Regulator Sebi has asked Nirmal Infrahome Corporation Ltd and its present as well as former directors to refund the money that the company had collected illegally from the public and has also barred them from the markets for at least four years.
The Securities and Exchange Board of India (Sebi) noted that Nirmal Infrahome had collected over Rs 49.5 crore through the issuance of non-convertible debentures (NCDs) from at least 3,300 investors during financial year 2012-2013 till May 2014, the regulator said in an order dated November 21.
The regulator further said that it is possible that the actual number of allottees and amount mobilised could be more than this.
The securities were issued to over 50 people and accordingly the offer of NCDs qualified to be a public issue and required compulsory listing of securities on a recognised exchange. However, the firm did not comply with the provision.
Among other requirements, the firm was to register a prospectus with the Registrar of Companies (RoC) under the Companies Act, which it failed to do.
"I am of the view that Nirmal Infrahome was engaged in fund mobilising activity from the public, through the offer of NCDs and has contravened the provisions of ...the Companies Act and... provisions pertaining to the Sebi (Issue and Listing of Debt Securities) Regulations," Sebi Whole Time Member Madhabi Puri Buch said.
"In view of the violations committed by the company and its directors and promoters, to safeguard the interest of the investors who had subscribed to such NCDs issued by the company, to safeguard their investments, and to further ensure orderly development of securities market, it also becomes necessary for Sebi to issue appropriate directions against the company and the other noticee," she added.
Accordingly, Sebi has directed Nirmal Infrahome and its present directors -- Harish Sharma and Abhishek S Chauhan -- as well as former director Phool Singh Choudhary to refund the money collected by the company, during their respective period of directorship through the issuance of NCDs along with an annual interest of 15 per cent.
After completion of refund, they have been directed to file a report of such completion with Sebi, within three months, certified by two independent chartered accountants.
In case these entities fail to comply with the order, Sebi may recover such amounts in accordance with provisions of securities laws.
Further, Sebi has prohibited the company and its present directors from the securities markets till the refund and a further period of four years from the date of completion of the refund to investors. Also, they have been restrained from associating themselves with any listed public company during the period under review.
Besides, Sebi has banned the present director Prabal Pratap Singh Yadav, who joined subsequent to the NCDs issue, from the capital markets as well as from associating himself with any listed public firm, for a period of four years.
"Nirmal Debenture Trust and Jeetendra Rajput are restrained from accessing securities market and are further restrained from buying, selling or dealing in securities, in any manner whatsoever, for a period of four years," Sebi noted.
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