Case: Sahara India Real Estate Corp.Ltd Vs. Securities &amp; Exch.Board Of India

formal prospectus (or RHP). Thus viewed, according to learned counsel, the information memorandum would inevitably precede the issuance of a prospectus (or RHP). Herein, however, the information memorandum was circulated well after the issuance of the RHP, which clearly indicates that the information memorandum had been circulated by the SIRECL, not for the purposes for which it is meant, but for some extraneous consideration. It is submitted, that the appellant-companies had apparently taken upon themselves to tread a path different from the one stipulated under the Companies Act. 113. On considering the submission advanced at the hands of the learned counsel representing SEBI, as has been noticed in the foregoing paragraph, it is clear that an information memorandum must inevitably precede the issuance of a prospectus (including a RHP). One must agree with the contention of the learned counsel, that there was no justification whatsoever for circulating an information memorandum after SIRECL had already issued a RHP. The procedure adopted by the appellant-companies is obviously topsy turvy and contrary to the recognized norms in company affairs. All this makes the entire approach of the appellant-companies calculated and crafty. It is clearly apparent, that the appellant- companies had clearly taken upon themselves to tread a path different from the mandate of law delineated under the Companies Act. There can, therefore, be no doubt about the inferences drawn by the learned counsel representing the SEBI even in so far as the second perspective is concerned. The third perspective: 114. Learned counsel representing SEBI also invited our attention to the attempt at the hands of the appellant-companies in withholding information from the SEBI. Details in this behalf have already been recorded under the first perspective, while debating the issue whether the invitation to subscribe to the OFCDs issued by SIRECL and SHICL was by way of private placement. The aforesaid details are accordingly not being narrated again for reasons of brevity. I shall therefore, merely summarise the sequence of facts relevant for determining the willingness of the appellant- companies to disclose information sought by the SEBI. In this behalf, it is clear that the appellant-companies did not disclose information to SEBI despite its repeated requests. Not even, in the response to the summons (dated 30.8.2010 and 23.9.2010) issued by the SEBI containing threats of taking penal action and initiation of criminal prosecution. All this, failed to prompt the appellant-companies to divulge the facts solicited. Thereafter on 24.11.2010 the SEBI (FTM) passed far reaching directions against the appellant-companies. The Lucknow Bench of the High Court of Judicature at Allahabad on 13.12.2010 first stayed (whereby the SEBI (FTM) order dated 24.11.2010 was stayed) and thereafter, vacated the interim order passed in favour of the appellant-companies. While vacating the aforesaid order the High Court took express note of the fact, that the appellant-companies were not cooperating with the inquiry being conducted by the SEBI. The High Court felt, that the appellant-companies had thereby violated the assurance given to the High Court. The effort made by the appellant-companies to resurrect the earlier interim order (dated 13.12.2010) through an application filed before the High Court was rejected (on 29.11.2011), because the High Court was of the considered view, that the appellant-companies had not approached the High Court with clean hands, and the intention of the appellant-companies was not bona fide. Consequent upon directions issued by this Court, SEBI issued a second show cause notice (on 20.5.2011). The appellant-companies adopted the same stubborn position. They contested the show cause notice on legal pleas, and calculatingly did not disclose the information sought. The SEBI (FTM) by an order dated 23.6.2011 held, that the appellant-companies were in violation of law. The said order dated 23.6.2011 was assailed by the appellant-companies before the SAT. In the appeals preferred before the SAT, the appellant-companies remained steadfast in their approach by adopting the same course, as they had chosen before the SEBI (FTM). For the first time before this Court, in their challenge to the SAT order dated 26.8.2011 (whereby the SEBI (FTM) order dated 23.6.2011 was upheld), some details were disclosed by SIRECL. On an analysis the material placed before this Court, I have recorded hereinabove, that the same seemed to be unrealistic, and may well be, fictitious, concocted and made up. Independently of the interaction of the appellant-companies with SEBI, from letters written by SIRECL in January, 2011, it was concluded by the SEBI (FTM), that the company was seeking professional services to collect and compile data pertaining to the OFCDs issued by it. Since the subscription to the OFCDs under reference commenced in March, 2008, the same raised suspicious about the genuineness and the bonafides of the appellant- companies. Surely the suspicion was well placed. This itself is sufficient to conclude, that the whole affair was doubtful, dubious and questionable. The consequence thereof, if correct, would be shocking. 115. There can therefore be no hesitation in accepting, that on all three perspectives raised at the behest of the SEBI, to demonstrate that there was a pre-planned attempt at the hands of the SIRECL and SHICL, to bypass the regulatory and administrative authority of the SEBI, does seem to be real. One can only hope, it is not so. But having so concluded, it is essential to express, that there may be no real subscribers for the OFCDs issued by the SIRECL or SHICL. Or alternatively, there may be an intermix of real and fictitious subscribers. The issue that would emerge in the aforesaid situation (which one can only hope, is untrue) would be, how the subscription amount collected, should be dealt with, specially when the impugned orders passed by the SEBI, SAT are to be affirmed. Even though I hope that all the subscribers are genuine, and so also, the subscription amount, it would be necessary to modify the operative part of the order issued by the SEBI which came to be endorsed by the SAT, so that the purpose of law is not only satisfied but is also enforced. ORDER

