Sebi orders Pailan Agro to refund investors money

Regulator Sebi has asked Pailan Agro India and its present as well as former directors to refund the money that the company had collected illegally from investors and barred them from the markets for at least four years.

According to Sebi, the company raised Rs 83.42 crore by issuing non-convertible debentures (NCDs) to 23,685 persons between 2010-11 and 2014-15.

The number of investors to whom securities were allotted were in excess of 49 so the firm was under a legal obligation to list such shares on a stock exchange. Among others, it was also mandatory for the firm to bring out a prospectus with respect to the public issue.

However, the company did not comply with the provisions.

"I am of the view that PAIL (Pailan Agro India Ltd) 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 an order dated May 23.

Accordingly, Sebi has asked the firm, besides, its present and former directors to jointly refund the money raised from investors along with an annual interest of 15 per cent.

After completing the refund, they will have to file a report of such completion to the regulator within three months.

These directors have also been restrained from the securities markets till the refund is completed. Thereafter, they will be prohibited from the markets for a further period of four years from the date of completion of the refund.

In case they fail to comply with the directions of refund, the Securities and Exchange Board of India (Sebi) may initiate recovery proceedings.

Besides, Sebi has restrained Pailan Agro Debenture Trust and Dilip Das from accessing the securities market for a period of four years.

The regulator, through an interim order passed in July 2015, had barred the company and its directors from accessing the securities market.