Вы находитесь на странице: 1из 18

WTM/PS/55/WRO-ILO/SEPT/2015

SECURITIES AND EXCHANGE BOARD OF INDIA


ORDER
Under Sections 11(1), 11(4), 11A(1)(b) and 11B of the Securities and Exchange Board of
India Act, 1992 read with Regulation 107 of the Securities and Exchange Board of India
(Issue of Capital and Disclosure Requirements) Regulations, 2009
In the matter of BNP Real Estate and Allied Limited
In respect of:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
1.

BNP Real Estate and Allied Limited [PAN: AADCB2189H],


Mr. Sanjeev Kumar Purwansi [PAN: AQQPP3214P],
Mr. Munendra Kumar [PAN: ATVPK1011B],
Mr. Mukesh Kumar Sharma [PAN: BCKPS7359M],
Mr. Mahesh Paliwal [PAN: BBIPP4520L],
Mr. Santosh Sharma [DIN: 02643085],
Mr. Raghvendra Singh Narwaria [PAN: ADPPN6255N],
Ms. Surekha Sharma [PAN: BNUPS4121C],
Mr. Umesh Narwaria[PAN: ACOPN4971B],
Mr. Ravindra Singh [PAN: BHAPS1632N],
Mr. Kunver Singh [PAN: BOUPS2175H],
Mr. Kishori Sharma [PAN: BDVPS3534A],
Mr. Padam Singh Narwaria [PAN: ACOPN4986E],
Mr. Gyanesh Rawat [DIN: 01498588],
Mr. Devendra Kumar Sharma [DIN: 03346208] and
Mr. Gyanesh Sharma [DIN: 02498403].
Securities and Exchange Board of India (hereinafter referred to as 'SEBI') had received
an e-mail dated December 06, 2014 from a complainant enclosing therewith a copy of
the certificate issued by one BNP Real Estate and Allied Limited (hereinafter referred
to as 'BNP' or 'the Company'). Having received the complaint, SEBI initiated a
preliminary examination and asked BNP vide letter dated December 30, 2014, to inter
alia furnish the following information/ documents:

a. Copies of the Memorandum and Articles of Association of the Company.


b. Details of the past and present directors of the Company.
c. Brochures pertaining to the schemes/ offers made available to the public.
d. Copies of the application forms required to be submitted by investors/ applicants to
participate in the schemes.

Page 1 of 18

e. Sample copies of the regulations letter and allotment letter issued to the investors who
had subscribed to the schemes.
f. Sample copies of the agreement letter/ contract required to be entered into by the
investor/ applicant under the schemes.
g. Details of the scheme wise amounts mobilised by the Company along with the number
of investors under the scheme.
h. Name and address of all investors who had put in their money with the Company.
i. List of all branches with their address.
j. Name and Address of agents and details of commission paid for each financial year
from start till date.
k. Certified copy of the audited financial statement for the Financial Year 2007-08 to
2013-14. Copy of detailed trial balance for 2013-14.
l. Copy of the Income Tax Return filed by the Company for the Financial Year 2007-08
to 2013-14.
m. Details of regulatory approvals obtained by the Company, etc.
n. Details of any other similar schemes floated by the Company or/ and group/associate
company(ies).
o. Details regarding the relation of the Company with BNP India Developers and
Infrastructure Limited.
BNP was advised to provide the above required information and the documents latest
by January 07, 2015.
2.

The Company vide its letter dated January 15, 2015 replied through its director namely
Mr. Mukesh Kumar Sharma and submitted that for incorporation of the Company, he
along with Mr. Mahesh Paliwal, Mr. Gyanesh Sharma, Ms. Kishori Sharma, Mr. Sanjeev
Kumar Purvanshi, Mr. Munendra Kumar and Ms. Surekha Sharma had approached one
Mr. Vinay Choudhary for assistance. They said that Vinay Choudhary had advised these
that for forming a Company, twelve (12) persons are required and had also suggested the
names of rest of the five (5) names namely Mr. Raghvendra Singh Narwariya, Mr. Umesh
Narwariya, Mr. Ravindra Singh, Mr. Padam Singh Narwariya and Mr. Kunver Singh. Mr.
Mukesh Kumar Sharma vide his letter had also claimed that the said five (5) persons
namely Mr. Raghvendra Singh Narwariya, Mr. Umesh Narwariya, Mr. Ravindra Singh,
Mr. Padam Singh Narwariya and Mr. Kunver Singh had started collecting money and

Page 2 of 18

issued forged certificates bearing the name of the Company and the pre-printed
signatures of Ms. Surekha Sharma. Further, it was said that Vinay Choudhary had later
got two more companies, which had similar names namely BNP India Developers and
Infrastructure Limited and BNP Insurance and Investment Service India Limited and
had collected monies from the gullible investors.
Vide this letter, the Company also submitted the details like the copies of the
Memorandum and Articles of Association of the Company, list of the past and present
directors of the Company, copy of scheme chart (brochure) for offering redeemable
preference shares, copy of the application form for investment in preference share,
details of scheme wise amount mobilized with total number of shareholder/ applicant,
certified copy of the audited financial statement for the Financial Year 2007-08 to
2013-14 and trial balance up to January 02, 2015, copies of the Income Tax Return
filed by the Company for the Financial Year 2007-08 to 2013-14, details of the other
associate company, etc.
3.

