WTM/PS/180/IMD-ERO/MAR/2016

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA

CORAM: PRASHANT SARAN, WHOLE TIME MEMBER
ORDER
Under sections 11(1), 11(4), 11A and 11B of the Securities and Exchange Board of India Act, 1992
In respect of
1. Silicon Projects India Limited (PAN: AAMCS7625L) and its Directors,
2. Mr. Jugal Kishor Gupta (DIN:02572736, PAN: ALVPG7319N) ,
3. Mr. Bijay Pratap Mishra (DIN:05253188; PAN: BEYPM5770A),
4. Mr. Swarup Kumar Dutta (DIN:05306588; PAN: ALZPD5431G),
5. Mr. Biswajit Bera (DIN:02529396,PAN: AMGPB2130A),
6. Mr. Tushar Jana (DIN:02529742),
7. Mr. Asesh Mitra (DIN:05220340; PAN:AOHPM4366A),
8. Mr. Debashis Dey (DIN:05255046; PAN: ALAPD5970B) and
9. Mr.Tapan Sahoo (DIN:05257691; PAN: CDGPS2983D)
10. Mr. Afzal Hussain (debenture trustee of company)

Date of hearing: April 22, 2015

AppearanceFor noticees: Noticees, Bijay Pratap Mishra and Jugal Kishore Gupta appeared along with their
Advocates M/s. Panchu Gopal Ghosh and A. Kumar Mukherjee.
Noticees Tapan Sahoo, Asesh Mitra and Swarup Kumar Datta appeared in-person.
For SEBI: Ms. Soma Majumder, General Manager, Mr. N. Murugan, Assistant General Manager, Mr.
T. Vinay Rajneesh, Assistant General Manager, Mr. Sisir Mondal, Assistant General Manager and Ms.
Nikki Agarwal, Assistant Manager.
Date of hearing: September 04, 2015
Debenture trustee, Afzal Hussain did not appear.

1.

Securities and Exchange Board of India (hereinafter referred to as SEBI), vide an ex-parte

interim Order dated January 06, 2015 (hereinafter referred to as the interim order) observed that
the company, Silicon Projects India Limited (hereinafter referred to as SPIL or the Company)
is prima facie engaged in fund mobilization activity from the public, through its offer and issue of Non-

Page 1 of 24

Convertible Redeemable Debentures (hereinafter referred to as "NCDs") and had allegedly

violated the provisions of sections 56, 60 read with section 2(36), 73, 117B and 117C of the Companies
Act, 1956 read with the Companies Act, 2013 and the relevant provisions of the SEBI (Issue and
Listing of Debt Securities) Regulations, 2008 (the ILDS Regulations). The interim order also
alleged that the debenture trustee, Mr. Afzal Hussain allegedly failed to meet the eligibility conditions
specified under regulation 7 of the SEBI (Debenture Trustees) Regulations, 1993 ("DT Regulations")
and acted as an unregistered debenture trustee in violation of section 12(1) of the Securities and
Exchange Board of India Act, 1992 (SEBI Act).
16. In order to protect the investors who have subscribed to the impugned offer and issue of NCDs and to
ensure that the Company, its directors and debenture trustee are restrained from carrying on with their fund
mobilizing activity, SEBI had issued the following directions:
In view of the foregoing, I, in exercise of the powers conferred upon me under Sections 11(1), 11(4), 11A
and 11B of the SEBI Act read with the Debt Securities Regulations and the Debenture Trustee
Regulations, hereby issue the following directions
i. SPIL shall not mobilize any fresh funds from investors through the Offer of NCDs or through the issuance
of equity shares or any other securities, to the public and/or invite subscription, in any manner whatsoever,
either directly or indirectly till further directions;
ii. SPIL and its Directors, viz. Mr. Jugal Kishor Gupta (DIN:02572736), Mr. Bijay Pratap Mishra
(DIN:05253188; PAN: BEYPM5770A), Mr. Swarup Kumar Dutta (DIN:05306588; PAN:
ALZPD5431G), Mr. Biswajit Bera (DIN:02529396), Mr. Tushar Jana (DIN:02529742), Mr.
Asesh Mitra (DIN:05220340; PAN:AOHPM4366A), Mr. Debashis Dey (DIN:05255046;
PAN: ALAPD5970B), Mr.Tapan Sahoo (DIN:05257691; PAN: CDGPS2983D), are
prohibited from issuing prospectus or any offer document or issue advertisement for soliciting money from
the public for the issue of securities, in any manner whatsoever, either directly or indirectly, till further
orders;
iii. SPIL and its abovementioned 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;
iv. SPIL shall provide a full inventory of all its assets and properties;
v. SPIL's abovementioned Directors shall provide a full inventory of all their assets and properties;

Page 2 of 24

vi. SPIL and its abovementioned Directors 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;
vii. SPIL and its abovementioned present Directors shall not divert any funds raised from public at large
through the Offer of NCDs, which are kept in bank account(s) and/or in the custody of SPIL;
viii. SPIL shall furnish complete and relevant information within 21 days from the date of receipt of this
Order.
ix. The Debenture Trustee, viz. Mr. Afzal Hussain, is prohibited from continuing with his present
assignment as a debenture trustee in respect of the Offer of NCDs of SPIL and also from taking up any
new assignment or involvement in any new issue of debentures, etc. in a similar capacity, from the date of
this order till further directions.
x. Mr. Jugal Kishor Gupta, Mr. Biswajit Bera , Mr. Tushar Jana are directed to provide their PAN
details along with their reply.
17. The above directions shall take effect immediately and shall be in force until further orders.

