14%
and for 10 years, the rate is 15%. The brochure/solicitation material also mentions that a maturity
bonus of 1.5% for 5 years and 2% for 10 years is available for this plan.
(d) The Company had issued NCDs on several occasions since incorporation, to a large number of
investors, details of which are reproduced below:
Type of
Security

Year

No.
of
subscribers
to the Issue

Total Amount
(` in Crores)

*2009-10

NCDs

0.0005

2010-11

NCDs

4998

2.31

2011-12

NCDs

19904

8.91

2012-13

NCDs

12

0.0855

24915

11.30 (approx.)

Total

* (seems to be a typographical error by the company, as the company was incorporated on Sept 15,
2010, i.e., during FY 2010-2011)

Page 7 of 20

Brought to you by http://StockViz.biz

(e)

As the Company had offered and allotted NCDs to more than 49 investors during the

financial years 2010-2011 and 2011-2012, the issue of NCDs was a public issue in terms of first
proviso to section 67(3) of the Companies Act, 1956.
(f)

The SEBI Order had also observed from the provisional balance sheet of the Company for

the year 2012-2013, that Debentures issued by the Company was for `22.50 Crores and the application
money received on such Debentures was `7.70 Crores. The SEBI Order has alleged that the Company
failed to comply with the requirements specified for public issue of securities as provided under
section 56, section 60 read with section 2(36), section 73 of the Companies Act, 1956 read with the
provisions of the Debt Securities Regulations.
(g)

The SEBI Order had further observed that the Company had failed to provide

information/documents to SEBI in respect of its issuance of NCDs to the public, as advised by

SEBI during the preliminary examination.

The Company was also alleged to have provided

incomplete and contradictory information with respect to its offer of NCDs for the period 20122013. The relevant observation from the SEBI Order is mentioned below :
"13.12 In addition, I note that GLAIL submitted incomplete and contradictory information in respect of the "Offer
of NCDs" for the period 201213, wherein while submitting to SEBI that the amount raised during the period was

`0.0855 Crores, it was however, observed from the provisional balance sheet for that financial year (as submitted by
GLAIL in W. P. No. 16338 (W) of 2013), that the Debentures issued by that company was `22.50 Crores and
the application money received on such Debentures was `7.70 Crores ............ I find that more than a reasonable
opportunity has been afforded to GLAIL to respond to SEBI and its refusal do so, when considered in light of the
abovementioned prima facie finding at paragraphs 13.113.11, leads me to believe that such refusal to submit the
information sought was only to conceal the true nature and operation of the fund mobilising activity by way of the
"Offer of NCDs".
(h)

The SEBI Order further observed that the Company had appointed Mrs. Jyotsna Sadhukhan

and Mrs. Jharna Sarkar as its Debenture Trustees with respect to its issue of NCDs and that the said

Page 8 of 20

Brought to you by http://StockViz.biz

individuals have prima facie failed to meet the eligibility criteria specified under the SEBI (Debenture
Trustees) Regulations, 1993 ("the DT Regulations). Therefore, the Debenture Trustees were alleged
to have acted as unregistered Debenture Trustees in violation of section 12(1) of the Securities and
Exchange Board of India Act, 1992 ("the SEBI Act") and regulation 7 of the DT Regulations.
12.

The directions issued vide the SEBI Order came into immediate effect from the date of the

Order. The SEBI Order advised the Company, its directors and debenture trustees that they may file
their reply and avail an opportunity of personal hearing. For the sake of convenience, the Company,
its directors and debenture trustees are collectively referred to as "the noticees".
13.

Thereafter, the Company vide letter dated June 04, 2014 sought extension of time for filing

its reply. In this regard, the noticees were afforded an opportunity of personal hearing on July 08,
2014 and the same was communicated vide SEBI's letter dated June 23, 2014.
14.

