WTM/PS/07/IMD/ERO/APR/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
S. No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.

Name of noticee
Chakra Infrastructure Limited

CIN/PAN/DIN
CIN U45400WB2008PLC131200
PAN - AADCC6855H
Swapan Majumdar
DIN- 06405352
PAN- AKJPM4426D
Pranab Kumar Roy
DIN- 06623130
PAN- ACDPR4876J
Subhas Bose
DIN- 06623134
PAN- BLEPB3468F
ParthaChakraborti
DIN- 01274437
PAN- ADQPC5578E
Soma Chakraborti
DIN-01274477
PAN- AEKPC9920P
Swapan Kumar Sen
DIN- 02704406
PAN- CILPS3142L
Prithwis Kumar Das
DIN- 05268472
PAN- AFCPD3788F
Litan Chandra Sen
DIN- 05268471
PAN- CEDPS4072K
BiplabHalder
DIN- 05268469
PAN- AHGPH6624N
Santosh Kumar
DIN- 06710209
PAN- ALUPK5400F
Bijoy Das
DIN- 03155078
PAN- ALRPD5933D
Chakra
Debenture
Trust
(represented by its trustee viz. Shri
Sunil Kumar Saha )

Page 1 of 34

Date of hearing: April 22, 2015

Appearance: Noticees, Parta Chakraborty, Swapan Kumar Sen and Soma Chakraborty were
represented by Advocates, M/s.TriptimoiTalukdar and HitendraNathPramanik.
Noticee Pranab Kumar Roy was represented by ShambaChakroborty, Advocate.
Noticee Subhas Bose appeared in person.
For SEBI: Ms. Soma Majumder, General Manager, Mr. N. Murugan, Assistant General Manager
and Ms. Nikki Agarwal, Assistant Manager.
Date of hearing: July 29, 2015
Noticees, Prithwis Kumar Das and Santosh Kumar failed to appear.
Date of hearing: November 23, 2015
Appearance:
Noticee, Mr. Prithwis Kumar Das appeared in person.
For SEBI: Mr. PrasantaMahapatra, General Manager, Mr. T. Vinay Rajneesh, Assistant General
Manager and Ms. Nikki Agarwal.
1.

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

interim Order dated January 29, 2015 (hereinafter referred to as the interim order) observed
that the company, Chakra Infrastructure Limited (hereinafter referred to as CIL or the
Company) is prima facie engaged in fund mobilization activity from the public, through its offer and
issue ofNon-Convertible Redeemable Debentures(hereinafter referred to as "NCDs") and had
allegedly violated theprovisions 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, Chakra Debenture Trust(represented by its trustee
Mr. Sunil Kumar Saha)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).

Page 2 of 34

2.

In order to the protect the interest of investors and to ensure that the Company does not

continue with its unauthorized fund mobilization through its offer and issue of NCDs, SEBI issued
the following directions vide the interim order:
15. 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.

ii.

iii.

iv.
v.
vi.

vii.
viii.

CIL 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;
CIL and its present and past Directors, viz. Shri SwapanMajumdar (DIN- 06405352, PANAKJPM4426D), Shri Pranab Kumar Roy (DIN- 06623130, PAN- ACDPR4876J), Shri
Subhas Bose (DIN- 06623134, PAN- BLEPB3468F), Shri ParthaChakraborti (DIN01274437, PAN- ADQPC5578E), Smt Soma Chakraborti (DIN-01274477, PANAEKPC9920P), Shri Swapan Kumar Sen (DIN- 02704406, PAN- CILPS3142L), Shri
Prithwis Kumar Das (DIN- 05268472, PAN- AFCPD3788F), Shri Litan Chandra Sen (DIN05268471, PAN- CEDPS4072K), Shri BiplabHalder (DIN- 05268469, PANAHGPH6624N), Shri Santosh Kumar (DIN- 06710209, PAN- ALUPK5400F) and Shri
Bijoy Das (DIN- 03155078, PAN- ALRPD5933D) 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;
CIL 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;
CIL shall provide a full inventory of all its assets and properties;
CIL's abovementioned Directors shall provide a full inventory of all their assets and properties;
CIL 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;
CIL and its abovementioned 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 CIL;
CIL and its abovementioned Directors shall furnish complete and relevant information within 21 days
from the date of receipt of this Order.

Page 3 of 34

ix. The Debenture Trustee, viz. Chakra Debenture Trust (represented by its trustee Mr. Sunil Kumar
Saha), is prohibited from continuing with his present assignment as a debenture trustee in respect of the
Offer of NCDs of CIL 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.
16. The above directions shall take effect immediately and shall be in force until further orders.
.
3.

The interim order was passed on the basis of prima facie observations that emerged from the

documents/material submitted by the Company to SEBI, the information obtained from the MCA
21 Portal,communication received from RoC, Kolkata, complaints received against the Company
along with documents contained therein.
4.

The interim order advised the Company and its present and past Directors, viz.

SwapanMajumdar, Pranab Kumar Roy, Subhas Bose, ParthaChakraborti, Soma Chakraborti, Swapan
Kumar Sen, Prithwis Kumar Das, Litan Chandra Sen, BiplabHalder, Santosh Kumar and Bijoy
Dasand the debenture trustee viz. Sunil Kumar Saha(collectively referred to as noticees) to file
their replies and also indicate whether they desire to avail opportunity of personal hearing.
5.

