Sebi asks Kolkata firm to refund Rs 595 cr with 15% interest

In one of its biggest crackdowns against a Kolkata-based company that illegally raised nearly Rs 600 crore from over one lakh people, Sebi has ordered NVD Solar to refund money to investors within three months.

It has also ordered payment of 15 per cent interest along with the refund amount, while barring NVD Solar and its directors from dealing and soliciting money in capital markets for three years from the date of completion of the refund.

A probe by Securities and Exchange Board of India (Sebi) has found that NVD Solar had raised Rs 595 crore through issuance of fresh equity shares to 1,09,480 entities, during 2012-13, without complying with the regulatory provisions applicable for a public issue.

The capital market regulator noted that as the issue by NVD Solar was made to 50 or more persons, the company was under a legal obligation to get listed on a stock exchange.

Among others, it was also mandatory for the firm to bring out a prospectus with respect to the public issue.

"Since, NVD failed to make application for listing of its shares on any recognised stock exchange, NVD and its directors at the time of issuances of shares...are liable to refund the amounts collected from subscribers of its shares issued to them along with interest at the rate of 15 per cent per annum," Sebi said.

As per the order dated November 27, NVD Solar and its directors -- Saibal Kumar Hazra, Subrata Kumar Mondal and Dipsekhar Mukherjee -- have been asked "to jointly and severally" refund the entire amount of Rs 595 crore to the subscribers of its equity shares.

NVD Solar is also required to issue public notices detailing modalities for refund, including details of the investors within 15 days of the order.

The three directors have also been restrained from associating themselves with any listed public company and any public company which intends to raise money from the public.

Sebi said that the directors, being in control of the affairs of NVD, were under obligation to ensure that the issuance of shares was in compliance with all the applicable provisions of the Companies Act and ICDR Regulations.

Pursuant to allotment of equity shares by the company to 1,09,480 entities for an amount of Rs 595 crore, its share capital increased from Rs 2 crore to Rs 600 crore in 2012-13.

Balance sheet of NVD Solar for the year ending March 31, 2013 showed that the money received from the issue of the equity shares was shown to be invested almost entirely in its associate companies.

Sebi also warned that further action can be taken in the case if its order is not complied with.

In October 2013, KPH Dream Cricket, owners of the IPL franchise Kings XI Punjab, had filed a criminal complaint against NVD Solar, title sponsor, alleging the group of "cheating and duping" them of around Rs 14 crore which they were supposed to pay as per the contract.