In the personal hearing held on the scheduled date, Mr. Bichitra Nanda Muni, Advocate

appeared for the noticees and requested permission to file written submissions with respect to the
observations and allegations contained in the SEBI Order. This request was allowed. Thereafter, the
learned Advocate filed written submissions vide letter dated July 12, 2014, wherein the following
submissions were inter alia made:
a)

The Company has obtained 'charge creation certificate' for the amount of
Rs.25,46,00,000/- from the concerned Registrar of Companies regarding its privately
placed debentures.

b)

The Hon'ble High Court of Calcutta vide Order dated September 02, 2013 has
observed "It will be open to the petitioners to cause all or any of their assets or properties to be sold
under the aegis of SEBI under any asset sale committee that may be set up by SEBI for the purpose
of refund of money which appears to have been illegally obtained from the depositors. Both SEBI
and Registrar of Companies, West Bengal, should monitor the activities of the petitioner company
and ensure strict compliance of this order. " This portion of the Hon'ble High Court's was
not taken into consideration in the SEBI Order.

c)

The request made by Company/Advocate vide letter dated December 27, 2013 for
formation of 'sale committee' and the name of members was not answered.

Page 9 of 20

Brought to you by http://StockViz.biz

d)

In pursuance of the Hon'ble High Court's Order, the Company claims to provide the
list of its assets (immovable) along with photo-copy of sale deeds. (Annexure 'C' of
this reply).

e)

The valuation report of the cold storage and other such assets of the Company were
stated to be placed as Annexure 'D' of the reply.

f)

The audited balance sheet for the year ended on March 31, 2013 was annexed as
Annexure 'E'.

g)

The Company undertook that it does not mobilize any funds from investors by
further issuance of equity shares or any other securities or by way of any invitation
from public, either directly or indirectly, or through any unsecured loans.

h)

The Company and its directors undertook not to issue any prospectus or any offer
documents or issue advertisements soliciting money from public by issue of any sort
of securities either directly or indirectly.

i)

The Company and its directors further undertook that they would not divert,
dispose, alienate and encumber any assets and properties of the Company.

j)

The Debenture Trustees of the Company undertook that they will not involve any
such new assignment or involvement in any new issue of debentures till further
orders.

The Company has submitted that it has provided substantial assets vide annexures 'C' and 'D' for
earlier redemption of total unpaid debentures and accordingly it is desirable that SEBI treats the
matter as closed and no action be contemplated against the Company or its directors. Vide letter
dated July 24, 2014, the Company has submitted that it is engaged in fulfilling its commitment made
towards the customers and is trying its utmost effort for disposing its assets and make payments.
15.

Thereafter, vide letter dated November 03, 2014, the Company stated that since the filing of

the writ petition before the Hon'ble Calcutta High Court (i.e., W.P. 16338 of 2013), the Company is
not collecting money from the general public. The Company reiterated that it has submitted the list
of its assets and requested SEBI to speed up the formation of the 'Asset Sale Committee' in
compliance with the directions of the Hon'ble Calcutta High Court. The Company undertook to
provide information and documents if sought by SEBI. The Company also stated that in order to
prove its bonafide intention in making payments to its creditors and to comply with the Order of the

Page 10 of 20

Brought to you by http://StockViz.biz

Calcutta High Court and to assist the SEBI/Asset Sale Committee, it is willing to make a suitable
newspaper advertisement in leading dailies. The Company also forwarded a letter dated November
17, 2014 requesting SEBI to form the 'Asset Sale Committee'.
16.

I have perused the observations and allegations made in the SEBI Order, the submissions

made by the Company/noticees and other material available on record. The allegation against the
noticees are that (a) the Company had issued NCDs to the public {in terms of the first proviso to section 67(3) of the
Companies Act, 1956} without complying with the public issue norms laid down under sections 56,
60 read with 2(36) and 73 of the Companies Act, 1956 (read with section 465 of the Companies Act,
2013) and the other requirements specified under the Debt Securities Regulations ;
(b) The directors of the Company namely Mr. Tipu Sultan, Mr. Biswanath Mondal, Mr. Subhas
Sarkar, Mr. Nirjal Pal, Mr. Swapan Sadhukhan, Mr. Chandan Debnath and Mr. Uttam Chakraborty,
are responsible for the above alleged violations ; and
(c) The Debenture Trustees, namely, Mrs. Jyotsna Sadhukhan and Mrs. Jharna Sarkar did not meet
the eligibility criteria as they were not registered as Debenture Trustees with SEBI, as required under
section 12(1) of the SEBI Act and regulation 7 of the DT Regulations.
17.

