BEFORE THE SECURITIES APPELLATE TRIBUNAL MUMBAI Date of Decision : 25.11.2019 Appeal No. 577 of 2019

1. Greentouch Projects Ltd.

2. Mr. Shyam Sundar Dey

3. Mr. Snehasish Sarkar

4. Mr. Sumon Sarkar

P-164/1, 1st Floor, CIT Road Scheme – 7M, Near Sony World, Ultadanga, Kolkata, West Bengal – 700054. ….. Appellants Versus Securities & Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai – 400 051. … Respondent Mr. Vinay Chauhan, Advocate with Mr. Nikhil Shah, Mr. Joby Mathew, Mr. Anshuman Sugla, Advocates i/b Joby Mathew & Associates for the Appellants. Mr. Pradeep Sancheti, Senior Advocate with Mr. Vivek Shah, Mr. Abhiraj Arora, Advocates i/b ELP for the Respondent. CORAM : Justice Tarun Agarwala, Presiding Officer Dr. C. K. G. Nair, Member Justice M. T. Joshi, Judicial Member Per : Justice M. T. Joshi, Judicial Member (Oral)

1. Heard both sides.

2. Aggrieved by the notice dated October 24, 2019 of the

attachment of the bank account in pursuance of the recovery certificate directing to freeze the bank account of the appellants in pursuance of the recovery of Rs. 56 crores collected by the appellants through the issuance of Non-Convertible Debentures (NCDs) against the various provisions of the Companies Act, the present appeal has been filed.

3. The Respondent Securities & Exchange Board of India

(hereinafter referred to as, “SEBI”) has launched the proceedings against the appellants earlier under Sections 11, 11(4), 11A and 11B of the Securities & Exchange Board of India Act, 1992 (hereinafter referred to as, “SEBI Act”) for violation of the provisions of Sections 56, 60 read with Section 2(36), 73, 117B and 117C of the Companies Act, 1956 read with Section 465 of the Companies Act, 2013 and the relevant provisions of the Securities & Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 (hereinafter referred to as, “ILDS Regulations”).

4. On the basis of the submissions made by the appellants with

the Whole Time Member (hereinafter referred to as, ‘WTM’) in the proceeding found that the appellants had allotted securities and collected cash as detailed in paragraph 8 of the order as under :- “(a) During the financial year 2010-11, it had allotted securities to 134 investors against a total of Rs.38,57,000/- mobilized from them. (b) During the financial year 2011-12, the Company had allotted securities to 3230 persons against a total of Rs.11,36,40,000/- mobilized from such persons. (c) During the financial year 2012-13, the Company had allotted securities to 17,185 persons against total mobilization of Rs.44,21,32,000/-.”

5. In view of the material on record, WTM issued various

directions including repayment to the investors. The appellants had claimed that it had already repaid a sum of Rs. 12,24,13,460/-.

6. The directions issued by the WTM were as under :-

“(a) The Company, Greentouch Projects Limited and its directors/promoters including Shyam Sundar Dey, Snehasish Sarkar, Sujoy Sinha and Sumon Sarkar, 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 yearly 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. The Company has claimed to have already repaid a sum of Rs. 12,24,13,460/- to its investors. However, such claimed repayments by the Company shall be certified by Chartered Accountants, as directed in sub-paragraph (e) below. (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, its directors and other persons named above, shall issue public notice, in all editions of two National Dailies (one English and one Hindi) and in one local daily (in Bengali) 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 aforesaid 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 categorized so by the Institute of Chartered Accountants of India ("ICAI"). (f) Greentouch Projects Limited and its directors/promoters including Shyam Sundar Dey, Snehasish Sarkar, Sujoy Sinha and Sumon Sarkar 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…………… …………………………………………………………….”