The interim order was forwarded to the noticees vide SEBI letter dated January 29, 2015.

6.

Replies of the noticees:

(a) Mr. SwapanMajumdar, vide letter dated February 17, 2015, made the following
submissions:
i. He was appointed as a director of the Company on August 03, 2012 and had
resigned on December 31, 2013 due to his illness.
ii. During his tenure, the noticee did not take part in any financial activities.
Due to his prolonged illness, he was not able to participate in the day to day
working of the Company and was not in touch with the Company from
December 31, 2013.

Page 4 of 34

iii. As per the interim order, the NCDs were issued from March 31, 2012 to
June 30, 2012 and that he had joined on August 03, 2012, which was after a
month of closure of the issue of NCDs.
iv. Even after accepting his resignation and taking advantage of his illness, the
Companys board in order to fulfil their malafide intention has not given
effect to the resignation in the records of the RoC.
v. The noticee has intimated the same to the RoC and requested them to take
appropriate measures against the concerned persons.
vi. The noticee does not have any immovable property and till date is staying in
rented premises.
vii. The noticee requested SEBI to advise the concerned persons for supply of
required documents.
Copies of resignation letter dated December 31, 2013 (acknowledged by the
Company) and noticees letters dated February 24, 2014 and February 19,
2014 to RoC and MCA respectively intimating his resignation in the
Company and 4 other Chakra group companies, were submitted.
(b) Mr. Swapan Kumar Sen, vide his letter (received in SEBI on March 02, 2015), inter alia
submitted that
i. He is a senior citizen and because of various physical ailments his physical
movements were restricted. In view of the same, he was not able to collect
the interim order.
ii. He had contacted one of the ex-directors who had informed that the interim
order was received by some directors and necessary reply was already
prepared and this noticee was not required to make any correspondence with
SEBI in respect of the interim order.
iii. He had already resigned from the directorship of the Company on April 21,
2012. Form-32 was enclosed in this regard.

Page 5 of 34

iv. The noticee was a part-time director of the Company from July 06, 2009 to
April 21, 2012. He was never engaged in any day to day activities of the
Company and hence it was not possible to comment anything on the subject.
v. The noticee requested SEBI to consider the facts and circumstances and
expunge his name and not to initiate any action.
(c) Mr. ParthaChakraborti, vide letter dated February 20, 2015, inter alia submitted the
following:
i. On the basis of Form no. 10 filed by the Company on October 13, 2011, the
RoC had granted permission to the Company to issue NCDs to the tune of
Rs.10 crore.
ii. During filing of Form 10, necessary charge was created over the
assets/properties of the Company including that of this noticee, whose value
is much higher that the issued amount of Rs.10 crore.
iii. There was therefore no illegality in respect of the issue of debentures to the
tune of Rs.10 crore.
iv. The share application money to the tune of Rs. 30 lakh as appearing in the
Balance Sheet of the Company as on March 31, 2012 was duly allotted on
June 28, 2012 for which necessary Form-2 was filed with RoC on May 08,
2013. The allotment appears in the Balance Sheet as on March 31, 2013.
v. After permission from RoC, the Company proceeded by issuing NCDs to
the tune of Rs.10 crore to 48 different persons on private placement basis in
compliance with the Companies Act, 1956.
vi. After issuance of NCDs, at the instance of two allottees (Chakra Wealth
Management Advisory Limited which was allotted7,80,900NCDs and Chakra
Welfare Society which was allotted 1,27,360 NCDs), the NCDs were
transferred to a number of persons. As a result, the number of subsequent
holders may be matching with the list of 48 allottees. Such transfer was made
in compliance with the Companies Act, 1956 and therefore these transfers
cannot be questioned.

Page 6 of 34

vii. The list of investors other than the 48 allottess are mere list of transferees.
viii. The noticee resigned on July 03, 2013 and therefore would not be able to
comment on SEBI letters dated February 03, 2014 or April 11, 2014.
ix. Therefore, the noticee would be able to offer any comments only after
perusal of information in the MCA 21 portal and records available from the
Honble High Court.
x. The 24 complainants knew that they were mere transferees. Therefore, it
cannot be said that total amount raised was Rs.10,24,18,000/- as the sum of
Rs.24,18,000/- was included in the Rs.10,00,00,000/- raised through issue of
NCDs.
xi. While issuing NCDs, the Company never crossed the limits prescribed under
the various provisions of the Companies Act and do not attract SEBI rules
and regulations. The Company is neither a listed company nor intended to
get its securities listed. Therefore, section 55A of the Companies Act, 1956 is
not applicable.
xii. Section 67(1) or (2) were not applicable as the issue was made on private
placement basis.
xiii. The noticee submitted that the Company offered NCDs to only 48 persons
and not to 72 persons as alleged in the interim order. SEBI has not examined
the 24 complaints in the light of first proviso to section 67(3). Making a
general statement that the offer of NCDs was a public issue is a gross
misconception. The Company is covered under the first proviso to section
67(3). The Company was neither a NBFC nor a PFI.
xiv. The case of the Company does not match with the Sahara case.
xv. As the issue was not a public issue, the provisions of sections 56, 60 and 73
of the Companies Act, as alleged in the interim order, do not get attracted.
xvi. The Trustee of Chakra Debenture Trust cannot be said to have failed to
meet the eligibility criteria specified under the provisions of the DT
Regulations. The Company never issued Prospectus or letter of offer to the
public for subscription of its debentures. However, the Company appointed