I have perused the reference/letter dated January 24, 2014 from the Office of Registrar of

Companies (West Bengal) to SEBI, wherein, it is stated that as per Form-20B (Form for filing annual
return by a company having a share capital with the RoC) dated August 14, 2012 in respect of Annual
Return of the Company for the year ended March 31, 2012, the indebtedness of the Company is
shown as Rs.11,29,99,400/-. The Company had informed RoC that it has raised/issued debentures
of Rs.11,29,99,400/- till March 31, 2012 from 24,915 allottees. In view of the same, RoC had
inferred that debentures were issued to large number of persons thereby violating public issue norms
governed by SEBI.
18.

I have perused the Balance Sheet of the Company for the financial year 2012-2013, wherein

the Company has stated that as at March 31, 2013, its Long Term Borrowing (Note:3) i.e., NonConvertible Debenture was Rs.16,22,41,930/-

(Rs.16 crores approx.).

This amount stood at

Rs.9,40,45,230/- as on March 31, 2012. The Company has also stated that the "above Non Convertible
debentures have been issued at an effective interest rate of 14% p.a....".

Page 11 of 20

Brought to you by http://StockViz.biz

19.

The Company, as per the SEBI Order, is alleged to have offered and issued securities i.e.,

NCDs during the financial years 2010-2011, 2011-2012 and 2012-2013 to 24,915 investors and
raised approximately 11.30 crores from the public. The SEBI Order has stated that the Company
had issued NCDs to 12 investors during 2012-2013 and raised Rs.85,500/-. However, as per the
Balance Sheet which has now been filed, it is seen that the Company has raised Rs.6,81,96,700/during 2012-2013. The Balance Sheet does not disclose the number of allottees. However, going by
the past trends, it is likely that this substantial amount too might have been raised from more than
49 investors. The noticees have not asserted that this amount was raised from less than 50 investors.
Further, the latest Balance Sheet i.e., for the period 2013-2014 is not available on the MCA website.
Therefore, SEBI is not able to ascertain the amount collected by the Company from the public by
issuing the NCDs during the financial year 2013-2014 and thereafter.
20.

Considering the above, it can be observed that the Company by issuing NCDs to more than

49 investors during the financial years - 2010-2011, 2011-2012 and 2012-2013 had made a public
issue of NCDs by virtue of first proviso to section 67(3) of the Companies Act, 1956. Section 67 of
the Companies Act, 1956, reads as under :
"67. (1) Any reference in this Act or in the articles of a company to offering shares or debentures to the public shall,
subject to any provision to the contrary contained in this Act and subject also to the provisions of sub-sections (3) and
(4), be construed as including a reference to offering them to any section of the public, whether selected as members or
debenture holders of the company concerned or as clients of the person issuing the prospectus or in any other manner.
(2) ...
(3) No offer or invitation shall be treated as made to the public by virtue of sub-section (1) or sub- section (2), as the
case may be, if the offer or invitation can properly be regarded, in all the circumstances(a) as not being calculated to result, directly or indirectly, in the shares or debentures becoming available for
subscription or purchase by persons other than those receiving the offer or invitation; or
(b) otherwise as being a domestic concern of the persons making and receiving the offer or invitation

Provided that nothing contained in this sub-section shall apply in a case where the offer or
invitation to subscribe for shares or debentures is made to fifty persons or more:
Provided further that nothing contained in the first proviso shall apply to non-banking financial companies or
public financial institutions specified in section 4A of the Companies Act, 1956 (1 of 1956).