2.

The copies of the interim order were forwarded to the noticees, the Company, Bijay Pratap

Mishra, Biswajit Bera, Asesh Mitra, Tapan Sahoo, Jugal Kishor Gupta, Swarup Kumar Dutta, Tushar
Jana, Debashis Dey and Afzal Hussain (debenture trustee).
The letters were delivered on Asesh Mitra, Debashis Dey, Bijay Pratap Mishra and Swarup Kumar
Dutta. The letters returned undelivered with respect to the following noticees with the remarks as
indicated
a. Company left
b. Biswajit Bera addressee moved
c. Afzal Hussain addressee moved
d. Tushar Jana refused
e. Jugal Kishore Gupta addressee moved
3.

Tapan Sahoo, vide an undated letter (received in SEBI on February 03, 2015) stated that he

would comply with the interim order. He submitted that he was a director in the Company from April

Page 3 of 24

17, 2012 to May 27, 2013. The noticee further submitted that he did not attend any board meeting of
the Company during his tenure and did not sign any documents or statements as he did not have the
power to do so. He requested for a hearing in Kolkata.
4.

Asesh Mitra, vide letter dated February 06, 2015, stated that he was a field worker of the

Company. He stated SEBI has not directed the Chairman, Mr. Shib Narayan Das (who was in CBI
custody), to appear and submitted that the Chairman was the owner of the Company and could
provide all information. The noticee requested for a hearing in Kolkata in view of his financial
condition. Noticee, Bijay Pratap Mishra, vide letter dated February 06, 2015, also made submissions
similar to that of Asesh Mitra.
5.

Noticee, Jugal Kishor Gupta, vide his letter dated February 10, 2015 stated that he worked

for the Company. He too made similar submission as made by Asesh Mitra. Vide another undated
letter, this noticee had stated as follows:
(a) He joined the Company on February 14, 2009 as a Member/Collection agent. Thereafter, on
February 23, 2009, he was selected as Executive Developer.
(b) Mr. Shib Narayan Das had signed an undated letter indicating that the member has no liability.
(c) The noticee was fraudulently appointed by Mr. Shib Narayan Das, Founder and managing
Director of the Company. Notice dated August 30, 2011 indicates that Mr. Shib Narayan Das
is the Chairman and Director of the Company.
(d) The noticee does not have any bank account.
(e) He is willing to co-operate with SEBI and requested SEBI to remove him from the
proceedings.
(f) This noticee enclosed copies of documents including the followingi. His identity card, offer letter from Silicon Smart Marketing Pvt. Ltd.
ii. Certificate of incorporation of the Company
iii. Certificate for commencement of business
iv. PAN card of the Company
v. MoA and AoA dated August 10, 2010

Page 4 of 24

6.

Swarup Kumar Dutta, vide letter dated February 23, 2015 submitted that he joined as an

agent in the Company as he wanted to earn. He stated that the owner of the Company is Mr. Shib
Narayan Das, who is in custody of the CBI. He submitted that he was not involved in the affairs of
the Company including its mobilization activities. He is now unemployed and requested SEBI to
discharge him from the proceedings. He submitted that he would co-operate with SEBI and requested
for a hearing in Kolkata.
7.

The noticees were afforded an opportunity of personal hearing on April 22, 2015 in the SEBI

eastern Regional Office at Kolkata and the same was informed vide SEBI letters dated March 25,
2015. As the interim order could not be delivered on few of the noticees, SEBI made a public notice
regarding the proceedings and the schedule of the personal hearing in Times of India dated April 15,
2015 and Ananda Bazar Patrika dated April 14, 2015. The noticees were advised that in case they fail to
appear before SEBI on the aforesaid date, the matter would be proceeded ex-parte on the basis of
material on record.
8.

On the date (i.e. April 22, 2015) of personal hearing, noticees, Bijay Pratap Mishra and Jugal

Kishore Gupta appeared along with their Advocates M/s. Panchu Gopal Ghosh and A. Kumar
Mukherjee. The advocates and Bijay Pratap Mishra made oral submissions. Noticees Tapan Sahoo,
Asesh Mitra and Swarup Kumar Datta appeared in-person and made oral submissions. Swarup
Kumar Dutta filed his written submissions in Bengali language, wherein he submitted as follows:
(a) He does not know as to how, when and where he became a director and does not have any
documents in this regard.
(b) The Companys owner Mr. Shib Narayan Das, for saving himself and with an ulterior motive,
had inducted him as a director.
(c) Presently, he is unemployed and has become financially weak.
(d) The persons who had invested money in the Company as per his advice were forcing him to
return the money. The noticee is therefore under mental trauma.
(e) The noticee requested SEBI to consider his submissions, take a lenient view and discharge
him from the present proceedings.

Page 5 of 24

All the above noticees were advised to file written submissions recording their oral submissions made
in the hearing along with copies of all documents, which they wish to rely in the matter.
9.