Page 7 of 34

a trustee after registering the Trust Deed and has complied with the
provisions of section 117B of the Companies Act. The Company did not
make a public issue. Therefore, the Debenture trust along with the trustee
were not required to get themselves registered with SEBI as alleged.
xvii. As per the Balance Sheet as on March 31, 2012, a provision of Rs.71,525/was made towards Debenture Redemption Reserve (DRR) out of the profits
of Rs.2,86,098.06/- earned by the Company during the year. Due to losses
sustained by the Company during the year ended March 31, 2013, it was not
possible for the Company to book any amount towards DRR. The Company
had successfully and properly utilized the monies collected through issuance
of NCDs towards the business proposition.
xviii. The monies received by issue of NCDs were started to be refunded by the
Company phase-wise though redemption rate were much later on. However,
due to scandal of various money marketing companies and restrictions laid
down by the Government, the Company could not continue with its refund
process.
xix. The Company cannot be treated as a fund mobilizing company as NCDs
issued by it were for legitimate purpose as per the object clause of the
Company.

The whole of the NCD proceeds were invested in various

projects or properties of the Company and are secured.

xx. The noticee submitted that he would comply with the restrictions imposed
on him vide the interim order.
xxi. As the notice is not a director in the Company presently, he is not able to
provide full inventory of assets of the Company or ensure that funds are not
diverted. Further, according to the noticee, providing inventory of his assets
do not arise as none of his assets were purchased from the Companys funds
at any time.
xxii. The Government of West Bengal had imposed an embargo over the sale of
assets of the Company. The Company was left with no other option except
moving the Honble Court. The Company had preferred as writ petition

Page 8 of 34

{W.P. No. 27879(W) of 2013} before the Honble Calcutta High Court inter
alia praying the Honble Court to appoint a special officer for disposing off
the properties of the Company to for satisfying the claims of the debenture
holders. The assets of the Company were much more than its liabilities and
that the Company was confident of obtaining a favourable order.

The

Company had provided detailed list of properties owned by it. The Company
stated that the matter was sub-judice. Copy of the writ petition was enclosed.
The noticee has also referred to the Order dated March 18, 2014 passed by
the Honble High Court.
xxiii. The noticee requested SEBI to drop all charges. He has enclosed copy of
Form-32 indicating his resignation.
The above noticee had inter alia enclosed the following documents:
(a) Form-10 registration of charges
(b) RoCs notice calling for information and Companys response
(c) Debenture Trust Deed dated 07/05/2011
(d) Provisional Balance Sheet as on March 31, 2013
(e) Balance Sheet as on March 31, 2013
(f) MoA and AoA (Soma Chakraborti and ParthaChakraborti are the
initial subscribers and promoters of the Company).
(g) Mortgage Deed dated November 02, 2011 between Company and
Chakra Debenture Trust.
(h) Form-32, indicating that ParthaChakraborti had resigned on July 03,
2013.
(d) Ms. Soma Chakraborti, vide letter dated March 10, 2015, inter alia made the following
submissions:
i. She is one of the ex-directors of the Company.
ii. The Company applied to the RoC, West Bengal to grant permission for
allowing it to issue NCDs to the tune of Rs.10 crore against charge created

Page 9 of 34

on the assets and properties of the Company as well as of Mr.

ParthaChakraborti, whose value was much more than the amount of NCDs.
iii. The RoC, on the basis of such application, was kind enough to grant
permission to the Company for issue of NCDs. Therefore, the permission to
issue NCDs and creation of charge was legal and in accordance with the
Companies Act, 1956.
iv. As per information obtained from MCA portal, the application money of
Rs.30 lakh received by the Company as on March 31, 2012 was duly allotted
as per Form-2 filed with RoC.
v. All the letters/correspondence of SEBI were duly addressed by the Company
especially during her tenure as a director.
vi. During her tenure as a director (i.e. upto April 21, 2012, when she resigned
from the directorship), the Company had received only 8 applications for
issue of 10,500 NCDs to the tune of Rs.10,50,000/-.
vii. The noticee does not possess any information regarding application and
allotment of any NCDs after her resignation.
viii. Further, she is also not able to comment on letters dated February 03, 2014
and April 11, 2014, received by the Company after April 21, 2012.
ix. The noticee is also not able to comment on allotment of NCDs to 72
persons as she resigned on April 21, 2012.
x. During her tenure, she did not find the Company committing or doing
anything which is either illegal or bad in law.
xi. The noticee enclosed copy of Form-32 indicating her resignation. As per this
document, the noticee had resigned on April 21, 2012.
xii. The noticee also submitted that she was not involved in the day to day affairs
of the Company during her tenure as a non-executive director till April 21,
2012.
(e) Mr. Pranab Kumar Roy, vide letter dated March 09, 2015 (sent by his wife Ms. Nabanita
Roy) read with letter dated September 16, 2014 submitted as follows:

Page 10 of 34

i. He joined Chakra Group in January 2013 as Advisor to look after their B.Ed.
college and agriculture business for a monthly remuneration of Rs.20,000/-.
ii. During August 2013, at the request of Mr. Partha Chakraborty, he was
inducted as a director in three companies of the Chakra Group, namely,
Chakra Infrastructure Limited, Chakra Wealth Management Advisory
Limited and Chakra Agrotech (P) Limited.
iii. During November 2013, in the general meeting of the members, two
directors including the noticee were released from directorship and two new
directors were inducted. The noticee had submitted his resignation to Mr.
Partha Chakraborty from all three companies and left the company on
November 30, 2013.
iv. The noticee now understands that Mr. Partha Chakraborty did not remove
his name from RoC records for reasons best known to him.
v. During his tenure, the Company did not pay any remuneration/fees to him.
vi. Further, during his tenure of four months, the Company did not mobilize
funds through issuance of bonds and did not convene any meeting.
vii. In view of the above, he is not in a position to provide information as sought
by SEBI.
viii. He does not have any connection with the Company since November 2013.
The noticee further submitted that the Companys registered office was
closed and indicated that Mr. Partha Chakraborty was the key person cum
promoter of the Chakra group who would be able to provide information.
(f) Mr. Prithwis Kumar Das, vide letter dated March 17, 2015, filed his reply and inter alia
submitted the following:
i. He was an employee of Chakra Wealth Management Advisory Limited as a
Business Development Head against a meagre monthly salary of Rs.12,000/from September 01, 2011.

Page 11 of 34

ii. During the time when he joined and even after joining, he had no idea about
the nature of business. However, after being aware of the business, he had
immediately resigned from the assignment in the month of July 2012.
iii. During his short tenure of employment with the company, the promoter of
the Group, Mr. ParthaChakraborti forcibly compelled him to sign in some
papers which he could not understand due to lack of knowledge and
ignorance.
iv. He was not given copies of such documents.
v. The noticee had lodged a complaint during November 2012 with the
Ministry of Corporate Affairs against the reluctance in accepting his
resignation.
vi. Finally, the company had informed him vide letter dated January 25, 2013
that his resignation was accepted on and from August 08, 2012.
vii. The noticee submitted that he does not have any knowledge about any
decision taken by the board of directors of the company during his short
tenure. He further stated that he did not receive any agenda for board
meeting and did not sign in any attendance register.
viii. The noticee submitted that he is no more associated with the Chakra group
and that his personal assets owned or acquired were not out of the money
raised by the Company from public.
ix. The noticee enclosed copies of his appointment letter, letter sent to MCA
and his termination letter.
The noticee had stated the following in his letter to the MCA:
(i)

He joined Chakra Wealth Management Advisory Limited on

September 01, 2011 as Business Development Head.

(ii)

Subsequently, he was approached by the management for being

inducted as one of the directors of the company in the month of
April 2012. Due to repeated requests, he had eventually expressed his
consent for the position of directorship of the group of
companies.

Page 12 of 34

(iii)

As the Business Head, he was not privy to the internal affairs of the
company. Due to the bad state of affairs, the noticee had lost
confidence in the Chakra group of companies and tendered his
resignation in the month of August 2012. Instead of accepting the
resignation, the noticee was issued a termination letter.

(iv)

The noticee was issued separate termination letters by Chakra Wealth

management Advisory Limited, Chakra Infrastructure Limited and
Chakra Hotel and Leisure Limited on August 08, 2012.

(v)

After having severed all ties with the Chakra group companies, the
noticee cannot be held responsible in any manner for any of the acts
committed and or contracts entered into by the companies after he
resigned.

7.

The noticees were afforded an opportunity of personal hearing on April 22, 2015. As the

interim order could not be served on the Company and other directors, SEBI made public
noticesdated April 14, 2015 and April 15, 2015 in Ananda Bazar Patrika and Times of Indiarespectively
regarding the proceedings initiated against the noticees and the personal hearing fixed on April 22,
2015.
8.

On April 22, 2015 i.e. the date of personal hearing, noticees, Partha Chakraborty, Swapan

Kumar Sen and Soma Chakraborty were represented by Advocates, M/s. TriptimoiTalukdar and
HitendraNathPramanik. Noticee,Pranab Kumar Roy was represented by Advocate, Mr.
ShambaChakroborty. The Advocates made submissions reiterating the reply filed earlier by the
respective noticees.The Advocates requested for the copy of the complaint referred to in the interim
order. SEBI was directed to provide the same.

Noticee,Subhas Bose appeared and made oral

submissions and was advised to submit written submission along with supporting documents within
a period of 15 days.Noticee, Mr. Prithwis Kumar Das vide letter received in SEBI on April 17, 2015
requested for another opportunity of hearing on the ground of his daughters ill health and medical
treatment.

Page 13 of 34

9.