Page 12 of 20

Brought to you by http://StockViz.biz

A reading of the above, makes it clear that in terms of the first proviso to section 67, 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. In this case, the Company had issued and allotted
NCDs during the above said financial years to investors who are substantially in excess of 49.
Therefore, the offer and issue of NCDs by the Company cannot be said to be a 'private placement',
as contended by the Company. By virtue of the above provision, the issue of NCDs by the
Company is a public issue of such securities. 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. "
21.

As it is found that the Company has issued NCDs to the public during FY-2010-2011, 2011-

2012 and 2012-2013, it was supposed to comply with public issue norms as prescribed under the
Companies Act, 1956 including sections 56, 60 [read with section 2(36)] and 73 of the Companies
Act, 1956. 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'. Further, by issuing NCDs to more than 50 persons, the
Company had to compulsorily list such securities in compliance with section 73 of the Companies
Act, 1956. As per section 73(1) and (2) of the Companies Act, 1956, a company is required to make
an application to one or more recognized stock exchanges for permission for the shares or
debentures to be offered to be dealt with in the stock exchange and if permission has not been
applied for or not granted, the company is required to forthwith repay with interest all moneys
received from the applicants. The Company appears to have contravened the said provisions as it
has neither made an application seeking listing permission nor refunded the amounts on account of
such failure. The Company has also not complied with the provisions of section 73(3) as it has not

Page 13 of 20

Brought to you by http://StockViz.biz

kept the amounts received from investors in a separate bank account and failed to repay the same in
accordance with section 73(2) as observed above. The Company has admittedly did not comply
with the above said provisions of law.
22.

In terms of section 55A of the Companies Act, 1956, sections 55 to 58, 59 to 81 (including

Sections 68A, 77A and 80A), 108, 109, 110, 112, 113, 116, 117, 118, 119, 120, 121, 122, 206, 206A
and 207, so far as they relate to the issue and transfer of securities shall be in the case of listed public
companies and in the case of those public companies which intend to get their securities listed on
any recognized stock exchange in India, be administered by SEBI. Accordingly, under sections 11
and 11A of the SEBI Act, SEBI could regulate inter alia the issue of capital by companies and the
contents of prospectus for such issue. Whenever a company which raises capital from the public
through issue of securities, it has to comply with the SEBI Act and the rules, regulations and
guidelines framed thereunder in addition to the provisions of the Companies Act. This position has
been strongly reiterated by the Hon'ble Supreme Court also in the Sahara case.
23.

The Company had issued NCDs. SEBI has framed the Debt Securities Regulations in order

to govern and regulate the issuance of debt securities including debentures. As alleged in the SEBI
Order, the Company has contravened the following provisions of the Debt Securities as it did not
comply with the same in respect of its issuance of NCDs during the relevant years:
Regulation 4(2)(a) Application for listing of debt securities
Regulation 4(2)(b) In-principle approval for listing of debt securities
Regulation 4(2)(c) Credit rating has been obtained
Regulation 4(2)(d) Dematerialization of debt securities
Regulation 4(4) Appointment of Debenture Trustee
Regulation 5(2)(b) Disclosure requirements in the Offer Document
Regulation 6 Filing of draft Offer Document
Regulation 7 Mode of disclosure of Offer Document
Regulation 8 Advertisements for Public Issues
Regulation 9 Abridged Prospectus and application forms
Regulation 12 Minimum subscription
Regulation 14 Prohibition of mis-statements in the Offer Document
Regulation 15 Trust Deed
Regulation 16 Debenture Redemption Reserve
Regulation 17 Creation of security

Page 14 of 20

Brought to you by http://StockViz.biz

Regulation 19 Mandatory Listing

Regulation 26 Obligations of the Issuer, etc.
24.

I also note that Mr. Tipu Sultan, Mr. Biswanath Mondal, Mr. Subhas Sarkar, Mr. Nirjal Pal,

Mr. Swapan Sadhukhan, Mr. Chandan Debnath and Mr. Uttam Chakraborty are the directors of the
Company. There has been no dispute regarding this fact from anyone of the individuals. These
individuals were the first subscribers to the Company's Memorandum of Association, executed on
September 06, 2010. They, therefore, are also the promoters of the Company. These directors are
responsible for the above contraventions committed by the Company in not adhering to the public
issue norms stipulated under the Companies Act, as alleged in the SEBI Order.