Mr. Tapan Sahoo, vide letter dated April 28, 2015, filed his written statement inter alia

submitting as follows:
(a) He was an employee in Silicon Chain Multiservices Limited and Silicon Smart Marketing Pvt.
Ltd. as Developer on commission basis. Copies of his Identity card issued by these companies
and commission payment vouchers were enclosed.
(b) He had to sign many papers under duress without knowing the contents.
(c) He was appointed as a director in the Company on April 17, 2012 and resigned on May 27,
2013.
(d) During his tenure, he was neither invited to any board meeting nor attended such meetings.
(e) He did not draw directors remuneration or fees from the Company.
(f) He was not given power to operate any bank account of the Company.
(g) He was never a part of the decision making process in the Company and did not know any
other director of the Company.
(h) The noticee submitted that he was never involved in any illegal or immoral activities, if any,
carried on by the Company and requested SEBI to withdraw the directions.
10.

As the name of the noticee, Afzal Hussain was inadvertently not mentioned in the public

notice made in the newspapers, SEBI afforded another opportunity to this noticee on September 04,
2015. SEBI made a public notice in the newspapers, Times of India and Anandbazar Patrika dated
September 03, 2015, regarding the proceedings initiated vide the interim order against this noticee and
the opportunity of personal hearing granted to him on September 04, 2015. Despite the public notice,
this noticee failed to appear.
11.

The noticees, Bijay Pratap Mishra and Asesh Mitra who were advised to file their written

statements during the hearing held on April 22, 2015, did not do so till date. As adequate time and
opportunities have been afforded, I consider it appropriate to proceed in the matter on merits.

Page 6 of 24

12.

The Company has been alleged of making a public issue of NCDs without complying with the

provisions of the Companies Act, 1956 and the provisions of the ILDS Regulations. Therefore, the
first question to be determined is whether the Company made a public issue of NCDs. The interim
order has alleged that the Company made offer and issued such securities during 2009-2010, 20102011 and 2011-2012 to more than 406 persons and raised more than Rs.18,03,16,702/-. Such
observation was made on the basis of the Balance sheet of the Company as at March 31, 2010 and
information submitted by the Company vide its letters dated December 18, 2012 and May 24, 2013 to
SEBI. The following table provides further details:
Year
2009 10

No.
of Face value (in Amount Raised
No.
of
debentures
Rs.)
(in Rs.)
Allottees
NA
100
2,10,74,802 *not known

2010 11

2,32,160

100

2,32,16,000

#368

2011 12

13,60,259

100

13,60,25,900

^38

18,03,16,702

>406

>15,92,416

* Amount raised through NCDs as per the disclosure in Balance Sheet for year ended March 31, 2010. The same has
been disclosed as Secured Loans and as per Schedule 2 as Redeemable Debentures. The Company has not submitted
the number of investors.
# Number of investors as disclosed by the Company vide letter dated May 24, 2013 read with the disclosures in the
Balance Sheet for 2010-11. Balance Sheet signed by Shib Narayan Das and Tushar Jana.
^ Number of investors as disclosed by the Company vide letter dated December 18, 2012 read with disclosures made
in the Balance sheet for 2011-12. As of March 31, 2012, the total outstanding debentures stood at Rs.17,19,16,700/(a) The Company had passed a Resolution on October 15, 2009 for issuing 5,00,000 debentures
of face value of Rs.100/- each aggregating to Rs.5,00,00,000/-. A charge for Rs.5 crores was
created on immovable properties, plant and machinery, furniture and fixtures, stock in trade
and book debts of the Company on October 21, 2009. Silicon Debenture Trust, managed by
trustee Mr. Afzal Hussain was the debenture trustee. The Company had circulated Brochure

Page 7 of 24

cum Application Form for solicitation and subscription of the NCDs (Series-I) on the
following terms and conditions:
Scheme I: multiplier Secures Redeemable Debenture
Plan

Issue Price (Minimum

1,000/-

1,000/-

1,000/-

1,000/-

1,000/-

Maturity value

1,500/-

2,000/-

3,000/-

5,000/-

10,000/-

Redemption period

3 Years

5 Years

7 Years

10 Years

14 Years

10 debentures)

Scheme II: Regular Income Secured Redeemable debenture

Minimum Amount Acceptable is Rs. 50,000/Interest payable half Yearly
Plan
G

Redemption Period

Rate of Interest (per year)

3 Years

(13.2%)

5 Years

(14.4%)

The said Brochure cum Application Form, as provided by the Company, inter alia mentioned
the following particulars:
a. "Issue of Opening date: 21.10.2009
b. The company is managed, superintended and controlled by the Board of Directors of the company.
c. The debentures are being issued pursuant to the resolutions passed in the meeting of the Board of
Directors of the Company held on 7th September 2009.
d. Size of issue is Rs. 500 lakhs with an option to retain additional Rs.500lakhs. While it will
be the company's endeavor to allot debentures as indicated, the company has right to
increase/decrease the size of the offer.
e. The debentures will be secured by creation of charges the assets (movable & immovable) to RoC,
Kolkata."