Mr. Santosh Kumar, through his advocate Mr. Subhasis Chakraborty, vide letter dated

April 23, 2015, made the following submissions:

i. The noticee came to know that his name was appearing in the public notice
issued in respect of the Company.
ii. The noticee had initially deposited Rs.1,00,000/- (NCD certificate dated
January 10, 2012 issued by Company was enclosed) and thereafter became an
agent of the Company.
iii. The directors of the Company particularly Mr. ParthaChakraborti had by way
of misrepresentation inducted him as a director in the Company.
iv. Immediately on coming to know about the same, the noticee resigned from
the directorship in the Company by submitting Form-32. A copy of such
Form and Agency card ere enclosed. As per Form-32, this noticee has ceased
to be a director w.e.f. February 26, 2014. Noticee had also enclosed Form-32
regarding his resignation from three other Chakra group companies.
v. The noticee was not able to appear on April 22, 2015 and requested for
another opportunity of hearing.
10.

Subhas Bose, vide letter dated April 27, 2015, filed his written statement, wherein he had

inter alia submitted as under:

(a) He had joined the Company on October 09, 2011 as site in-charge. During July 2013, Mr.
Partha Chakraborty, the CMD of the Company had requested him to become a director for
three months as he was going out of India. The noticee was assured that he would be
relieved of the directorship position after return of Mr. Partha Chakraborty.
(b) The noticee was forced to take up the position as otherwise he would be sacked from his
employment.
(c) At the age of 54 years, the noticee did not want to lose his job and so accepted the offer.
However, he realized that Mr. Partha Chakraborty did not go anywhere. The noticee, in
December 2013, requested Mr. Partha Chakraborty to release him from the directorship
position. Though the CMD promised to do so, he never kept the promise.

Page 14 of 34

(d) Thereafter, he had submitted his resignation letter to Mr. Partha Chakraborty who had told
him that he was no longer the CMD and told him to tender the same to the Mr. Santhosh
Kumar said to be the new CMD. When the noticee tendered the resignation letter to Mr.
Santhosh Kumar, he too did not accept stating that he wanted to discuss with Mr. Partha
Chakraborty.
(e) The noticee sent his resignation letter through speed post and e-mail and the same was
received by the Company.
(f) The noticee had received a letter from the liquidator of the HonbleHigh Court with respect
to the affairs of the Company. After going through the details, he was declared dummy
director.
(g) The noticee enclosed copies of appointment letter, resignation letter dated February 22,
2014, resignation sent through email on March 09, 2014, letter of Liquidator (in the matter of
Chakraborty Estates Pvt. Ltd. in liquidation C.P. No. 22/2013) of Honble High Court and
receipt of speed post.
11.

Pursuant to the personal hearing, noticee, Santosh Kumar had sought for an opportunity of

personal hearing. He was afforded another opportunity of personal hearing on July 16, 2015, which
was rescheduled to July 29, 2015. However, he failed to appear in the said personal hearing.
Another noticee, Prithwis Kumar Das was also afforded an opportunity of personal hearing on July
29, 2015. However, vide letter dated July 27, 2015, the said noticee citing his financial condition and
age requested that the personal hearing may be held in SEBIs office at Kolkata. His request was
accepted and his personal hearing was scheduled in SEBIs office at Kolkata on September 04, 2015,
when hearings were scheduled in various other matters also. However, he did not appear in the
hearing. Thereafter, vide letter dated September 14, 2015, Prithwis Kumar Das informed that he
could not appear in the hearing scheduled on September 04, 2015 as he was out of station for his
daughters medical treatment and requested for another hearing. Considering the grounds and
material submitted by him, he was granted another hearing on November 23, 2015 when he
appeared in person and stated that he already filed his reply along with documents. He reiterated his
submissions made in his reply.

Page 15 of 34

12.

I have considered the interim order, the submissions made by the concerned noticees, the

material submitted by them and other material available on record. The interim order has alleged
that the Company made a public offer and issued NCDs in violation of sections 56, 60, 73, 117B
and 117C of the Companies Act, 1956 and the ILDS Regulations. In this regard, I note the
following from the interim order:
i.

The Company was incorporated on December 12, 2008 with the RoC, Kolkata.

ii.

From the e-Form 10 filed by the Company with RoC, it was noted that the Company
passed a Resolution on October 07, 2011 to issue debentures amounting to Rs.10 crore.

iii. The debenture trust was Chakra Debenture Trust managed by trustee Mr. Sunil
Kumar Saha. It was also observed that the Company had offered 18% rate of interest on
debentures.
iv. The copy of the brochure cum application form submitted by CIL for the said issue of
debentures inter alia mentions that CIL had issued NCDs on following terms and
conditions:
Scheme I: Non-Convertible Secured Redeemable Debenture
Particulars

Plan A

Period (Year)
Min. App. Value

Plan B

10

1000

1000

1000

1000

12.5%

12.5%

12.5%

12.5%

4.5%

2.5%

4.5%

7%

per 10 debentures
(Rs.)
Simple

rate

of

interest payable
Bonus

Scheme II: Regular Income Non-Convertible Secured Redeemable debenture

Particulars
Period (Year)
Min. App. Value

Plan C

Plan D

10

50000

50000

50000

50000

(Rs.)

