SEBI has restrained the company and its 10 promoters, directors from any further fund mobilising activity and from accessing the securities market
Market regulator Securities and Exchange Board of India (SEBI) directed Sukhchain Hire Purchase Ltd, not to mobilise funds from investors. Further, 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, either directly or indirectly. 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, either directly or indirectly.
Sukhchain Hire Purchase was engaged in fund mobilising activity through issue of NCDs to more than 49 persons without complying with the relevant provisions of the Companies Act, 1956, read with SEBI (Issue and Listing of Debt Securities) Regulations, 2008, according to the SEBI Order.
SEBI had received a communication dated 12 December 2012, from Ministry of Finance forwarding a complaint regarding illegal raising of funds through the issuance of debentures by some companies including Sukhchain Hire Purchase.
SEBI also received a communication dated 29 October 2013 from Registrar of Companies (RoC), Gwalior stating that Sukhchain has issued secured debentures 10 times to more than 50 subscribers collectively on private placement basis.
SEBI on seeking information found out that Sukhchain was incorporated on 15 May 1995 with the ROC, Gwalior with CIN No. as U65921MP1995PLC024674. The company has its Registered Office situated at Plot No.78, 1st Floor, VM Arcade, M.P. Nagar, Zone-II, Bhopal, Madhya Pradesh-462011. The Directors of the company are Malwinderwant Singh, Sukhraj Bahadur Singh, Vijay Laxmi Kathait, Jitendra Singh Gurjar, Guriqbal Singh Bhullar, Harpreet Singh, Harjit Kaur Bhullar, Abhay Shukla, Vishwanathan Iyer and Akshay Tiwari. The name of debenture trustee is Hemant Sahu having address at H No. 105-A, Ravidas colony, JK Road, Bhopal, Madhya Pradesh-462011.
Based on its investigation, SEBI found that Sukhchain is not exempted from the applicability of section 67(3) of the Companies Act, 1956 and the issuance of the NCDs by Sukhchain is prima facie a public issue in terms of the provisions of Section 67(3) of the Companies Act, 1956. SEBI hence observed, “From the abovementioned, it will follow that since the Offer of NCDs is a public issue of securities, such securities shall also have to be listed on a recognised stock exchange, as mandated under Section 73 of the Companies Act, 1956. In this regard, reference is made to Sections 73 of the Companies Act, 1956, of which sub-Sections (1), (2) and (3) are relevant.”
SEBI also pointed out that there was no debenture redemption reserve. The SEBI Order says, “Further, under Section 117C of the aforesaid Act, where a company issues debentures, it shall create a debenture redemption reserve for the redemption of such debentures, to which adequate amounts shall be credited, from out of its profits every year until such debentures are redeemed. There is no evidence on record that indicates creation of debenture redemption reserve by Sukhchain. Hence, Sukhchain has not complied with the provisions of Sections 117C of the Companies Act, 1956.”
Based on these findings, the SEBI has restrained the company and its promoters from any further fund mobilising activity and from accessing the securities market. Further, the company and its promoters shall not dispose of any of the properties or alienate or encumber any of the assets owned/acquired by that company through the Offer of NCDs, without prior permission from SEBI.
The SEBI Order has been strict with the debenture trustee as well. The Order says, “The Debenture Trustee, Hemant Sahu, is prohibited from continuing with his present assignment as a debenture trustee in respect of the Offer of NCDs of Sukhchain and also from taking up any new assignment or involvement in any new issue of debentures, etc. in a similar capacity.”
In its concluding remarks, the SEBI Order says, “This Order is without prejudice to the right of SEBI to take any other action that may be initiated against Sukhchain and its Directors; its Debenture Trustee, viz. Hemant Sahu, in accordance with law.”