SEBI bars Dolphin Universal Rural Development from collecting funds from investors
The company was engaged in fund mobilising activity through issue of NCRSDs to more than 49 persons without complying with the relevant provisions of the Companies Act, 1956 and provisions of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008, according to an interim order from SEBI
SEBI passed an interim order dated 27 May 2015 on Dolphin Universal Rural Development Limited issuing the following directions: the company shall forthwith cease to mobilise any fresh funds from investors; the company and its present/past directors namely, Subham Bose, Anindyo Paul, Koushik Dutta, Debraj Mitra, Saugata Basu, Rana Sikdar, 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 restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in the securities market.
The company was engaged in fund mobilising activity through issue of NCRSDs (Non-Convertible Redeemable Secured Debentures) to more than 49 persons without complying with the relevant provisions of the Companies Act, 1956 and provisions of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008, according to the SEBI Order.
SEBI had received a reference dated 8 October 2013 from the office of District Magistrate, Patna regarding the activities of Dolphin. SEBI immediately began to investigate Dolphin. SEBI did not get any replies to the letters sent to Dolphin and its directors.
Meanwhile, SEBI received several complaints from investors in the months of June, July and August 2014 alleging non-repayment of their invested money in Secured Non-Convertible Redeemable Debentures (NCRDs) issued by the company. The complainants also provided the copies of certificates of NCRDs issued by the company to them. SEBI also received a complaint dated 31 July 2014 from “Dolphin Integrated Sufferers Help Association”, Cooch Behar (West Bengal) alleging that Dolphin group consisting of (a) Dolphin Universal Rural Development Ltd., (b) Dolphin Infratower Ltd., (c) Anupam Advisory Pvt. Ltd., (d) Chirag Biniyog & Commercial Pvt. Ltd., (e) Dolphin Instafood Pvt. Ltd., (f) Dolphin Shoes Pvt. Ltd. and (g) Dolphin Infra Power Projects Ltd., was raising money through issuance of debentures.
A SEBI official also conducted physical verifications at the registered office address of the company on October 15, 2014. It was found that the company did not exist at the given address. Efforts were also made to obtain the information from Ministry of Corporate Affair's Website i.e. MCA21 portal.
SEBI observed that merely mentioning that an issue is on a private placement basis does not make it such. If it is a public issue of debentures, Dolphin is obliged to follow proper procedure. Also, following the public issue, the debentures must be listed in the stock exchange, pointed out the SEBI Order.
The SEBI Order also observes, “Based on the material available on record, I find that Dolphin Debenture Trust (represented by its trustee viz. Sumit Jana) has prima facie, failed to meet the eligibility criteria specified under the provisions of the Debenture Trustees Regulations and therefore, has acted as unregistered Debenture Trustee, which amounts to violation of the abovementioned provisions of the SEBI Act read with the Debenture Trustees Regulations.”
In this context, the SEBI Order infers, “is prima facie engaged in fund mobilising activity from the public, through the Offer of NCRDs 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, Section 117C) and the Debt Securities Regulations.”
SEBI Order directs the debenture trustee to cease to function in such capacity and to also not take up similar responsibility in the securities market.
Finally, 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 Dolphin and its directors; its debenture trustee, viz. Dolphin Debenture Trust (represented by its trustee viz. Sumit Jana) , in accordance with law.”