Page 8 of 24

(b) The Board of Directors (on May 30, 2011) of the Company and Shareholders of the Company
in its Extraordinary General Meeting held on July 01, 2011 passed resolutions to issue
30,00,000, NCDs of face value of Rs. 100/- each to raise a sum of Rs. 30 Crores through
private placement. A charge for Rs.30 crores was created on immovable properties, plant and
machinery, furniture and fixtures, stock in trade of the company on July 19, 2011. Here too
the debenture trustee was Silicon Debenture Trust managed by trustee Mr. Afzal Hussain.
The Debenture Trust Deed mentions that the debentures shall consist of a series of 30,00,000
debentures of Rs.100/- each, aggregating to Rs.30 Crores. The debentures were to be issued
as per the following schemes, as provided in the Brochure cum Application Form:
Scheme I: multiplier Secures Redeemable Debenture
Plan

Issue Price (Minimum 1,000/-

1,000/-

1,000/-

1,000/-

1,000/-

10 debentures)
Maturity value

1,500/-

2,000/-

3,000/-

5,000/-

10,000/-

Redemption period

3 Years

5 Years

7 Years

11 Years

15 Years

Scheme II: Regular Income Secured Redeemable

Minimum Amount Acceptable is Rs. 50,000/Interest payable half Yearly
Plan
G

Redemption Period

Rate of Interest (per year)

3 Years

(13.2%)

5 Years

(14.4%)

Brochure cum application form inter alia mentioned as undera. "Issue of opening date: 2.07.2011
b. The company is managed, superintended and controlled by the Board of Directors of the company.
c. The debentures are being issued pursuant to the resolutions passed in the meeting of the Board of
Directors of the Company held on 01.07.2011.

Page 9 of 24

d. Size of issue is Rs. 3,000 lakhs with an option to retain additional Rs.3,000 lakhs. While it
will be the company's endeavor to allot debentures as indicated, the company has right to
increase/decrease the size of the offer.
e. The debentures will be secured by creation of charges on the assets (movable & immovable) to the
RoC, Kolkata."
(c) The Company had admittedly issued NCDs of face value of Rs.100/- each issued during the
financial year (FY) 2010-11 as per details below:
Sr.
No.
1

Opening date
subscription
01/04/2010

of

Closing date
subscription
15/04/2010

22/04/2010

07/05/2010

12/05/2010

14/06/2010

No.
of
debentures
6000

No.
of
allottees
10

10/05/2010

18000

23

05/06/2010

09/06/2010

27270

41

16/07/2010

20/07/2010

25600

39

21/07/2010

07/08/2010

12/08/2010

11600

18

16/08/2010

06/09/2010

10/09/2010

15050

23

14/09/2010

13/10/2010

15/10/2010

27500

41

18/10/2010

03/11/2010

08/11/2010

14600

20

10/11/2010

07/12/2010

10/12/2010

28280

39

10

14/12/2010

05/01/2011

11/01/2011

14100

27

11

15/01/2011

03/02/2011

19/02/2011

21760

43

12

11/02/2011

04/03/2011

08/03/2011

12000

24

13

10/03/2011

31/03/2011

31/03/2011

Total

13.

of

Date
Allotment
16/04/2010

of

10400

20

2,32,160

368

The Company had issued NCDs for Rs.2,10,74,802/- during 2009-10, in terms of the

Resolution passed on October 15, 2009. Thereafter, the Company had issued NCDs worth
Rs.2,32,16,000/- during 2010-11 as per the permission to issue 5,00,000 debentures. Therefore, it can
be seen that the NCDs issued during 2009-10 and 2010-11 were pursuant to the Resolution passed
on October 15, 2009. The Company had further allotted 13,60,259 NCDs to 38 persons during 201112 and the same was stated (in Balance Sheet for 2011-2012) to be against the permission of Rs.35
crore to be raised through debentures. Therefore, the allotments made during 2009-10, 2010-11 and
2011-12 should be seen as a whole. Accordingly, I note that the Company had allotted NCDs to more
than 406 persons and raised Rs.18.03 crore.

Page 10 of 24

14.

In order to ascertain whether an issue is a public issue or not, reference needs to be made to

section 67(3) of the Companies Act. This provision, as amended by the Companies (Amendment) Act,
2000, with effect from December 13, 2000, states that no offer or invitation shall be treated as made to the
public by virtue of sub-sections (1) or (2), as the case may be, if the offer or invitation can properly be
regarded, in all circumstances (a) as not being calculated to result, directly or indirectly, in the shares
or debentures becoming available for subscription or purchase by persons other than those receiving
the offer or invitation ; or (b) otherwise as being a domestic concern of the persons making and
receiving the offer or invitation. More importantly, in terms of the first proviso to the aforesaid section,
the provisions of section 67(3) shall not apply in a case where the offer or invitation to subscribe
for shares or debentures is made to fifty persons or more. Therefore, the number of subscribers
becomes relevant to judge whether an issue of shares are for public or on a private placement basis,
in the light of the above said provision. Therefore, if an offer of securities are made to fifty or more
persons, it would be deemed to be a public issue. NBFCs or PFIs are exempted only from the first
proviso to section 67(3). Therefore, NBFC or PFI do not have any restriction on the number of
allottees as imposed on a company which is not an NBFC or PFI. However, such companies also
need to prove that its offer falls either under clause (a) or (b) of section 67(3) to claim such issuance
to be a private placement.
15.

Though the Company, in its Balance Sheet for 2011-12 has stated that The Company has raised

money by issuing debentures from various parties. These parties are directors and company shareholders, relatives, friends,
relatives friend, friends friend and friends relative etc, considering that it had made offer and issued NCDs
to more than 406 persons during FY 2009-10, 2010-11 and 2011-12, I conclude that the Company
made a public issue of NCDs in terms of the first proviso to section 67(3) of the Companies Act.
16.