Page 16 of 34

Monthly

income

1250

1250

1300

1300

2%

3%

4%

5%

per Lakh (Rs.)

Bonus

v.

The Company, vide its letter dated October 09, 2013, provided the details of 48 allotees
to whom it issued NCDs of face value Rs. 100/-each and mobilised funds aggregating
to Rs.10 crore during FY 2012-13.

vi. It was noted from the list of 48 allottes provided by CIL that all the allottees were
individuals except for Chakra Wealth Management Advisory Limited and Chakra
Welfare Society.
vii. SEBI had also received complaints from the debenture holders. From the copies of the
debenture certificates enclosed with the complaints received by SEBI on December 02,
2013, February 27, 2014, March 06, 2014and March 27, 2014, it was noted that such
debentures were also issued during FY 2012-13. The names of the complainants were
not mentioned in the list provided by the company.
viii. The interim order had summarized the details of the NCDs submitted by the Company
and those in the complaints as under:
Year

2012-13

13.

Source of information
Information provided by CIL
Complaints received and the copies of
debenture certificates enclosed therein
Total

Amount Raised
No.
of
(inRs.)
Allottees
10,00,00,000
48
24,18,000
24
10,24,18,000

72

The interim order has also made the following observation:

a. CIL stated that the Offer of NCDs has been made on a private placement basis and provided a
list of 48 investors to whom NCDs aggregating to Rs.10 Crores were issued during FY 2012-13.
However, SEBI received several more complaints wherein the complainants enclosed copies of
debenture certificates issued to a total of 24 investors. On verification, we find that none of these 24
investors is mentioned in the list of 48 investors provided by CIL. This indicates that CIL issued
NCDs to at least 72 (48+24) investors during FY 2012-13. The NCDs have thus been issued

Page 17 of 34

to more than 49 persons. SEBI also did not receive any reply from CIL and its directors to our
letters seeking clarifications (further information), despite several reminders. Considering the above
mentioned facts and considering the fact that CIL failed to provide the clarifications sought by SEBI
with regard to the discrepancy in the total number of investors, I am left with no alternative but to
prima facie conclude that the Offer of NCDs was nothing but a public issue of securities under
Section 67(3) of the Companies Act, 1956. It is clear that CIL has deliberately submitted a
truncated list of 48 investors, a mere one less than the threshold of 49, with the sole intention to
depict the issue as a private placement.
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 firstproviso 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.

In the present case, the Company has admitted raising Rs.10 crore through issue of NCDs to

48 investors. As per the information submitted by the Company, allotments to such 48 persons were
done on April 10, 2012 (for 8 persons), June 30, 2012 (for 14 persons) and November 15, 2012 (for

Page 18 of 34

26 persons). Noticee, Mr. ParthaChakraborti, an ex-director has stated that the Company had issued
debentures to 48 investors and that two of its allottees viz., Chakra Wealth Management Advisory
Limited and Chakra Welfare Society had transferred the NCDs allotted to them to others. I have
perused the submissions of the Company and the list of 48 allottees provided by it. From the same,
I note that 1,27,360 NCDs were allotted to Chakra Welfare Society on November 15, 2012and
780,900 NCDs on June 30, 2012to Chakra Wealth Management Advisory Limited, out of the total
10,00,000 NCDs that were admittedly issued by the Company. From the above, it can be noted that
around 91% of the NCDs were issued to these two entities. It is important to note that these two
entities appear to be part of the Chakra group of companies. Further, as per the details available on
record, it is noted that the 24 complainants had received NCDs on dates (deposit date as per the
NCD certificate issued by the Company) which were in close proximity (allotments starting from
November 30, 2012) with the claimed allotment date for these two entities. The Company has
consciously kept the number of investors at 48 in order to evade the provision of section 67(3).
Further, it is noted from the submissions of Mr. ParthaChakraborti that the Company had
commenced repayments. The same further fortifies the finding that the contention regarding
transfer of shares by Chakra Wealth and Chakra Welfare Society to other persons is only a sham
and for evading compliances required under law.
16.

In his submissions, Mr. ParthaChakraborti, while admitting that the Company issued NCDs

for Rs.10 crore contended that Rs.24,18,000/- (amounts as per NCD certificates from 24
complainants) should not be added as the said amount was part of the mobilized Rs.10 crore. In this
regard, I have perused the share certificates forwarded by the complainants and note that such
certificates are issued by the Company directly to such investors and there is no mention of transfer
from Chakra Wealth or Chakra Society. If it was really a case of transfer, the share certificates would
have necessary endorsement regarding transfer. In view of the same, it becomes difficult to accept
the submission of this noticee.
17.

Considering the above said facts and circumstances, I find that the Company had engaged an

artifice by first allotting the NCDs to 48 investors and thereafter transfer/allot the same to a number
of investors. Therefore, it is clear that the debentures were meant to be subscribed by the public and

Page 19 of 34

in order to avoid the provision of section 67(3) and comply with the legal requirements associated
with a public issue of securities, the Company has adopted this ploy to first allot the same to the two
group companies and thereafter transfer securities to numerous investors as alleged in the interim
order. The Company has also not shown, with documents, as to whether the payment was made by
Chakra Wealth or Chakra Society directly to the Company against allotment of debentures.
18.

