The company was engaged in fund mobilising activity through issue of Preference Shares and NCDs 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
SEBI passed an interim order dated 19 March 2015, directing that Infocare Infra Limited (IIL) shall not mobilise funds from the investors. Further, the company and its directors shall not dispose off any of the properties of the company and shall not divert any funds raised from the public. The company and its directors and promoters are also prohibited from accessing the securities market.
Debenture Trustee, Pawan Kumar Agarwal, is prohibited from continuing with his present assignment as debenture trustees in respect of the issue of NCDs of the company and also from taking up any new assignment or involvement in any new issue of debentures, etc. in a similar capacity, according to the SEBI Order.
The company was engaged in fund mobilising activity through issue of Preference Shares and NCDs 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.
SEBI had received a complaint on 2 July 2014 (forwarded by the Reserve Bank of India vide letter dated 25 June 2014), alleging mobilisation of funds by Infocare Infra Limited (IIL). SEBI had also received a letter dated 22 July 2014, from the Criminal Investigation Department, Government of West Bengal, stating that IIL "has collected huge money from good number of investors." SEBI began its investigation by writing to the company and by looking up the data on the MCA 21 Portal.
From its investigation, SEBI observed, “it will follow that since the Offer of Redeemable Preference Shares and Offer of NCDs are public issues of securities, such securities shall also have to be listed on a recognized 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 for the instant case…” Clearly, the company had not followed proper procedure required for a public issue.
The SEBI Member in his Order said, “I am of the view that IIL 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 aforementioned 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 IIL created a charge for an amount of Rs11.40 crore and appointed Pawan Kumar Agarwal as Debenture Trustee for the Offer of NCDs by that company. Based on the material available on record, I find that Pawan Kumar Agarwal has acted as unregistered Debenture Trustee, which amounts to violation of the provisions of the SEBI Act read with the Debenture Trustee Regulations.”
The SEBI Order adds that the company and its directors should show cause as to why they should not be compelled to refund the entire money collected by them from the
public.
The SEBI Order concludes by saying that the Order is without prejudice to the right of SEBI to take any other action that may be initiated against IIL and its director and debenture trustee.