In the meantime, SEBI received certain other investor complaints against the Company.
SEBI vide its letter dated January 30, 2015, while forwarding the copy of the complaints
to the Company had also sought certain explanation on its issue of preference shares and
equity shares. The Company was also asked to submit the letter of offers made to the
allottees of the equity shares, date-wise receipt of money towards equity shares along with
mode of payment, evidence of payments, source of the funds invested by allottees, etc.
BNP was advised to provide the above said details and the documents latest by
February 10, 2015.

4.

The Company vide its letter dated February 10, 2015, sought an extension of seven (7)
days for submitting the reply and the documents. Later the Company vide its letter dated
February 18, 2015, submitted the reply to the SEBI letter and provided the explanation
to the queries of SEBI. It was said that the main business of the Company is dealing in
real estate by purchasing and selling of properties. For the said purpose, it had collected
money from small investors and it shared the profit among the shareholder. The
Company also submitted that the certificates attached with the investor complaints prima
facie do not belong to it as the certificates were issued during the year 2007, when the
management of the Company was controlled by Raghvendra Singh Narwaria, Kunver

Page 3 of 18

Singh Narwaria, Padam Singh Narwaria, Umesh Singh Narwaria and Ravindra Singh
Narwaria. Further, it was said that these five persons had issued forged joint venture
certificate to various investors and had collected money.
5.

SEBI vide its letter dated April 15, 2015, had forwarded the details of the fresh investor
complaints to the Company for explanation and sought the complete investor details to
be furnished by April 24, 2015 and also filled in application of 10 investors of each
scheme offered by the Company on sample basis. The Company vide its letter dated April
24, 2015 sought five (5) days time to submit the details as asked by SEBI. Vide another
letter dated April 29, 2015, the Company denied receiving funds from the complainants
and submitted that it had not propagated any investment scheme to deceive any person
or public and it had issued only equity and preference shares to the genuine investors
after following the rules and regulation as formed by the State Government and the
Government of India.

6.

On perusal and examination of the documents as submitted by BNP, the information


obtained from the MCA-21 portal maintained by Ministry of Corporate Affairs
(MCA), the complaints received, etc., the following are the prima facie observations
made by SEBI in its examination with respect to the money mobilization activities by
the Company through the issue of Redeemable Preference Share with an option
to convert into equity shares (hereinafter referred to as convertible RPS) and equity
shares:
a. Background: BNP was incorporated on May 17, 2007. The CIN of BNP is
U45200MP2007PLC019536 and its registered office is at: M-7, Trishul Apartment, 5Sanghi Colony, A.B. Road, Indore- 452001.
b. Objects as per the Memorandum of Association of the Company:
A. Main objects
1. To carry on the business of sale and purchase of property, acquisition of land, building, civil and
electric contract, construction contracts for infrastructure development .

B. Ancillary to the attainment of the main objects of the Company are:

14A. To borrow or raise money with or without security or to receive money on deposit at interest or
otherwise, in such a manner as the Company may think fit and in particular by the issue of debentures
or debenture stock perpetual or otherwise including debenture or debenture stock convertible into shares
of this or any other company and in security of any such moneys to be borrowed, ...

Page 4 of 18

c. Details of Promoters and Directors: From the documents submitted by the


Company, it is noted that the subscribers to its Memorandum of Association were Mr.
Raghvendra Singh, Ms. Surekha Sharma, Mr. Umesh Narwaria, Mr. Ravindra Singh,
Mr. Munendra Kumar, Mr. Sanjeev Kumar Purwansi, Mr. Mukesh Kumar Sharma,
Mr. Kunwar Singh, Mr. Kishori Sharma, Mr. Padam Singh Narwaria, Mr. Gyanesh
Rawat and Mr. Mahesh Paliwal.
As per the details available on MCA-21 portal, the present directors of the Company
are Mr. Sanjeev Kumar Purwansi, Mr. Munendra Kumar, Mr. Mukesh Kumar Sharma,
Mr. Santosh Sharma and Mr. Mahesh Paliwal.
As per the details submitted by the Company, its past directors were Mr. Raghvendra
Singh Narwaria, Ms. Surekha Sharma, Mr. Umesh Narwariya, Mr. Ravindra Singh, Mr.
Kunver Singh, Ms. Kishori Sharma, Mr. Padam Singh Narwariya, Mr. Devendra
Kumar Sharma, Mr. Gyanesh Rawat and Mr. Gyanesh Sharma.
d. Fund raising by the Company through the issue of RPS and equity shares.
i.

