Cell Industries directed not to mobilise funds from investors, by a SEBI Order

Cell Industries was engaged in fund mobilising activity through issue of Redeemable Preference Shares and NCDs to more than 49 persons without complying with the provisions of the Companies Act, 1956


SEBI passed an Interim Order dated 17 March 2015 in the matter of Cell Industries Limited directing that the company shall not mobilise funds from investors and that the company and its directors are prohibited from issuing prospectus or any offer document or issue advertisement for soliciting money from the public for the issue of securities.
The company and its directors are also restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in the securities market, according to the SEBI Order.
The company was engaged in fund mobilising activity through issue of Redeemable Preference Shares and NCDs (non-convertible debentures) to more than 49 persons without complying with the provisions of the Companies Act, 1956.
SEBI had received a complaint dated 9 June 2014, alleging mobilisation of funds by Cell Industries Limited. SEBI began to investigate by seeking information from Cell Industries and by looking up the MCA 21 portal. 
Based on its investigation, SEBI observed, “Having regard to the observations of the Hon'ble Supreme Court of India, since the Offer of Redeemable Preference Shares and Offer of NCDs are prima facie public issues in accordance with the provisions of the Companies Act, 1956, the same will attract the requirement of compulsory listing before a recognized stock exchange in terms of Section 73(1) of the Companies Act, 1956 and also compliance with the provisions of Sections 73(2) and 73(3) of that Act.. In the facts of the instant case, it prima facie appears that Cell Industries has violated the provisions of Section 73 of the Companies Act, 1956, in respect of the Offer of Redeemable Preference Shares and Offer of NCDs.”
SEBI also observed, “Under Section 2(36) read with Section 60 of the Companies Act, 1956, a company needs to register its prospectus with the ROC, before making a public offer or issuing the prospectus.” Cell Industries has thus not followed proper procedure for its public issue.
Hence, SEBI made the following inference in its interim Order: “I am of the view that Cell Industries is prima facie engaged in fund mobilising activity from the public, through the Offer of Redeemable Preference Shares and Offer of NCDs and as a result of the aforesaid activity has violated the provisions of the Companies Act, 1956 (Section 56, Section 60 read with Section 2(36), Section 73, Section 117B) read with the Debt Securities Regulations. From the material available on record, it is observed that Cell Industries created charge on 6 July 2011 and appointed Ashish Kumar De Sarkar, Samrat Sinha and Abdul Basad Molla, as Debenture Trustees for the Offer of NCDs by that company.” The latter have acted as unregistered Debenture Trustees, which amounts to violation of the provisions of the SEBI Act read with the Debenture Trustee Regulations.
The interim SEBI Order includes a show cause notice, which reads as: “In this context, Cell Industries and its directors are advised to show cause as to why suitable directions/prohibitions under Sections 11(1), 11(4), 11A and 11B of the SEBI Act including the following, should not be taken/imposed against them:
i. Directing them jointly and severally to refund money collected through the Offer of Redeemable Preference Shares and Offer of NCDs along with interest, if any, promised to investors;
ii. Directing them to not issue prospectus or any offer document or issue advertisement for soliciting money from the public for the issue of securities;
iii. Directions restraining them from accessing the securities market and prohibiting them from buying, selling or otherwise dealing in securities for an appropriate period.”
The SEBI Order concludes with the warning, “This Order is without prejudice to the right of SEBI to take any other action that may be initiated against Cell Industries and its directors, and its Debenture Trustees, in accordance with law.”


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Scams of Car Service Dealers
Be careful and do not fall for their pitches when you go for routine servicing
With urban real estate costs high, and showing no signs of declining, car sales flattening out and utilisation going down, one of the only remaining income streams for service dealers is a variety of scams foisted on you—if you are not careful about reading the fine print when your vehicle goes for routine servicing or maintenance. Here are some of these:
•  Nitrogen in tyres has to be the biggest scam going. With normal driving, or even fast driving, there is no real benefit on existing standard tyres fitted on standard rims. Only if you are headed out to a race track will it make sense to pay thousands of rupees for what they claim is nitrogen gas.
• Alignment and wheel balancing, ideally done once every 15,000-20,000km, unless there is sign of heavy wear & tear on tyres, for which again there can be multiple other causes. Every which way, if you end up paying more than Rs500 to align and balance all four tyres, then you are paying too much.
• Clutch overhauling scam. Clutch does not need overhauling if it goes slightly ‘hard’. Clutch needs overhauling if your engine starts ‘slipping’, i.e., when you press down hard, the engine roars ahead, while the car follows not so quickly.
• Steam cleaning of air-conditioner ducts. This one takes the cake. All they do is take your car, turn your temperature controls at hottest, run fan at highest for five minutes, and then let the car cool down for half-an-hour.
Don’t fall for these scams. I have written multiple pieces on how to take care of your car before, and after, the rains. If you follow them, hopefully, you will be fine.

Car Pooling Urgently Needed

About 30-40 years ago, when the total production of motor-cars in India was around 70,000-100,000 per annum, the Motor Vehicles Act and amendments, as they stood then, had a very interesting provision for optimal utilisation of existing roads and vehicles. You could, on the payment of a moderate and reasonable fee, convert your private car into a commercial taxi for a few months, and then, after paying the required insurance top-up fees, be street legal as a taxi too.
This way, in peak seasons, private cars otherwise lying around unused could, and often were, used as legitimate private taxies. As long as they satisfied the basic criteria on fitness and permits required, regardless of age, you could wrap an additional registration plate over the existing one and earn some money as well as keep an asset from blocking expensive public real estate. What ails most Indian cities nowadays is the large number of private cars lying underused—often not used at all, for whatever reason. On the other hand, with parking rates and drivers’ salaries going up, in some cities, there appears to be a shortage of good quality cabs. There is an obvious fit here. Which will also be an income-earning opportunity to those who have bought cars but don’t use them all the time.

