Market regulator SEBI (Securities and Exchange Board of India) ordered Neesa Technologies and seven of its officials to refund the money which it had raised illegally from investors and also barred them from the securities market for four years. These entities had raised Rs5.96 crore through the issuance of non-convertible debentures (NCDs) in an illegal manner. They have been directed to refund the money along with interest of 15% per annum.

A SEBI probe found that the company had mobilised Rs5.96 crore from 341 investors during financial year 2013-14 under its offer of NCD and in doing so, failed to comply with the provisions of the Companies Act. The securities were issued by the firm to more than 50 people, which qualified it as a public issue that requires compulsory listing on recognised stock exchanges. The company and its directors were also required to file a prospectus, among other things, which they failed to do.

Market regulator SEBI, in exercise of the powers under section 19 of the Securities and Exchange Board of India Act, 1992 read with sections 11(1), 11(4), 11A and 11B thereof and regulation 28 of the SEBI (Issue and Listing of Debt Securities) Regulation, 2008 issued the following directions:

a.  Neesa Technologies Limited, and its directors, Arvind Gupta,  Yogesh  Ghisumal  Gemawat , Girishchandra Mukundram Baluni , Nimain  Charan  Biswal,  Sanjay Gupta , Kamlendra Joshi,  Manoj Singhal , jointly and severally,  shall forthwith refund the money collected by the Company through the issuance of Non-Convertible Debentures (which have been found to be issued in contravention of the public issue norms stipulated under the Companies Act, 1956 and the ILDS Regulations),  to the investors including the money collected from investors, till date, pending allotment of securities, if any, with an interest of 15% per annum compounded at half y early intervals, from the date when the repayments became due (in terms of Section 73(2) of the Companies Act, 1956) to the investors till the date of actual payment.

b. The repayments to investors shall be effected only in cash through Bank Demand Draft or Pay Order.

c. The Company/its present management are permitted to sell the assets of the Company only for the sole purpose of making the refunds as directed above and deposit the proceeds in an Escrow Account opened with a nationalised Bank.

d.  The Company and its directors shall issue public notice, in all editions of two National  Dailies  (one  English  and  one  Hindi)  and  in  one  local  daily  with  wide circulation, detailing the  modalities for refund, including details  of  contact persons including  names,  addresses  and  contact  details,  within  fifteen  days  of  this  Order coming into effect.

e.  After completing the repayments, the Company  shall file a  certificate of such completion with SEBI,  within a period of three months from the date of this Order, from two independent peer reviewed Chartered Accountants who are in the panel of any  public  authority  or  public  institution.  For the purpose of this Order, a peer reviewed Chartered Accountant shall mean a Chartered Accountant, who has been categorised so by the Institute of Chartered Accountants of India.

f. Neesa Technologies Limited and its directors are also directed to provide a full inventory of all their assets and properties and details of all their bank accounts, demat accounts and holdings of shares/securities, if held in physical form.

g.  In case of  failure  of the company,  Neesa Technologies Limited and its directors in complying with the directions, SEBI, on the expiry of the three months period from the date of this order, -  shall recover such amounts in accordance with section 28A of the SEBI Act including such other provisions contained in securities laws;  may initiate appropriate action against the Company, its promoters/ directors and the persons/ officers who are in default, including adjudication proceedings against them, in accordance with law ;  would make a reference to the State Government/ Local Police to register a civil/ criminal case against the Company, its promoters, directors and its managers/ persons in-charge of the business and its schemes, for offences of fraud, cheating, criminal breach of trust and misappropriation of public funds; and would also make a reference  to the Ministry of Corporate Affairs to initiate  appropriate action as deemed fit;  would also make a reference to the Ministry of Corporate Affairs to flag the names of noticee directors in its database so that information may be perused by RoC or any other regulatory authority.

h.  Neesa Technologies Limited  is directed not to, directly or indirectly, access the capital  market  by  issuing  prospectus,  offer  document  or  advertisement  soliciting money from the public and are further restrained and prohibited from buying, selling or  otherwise  dealing  in  the  securities  market,  directly  or  indirectly, from the date of this Order till the expiry of  four  years from  the date of completion of refunds to investors as directed above.

i. The directors are restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in the securities market, directly or indirectly in whatsoever manner, with immediate effect.  They are also restrained from issuing prospectus, offer document or advertisement soliciting money from the public and associating themselves with any listed public company and any public company which intends to raise money from the public, or any intermediary registered with SEBI. 

The above directions shall come into force with immediate effect and shall continue to be in force from the date of this Order till the expiry of four years from the date of completion of refunds to investors, as directed above.  The above directions shall come into force with immediate effect.