The document/ details submitted by the Company shows that it had issued RPS
with an option to convert the same as well as the accrued interest into equity
shares of 10/- and equity shares, on various dates. Both these securities are
being discussed below in seriatim.
-

From the information furnished by BNP in its replies (including the reply dated
February 18, 2015) and the return of allotment (Form 2), the following table has
been compiled regarding the allotment of RPS with an option to convert into
equity shares (convertible RPS) and amount mobilised:
Table 1
Year
allotment
2008-09
2009-10
2011-12
2012-13
2013-14

of Number of allottees Number


of
As
per As
per preference shares
Company Form 2
29
29
3,52,600
252
252
4,55,946
1,806*
1,806
45,46,000
12
12
25,00,000
896
894
20,00,000
2,995

2993

Page 5 of 18

98,54,546

Amount ()
35,26,000
45,59,460
4,54,60,000
2,50,00,000
2,00,00,000
9,85,45,460

The money appears to be collected during the financial years 2010-11 and 2011-12. However, the
preference shares were allotted in 2011-12.

I have seen the details of allotment and I note that BNP had made continuous
allotment of RPS, as detailed hereunder:
Table 2
Date of allotment No.
of Amount
preference
mobilized ()
shares allotted
2009-10
25/3/2010
24,649*
2,46,490
26/3/2010
90,800
9,08,000
27/3/2010
71,003
7,10,030
28/3/2010
93,483
9,34,830
30/3/2010
77,011
7,70,110
31/3/2010
99,000
9,90,000
2011-12
23/11/2011
74,000
7,40,000
24/11/2011
1,34,000
13,40,000
25/11/2011
79,500
7,95,000
26/11/2011
61,500
6,15,000
27/11/2011
72,000
7,20,000
28/11/2011
63,500
6,35,000
29/11/2011
71,900
7,19,000
30/11/2011
79,000
7,90,000
01/12/2011
75,050
7,50,500
02/12/2011
99,350
9,93,500
03/12/2011
1,01,500
10,15,000
04/12/2011
59,650
5,96,500
05/12/2011
58,050
5,80,500
06/12/2011
87,500
8,75,000
07/12/2011
73,000
7,30,000
08/12/2011
91,200
9,12,000
09/12/2011
64,200
6,42,000
10/12/2011
70,500
7,05,000
11/12/2011
70,500
7,05,000
12/12/2011
66,000
6,60,000
13/12/2011
63,750
6,37,500
14/12/2011
69,250
6,92,500
15/12/2011
61,450
6,14,500
16/12/2011
56,350
5,63,500
17/12/2011
70,400
7,04,000
21/12/2011
1,27,500
12,75,000
22/12/2011
1,46,300
14,63,000
23/12/2011
1,42,300
14,23,000
24/12/2011
1,07,500
10,75,000
25/12/2011
1,39,000
13,90,000
26/12/2011
1,50,000
15,00,000
27/12/2011
1,28,000
12,80,000
28/12/2011
1,38,000
13,80,000
29/12/2011
1,33,500
13,35,000
02/1/2012
1,16,350
11,63,500
03/1/2012
1,51,000
15,10,000
04/1/2012
1,40,200
14,02,000

Page 6 of 18

No. of allottees
As
per As
per
Company Form 2
16
49
49
49
49
40

16
49
49
49
49
40

48
44
20
45
46
45
41
45
39
38
39
47
40
49
34
49
49
45
46
45
44
47
44
27
46
49
49
49
49
48
48
49
49
49
49
49
49

48
44
20
45
46
45
41
45
39
38
39
47
40
49
34
49
49
45
46
45
44
47
44
27
46
49
49
49
49
48
48
49
49
49
49
49
49

05/1/2012
06/1/2012
07/1/2012
08/1/2012
10/2/2014
11/2/2014
12/2/2014
13/2/2014
14/2/2014
15/2/2014
17/2/2014
18/2/2014
19/2/2014
20/2/2014
21/2/2014
22/2/2014
24/2/2014
25/2/2014
26/2/2014
27/2/2014
28/2/2014
01/3/2014
03/3/2014

57,250
6,93,000
1,59,000
1,44,000
2013-14
1,26,425
74,555
98,875
1,17,750
84,400
1,12,605
1,00,325
94,175
98,675
79,160
85,755
1,14,115
79,555
1,30,715
97,535
99,445
1,43,450
1,17,150
1,45,335

5,72,500
69,30,000
15,90,000
14,40,000

25
44
48
41

25
44
48
41

12,64,250
7,45,550
9,88,750
11,77,500
8,44,000
11,26,050
10,03,250
9,41,750
9,86,750
7,91,600
8,57,550
1,141150
7,95,550
13,07,150
9,75,350
9,94,450
14,34,500
11,71,500
14,53,350

49
47
47
50
49
48
48
48
47
46
48
47
46
47
47
47
48
45
42

49
47
47
48
49
48
48
48
47
46
48
47
46
47
47
47
48
45
42

From the above, it is noted that BNP had made a continuous allotment of RPS
to 17, 49, 49, 49, 49 and 40 investors on March 25, 2010, March 26, 2010, March
27, 2010, March 28, 2010, March 30, 2010 and March 31, 2010 respectively,
aggregating to 252 investors and an amount of 45,59,460 had been collected.
Similarly, the Company had made another continuous allotment from
November 23, 2011 to January 08, 2012 and an amount of 4,54,60,000 had
been collected.
In view of the above, it can be said that the Company had made continuous
allotments of RPS, in various tranches and had attempted to retain the number
of investors to below 50, in order to circumvent the provisions of the Companies
Act, 1956.

