SEBI observed that VPIPL is prima facie engaged in fund mobilising activity from the public, through the Offer of NCDs
The Securities and Exchange Board of India (SEBI), based on its investigation ruled that VPIPL (Vaibhav Pariwar India Projects Limited) shall not mobilise funds from investors through the Offer of NCDs or through the issuance of equity shares or any other securities, to the public.
SEBI received a complaint dated 29 April 2014 from an investor alleging non-payment of interest and maturity amount in respect of Secured Redeemable Non-Convertible Debentures issued by VPIPL. SEBI, in the process of investigating the complaint asked for papers from VPIPL.
SEBI also received a complaint dated 5 June 2014 from another investor in respect of the non-payment of interest and maturity amount in respect of Secured Redeemable Non-Convertible Debentures issued by VPIPL.
Meanwhile, RBI vide letter dated 4 July 2014 and Office of the Director, Economic Offences Investigation Cell, Finance Department, Govt. of West Bengal, Kolkata vide letter dated July 28, 2014 also forwarded a complaint received by them from an investor of VPIPL regarding non-payment of maturity amount in respect of Secured Redeemable Non-Convertible Debentures issued by VPIPL.
SEBI’s investigation observed from the Balance Sheets that VPIPL has not created any Debenture Redemption Reserve and failure to create Debenture Redemption Reserve is prejudicial to the interests of the debenture holders.
SEBI also concluded, “Based on the material available on record, I find that Ashok Kumar Banerjee and Chandrima Sarkar have prima facie failed to meet the eligibility criteria specified under the provisions of the Debenture Trustees Regulations and therefore, have acted as unregistered Debenture Trustees, which amounts to violation of the abovementioned provisions of the SEBI Act read with the Debenture Trustees Regulations.”
The SEBI member in his order argued as follows: “It is pertinent to mention that urgent measures have to be taken in the matter as VPIPL and its Directors have failed to submit relevant information to SEBI. In light of the same, I find there is no other alternative but to take recourse through an interim action against VPIPL and its Directors along with its Debenture Trustees, viz. Ashok Kumar Banerjee and Chandrima Sarkar, for preventing that company from further carrying on with its fund mobilising activity under the Offer of NCDs.”
The SEBI order said that VPIPL shall not mobilize funds from investors through the Offer of NCDs or through the issuance of equity shares or any other securities, its Directors, viz. Rajesh Kumar Rai, Manoj Kumar Rai, Binay Kumar Lall and Indrakala Rai and its Debenture Trustees viz. Ashok Kumar Banerjee and Chandrima Sarkar, are prohibited from issuing prospectus or any offer document or issue advertisement for soliciting money from the public for the issue of securities, and VPIPL and its Directors, are restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in the securities market, either directly or indirectly, till further directions.
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