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2020 (5) TMI 639 - AT - SEBILiability of the Company and directors - repayment of the money collected through issuance of Secured Optionally Convertible Debentures - HELD THAT - WTM relying on the provisions of sub section 2 of Section 73 of the Companies Act has observed that the liability of the Company and directors would remain until the whole of the subscription amount along with interest is refunded to the allottees. This being the position the appellant cannot escape from the liability of the repayment. In the case of Sayanti Sen 2019 (8) TMI 1441 - SECURITIES APPELLATE TRIBUNAL, MUMBAI this Tribunal has observed that WTM in the impugned order therein had given a categorical finding that one Shri Shib Narayan Das was responsible for the affairs of the company. In the present case the appellant during the relevant period being a promoter director of GIIPL cannot escape from the liability. In the case of Pritha Bag 2019 (2) TMI 1742 - SECURITIES APPELLATE TRIBUNAL, MUMBAI also finding that one Late Indranath Daw was the Managing Director of the defaulting company, the director Pritha Bag was exonerated by this Tribunal. Since facts are distinguishable the ratio of the same cannot be applied in the present case. The circular of the Ministry of Corporate Affairs dated July 29, 2011 is also on the similar line indicating as to who can be held as an officer in default. Considering all the materials on record the appeal is dismissed. Whether GIIPL did not issue SOCDs to the private entities but only to the two companies? - HELD THAT - A new plea is raised before this Tribunal that GIIPL had a Managing Director. The appellant himself was promoter / director of GIIPL as well as of the group companies and therefore in the facts of the case he submitted that appeal be dismissed. Appeal is liable to be dismissed. No plea was taken before the WTM that the GIIPL was run by a Managing Director. The appellant was admittedly promoter cum director of GIIPL as well as of the group companies. Insofar as a case of Sanjeeb Kumar is concerned we find that in paragraph 25 of the impugned order the WTM clearly held that said Sanjeeb Kumar was responsible. However, in the final order his name was not merely included so far as direction no. 29(i). However, his name is included in other directions and thus it is a case of inadvertent mistake on the part of the WTM of which present appellant cannot take any benefit. The case of Madhavan Nambiar 2001 (11) TMI 955 - HIGH COURT OF MADRAS would show that the facts of the same were different. The appeal is therefore liable to be dismissed.
Issues:
1. Directions issued by the Whole Time Member of SEBI against the appellants regarding repayment of money collected through issuance of Secured Optionally Convertible Debentures. 2. Allegations of misleading regulatory authorities by issuing SOCDs to group companies to circumvent legal provisions. 3. Liability of the appellants as directors in default under the Companies Act and SEBI Act. Analysis: Issue 1: Directions for Repayment The Whole Time Member of SEBI issued directions for the repayment of money collected through SOCDs with interest, alleging misuse to circumvent legal provisions. SEBI's efforts to serve notices were futile due to non-cooperation from GIIPL, leading to further investigations by authorities. The appellants, including Mr. Debasis Padhy, sought exoneration, claiming lack of involvement in the affairs of GIIPL during the relevant period. However, the WTM found Mr. Padhy liable as an original subscriber and promoter of GIIPL under the Companies Act, holding him responsible for the repayment. Issue 2: Allegations of Misleading Authorities SEBI alleged that issuing SOCDs to group companies was a deceptive tactic to avoid the public issue regulations, attracting provisions of the Companies Act and ICDR Regulations. The appellants' defense of not participating in the affairs or benefiting from the funds raised through SOCDs was countered by the WTM's findings based on the Memorandum of Association and Articles of Association, establishing their roles as directors and promoters, thus upholding their liability. Issue 3: Liability under Companies Act and SEBI Act The appellants argued against being termed officers in default, citing provisions of the SEBI Act and Companies Act, emphasizing the distinction between directors and officers in default. They relied on previous tribunal decisions to support their stance. However, the WTM's observations under Section 73 of the Companies Act emphasized the joint and several liability of the company and its directors until full repayment with interest is made to allottees. The Tribunal dismissed the appeals, considering the appellants' roles as promoters and directors, rejecting their pleas for exoneration based on new assertions and legal precedents. In conclusion, the Tribunal upheld the WTM's directions, emphasizing the accountability of the appellants as directors in default, dismissing the appeals and highlighting the legal obligations under the Companies Act and SEBI regulations.
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