From the sample application form for allotment of RPS as submitted by the
Company, it is noted that the Company had offered various schemes for issuing
RPS, the same have been reproduced below:
Table 3
a. Option-1
b. Option-2

3 Years @ 9.26% (p.a)


5 Years @ 8.13% ( p.a)

Page 7 of 18

c.
d.
e.
f.
g.
h.
i.
j.

Option-3
Option-5
Option-6
Option-7
Option-A
Option-B
Option-C
Option-D

6 Years @ 9.20% (p.a)


8 Years @ 5.46% (p.a)
1 Year @ 5.83 %
4 Years @ 11.85% (p. a)
3 Years @ 9.14%
6 Years @ 12.25%
8.5 Years @ 11.38%
11 years @ 13.43%

From the terms and conditions attached with the application form for RPS, the
following is noted:

An applicant can apply for minimum of 4 RPS (10/- per RPS). For any
additional RPS, the applicant can procure the same after paying 100/- per
additional RPS per month for a period of 60 months. Payment option for the
same were weekly, monthly, quarterly, half yearly.

The period of the RPS will be minimum for 12 months and maximum for 132
months.

The payments could be made by cash.

The RPS holder can enjoy the facility of converting to fully paid up equity
share of 10/- against the RPS value and its accrued interest, on completion
of term.

If an RPS holder makes the payment for a minimum period of 36 months, he


can avail a secured loan equivalent to 50% of the total amount deposited.

From the material available and as per the details collated in the table 1 above,
it can be seen that the Company was issuing convertible RPS, thereby mobilizing
funds, in a regular and sustained manner. The Company along with its
submissions had also provided the scheme wise details of the amount mobilised
by the issuance of such RPS. The same have been reproduced below:
Table 4

Scheme
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
Total
Name Amount AllotteAmount ()AllotteAmouAllott Amount () Allotte Amount () Allott Amount () Allott Amount () Allott
()
es
es nt () ees
es
ees
ees
ees
Plan D
Year 11
0
Plan A
Year 03
0
Plan 2
Year 05 35,13,100
Plan 3

12,900

12,27,000

76

2,86,69,500 1,061 1,36,54,500

10,000

28

1,220,540

75

50,000

6,25,600

11,94,480

77

1,55,19,000

710

66,72,300

4,75,000

Page 8 of 18

49,21,500

40,22,600

12

200 4,84,72,500 1,349

45,07,600

38,70,000

253

92,79,240

357

1,11,57,000

476 3,45,55,680 1,265

Year 06
Plan 4
Year 6.25
Plan 5
Year 8
Plan C
Year 8.25

1,66,840

17

1,66,840

17

7,00,600

17

11,500

7,12,100

18

40,000

7,46,500

30

25,000

40,000

8,51,500

34

The figures in the table above are prima facie inconsistent with the RPS details as
submitted by the Company.
-

From the records available, it appears that the Company had paid commission
at the rate of about 10% to its agents, on the collection of amounts from the
investors. However, the Company in its replies has mentioned that commission
paid were only 1.5% to 2% and the said 10% commission is paid on the sale of
product. It is seen that the Company in its reply has not mentioned about the
product in which it deals.

ii.

In addition to the above, the Company had also issued equity shares. The
Company vide the special resolution dated March 20, 2010 had inter alia
approved the allotment of 1,09,151 equity shares to 178 persons. As per the
Form 2, the allotment of equity shares was as under:
Table 5
S.No.
1.
2.
3.
4.

Date of allotment
22/03/2010
23/03/2010
24/03/2010
25/03/2010
Total

No. of shares
27,330
30,224
26,928

No. of allottees
49
49
49

24,669*

32

1,09,151

179

As the persons to whom equity shares allotted were shown as 179, which prima
facie was not as per the resolution, SEBI had sought an explanation from the
Company. The Company in its reply had explained the discrepancy and
submitted that one entry was wrongly repeated and there were 179 allottees. The
details in table 5 above shows that the Company had made continuous
allotment of equity shares to 49, 49, 49 and 32 investors on March 22, 2010,
March 23, 2010, March 24, 2010 and March 25, 2010 respectively, aggregating
to 179 investors. It can be said that the Company had always retained the number
of investors below 50, in order to circumvent the provisions of the Companies
Act, 1956.