In terms of section 55A of the Companies Act, 1956, SEBI shall administer various provisions

(as mentioned therein) of the said Act with respect to issue and transfer of securities by listed
companies, companies that intend to list and also those companies that are required to list its securities
while making offer and issue of securities to the public. While examining the scope of Section 55A of
the Companies Act, 1956, the Hon'ble Supreme Court of India in Sahara Case, had observed that:

Page 11 of 24

"We, therefore, hold that, so far as the provisions enumerated in the opening portion of Section
55A of the Companies Act, so far as they relate to issue and transfer of securities and non-payment
of dividend is concerned, SEBI has the power to administer in the case of listed public companies
and in the case of those public companies which intend to get their securities listed on a recognized
stock exchange in India."
" SEBI can exercise its jurisdiction under Sections 11(1), 11(4), 11A(1)(b) and 11B of SEBI
Act and Regulation 107 of ICDR 2009 over public companies who have issued shares or
debentures to fifty or more, but not complied with the provisions of Section 73(1) by not listing its
securities on a recognized stock exchange".
17.

Under section 11A of the SEBI Act, SEBI is also empowered to regulate, by

regulations/general or special orders, the matters pertaining to issue of capital, transfer of securities
and matters related thereto. Accordingly, the Company, having made a public offer and issue of
securities, as observed above, is under the jurisdiction of SEBI. By making a public issue of NCDs,
the Company was mandated to comply with all the legal provisions that govern and regulate public
issue of such securities, including the Companies Act, 1956 and the SEBI Act and regulations. In this
context, I refer and rely on the below mentioned observation made by the Hon'ble Supreme Court of
India in the matter of Sahara India Real Estate Corporation Limited & Ors. Vs. SEBI (Civil Appeal no. 9813
and 9833 of 2011) (hereinafter referred to as the 'Sahara Case'):
... ... that any share or debenture issue beyond forty nine persons, would be a public issue attracting all the relevant
provisions of the SEBI Act, regulations framed thereunder, the Companies Act, pertaining to the public issue. ".
18.

Accordingly, sections 56, 60, 73, 117B and 117C of the Companies Act, 1956 and the

provisions of the ILDS Regulations are required to be complied by a company making a public issue
of securities. These provisions have been allegedly not adhered to by the Company. In this regard, I
note that (i)

In terms of section 56(1) of the Companies Act, 1956, every prospectus issued by or on
behalf of a company, shall state the matters specified in Part I and set out the reports
specified in Part II of Schedule II of that Act. Further, as per section 56(3) of the

Page 12 of 24

Companies Act, 1956, no one shall issue any form of application for shares in a company,
unless the form is accompanied by abridged prospectus, contain disclosures as specified.
Section 2(36) of the Companies Act read with section 60 thereof, mandates a company
to register its 'prospectus' with the RoC, before making a public offer/ issuing the
'prospectus'.
(ii)

By making a public issue, the Company had to compulsorily list such securities in
compliance with section 73(1) of the Companies Act, 1956. A Company making a public
issue of securities cannot choose whether to list its securities or not as listing is a
mandatory requirement under law. As per section 73(1) Companies Act, 1956, a company
is required to make an application to one or more recognized stock exchanges for
permission for the shares or debentures to be offered to be dealt with in the stock
exchange. Further, there is no material to say that the Company has filed an application
with a recognized stock exchange to enable the NCDs to be dealt with in such stock
exchange. Therefore, the Company has failed to comply with this requirement.
Section 73(2) states that "Where the permission has not been applied under subsection (1) or such
permission having been applied for, has not been granted as aforesaid, the company shall forthwith repay
without interest all moneys received from applicants in pursuance of the prospectus, and, if any such money
is not repaid within eight days after the company becomes liable to repay it, the company and every director
of the company who is an officer in default shall, on and from the expiry of the eighth day, be jointly and
severally liable to repay that money with interest at such rate, not less than four per cent and not more
than fifteen per cent, as may be prescribed, having regard to the length of the period of delay in making
the repayment of such money".
As the Company failed to make an application for listing of such securities, the Company
had to forthwith repay such money collected from investors. If such repayments are not
made within 8 days after the Company becomes liable to repay, the Company and every
director is liable to repay with interest at such rate. The liability of the Company to refund
the public funds collected through offer and allotment of the impugned securities is
continuing and such liability would continue till repayments are made. There is no record

Page 13 of 24

to suggest that the Company made the refunds as per law. The Hon'ble Supreme Court
of India in the Sahara case has examined section 73 and made the following observations:
"Section 73(1) of the Act casts an obligation on every company intending to offer
shares or debentures to the public to apply on a stock exchange for listing of its
securities. Such companies have no option or choice but to list their securities on a
recognized stock exchange, once they invite subscription from over forty nine investors
from the public. If an unlisted company expresses its intention, by conduct or otherwise,
to offer its securities to the public by the issue of a prospectus, the legal obligation to
make an application on a recognized stock exchange for listing starts. Sub-section
(1A) of Section 73 gives indication of what are the particulars to be stated in such a
prospectus. The consequences of not applying for the permission under sub-section (1)
of Section 73 or not granting of permission is clearly stipulated in sub-section (3) of
Section 73. Obligation to refund the amount collected from the public with interest is
also mandatory as per Section 73(2) of the Act. Listing is, therefore, a legal
responsibility of the company which offers securities to the public, provided offers are
made to more than 50 persons."
As the amounts mobilized through the issue of securities have not been refunded within
the time period as mandated under law, it would therefore be appropriate to levy an
interest @ 15% p.a. as provided for under the above section read with rule 4D (which
prescribes that the rates of interest, for the purposes of sub-sections (2) and (2A) of section 73, shall be
15 per cent per annum) of the Companies (Central Governments) General Rules and Forms,
1956 on the amounts mobilized by the Company through its offer and issue of NCDs
including Rs.18.03 crore as alleged in the interim order, from the date when the same was
liable to be repaid till date of actual payment to the investor.

