Shri Rajeev Kumar Agarwal, Whole Time Member, Securities and Exchange Board of India (SEBI), has passed an Order dated July 17, 2015 in the matter of Madurai Rural Development Benefit Fund (India) Limited and Madurai Rural Development Transformation India Limited, inter-alia directing as follows :-
a) The Noticees i.e. Madurai Rural Development Benefit Fund (India) Limited (CIN: U65999TN2011PLC081265) and Madurai Rural Development Transformation India Limited, Mr. Mohammed Yusuff Suresh Batcha, Mr. Gopalarathinam Ramarathinam, Mr. Srinivasan Srikumar, Mr. Vasudevan Balaji, Mr. Kasiviswanathan Venkataraman, Mr. Nagasubramanian Rajalakshmi, Mr. Sudhakaran Lataji, Ms. Mumtaj Begam Baba, Mr. Sithikbasha Mohamed Yusuf and Ms. Lilun Nihar Yousuff shall, jointly and severally refund ₹ 5,32,34,400 collected pursuant to the allotment of shares (i.e. ₹4,99,22,400 collected by MRDT and ₹33,12,000 collected by MRDF) along with interest at the rate of 15% per annum from the date of receipt of money till the date of such refund in the manner and within the time as directed by the Committee constituted pursuant to the directions of Madurai Bench of Hon’ble High Court of Madras or as per such other directions of the Hon’ble High Court.
b) The Noticees shall within a period of one month from the date of this order produce to the satisfaction of the aforesaid Committee, documentary evidence to show that only ₹ 1,99,24,200 are payable to the public and the balance ₹ 2,99,98,200 (i.e. ₹4,99,22,400 - ₹ 1,99,24,200) raised by MRDT from issuance of equity shares to the public have been refunded/repaid by the promoters of MRDT, as claimed by them. In the event, the Committee is satisfied with the documentary evidence so produced by the Noticees, the direction given above shall not apply in respect of ₹ 2,99,98,200. For the purpose of this direction, the documentary evidence shall be certified by a peer reviewed Chartered Accountant.
c) Within seven days of completion of refund as directed hereinabove, the Noticees shall file a certificate of such completion with SEBI from two independent peer reviewed Chartered Accountants who are in the panel of any public authority or public institution. Such certificate shall be issued by the Chartered Accountants after verifying the relevant documents including bank accounts of the Noticees and satisfying themselves that the refund has actually been made.
d) For the purpose of this order, a peer reviewed Chartered Accountant shall mean a Chartered Accountant, who has been categorized so by the Institute of Chartered Accountants of India.
e) The Noticees are restrained from, directly or indirectly, accessing the capital market by issuing prospectus, any offer document or advertisement soliciting money from the public and are further prohibited from buying, selling or otherwise dealing in the securities market, directly or indirectly, in whatsoever manner for a period of three years or till the date of refund of money to the allottees whichever is later.
f) Mr. Mohammed Yusuff Suresh Batcha, Mr. Gopalarathinam Ramarathinam, Mr. Srinivasan Srikumar, Mr. Vasudevan Balaji, Mr. Kasiviswanathan Venkataraman, Mr. Nagasubramanian Rajalakshmi, Mr. Sudhakaran Lataji, Ms. Mumtaj Begam Baba, Mr. Sithikbasha Mohamed Yusuf and Ms. Lilun Nihar Yousuff are also restrained from associating themselves, with any listed public company and any public company which intends to raise money from the public, for a period of three years or till the date of refund of money to the allottees whichever is later.
The companies were engaged in fund mobilizing activity through issue of equity shares to public without complying with the relevant provisions of the Companies Act, 1956, Companies Act, 2013 and the provisions of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009. It was also found that the companies were mobilizing monies from the public and are issuing equities to such persons in order to make them 'members' before making them as 'deposit holders' and rampantly soliciting 'fixed deposits'/ 'recurring deposits' from such members, especially in Southern Districts of Tamilnadu. SEBI had passed an interim order in the said matter on October 27, 2014. In a writ petition filed before it, Madurai Bench of the Hon'ble High Court of Madras inter-alia directed that a Committee (of regulators) be constituted to monitor the process of verification and refund to investors in MRDT.
The full text of the order is available on the website: www.sebi.gov.in