Page 9 of 18

e. Capital structure of the Company w.r.t. preference shares: A perusal of the


balance sheets of the Company, revealed discrepancies/ mismatch in figures between
the amount collected from the issue of RPS and those reported in the balance sheets.
The details of the preference shares as reported in the respective balance sheets are as
under:
Table 6
2007-08 2008-09 2009-10
2010-11
2011-12
2012-13
2013-14
Paid-up Preference share
0
35,26,000 80,85,460 80,85,460 5,35,45,460 7,39,90,760 9,11,12,660
capital ()
Number of preference
0
3,52,600 8,06,546 8,06,546 53,54,546 73,99,076 91,11,266
shares
Redeemed or bought
2,87,810
back (no. of preference
shares)
Share application money
1,97,99,000
73,25,600
received () pending
allotment

7.

Having considered the above, I proceed further with the matter. The issue for
determination in the instant matter is whether the offer and issuance of RPS and equity
shares made by the Company, as mentioned above, was on 'private placement' or a
'public issue'. In terms of Section 67(3), no offer or invitation shall be treated as made
to the public by virtue of sub-sections (1) or (2), as the case may be, if the offer or
invitation can properly be regarded, in all circumstances (a) as not being calculated
to result, directly or indirectly, in the shares or debentures becoming available for
subscription or purchase by persons other than those receiving the offer or invitation;
or (b) otherwise as being a domestic concern of the persons making and receiving the
offer or invitation. In terms of the 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, if an offer of securities
is made to fifty or more persons, it would be deemed to be a public issue, even if it is of domestic concern
or proved that the shares or debentures are not available for subscription or purchase by persons other
than those receiving the offer or invitation. The number of persons to whom the shares/
debentures have been allotted becomes relevant to judge whether an issue of shares is
made to public or made on a private placement basis.

8.

Further, from the details of allotment of RPS and equity shares made by BNP over
the period, it is observed that BNP had made allotments to 49 or less than 49 persons
(as noted from the table 1 and 5 above) and that the same was done in order to

Page 10 of 18

circumvent the provisions of first proviso to Section 67(3) of the Companies Act,
1956. Further, the allotments were made on continuous dates or in short intervals and
that the aggregate number of investors to whom such offer and subsequent allotment
was made exceeds 49.
9.

Considering the regular occurrence of the series of convertible RPS and equity
share allotments, it appears that the method adopted by BNP (i.e. of making allotment
through multiple allotments) is a device intended to give a picture that each allotment
was a separate offer and purportedly done on private placement basis. In view of the
same, the aforesaid offer of convertible RPS and equity shares made by BNP has
to be construed as a single offer. In view of the same, it is alleged that BNP had made
public issue of convertible RPS and equity shares between March 2009 and March
2014. During this period, the Company had issued 1,09,151 equity shares to 179
investors and 98,54,546 convertible RPS to 2,993 investors and had prima facie
mobilized around 9.85 crore from convertible RPS. I note that the company has
not claimed to be a non-banking financial company or a public financial institution
within the meaning of Section 4A of the Companies Act, 1956 and therefore, is not
covered under the second proviso to Section 67(3) of the Companies Act, 1956.
Considering the facts and circumstances of the case, it is alleged that the offers made
by the Company were public in nature, thereby making such offer and subsequent
issuance a 'public issue' of convertible RPS and equity share.

10.

Having prima facie observed that the Company had made a public issue of convertible
RPS and equity shares between March 2009 and March 2014, the Company was
under an obligation to comply with the Companies Act, 1956 read with Companies
Act, 2013,

SEBI Act, 1992 (hereinafter referred to as 'SEBI Act'), the SEBI

(Disclosure and Investor Protection) Guidelines 2003 (hereinafter referred to as 'DIP


Guidelines') read with the SEBI (Issue of Capital and Disclosure Requirements)
Regulations, 2009 (hereinafter referred to as 'ICDR Regulations') which regulate the
public issue of equity shares. 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'), had observed that:
" after 13.12.2000, any offer of securities by a public company to fifty persons or more will
be treated as a public issue under the Companies Act, even if it is of domestic concern or it is

Page 11 of 18

proved that the shares or debentures are not available for subscription or purchase by persons
other than those receiving the offer or invitation.

90. ... ... 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. "
[Emphasis supplied]
11.

Having observed that the convertible RPS and equity shares issued by BNP are in
the nature of public issue, the Company was required to comply with provisions of
the Companies Act, 1956 and other relevant statutory provisions as applicable. I note
that in the case of any public issue of securities, the relevant provisions of the
Companies Act, 1956 inter alia Sections 60 read with Section 2(36) [corresponding provision
is section 2(70) of the Companies Act, 2013, notified on September 12, 2013], 56(1), 56(3)
[corresponding provision is section 33(1) of the Companies Act, 2013, notified on September 12,
2013] and Section 73 [corresponding provision is section 40 of the Companies Act, 2013] thereof
needs to be complied with. In terms of Section 60 read with the Section 2(36) of the
Companies Act, 1956, a company needs to file a prospectus with respect to its public
issue with the RoC. Further, in terms of Section 60B(2) of the Companies Act, 1956, a
Company inviting subscription by an information memorandum is bound to file a
prospectus prior to the opening of the subscription lists, at least three days before the
opening of the offer. While Section 60B(3) stipulates that the 'Information
Memorandum' shall carry the same obligations as are applicable in case of prospectus.
Section 60B(9) requires the Company to file a final prospectus with SEBI/ RoC. As per
Section 2(36) of the Companies Act, 1956, 'prospectus' means any document described
or issued as a prospectus and includes any notice, circular, advertisement or other
document inviting deposits from the public or inviting offers from the public for the
subscription or purchase of any shares in a body corporate. As per the information
available on record and also admitted by the Company, it did not file any prospectus/
information memorandum with respect to the said issues of convertible RPS and
equity shares and had also prima facie not complied with the above discussed
provisions of the Companies Act, 1956.