On an examination of the Annual Report of the Company for 2013-2014, it is

observed that the Company did not attach the Notes to Accounts to the items
falling under the head Liabilities. Therefore, the amount of debentures
issued/outstanding could not be ascertained. It is observed at paragraph no. 18
of Annexure A to the Auditors Report made under the Companies (Auditors

Page 14 of 24

Report ) Order, 2003, that the total outstanding debentures till March 31, 2014
was Rs.1,35,71,470/-. This amount is also reflected under the head Secured Loan
in sr. no. 42 at page 9 of Form 23AC (form for filing balance sheet and other documents
with the Registrar). However, the Company has not submitted any evidence to
substantiate repayments, if any. As mentioned above, the Company had raised
more than Rs.18 crore through its offer and issue of NCDs.
(iii)

Section 117B of the Companies Act, 1956, prescribes that no company shall issue a
prospectus or a letter of offer to the public for subscription of its debentures, unless it
has, before such issue, appointed one or more debenture trustees for such debentures
and the company has, on the face of the prospectus or the letter of offer, stated that the
debenture trustee or trustees have given their consent to the company to be so appointed.
The Company has admittedly not filed any Prospectus. Therefore, the said provision has
not been fully complied with. Further, appointment of debenture trustee shall be in terms
of all applicable law. Further, section 117C stipulates that, 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 record to suggest that this provision
was complied with.

(iv)

As NCDs are debt securities in terms of the ILDS Regulations, the Company was also
mandated to comply with the provisions of the ILDS Regulations in respect of its public
issue of NCDs. However, the Company failed to comply with the following provisions
of the ILDS Regulations.
(a)
(b)
(c)
(d)
(e)
(f)

Regulation 4(2)(a) Application for listing of debt securities

Regulation 4(2)(b) In-principle approval for listing of debt securities
Regulation 4(2)(c) Credit rating has been obtained
Regulation 4(2)(d) Dematerialization of debt securities
Regulation 4(4) Appointment of Debenture Trustee
Regulation 5(2)(b) Disclosure requirements in the Offer Document

Page 15 of 24

(g)
(h)
(i)
(j)
(k)
(l)
(m)
(n)
(o)
(p)
(q)

Regulation 6 Filing of draft Offer Document

Regulation 7 Mode of disclosure of Offer Document
Regulation 8 Advertisements for Public Issues
Regulation 9 Abridged Prospectus and application forms
Regulation 12 Minimum subscription
Regulation 14 Prohibition of mis-statements in the Offer Document
Regulation 15 Trust Deed
Regulation 16 Debenture Redemption Reserve
Regulation 17 Creation of security
Regulation 19 Mandatory Listing
Regulation 26 Obligations of the Issuer, etc.

From the foregoing, I conclude that the Company failed to comply with the stipulation under sections
56, 60, 73, 117B and 117C of the Companies Act, 1956 read with Companies Act, 2013 and the
aforesaid provisions of the ILDS Regulations, in respect of its offer and issuance of NCDs as
discussed in this Order and liable for suitable action under the Companies Act, 1956, the SEBI Act
and the ILDS Regulations.
19.

The interim order was issued against the following directors (past and present) of the

Company:
a. Mr. Jugal Kishor Gupta (DIN:02572736),
b. Mr. Bijay Pratap Mishra (DIN:05253188; PAN: BEYPM5770A),
c. Mr. Swarup Kumar Dutta (DIN:05306588; PAN: ALZPD5431G),
d. Mr. Biswajit Bera (DIN:02529396),
e. Mr. Tushar Jana (DIN:02529742),
f. Mr. Asesh Mitra (DIN:05220340; PAN:AOHPM4366A),
g. Mr. Debashis Dey (DIN:05255046; PAN: ALAPD5970B) and
h. Mr.Tapan Sahoo (DIN:05257691; PAN: CDGPS2983D)
The following table provides the details regarding their date of appointment and also date of
resignation, if applicable:

Page 16 of 24

Noticee

Date of appointment as a Date of resignation

director

Bijay Pratap Mishra

16.04.2012

Continues as a director

Biswajit Bera

01.11.2011

20.05.2013

Asesh Mitra

16.04.2012

01.10.2013

Tapan Sahoo

17.04.2012

27.05.2013

Jugal Kishor Gupta

01.11.2011

Continues as a director

Swarup Kumar Dutta

30.05.2013

Continues as a director

Tushar Jana

07.08.2009

20.05.2013

Debashis Dey

16.04.2012

20.05.2013

Regarding their culpability in this matter, I observe the following:

(a) In terms of section 291 of the Companies Act, 1956, the board of directors of a company shall
be entitled to exercise all such powers and do all such acts and things as the company is
authorized to exercise and do. Therefore, the board of directors shall be responsible for the
conduct of the business of a company and liable for any non-compliance of law and such
liability shall trickle down to individual directors.
(b) Accordingly, a director who is part of a companys board shall be responsible and liable for all
acts carried out by a company unless exemptions are provided.
(c) With respect to the culpability of a director for breach of law by a company, I refer to and rely
on the following observations made by the Honble High Court of Madras in Madhavan
Nambiar vs Registrar Of Companies (2002 108 Comp Cas 1 Mad):
13. It may be that the petitioner may not be a whole-time director, but that does not mean he is
exonerated of the statutory obligations which are imposed under the Act and the rules and he cannot
contend that he is an ex officio director and, therefore, he cannot be held responsible. There is substance
in the contention advanced by Mr. Sridhar, learned counsel since the petitioner a member of the Indian
Administrative Service and in the cadre of Secretary to Government when appointed as a director on
the orders of the Government to a Government company or a joint venture company, he is expected not
only to discharge his usual functions, but also take such diligent care as a director of the company as
it is expected of him not only to take care of the interest of the Government, but also to see that the

Page 17 of 24

company complies with the provisions of the Companies Act and the rules framed thereunder.
Therefore, the second contention that the petitioner cannot be proceeded against at all as he is only a
nominee or appointed director by the State Government, cannot be sustained in law. A director either
full time or part time, either elected or appointed or nominated is bound to discharge the functions of
a director and should have taken all the diligent steps and taken care in the affairs of the company.
14. In the matter of proceedings for negligence, default, breach of duty, misfeasance or breach of trust
or violation of the statutory provisions of the Act and the rules, there is no difference or distinction
between the whole-time or part time director or nominated or co-opted director and the liability for such
acts or commission or omission is equal. So also the treatment for such violations as stipulated in
the Companies Act, 1956.
15. Section 5 of the Companies Act defines the expression "officer who is in default". The expression
means either (a) the managing director or managing directors ; (b) the whole-time director or wholetime directors ; (c) the manager ; (d) the secretary ; (e) any person in accordance with whose directions
or instructions the board of directors of the company is accustomed to act; (f) any person charged by the
board with the responsibility of complying with that provision ; (g) any director or directors who may
be specified by the board in this behalf or where no director is so specified, all the directors.
16. Section 29 of the Companies Act provides the general power of the board and ...
Therefore it follows there cannot be a blanket direction or a blanket indemnity in favour of the
petitioner or other directors who have been nominated by the Government either ex officio or otherwise.
Hence the second point deserves to be answered against the petitioner.
17. As regards the first contention, it is contended by Mr. Arvind P. Datar, learned senior counsel
appearing for the petitioner that the company or its board had resolved that Thiagaraj S. Chettiar
shall be the director in charge of the company of all its day-to-day affairs and, therefore, the petitioner,
an ex officio chairman and director, cannot be expected to attend to the affairs on a day-to-day basis.
This contention though attractive cannot be sustained as a whole. There may be a delegation, but
ultimately it comes before the board and it is the board and the general body of the company which are
responsible.
{Emphasis supplied}
(d) A person cannot assume the role of a director in a company in a casual manner. The position
of a director in a public company/listed company comes along with responsibilities and
compliances under law associated with such position, which have to be fulfilled by such
director or face the consequences for any violation or default thereof.
(e) The allotment of NCDs were made during FY 2009-10, 2010-11 and 2011-12. The Company
is found to have contravened the provisions of sections 56, 60, 73, 117B and 117C of the

Page 18 of 24

Companies Act, 1956 and the ILDS Regulations. From the above details, it can be inferred
that Biswajit Bera, Jugal Kishore Gupta and Tushar Jana were the directors of the
Company when the Company made the offer and allotment of NCDs in violation of the law.
(f) Section 56(1) and 56(3) read with section 56(4) imposes the liability for the compliance of the
said provisions, on the company, every director, and other persons responsible for the issuance
of the prospectus. The liability for non-compliance of section 60 of the Companies Act is on
the Company, and every person who is a party to the non-compliance of issuing the prospectus
as per the said section. Further, the directors of a company would also be responsible for
complying with the provisions of the ILDS Regulations.
(g) The liability of the company and directors to repay under section 73(2) of the Companies Act,
1956 and section 27 of the SEBI Act, is a continuing liability and the same continues till all
the repayments are made. Therefore, the directors (irrespective of whether they continue or resign) who
were present during the period when the Company made the offer and allotted NCDs shall
be liable for violation of sections 56, 60 and 73 of the Companies Act, including the default in
making refunds as mandated therein. As the liability to make repayments under sections 73(2)
of the Companies Act read with section 27 of the SEBI Act is a continuing liability, the persons
who join the Companys Board pursuant to the offer and allotment of NCDs shall also be
liable if the Company and the concerned directors have failed to make refunds as mandated
under law.
Accordingly, in addition to Biswajit Bera, Jugal Kishore Gupta and Tushar Jana, the other
noticees, namely, Bijay Pratap Mishra, Asesh Mitra, Tapan Sahoo, Swarup Kumar Dutta
and Debashis Dey are also responsible for making repayments, in terms of section 73(2) of
the Companies Act, 1956 read with section 27 of the SEBI Act, though they joined pursuant
to the offer and allotment of securities.
(h) In view of the above observations, the submissions made by noticees Tapan Sahoo, Jugal
Kishor Gupta and Swarup Kumar Dutta do not carry merit. Further, it is noted that