The RoC reference

dated January 24, 2014 has given the following details with respect to the directors:
Sr.No.
1
2

4
5

6
7

Name
and Address
Father's Name
Subhas Sarkar, S/o Subhash
Mayanguri,
Kunjalal Sarkar
Jalpaiguri, West Bengal
735224
Biswanath Mondal, Somra
Madhyapara,
S/o
Gobindo Mauja Somra JL No. 3,
Chandra Mondal
Somra 2 No. Balagrah,
West Bengal 712123

Date
Appointment
15/09/2010
15/09/2010

Resigned
w.e.f
01/10/2012

Swapan Sadukhan At-AModghata,

GP
S/o Rabindranath Mogra-1, PS Mogra,
Sadhukhan
Dist. Hoogly, Mogra,
West Bengal 712502
Niraj Pal, S/o Vill Sripurbazar PO,
Niranjan Pal
Sripurbazar,
Hoogly,
West Bengal 712514
Uttam
At
Purba
Tarapur,
Chakraborty S/o Pashimpara,
Mouja,
Kamalakanta
Tarapura District Nadia,
Chakraborty
Ranaghat, West Bengal
741201
Tipu Sultan, S/o Barui
Para,
Kalna,
Haidar Ali
Burdwan, West Bengal
713409
Chandan Debnath AtDakshin
Para
S/o
Priyalal (AmtalaSomira,
Debnath
Sukhariya, Balagarh Dist.
Hooghly, West Bengal
712123

15/09/2014

Resigned
w.e.f
01/10/2012

15/09/2014

Resigned
w.e.f
01/10/2012

15/09/2014

15/09/2014
15/09/2014

Page 15 of 20

Brought to you by http://StockViz.biz

of Remarks

Appointed as MD
w.e.f 0/104/2011

Though a few directors, namely Mr. Biswanath Mondal, Mr. Swapan Sadhukhan and Mr. Nirjal Pal
have resigned from their position as directors, they would be liable for the contravention committed
by the Company for the period during which they were the directors. Further, it is noted that all the
above persons are the promoters of the Company, wherein Mr. Tipu Sultan (Managing Director)
holds 15.79% and the others hold 14.04% each in the Company's equity capital.
The RoC reference has also stated the following :
"..................
6) The Balance Sheet of the company for the year ended 31/03/2012 shows that the amount of issued Debentures
Rs. 940.95 lac, Other Long Term Liabilities Rs. 89.97 lac, Other Current Liabilities Rs.195.91 lac, Trade
Payables Rs. 4.65 lac. Whereas the Tangible Assets Rs. 759.49 lac, Long Term Loans and Advance Rs. 173.00
lac, Inventories Rs. 36.41 lac, Non current Assets Rs. 59.71 lac, Other Current Assets Rs. 11. 5 0 lac and Cash
and Equivalents Rs. 125.60 lac. This indicates that almost entire amount of assets of the company are made from
borrowed and loaned money either from the issue of Debentures or from Current Liabilities.
7) In regard to the amount of issued Debentures of Rs. 940.45 as on 31/03/2012, neither, any list of debenture
holders available nor any Debenture Redemption Reserved (DRR) has been created. This is an alarming fact that the
company has no provisions for repayment of borrowed money collected by issue of Debentures.
.........."
25.

As regards the Debenture Trustees, Mrs. Jyotsna Sadhukhan and Mrs. Jharna Sarkar, I note

that the SEBI Order has alleged that they are not registered as debenture trustees as required under
section 12(1) of the SEBI Act and the DT Regulations. In this regard, I have perused the copy of
the Extract of Minutes of the Extra Ordinary General Meeting of the Board of Directors of the
Company held at its registered office of December 10, 2010, wherein the Board had unanimously
decided to appoint Mrs. Jyotsna Sadhukhan and Mrs. Jharna Sarkar as debenture trustees for issue of
various series of secured debentures of the Company. The board had authorized Mr. Tipu Sultan,
Managing Director of the Company to inter alia take all steps for the execution of the debenture trust
deed and creation of charge in favour of the debenture trustees from time to time. I have also
perused the Deed of Trust executed on December 10, 2010 between the aforesaid debenture
trustees and the Company. In the written submissions filed pursuant to the personal hearing, the
Debenture Trustees of the Company undertook that they will not involve any such new assignment
or involvement in any new issue of debentures till further orders.