12.

By issuing convertible RPS and equity shares to more than 49 persons, the Company
had to compulsorily list such securities in compliance with Section 73 of the Companies
Act, 1956, in order to ensure that the subscribers to the shares have a facility to approach

Page 12 of 18

a stock exchange for having their holdings converted into cash whenever they desire. The
same also provides liquidity and exit opportunity to the investors. As per Section 73(1)
and (2) of the Companies Act, 1956, a company is required to make an application to one
or more recognised 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. From the material available on record, the Company, does
not appear to have done so and thus, contravened the said provisions. It neither made an
application seeking listing permission nor refunded the amounts on account of such
failure. The Company had also not complied with the provisions of Section 73(3) of the
Companies Act, 1956 as it had not kept the amounts received from investors in a separate
bank account and failed to repay the same in accordance with Section 73(2) of the
Companies Act, 1956. In view of the above, it is alleged that the Company had
contravened the provisions of the Companies Act, 1956, which regulates the public issue
of securities, including Sections 2(36), 56(1), 56(3) and 73 of the Companies Act, 1956,
in respect of its collection of public funds towards the issue of equity shares.
13.

I now discuss the regulatory powers and the jurisdiction of SEBI on the company that
raise funds, by issue of securities, from the public. In this regard, I refer to the Section
55A of the Companies Act, 1956. In terms of the relevant provisions of the said
section, the provisions contained in 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 of the Companies Act, 1956, in 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 recognised
stock exchange in India, be administered by SEBI. The terms 'securities' as per Section
2(h) of the Securities Contracts (Regulation) Act, 1956 includes 'shares'. I observe that
Sections 56, 60, 67 and 73 of the Companies Act, 1956 are included in the list of the
sections as mentioned in Section 55A of the Companies Act, 1956, and therefore, such
sections are to be administered by SEBI.

14.

As per the provisions of Section 55A of the Companies Act, 1956, the administrative
authority on the subjects relating to public issue of securities is SEBI. For this purpose,
SEBI can exercise the jurisdiction under Sections 11(1), 11A, 11B and 11(4) of the

Page 13 of 18

SEBI Act read with Section 55A of the Companies Act, 1956, over companies who
issue equity shares to fifty persons or more, but fail to comply with the applicable
provisions of the aforesaid statutes. Therefore, in addition to the compliance with the
provisions of the Companies Act, 1956, the Company was mandated to comply with
the applicable provisions of the ICDR Regulations.
15.

I note that SEBI had framed the DIP Guidelines in exercise of the powers conferred
upon itself under the SEBI Act. The Hon'ble Supreme Court in Sahara Case has
observed that:
"DIP Guidelines had statutory force since they were framed by SEBI in exercise of its powers
conferred on it under Sections 11 and 11A of the SEBI Act. Powers have been conferred on
SEBI to protect the interests of the investors in securities and regulate the issue of prospectus, offer
documents or advertisement soliciting money through the issue of prospectus. Section 11 of the Act,
it may be noted has been incorporated, evidently to protect the interests of investors whose securities
are legally required to be listed. DIP Guidelines were implemented by SEBI with regard to the
listed and unlisted companies, which made public offer, until it was replaced by ICDR 2009".
The DIP Guidelines were applicable to all public issues by listed and unlisted
companies. I note that the ICDR Regulations (which came into effect from August
26, 2009) had replaced the DIP Guidelines and all public issues are now required to
comply with the ICDR Regulations. The DIP Guidelines (as applicable at the relevant
time) operated as reasonable safeguards for the investors who subscribed or intended
to subscribe in the public issues of securities. In this regard, I observe that BNP has
not complied with the following clauses of DIP Guidelines:
-

Clause 2.1.1 (filing of offer document)