Second-hand Car: More Insights

A friend of mine bought a used car recently from another friend of his. The car was in good shape and condition, about five years old, but had been lying abandoned and unused for the past three years or so. During this period, the car's insurance had lapsed; apart from that, it needed some minor repairs, and cleaning. Two issues that he came to me for advice were:
• Weird smell emerging from the air-conditioner. He had tried to use some fragrances but they didn’t appear to work. A quick servicing of the AC by a specialist fixed that, but what came out of the ducts was like a mini decayed forest, certainly unhealthy. And that is a point to remember if cars have not been used for a while.
• Synchronising the expired insurance for the purchased car while taking benefit of existing ‘no claim bonus’ for the old car he sold as scrap and re-registering it. To do that, he had to first take insurance in the previous owner’s name, then place the documents for re-registration and, simultaneously, transfer the previous ‘no claim bonus’ to the newer car. Bit of a hop-step-jump that, but that’s how it is.

Parking Troubles

Parking cars on roads comes naturally to many of us, in India. One can understand if the urge to double-park, as it is called in other countries when you pull over and stop on a road for whatever reason, overtakes us when we are on the move. But, to assume that it is a birthright to double-park even for overnight parking on roads which have multiple forms of traffic—from pedestrian to cycles to motor vehicles—on a regular basis, needs to be figured out.
Overnight parking has become a major issue in Delhi, the more ‘posh’ the locality, the more acute the parking ‘problems’. With what were single-unit houses becoming four- to eight-family habitats, over the past few decades, along with basements doubling up as offices and additional ‘servant's quarters’ coming up on the terraces, it is not unusual to see 12-16 cars, and an equal number of two-wheelers, adorn the road space outside a 300-400-square metre plot.
It gets even worse where there are smaller plots and in smaller cities. Likewise, in markets and bazaars all over India and not just Delhi. As a result, roads and pavements outside homes and offices are like war-zones, protected by man and machine and video cameras at a level not seen on the LoC (line of control) or international border between India and Pakistan.
In some parts of Delhi, the problems are so severe now that, after about 10pm or so, people just park anyhow anywhere, blocking the option of not just emergency vehicles accessing the streets, but pretty much all movement. Traffic jams inside inner ‘colony’ roads become gridlocks and parking rage is replacing road rage. It gets difficult to write about new cars and bikes when there is a parking war going on outside at 6:30 on a cold winter morning!

Reversing Safely

While looking out of the window from where I live and work, the most common sight is that of motor-cars trying their level best to squeeze into tight parking slots by any means possible. Often, this means huge usage of power-steering, and change of locomotion from forward to reverse gears, multiple times. All this provides continuous recreation to the vast variety of idlers who collect when such drama is going on. Power-steering has made multiple movements easier; but, at one time, many of us born to non-assisted steering, would take great pride in being able to slot a car into a parking bay in one smart move, regardless. (But not many people now even remember pre-power-steering  cars!) There are many online websites that teach you how to reverse into tight parking spots. Take a look at them. It will save you a lot of tyre and steering system wear & tear, to start with. Plus all those idle loafers will not laugh at you.
(Veeresh Malik started and sold a couple of companies, is now back to his first love—writing. He is also involved in helping small and midsize family-run businesses re-invent themselves.)



Harish Kohli

2 years ago

I have quite a bit of experience on the service stations carrying out unnecessary repairs. In on instance they called me to say that the brake pads have to be replaced. When I complained to the GM and told him the pads were replaced during the last servicing and the car has been driven only 1,000 Kms, the pads became alright.
An issue I would like your opinion on is regarding the manufacturers recommended service schedule after every, normally, 10,000 Kms. Tasks to be done and consumables/parts to be changed at each service are specified. Even if the vehicle has hardly logged, say 2,000 kms, I am asked to change the oil, filters, coolant, spark plugs, overhauling of fuel system, alignment etc. I reluctantly agree to change theoil & filters but not for the other works. Where do I stand with respect to the warranty, particularly the extended warranty. Can it be declined because of my refusal to follow the recommended schedule?


Veeresh Malik

In Reply to Harish Kohli 2 years ago

Thank you for writing in.

The previous generation of Indians and Indian cars, the Ambassadors and Premiers, typically needed a service ever 1600kms or so. From that to 10000kms has been a very rapid change.

In the bargain, however, there is this huge fleet of low-usage cars which run up huge servicing bills because the authorised service stations charge basis timeline recomendations and not mileage done.

Will warranty get impacted?

That depends on manufacturer to manufacturer and there is no one clear answer to that question.

Shall attempt to address this issue in a future article.

Harish Kohli

In Reply to Veeresh Malik 2 years ago

Namaste Veereshji, An article on this subject will be appreciated.By the way, now that we follow kilometer instead of miles, hasn't there been any word to replace milometer and mileage? I get foxed when I have to use these words.

In a lighter vein I can't help commenting on your statement "The previous generations of Indians and Indian cars ..........." Well I think the service schedules for the "Previous Indians" and the new Indians could be reversed. Do Fast Food companies have any comments?

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