Page 16 of 20

Brought to you by http://StockViz.biz

26.

To perform the functions or act as a debenture trustee, SEBI has, under section 12(1) read

with section 11(2)(b) of the SEBI Act, mandated that a trustee (in respect of debentures) who is
associated with the securities market shall buy, sell or deal in securities except under and in
accordance with the conditions of a certificate of registration obtained from SEBI in accordance
with the regulation made under the SEBI Act. SEBI has also framed the DT Regulations,
prescribing the conditions, responsibilities and obligations of a debenture trustee. Chapter II thereof
deal with 'Registration of Debenture Trustees'. Regulation 3 prescribes about the manner of making
an application for registration, regulation 5 states that such application should conform to
requirements and regulation 6A deals with criteria for fit and proper person. Further, regulation 7
stipulates that only (i) a schedule 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 shall be entitled to act as a debenture trustee. The individuals who
are appointed by the Company are natural persons and do not satisfy the eligibility conditions
prescribed under the DT Regulations. Therefore, Mrs. Jyotsna Sadhukhan and Mrs. Jharna Sarkar
have contravened the provisions of section 12(1) of the SEBI Act and the DT Regulations, as
alleged vide the SEBI Order.
27.

Therefore, in view of the violations committed by the Company, its directors and the

persons appointed as debenture trustees and in order to safeguard the interest of investors who had
invested in the Company and also the integrity of the securities market, I deem it appropriate to pass
a direction against the Company to repay the monies collected against issue of NCDs or against
promise to allot NCDs (monies which are kept pending allotment) and other attendant directions. I
also note that the Hon'ble High Court of Calcutta vide Order dated September 02, 2013 in W.P.
16338(W) of 2013 - Golden Life Agro India Limited and others vs. State of Bengal and others had
observed/directed the following :
"............
There will be an order of injunction restraining the petitioner company from dealing with or disposing of or
alienating or encumbering any of its assets without previous leave of the SEBI and the SEBI leave should not be
granted without an Executive Director of SEBI approving the same.
It will be open to the petitioners to cause all or any of their assets or properties to be sold under the aegis of
SEBI under any asset sale committee that may be set up by SEBI for that purpose of refund of money which appears

Page 17 of 20

Brought to you by http://StockViz.biz

to have been illegally obtained from the depositors. Both SEBI and the Registrar of Companies, West Bengal, should
monitor the activities of the petitioner company and ensure strict compliance of this order.
................"
In this respect, I also note the following remark made by the RoC vide its reference dated January
24, 2014 to SEBI "This indicates that almost entire amount of assets of the company are made from borrowed and loaned money either
from the issue of Debentures or from Current Liabilities".
As there is no bar or restraint on SEBI in passing of this Order and considering the above
observations, it would be in the interest of investors that the Company liquidates its assets and
properties for the sole purpose of making the repayments as directed below. However, any sale of
assets by the Company for the purpose of refunds to its investors shall be done under the aegis of
the Asset Sale Committee constituted by SEBI pursuant to the aforesaid directions of the Hon'ble
High Court of Calcutta.
28.