Page 19 of 24

Mr. Jugal Kishor Gupta and Tushar Tana were signatories in various issue related
documents and balance sheets.
(i) In view of the above observations, Biswajit Bera, Jugal Kishore Gupta and Tushar Jana
shall be liable for the violations as found against the Company in this Order as well as for
making refunds to the investors with attendant interest and for other enforcement action.
(j) Bijay Pratap Mishra, Asesh Mitra, Tapan Sahoo, Swarup Kumar Dutta and Debashis
Dey are also liable, as directors of the Company, for making refunds in terms of section 73(2)
of the Companies Act read with section 27 of the SEBI Act along with interest as ordered
herein along with other enforcement directions.
20.

I also note that the interim order has not covered some former directors of the Company,

namely, Shib Narayan Das, Antara Mukherjee, Purnendu Mallick and Sayanti Sen, who appear to be
in the board of directors of the Company during the period when the offer and issuance of NCDs
were made. SEBI is therefore advised to examine the same and initiate appropriate action against
them, in accordance with law.
21.

The interim order has alleged that the Mr. Afzal Hussain acted as the debenture trustee with

respect to the NCDs issued by the Company, without registration from SEBI as required under section
12(1) of the SEBI Act and has also not satisfied the eligibility condition stipulated under regulation 7
of the DT Regulations. As per the trust deed, it is seen that this person has been engaged as a debenture
trustee. This noticee has not filed any response despite affording opportunities. In this regard, I note
that the noticee is not registered with SEBI to perform the functions of a debenture trustee in the
capital market. Further, he does do not satisfy the following conditions under regulation 7 of the DT
Regulations:
"no person should act as a debenture trustee unless he is either
i. a scheduled bank carrying on commercial activity; or
ii. a public financial institution within the meaning of section 4A of the Companies Act, 1956; or
iii. an insurance company; or
iv. body corporate."

Page 20 of 24

Accordingly, the debenture trustee, Mr. Afzal Hussain is found to have violated section 12(1) of the
SEBI Act and regulation 7 of the DT Regulations. In view of these observations, it can be said that
the provisions of section 117B of the Companies Act, 1956 have not been completely complied with.
22.

For the above reasons, I, in exercise of the powers conferred upon me 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 hereby issue the
following directions:
(a) The company, Silicon Projects India Limited and its directors (past and present) Bijay
Pratap Mishra, Biswajit Bera, Asesh Mitra, Tapan Sahoo, Jugal Kishor Gupta, Swarup
Kumar Dutta, Tushar Jana, Debashis Dey, 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.
(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 (in Bengali) with wide circulation,

Page 21 of 24

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) Silicon Projects India Limited and its directors (past and present) Bijay Pratap Mishra,
Biswajit Bera, Asesh Mitra, Tapan Sahoo, Jugal Kishor Gupta, Swarup Kumar Dutta,
Tushar Jana, Debashis Dey 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, Silicon Projects India Limited and its directors (past
and present) Bijay Pratap Mishra, Biswajit Bera, Asesh Mitra, Tapan Sahoo, Jugal
Kishor Gupta, Swarup Kumar Dutta, Tushar Jana, Debashis Dey, in complying with the
aforesaid directions, SEBI, on the expiry of the three months period from the date of this
order, a) shall recover such amounts in accordance with section 28A of the SEBI Act including
such other provisions contained in securities laws.
b) 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.
c) 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

Page 22 of 24

d) would also make a reference to the Ministry of Corporate Affairs to initiate appropriate
action as deemed fit.
e) 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) Silicon Projects India 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 in whatsoever manner, from the date of this Order
till the expiry of 4 years from the date of completion of refunds to investors as directed above.
(i) Bijay Pratap Mishra, Biswajit Bera, Asesh Mitra, Tapan Sahoo, Jugal Kishor Gupta,
Swarup Kumar Dutta, Tushar Jana and Debashis Dey 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 4 years from the date of completion
of refunds to investors, as directed above.
(j) For the violations (i.e. acted as debenture trustee when they were not eligible to act as debenture trustees and
acted so without registration from SEBI) committed by Mr. Afzal Hussain, they are hereby
restrained from acting as an intermediary, accessing the securities market and further restrained
from buying, selling or dealing in securities, in any manner whatsoever, for a period of 4 years.
(k) The above directions shall come into force with immediate effect.

Page 23 of 24

23.

As mentioned in paragraph 20 of this Order, SEBI is directed to examine the role of directors,

who were not covered in the interim order and who were on the board of Silicon Projects India
Limited during the period when the Company had made the offer and issued NCDs and proceed
appropriately against them.
24.

This Order is without prejudice to any action, including adjudication and prosecution

proceedings that might be taken by SEBI in respect of the above violations committed by the
Company, its promoters, directors including former directors and other key persons.
25.

Copy of this Order shall be forwarded to the recognised stock exchanges and depositories for

information and necessary action.

26.

A copy of this Order shall also be forwarded to the Ministry of Corporate Affairs/concerned

Registrar of Companies, for their information and necessary action with respect to the
directions/restraint imposed above against the Company and the individuals.

PRASHANT SARAN
WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA
Date: March 03, 2016
Place: Mumbai

Page 24 of 24