From the above, I hereby conclude that the manner of allotting securities to Chakra Wealth

and Chakra Society and thereafter transferring the same to numerous individuals was a faade and
sham in order to circumvent the provisions of section 67(3) and avoid compliance with the public
issue norms mandated for a public issue under the Companies Act, 1956 and the SEBI Act and
regulations framed thereunder.

I therefore find that the Company made a public issue of NCDs

during 2012-2013.
19.

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:
"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 nonpayment 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".

Page 20 of 34

20.

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. ".
In view of the above, the contention that RoC permitted the Company in issuing the NCDs for
Rs.10 crore put forth by two of the noticees does not have merit.
21.

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. My observation,
in this regard, are as below:
(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
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'. Mr. ParthaChakraborti has admitted that the Company did not
circulate any Prospectus or offer document. The Company has therefore not complied
with sections 56 and 60 of the Companies Act, 1956.

Page 21 of 34

(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 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

Page 22 of 34

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 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.
(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.

Page 23 of 34

(iv)

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. The interim order has alleged There is no evidence on record to
indicate that CIL has created a debenture reserve as per the aforesaid provision for NCDs issued
during FY 2012-13. Therefore, I find that CIL has not complied with the provisions of Sections
117C of the Companies Act, 1956
Mr. ParthaChakraborti in his submissions had stated that as per the Balance Sheet as on
March 31, 2012, a provision of Rs.71,525/- was made towards Debenture Redemption
Reserve (DRR) out of the profits of Rs.2,86,098.06/- earned by the Company during
the year and that due to losses sustained by the Company during the year ended March
31, 2013, it was not possible for the Company to book any amount towards DRR. I
have perused the Balance Sheet of the Company as on March 31, 2012 and note that
Rs.71,525/- wasmentioned as Transfer to Debenture Redemption Reserve.

(v)

As NCDs are debt securitiesin 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)
(g)
(h)
(i)
(j)
(k)
(l)

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
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

Page 24 of 34

(m)
(n)
(o)
(p)
(q)

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 and 117B 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.
22.

The interim order was issued against SwapanMajumdar, Pranab Kumar Roy, Subhas Bose,

ParthaChakraborti, Soma Chakraborti, Swapan Kumar Sen, Prithwis Kumar Das, Litan Chandra
Sen, BiplabHalder, Santosh Kumar and Bijoy Das. These persons are either the present or former
directors of the Company. Despite affording opportunities, Litan Chandra Sen, BiplabHalder and
Bijoy Das have not filed their submissions. The following table presents (information from
RoC/MCA) the date when the noticees were appointed as directors and also the date of resignation,
if applicable:
Name

Date of appointment

SwapanMajumdar
Pranab Kumar Roy
Subhas Bose
ParthaChakraborti
Soma Chakraborti
Swapan Kumar Sen
Prithwis Kumar Das
Litan Chandra Sen
BiplabHalder
Santosh Kumar
Bijoy Das
* Date of original appointment

03/08/2012*
03/07/2013
03/07/2013
12/12/2008*
12/12/2008
06/07/2009
21/04/2012
21/04/2012
21/04/2012
22/11/2013
22/11/2013

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

Page 25 of 34

Date of resignation,
applicable
Continues as director
Continues as director
Continues as director
03/07/2013
21/04/2012
21/04/2012
08/08/2012
01/07/2012
03/07/2013
26/02/2014
26/02/2014

if

(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 being responsible for the
conduct of the business of a company will be liable for any non-compliance of law and such
liability shall be upon the individual directors also.
(b) 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
MadhavanNambiar 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 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 whole-time 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

Page 26 of 34

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 dayto-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}
(c) 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.
(d) The allotment of NCDs were made during FY 2012-2013 on various dates as seen from the
information submitted by the Company and the date of the certificates submitted by the
complainants. The Company is found to have contravened the provisions of sections 56, 60,
73 and 117Bof the Companies Act, 1956 and the ILDS Regulations.
(e) From the details pertaining to the tenure of the directors, as mentioned in the table above, it
can be inferred that
a. ParthaChakraborti, Soma Chakraborti, Swapan Kumar Sen, BiplabHalder, Litan
Chandra Sen, Prithwis Kumar Das and SwapanMajumdar were the directors of the
Company when the Company made the offer and allotment of NCDs during 20122013 in violation of the law.
b. Bijoy Das, Pranab Kumar Roy, Subhas Bose and Santosh Kumar had joined the
board pursuant to the allotment of NCDs.
(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

Page 27 of 34

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 liabilityand 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.
(h) In view of the above observations, the submissions made by the noticees (arrayed as
present/past directors in the interim order) that they were the past directors; they did not
have any role in the affairs of the Company; they were inducted by misrepresentation and
did not give effect to their resignation do not have merit. However, such persons are at
liberty to pursue remedies available under law.
(i) Accordingly, ParthaChakraborti, Soma Chakraborti, Swapan Kumar Sen, BiplabHalder,
Litan Chandra Sen, Prithwis Kumar Das and SwapanMajumdarshall be liable for the
violations as found against the Company in this Order as well as for default in making
refunds to the investors with attendant interest. They shall therefore be liable for necessary
enforcement action.
(j) Though Bijoy Das, Pranab Kumar Roy, Subhas Bose and Santosh Kumar joined the
Companys board pursuant to the allotments, they were also jointly and severally liable
(along with Company and others as found in the above sub-paragraph) to make refunds (as

Page 28 of 34

such liability is not yet discharged) in terms of section 73(2) of the Companies Act read with
section 27 of the SEBI Act along with interest. As they have not remedied the violations by
making refunds and have also not taken steps to report the violations to the regulator, they
shall also be liable to make refunds along with other enforcement action.
23.