Clause 2.1.4 (application for listing)
Clause 2.1.5(issue of securities in dematerialized form),
Clause 2.8. (means of finance),
Clause 4.1 (promoters contribution in a public issue by unlisted companies),
Clause 4.11 (lock-in of minimum specified promoters contribution in public issues),
Clause 4.14 (lock-in of pre-issue share capital of an unlisted company)
Clause 5.3.1 (memorandum of understanding),
Clause 5.3.3 (due diligence certificate)
Clause 5.3.5 (undertaking)
Clause 5.3.6 (list of promoters group and other details)
Clause 5.4 (appointment of intermediaries)
Clause 5.6 (offer document to be made public)
Clause 5.6A (Pre-issue Advertisement)
Clause 5.7 (despatch of issue material)
Clause 5.8 (no complaints certificate)
Clause 5.9 (mandatory collection centres and Clause 5.9.1.(minimum number of collection
centres)

Page 14 of 18

Clause 5.10 (authorised collection agents)


Clause 5.12.1 (appointment of compliance officer),
Clause 6.0 (contents of offer documents)
Clause 6.1 to Clause 6.15 (contents of prospectus)
Clause 6.16 to Clause 6.34 (contents of abridged prospectus) including Clause 6.17.13
Clause 8.3 (Rule 19(2)(b) of SC(R) Rules, 1957)
Clause 8.8.1 (Opening & closing date of subscription of securities)
Clause 9 (guidelines on advertisements by issuer company)

The ICDR Regulations operates as reasonable safeguards for the investors who
subscribe or intended to subscribe in the public issues of securities. In this regard, I
observe that BNP has not complied inter alia with the following clauses of the
provisions of ICDR Regulations:
16.

Application for listing of specified securities on one or more recognized stock exchange
(Regulation 4(2)(d)),
Appointment of merchant banker and other intermediaries (Regulation 5),
Filing of draft offer document with SEBI and the designated stock exchange and RoC
(Regulation 6),
Obtaining in-principle approval from the recognized stock exchanges in which the specified
securities are to be listed (Regulation 7),
Satisfy the conditions of initial public offer (Regulation 25 and 26),
Lock-in of specified securities held by promoters and persons other than promoters
(Regulation 36 and 37)
Keeping the public issue open for the specified period (Regulation 46),
Pre issue advertisement for public issue (Regulation 47)
Manner of disclosures in the offer documents (Regulation 57)
Refrain from offering any incentive to any person making application for allotment of
specified securities (Regulation 59).
Issuer to appoint compliance officer who would be responsible for monitoring the compliance
of securities laws and for redressal of investors' grievances. (Regulation 63)

I note that the Company had allegedly commenced allotment of convertible RPS and
equity shares to the public since March 2009. The promoters/ directors of the
Company are Mr. Raghvendra Singh, Ms. Surekha Sharma, Mr. Umesh Narwaria, Mr.
Ravindra Singh, Mr. Munendra Kumar, Mr. Sanjeev Kumar Purwansi, Mr. Mukesh
Kumar Sharma, Mr. Kunwar Singh, Mr. Kishori Sharma, Mr. Padam Singh Narwaria,
Mr. Ganesh Rawat, Mr. Santosh Sharma, Mr. Devendra Sharma and Mr. Mahesh
Paliwal. As per Regulation 2(1)(za) of the ICDR Regulations, the term 'promoter'
includes; 'the person or persons who are instrumental in the formulation of a plan or
program pursuant to which specified securities are offered'. In view of the same, it is
alleged that the above stated promoters/ directors of the Company being the persons
in-charge of and responsible to the Company for the conduct of the business, are

Page 15 of 18

responsible under Section 27(2) of the SEBI Act, for the contraventions committed
by the Company in its offer and issue of convertible RPS and equity shares.
17.

In the light of the above, I find that there is no other alternative but to take recourse
through an ex-parte interim action against BNP and its directors, for preventing them
from further carrying on with its fund mobilizing activity under the offer of
convertible RPS and equity shares or any other securities. Further, the interest of
the investors also need to be protected to ensure that public funds are not diverted
and misappropriated. In the absence of such preventive action, irreparable loss and
damage could be caused to shareholders and investors at large.

18.

Accordingly, I, in exercise of the powers conferred under Sections 11(1), 11(4), 11A
and 11B of the Securities and Exchange Board of India Act, 1992 read with Section
19 thereof and Regulation 107 read with Regulation 111 of the SEBI (Issue of Capital
and Disclosure Requirements) Regulations, 2009, hereby issue the following
directions:
a. The Company, BNP Real Estate and Allied Limited [PAN: AADCB2189H], its
promoters and directors namely Mr. Sanjeev Kumar Purwansi [PAN:
AQQPP3214P], Mr. Munendra Kumar [PAN: ATVPK1011B], Mr. Mukesh
Kumar Sharma [PAN: BCKPS7359M], Mr. Mahesh Paliwal [PAN: BBIPP4520L],
Mr. Santosh Sharma [DIN: 02643085], Mr. Raghvendra Singh Narwaria [PAN:
ADPPN6255N], Ms. Surekha Sharma [PAN: BNUPS4121C], Mr. Umesh
Narwaria[PAN: ACOPN4971B], Mr. Ravindra Singh [PAN: BHAPS1632N], Mr.
Kunver Singh [PAN: BOUPS2175H], Mr. Kishori Sharma [PAN: BDVPS3534A],
Mr. Padam Singh Narwaria [PAN: ACOPN4986E], Mr. Gyanesh Rawat [DIN:
01498588], Mr. Devendra Kumar Sharma [DIN: 03346208] and Mr. Gyanesh
Sharma [DIN: 02498403] are restrained from mobilizing funds through the issue of
convertible RPS and equity shares or through any other form of securities, to the
public and/ or invite subscription, in any manner whatsoever, either directly or
indirectly till further directions.
b. The Company, its promoters and directors are prohibited from issuing prospectus or
any offer document or issue advertisement for soliciting money from the public for

