BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Order Reserved : 7.6.2019
Date of Decision: 2.7.2019
Appeal No.198 of 2018
Sheikh Abdul Rabial
Pranabananda Pally West
Kenduadihi Post Office
Kenduadihi, District Bankura,
West Bengal – 722102.

….. Appellant
Versus
Securities and Exchange Board of India
SEBI Bhawan, Plot No.C4-A,
‘G’ Block, Bandra Kurla Complex,
Bandra (E), Mumbai, Maharashtra 400051.

… Respondent
Mr. Saurabh Bachhawat, Advocate with Mr. Pranav Shah,
Advocate i/b. Mr. Abhishek Adke, Advocate for the
Appellant.
Mr. J.P. Sen, Senior Advocate with Mr. Nishant Upadhyay,
Advocate i/b. Desai & Diwanji for the Respondent.

CORAM: Justice Tarun Agarwala, Presiding Officer
Justice M.T. Joshi, Judicial Member
Per : Justice M.T. Joshi
1.

Aggrieved by the order of the Whole Time Member
referred to hereinafter as ‘WTM’) dated 31st October, 2017
holding the appellant (Original notice no.7) liable for
violating the provisions of The Companies Act, 1956
2
(referred to hereinafter as ‘The Companies Act), Securities
and Exchange Board of India Act, 1992 (referred to
hereinafter as ‘SEBI Act’) for issuance of Secured
Redeemable
Non-Convertible
Debentures
(hereinafter
referred to as NCDs) during the financial year 2011-2012 and
2012-13 by appointing an unregistered debenture trustee i.e.
one Ms. Rojina Begam and raising at least an amount of
Rs.34,51,500/- and thereby violated various provisions as
detailed in page 31 of the impugned order. The proceedings
were started against the present appellant, the Company
Angel Rural Development Limited (hereinafter referred to as
the Company), the debenture trustee and other directors.
2.

Out of them only the present appellant noticee no.7 and
one Vasudev Ghosh responded by letters cum representation.
3.

The appellant’s case was that initially he was an
investor with the Company thereafter he became the agent for
a period of more than 2 years. Ultimately appreciating his
performance he was appointed as a director in the Company
on 16.8.2014. However, thereafter he found that there used
to be no board meeting and as such he raised the issue with
the Chairman-cum-Managing Director and offered his
resignation in December, 2012. His resignation was accepted
3
by the end of March, 2013. Registrar of Companies has duly
notified acceptance of his resignation on 1st April, 2013.
Since 1st April, 2013 he had no connection with the Company
and any of the promoter and as such he wanted to be
absolved from the proceedings.
4.

The WTM found that as per the submission of the
appellant and as per the record of the Registrar of Companies
the present appellant was director for a period between
16.8.2012 to 1.4.2013. At page no.27 of the impugned order
WTM gave the details of the investors, the date of plan and
date of acceptance of installment which would show that
during the above period many investors had invested in the
said NCDs. In the circumstances, the WTM found that there
is no plea or material to show that any Managing Director
was holding the field or any other person was specially
appointed held all the director including the present director
jointly and severally liable for the various violations.
Consequently, vide para no.51 directed repayment of the
money calculated with interest of 15% directing to provide
full inventory of their assets. Consequential directions and
lastly prohibition order against the appellant and others from
4
buying, selling or otherwise dealing in securities market for a
period of 4 years was passed.
5.

The learned counsel for the appellant placed before us
the print of form no.32 obtained from the website of
Registrar of Companies which would show that appellant
was professional director with effect from 16.8.2012. The
learned counsel submitted that the appellant in fact was a non
executive director. He was not in any way involved in the
administration of the Company or in the day to day affairs of
the same. He was appointed being a professional and that too
taking into consideration his performance as an agent of the
Company. The NCDs were issued prior to his appointment
and therefore the appellant could not have been roped into
the activities.
Learned counsel for the respondent opposed the plea.
He submitted that admittedly the appellant was director for a
period between 16.8.2012 till 1.4.2013. During this period as
detailed in the table in the impugned order at page no.11
many NCDs were issued and the amount was collected
during this period.

There is no plea that any Managing
Director was holding the field during the period or any other
officer was appointed specifically for this purpose.

He
5
therefore submitted that without complying any rules or
provisions, in violation of the Companies Act and SEBI Act
the Company and its directors had collected huge amount of
Rs.34,51,500/- from the investors by offering NCDs.
Respondent SEBI came to know only when various
complaints were received by it. After due investigation the
facts were collected and in the circumstance he submitted
that the appellant cannot be absolved.
6.

We find that the Companies Act does not differentiate
between a professional director or a director simpliciter. The
reasoning of the WTM holding present appellant jointly and
severally liable with other directors therefore cannot be
faulted with.
7.

The appeal is therefore dismissed with no order as to
costs.
Sd/Justice Tarun Agarwala
Presiding Officer
Sd/Justice M.T. Joshi
Judicial Member
2.7.2019
Prepared and compared by
RHN