Theinterim order has alleged that the Chakra Debenture Trust(represented by its trustee Mr.

Sunil Kumar Saha) 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 have also not
satisfied the eligibility condition stipulated under regulation 7 of the DT Regulations. As per the
trust deed, it is seen that Mr. Sunil Kumar Saha is the trustee of the Chakra Debenture Trust, the
debenture trust. 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 securities market. Further, they 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."
Mr. ParthaChakraborti, in his submissions, had contended that the Trustee of Chakra Debenture
Trust cannot be said to have failed to meet the eligibility criteria specified under the provisions of
the DT Regulations. According to him, the Company never issued Prospectus or letter of offer to
the public for subscription of its debentures and that the Company appointed a trustee after
registering the Trust Deed and has complied with the provisions of section 117B of the Companies
Act. His contention is that the debenture trust along with the trustee were not required to get
themselves registered with SEBI as the Company did not make a public issue of NCDs. I have
considered such submissions. It is already held in this Order that the Company made a public issue
of NCDs. The Company was therefore required to comply with the mandatory public issue norms
stipulated under the Companies Act, 1956 and the ILDS Regulations. Though, the Company may
have engaged the services of Mr. Sunil Kumar Saha as the trustee of the Debenture Trust, such

Page 29 of 34

person ought to be eligible to act as a debenture trustee in accordance with the eligibility conditions
prescribed under the SEBI Act and the DT Regulations. Accordingly, the contentions of Mr.
ParthaChakraborti made above do not have merit.
Accordingly, Chakra Debenture Trust(represented by its trustee Mr. Sunil Kumar Saha) is found
to have violated section 12(1) of the SEBI Act and regulation 7 of the DT Regulations for which
they are liable for necessary enforcement action. Further, in view of these observations, it can also
be said that the provisions of section 117B of the Companies Act, 1956 have not been completely
complied with.
24.

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) Chakra Infrastructure Limited, ParthaChakraborti, Soma Chakraborti, Swapan Kumar Sen,
BiplabHalder, Litan Chandra Sen, Prithwis Kumar Das, SwapanMajumdar, Bijoy Das,
Pranab Kumar Roy, Subhas Bose and Santosh Kumar, 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.

Page 30 of 34

(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.
However, in view of the writ petition pending before the Honble High Court against the
action of the State of West Bengal, the above direction shall be harmoniously read with the
Orders of the HonbleHigh Court/State Govt.
(d) The Company andits directorsshall issue public notice, in all editions of two
NationalDailies (one English and one Hindi) and in one local daily (in Bengali) with wide
circulation, detailing themodalities for refund, including details of contact persons including
names,addresses and contact details, within fifteen days of this Order coming intoeffect.
(e) After completing the aforesaid repayments, the Companyshall file acertificate of such
completion with SEBI,within a period of three months from the date of this Order, from
two independent peer reviewedChartered Accountants who are in the panel of any public
authority or publicinstitution. For the purpose of this Order, a peer reviewed Chartered
Accountantshall mean a Chartered Accountant, who has been categorized so by the Institute
ofChartered Accountants of India ("ICAI").
(f) Chakra Infrastructure Limited, ParthaChakraborti, Soma Chakraborti, Swapan Kumar Sen,
BiplabHalder, Litan Chandra Sen, Prithwis Kumar Das, SwapanMajumdar, Bijoy Das,
Pranab Kumar Roy, Subhas Bose and Santosh Kumar 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, Chakra Infrastructure Limited, ParthaChakraborti, Soma
Chakraborti, Swapan Kumar Sen, BiplabHalder, Litan Chandra Sen, Prithwis Kumar Das,
SwapanMajumdar, Bijoy Das, Pranab Kumar Roy, Subhas Bose and Santosh Kumar, in

Page 31 of 34

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
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) Chakra Infrastructure 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 of4 yearsfrom the date of completion of refunds to investors as directed
above.
(i) ParthaChakraborti, Soma Chakraborti, Swapan Kumar Sen, BiplabHalder, Litan Chandra
Sen, Prithwis Kumar Das, SwapanMajumdar, Bijoy Das, Pranab Kumar Roy, Subhas Bose
and Santosh Kumarare 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

Page 32 of 34

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 of4 yearsfrom the date of completion of
refunds to investors, as directed above.
(j) Chakra Debenture Trust and its trustee Mr. Sunil Kumar Sahaare 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.
25.

ThisOrder 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.
26.

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

for information and necessary action.

27.

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: April 20, 2016
Place: Mumbai

Page 33 of 34

Page 34 of 34