Page 16 of 18

the issue of securities, in any manner whatsoever, either directly or indirectly, till
further orders.
c. The Company, its promoters and directors shall not dispose off any of the properties
or alienate the assets of the Company or dispose off any of their properties or alienate
their assets.
d. The Company, its promoters and directors shall not divert any funds raised from
public at large through the issuance of the impugned equity shares, kept in its bank
accounts and/ or in the custody of the Company without prior permission of SEBI
until further orders.
e. The Company, its promoters and directors are restrained from accessing the securities
market and are further prohibited from buying, selling or otherwise dealing in
securities in any manner whatsoever, either directly or indirectly, till further directions.
f. The Company, its promoters and directors shall co-operate with SEBI and shall
furnish all the documents.
g. The Company, its promoters and directors are also directed to provide a full inventory
of all their assets and properties and details of all their bank accounts, demat accounts
and holdings of shares/ securities, if held in physical form.
19.

The above directions shall come into force with immediate effect and shall continue
to be in force till further directions.

20.

BNP Real Estate and Allied Limited, its promoters and directors namely Mr. Sanjeev
Kumar Purwansi, Mr. Munendra Kumar, Mr. Mukesh Kumar Sharma, Mr. Mahesh
Paliwal, Mr. Santosh Sharma, Mr. Raghvendra Singh Narwaria, Ms. Surekha Sharma,
Mr. Umesh Narwaria, Mr. Ravindra Singh, Mr. Kunver Singh, Mr. Kishori Sharma,Mr.
Padam Singh Narwaria, Mr. Gyanesh Rawat, Mr. Devendra Kumar Sharma and Mr.
Gyanesh Sharma are advised to show cause as to why suitable directions/ prohibitions,

under the Sections 11(1), 11(4), 11A and 11B of the SEBI Act read with 73(2) of the
Companies Act, 1956 and the ICDR Regulations, including the following, should not
be taken/ imposed against them:

Page 17 of 18

a. directing them jointly and severally to refund the money collected through the issue of
equity shares that are impugned in this Order, along with interest at 15% per annum
from the date when the refunds became due to the investors till the date of repayment;
b. directing them not to issue prospectus or any offer document or issue advertisement
for soliciting money from the public for the issue of securities, in any manner
whatsoever, either directly or indirectly, for an appropriate period;
c. directions restraining them from accessing the securities market and prohibiting them
from buying, selling or otherwise dealing in securities for an appropriate period;
d. directing them and other companies in which their directors hold substantial or
controlling interest, to not access the capital market for an appropriate period.
21.

BNP Real Estate and Allied Limited, its promoters and directors namely Mr. Sanjeev
Kumar Purwansi, Mr. Munendra Kumar, Mr. Mukesh Kumar Sharma, Mr. Mahesh
Paliwal, Mr. Santosh Sharma, Mr. Raghvendra Singh Narwaria, Ms. Surekha Sharma,
Mr. Umesh Narwaria, Mr. Ravindra Singh, Mr. Kunver Singh, Mr. Kishori Sharma,Mr.
Padam Singh Narwaria, Mr. Gyanesh Rawat, Mr. Devendra Kumar Sharma and Mr.
Gyanesh Sharma may file their replies/ submissions within a period of 21 days from

the date of receipt of this Order and may also indicate whether they desire to avail an
opportunity of personal hearing in the matter.
22.

This Order is without prejudice to the right of SEBI to take any other action including
prosecution proceedings under Section 24 of the SEBI Act and Section 621 of the
Companies Act, 1956 read with the relevant provisions of the Companies Act, 2013
and adjudication proceedings under the SEBI Act, against BNP Real Estate and Allied
Limited, its promoters and directors namely Mr. Sanjeev Kumar Purwansi, Mr.
Munendra Kumar, Mr. Mukesh Kumar Sharma, Mr. Mahesh Paliwal, Mr. Santosh
Sharma, Mr. Raghvendra Singh Narwaria, Ms. Surekha Sharma, Mr. Umesh Narwaria,
Mr. Ravindra Singh, Mr. Kunver Singh, Mr. Kishori Sharma,Mr. Padam Singh
Narwaria, Mr. Gyanesh Rawat, Mr. Devendra Kumar Sharma and Mr. Gyanesh
Sharma, in accordance with law.

Date : September 29th, 2015


Place : Mumbai

PRASHANT SARAN
WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA

Page 18 of 18