In view of the foregoing, I in exercise of the powers conferred under section 19 of the

Securities and Exchange Board of India Act, 1992 read with sections 11(1), 11A, 11B and 11(4)
thereof and regulation 28 of the Debt Securities Regulations, hereby issue the following directions :
(i)

Golden Life Agro India Limited (CIN - U01403WB2010PLC153027, PAN

AADCG9933C), its Directors and promoters, namely, Mr. Tipu Sultan (DIN - 02417223,
PAN AVJPS0723J), Mr. Biswanath Mondal (DIN 03188599), Mr. Subhas Sarkar
(DIN 03034180, PAN APNPS2689K), Mr. Nirjal Pal (DIN 03034193, PAN
AQOPP4638B), Mr. Swapan Sadhukhan (DIN 03188592, PAN BYHPS5176F), Mr.
Chandan Debnath (DIN 03188595, ATZPD5725F) and Mr. Uttam Chakraborty (DIN
03188597), shall jointly and severally, forthwith refund the money collected by the
Company through its illegal and irregular offer and allotment of NCDs including the money
collected from investors, till date, pending allotment of securities, if any, with interest of
15% per annum from the date of receipt of money from the investors till the date of
repayment.

Page 18 of 20

Brought to you by http://StockViz.biz

(ii)

As the Hon'ble Calcutta High Court had vide Order dated September 02, 2013 restrained the
Company from disposing of or alienating or encumbering any of its assets without previous
leave of the SEBI and has also directed the Company/petitioners to cause all or any of their
assets or properties to be sold under the aegis of SEBI under any Asset Sale Committee that
may be set up by SEBI for the purpose of refunding of money to the depositors, the
Company is directed to handover all the original documents of the properties and peaceful
possession of the properties and the possession of saleable movable assets and an inventory
of all its assets, to such Asset Sale Committee. The Company shall thereafter arrange for sale
of its assets under the aegis of such Asset Sale Committee in compliance with the directions
of the Hon'ble High Court for making the above directed refunds to the investors.

(iii)

The proceeds of such sale shall be kept with an Escrow Agent who shall preferably be a
Scheduled Commercial Bank or an Asset Reconstruction Company ('ARC') or an institution
of standing, as may be decided by the Asset Sale Committee, who would release the funds to
the debenture holders/investors with the supervision of the Asset Sale Committee.

(iv)

The Asset Sale Committee shall cause a public notice to be issued, in all editions of two
National Dailies (one English and one Hindi) with wide circulation and also a vernacular
daily (Bengali language), 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.

(v)

Golden Life Agro India Limited, its Directors and promoters, namely, Mr. Tipu Sultan, Mr.
Biswanath Mondal, Mr. Subhas Sarkar, Mr. Nirjal Pal, Mr. Swapan Sadhukhan, Mr. Chandan
Debnath and Mr. Uttam Chakraborty are directed not to, directly or indirectly, access the
capital market by issuing prospectus, offer document or advertisement soliciting money
from the public and are further restrained and prohibited from buying, selling or otherwise
dealing in the securities market, directly or indirectly in whatsoever manner, from the date of
this Order till the expiry of 4 years from the date of completion of refunds to investors as
directed above.

Page 19 of 20

Brought to you by http://StockViz.biz

(vi)

Mr. Tipu Sultan, Mr. Biswanath Mondal, Mr. Subhas Sarkar, Mr. Nirjal Pal, Mr. Swapan
Sadhukhan, Mr. Chandan Debnath and Mr. Uttam Chakraborty are restrained from
associating themselves, as a director or a promoter, with any listed public company and any
public company which intends to raise money from the public, from the date of this Order
till expiry of 4 years from the date of completion of refunds to investors as directed above.

(vii)

Mrs. Jyotsna Sadhukhan and Mrs. Jharna Sarkar shall not offer themselves to be engaged
as debenture trustees or in any capacity as an intermediary in the securities market, without
obtaining a certificate of registration to undertake that assignment as required under law.
Further, these individuals are restrained from accessing the securities market and are further
restrained from buying, selling or dealing in securities, in any manner whatsoever, for a
period of 4 years.

29.

The above directions shall come into force with immediate effect.

30.

This Order shall be without prejudice to any further action that may be initiated by SEBI, in

accordance with law, against the Company and its directors/promoters for the violations as
observed in this Order.
31.

Copies of this Order shall be served on the recognised stock exchanges and depositories for

information and necessary action.

PRASHANT SARAN
WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA
Date : January 07, 2015
Place: Mumbai

Page 20 of 20

Brought to you by http://StockViz.biz