7. Aggrieved by the said decision the appellants preferred an

appeal in this Tribunal vide Appeal No. 496 of 2015. The same was decided on October 6, 2017. The appellants contended before the Tribunal that they have refunded more than Rs. 36 crores out of the amount of Rs. 55.95 crores collected from various investors. It was further submitted that the appellants were ready and willing to refund the balance amount due to the investors in a time bound manner. In the circumstances, the Tribunal passed the following order :- “4. In these circumstances, since the appellants are willing to comply with the order of SEBI, we disposed of the appeal by directing the appellants to make a representation to SEBI within four weeks from today setting out in detail the names and the amount already refunded to the investors and also set out in detail the mode and the manner in which the balance amount would be refunded to the investors. If appellants make a representation within four weeks from today, SEBI shall dispose of the same as expeditiously as possible and preferably within a period of * twelve weeks from the date of receiving the representation. Ad-interim relief to continue for the period of three months from today subject to the appellants making a representation to SEBI within four weeks from today.

5. Appellants are directed to disclose list of their assets to SEBI within a period of *four weeks from today and also give an undertaking to SEBI that they shall not sell the said assets without the prior approval of SEBI.

6. Appeal is disposed of in the aforesaid terms with no order as to costs.”

8. After passing of the said order the recovery proceedings were

started as detailed (supra) hence the present appeal has been filed.

9. According to the appellants in pursuance of the order of this

Tribunal, they have made representation to the respondent SEBI on November 3, 2017. They also submitted details of redemption of NCDs to SEBI on 19th April 2018. However, without giving any decision in the said representation suddenly the impugned recovery proceedings were started. Hence the present appeal.

10. On the first day of hearing of the appeal, respondent SEBI

were directed to file an affidavit. Similarly, the appellants were also directed to file a copy of the representation alongwith its annexures as those annexures were not earlier filed. Both the sides have complied with the directions.

11. Learned counsel for the appellants submitted that even though

the documents pertaining to the repayment were supplied to SEBI, the same was overlooked. On the other hand, learned counsel for the respondent submitted that the representations are not in compliance of the order of the Tribunal. No undertaking at all was furnished though the directions were issued by the Tribunal. The detailed proposal including mode and manner of repayment is also not set out. Further, though the statement was made before the Tribunal that payment / refund to the tune of Rs. 36 crores has been made, the Chartered Accountant certificate (though not in accordance with the directions of the WTM) supplied by the appellants only relates to the principal amount of Rs. 10 crore plus interest which comes around Rs. 12 crores. Even the Chartered Accountant letter is incomplete. No verifiable details were submitted. The addresses of the investors, mode of repayments, bank details etc. are wanting. In the circumstances, vide letter dated February 21, 2018, respondent SEBI issued a letter to the advocate of the appellants to submit the requisite details on or before February 28, 2018. The copy of the said letter is filed with the reply at ‘Exhibit A’. The advocate of the appellants vide e-mail dated February 28, 2018 has informed respondent SEBI that the appellants are still in process of compiling documents and sought extension of two weeks’ time to file their reply. Thereupon, one week time was granted. However, no reply was forthcoming and, therefore, again respondent SEBI issued a letter dated March 28, 2018 ‘Exhibit D’ to the affidavit-in-reply. In reply, after six months, vide letter dated April 19, 2018, the appellants served a letter to the respondent SEBI. However, it did not contain manner of the repayment of the remaining amount. As per the said statement some repayments are made through NEFT but the details have not been given. Further, the certificate of Chartered Accountant attached to the letter is to the effect that the process of obtaining documentary evidence is continuing. Thereafter, no details were submitted. In view of the prolonged non-compliance and failure to give undertaking as directed by this Tribunal, the recovery proceedings were started.

12. Upon hearing both sides, in our view, the above details were

provided by SEBI would show that the appellants merely protracted the repayment. The detailed directions of the WTM are not followed. No undertaking is given to SEBI on the lines of the directions issued by this Tribunal vide paragraph No. 5 of the earlier order dated October 6, 2017 in Appeal No. 496 of 2015.

13. For the reasons stated aforesaid, there is no merit in the appeal.

The appeal is hereby dismissed with no order as to costs. Sd/- Justice Tarun Agarwala Presiding Officer Sd/- Dr. C. K. G. Nair Member Sd/- Justice M. T. Joshi Judicial Member 25.11.2019 Prepared & Compared by PTM