Capital markets regulator Sebi has ordered Sarada Pleasure & Adventure Ltd and its directors to refund the money collected through issuance of preference shares to the investors.
Besides barring the firm and its directors from capital markets for four years, Securities and Exchange Board of India (Sebi) also directed the company to pay 15 per cent interest annually along with the refund amount.
A Sebi probe found the company had raised about Rs 22.21 crore by way of issuance of Redeemable Preference Shares (RPS) to more than 8,000 investors between 2008-09 and 2012-13, without complying with the public issue norms.
However, the company claimed to have refunded Rs 10.25 crore and said that the remaining liability of Rs 11.90 crore will be paid by December 2017.
The firm said that all its investors "are genuine and requested time till 2017 to repay the dues".
Since the shares were issued to more than 50 persons, the company was required to list these securities on the stock exchanges. However, the company failed to comply with this norm.
The regulator said that money has to be refunded if listing is not applied or not obtained under Companies Act and it will not be proper to grant any relaxation of time to the company for making refunds as requested by it.
In an order, Sebi said Sarada Pleasure & Adventure and its directors -- Rakesh Shrivastav, Sukumar Debnath, Shubhankar Ray, Nandita Sengupta and Savita Srivastava, "jointly and severally, shall forthwith refund the money collected by the company through the issuance of RPS to the investors... With an interest of 15 per cent per annum."
The regulator said that money repaid to investors will be certified by Chartered Accountants.
After completing the repayments, Sarada Pleasure & Adventure and its directors will have to file a report of such completion of repayment with Sebi, within a period of three months, certified by two independent Chartered Accountants.
In case the firm fails to comply with the orders, Sebi will initiate attachment and recovery proceedings, besides registering a civil/criminal case against Sarada Pleasure & Adventure, among others.
Besides, Sebi has barred the company and its directors from the capital markets and said such debarment will be in place for four years from "the date of completion of refunds to investors".