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]68. All sections falling within Sections 55 to 58 of the Companies Act will fall under those sections. So far as Section 55A is concerned, it is the very Section which deals with powers of SEBI, Central Government, Tribunal, Company Law Board, Registrar of Companies etc. Reference to Sections 59 to 81 indicated that Parliament intended to include all sections in that range which takes in Sections 60B, 62, 63, 67, 73 etc. of the Companies Act. Section 67 is also a section of considerable importance because the expression offer of shares or debentures to the public finds a place in various sections of the Act, as well as the articles of a company. Further, the first proviso added to Section 67(3) vide the Companies (Amendment) Act, 2000 w.e.f. 13.12.2000 is also of considerable bearing in determining whether a public company offering shares or debentures to the public has to list its securities on a recognized stock exchange. Expression to clearly has a meaning i.e. everything in between or destination of an action. The meaning of the expression to came up for consideration before this Court in Hindustan Lever Ltd. v. Ashok Vishnu Kate and Ors. (1995) 6 SCC 326 . Further, the specific inclusion of Sections 68A, 77A and 80A in a bracket, would not mean the exclusion of all sections between in Sections 59 to 81 with suffix A or AA or B. The word including used in the parenthetical clause is only to give emphasis to those sections.Watson in Dilworth v. Commissioner of Stamps (1999) AC 99said that the word include is very generally used in interpretation clause in order to enlarge the meaning of words or phrases occurring in the body of the Statute and, when it is so used, these words and phrases must be construed as comprehending, not only things they signify according to their natural import, but also those things which the interpretation clause declares that they shall include. In Delhi Judicial Services Association v. State of Gujarat AIR 1991 SC 2176 , the expression used in Article 129 of the Constitution i.e. including the power to punish for contempt of itself which was interpreted by the Court stating that the expression including has been interpreted by Courts to extend and widen the scope of power. Giving emphasis to Sections 68A, 77A and 80A does not mean the exclusion of all such similar sections69. Legislature, in its wisdom, thought some emphasis has to be given to Sections 68A, 77A and 80A because all those sections provide certain offences to be punishable with imprisonment. Further clue for that reasoning, we may get, if we examine the manner in which the Legislature has used succeeding sections. In Section 55A there is a specific reference to Section 108, not Sections 108A to I. So also Section 55A specifically refers to Section 109, not Sections 109A and B. Legislature wanted inclusion of Sections 108A to I, Section 109A etc., then it would have said Sections 108 to 110. Further, the Legislature never wanted the inclusion of Sections 117A to C, hence it used Section 117 alone, not Sections 116 to 122. If it has used so, then Sections 117A to C also would have been included. Legislature in that sequence wanted inclusion of Sections 206 and 206A, hence both the sections have been included. Hence, when the legislature has used the expression Sections 59 to 81, 60B which falls in between, stands included. Further, the entrustment of powers on SEBI, under Section 55A, is in addition to the then existing powers of SEBI under SEBI Act, 1992, which takes Sections 11, 11A and 11B as well70. Explanation has been added to Section 55A to harmonize and to clear up doubts and allay groundless apprehensions. In S. Sundaram Pillai & Ors. v. V.R. Pattabiraman & Ors. (1985) 1 SCC 591 ,  this Court has ruled that the purpose of the explanation is to clarify where there is any obscurity or vagueness in the main enactment and to make it consistent with the dominant object which it seems to serve. The main part of Section 55A confers jurisdiction on SEBI with regard to three categories i.e. issue of securities, transfer of securities and non- payment of dividend. The expression all other matters mentioned in the explanation would refer to powers other than the above mentioned categories. Further, it may also be remembered that the explanation does not take away the powers conferred on SEBI by other sections of the Companies Act. At the same time, matters relating to prospectus, statement in lieu of prospectus, return of allotment, issue of shares and redemption of irredeemable preference shares be exercised by the Central Government, Tribunal, Company Law Board, Registrars of Companies, as the case may be. Further, Section 60B(9) clearly indicates that upon closing of the offer of securities, a final prospectus has to be filed in the case of listed company with SEBI and Registrar, hence the explanation to Section 55A can never be constructed or interpreted to mean that SEBI has no power in relation to the prospectus and the issue of securities by an unlisted public company, if the securities are offered to more than forty nine persons71. I am, therefore, of the view that the mere fact that emphasis has been given to Sections 68A, 77A and 80A, does not mean the exclusion of Section 60B from Section 59 to 81. We, therefore, hold that, so far as the provisions enumerated in the opening portion of Section 55A of the Companies Act, so far as they relate to issue and transfer of securities and non-payment of dividend is concerned, SEBI has the power to administer in the case of listed public companies and in the case of those public companies which intend to get their securities listed on a recognized stock exchange in India. In any other case, i.e. rest of the matters, that is excluding matters relating to issue and transfer of securities and non-payment of dividend be administered by the Central Government in the case of listed public companies and those companies which intend to get their securities listed on any recognized stock exchange in India. Explanation to that section further clarifies the position so as to remove doubts, saying all powers relating to other matters including the matters relating to prospectus, statement in lieu of prospectus, return of allotment, issue of shares and redemption of irredeemable preference shares, should be exercised by the Central Government, Tribunal or the Registrar of Companies, as the case may be. Section 55A, therefore, makes it clear that SEBI has the power to administer the above mentioned select provisions of the Companies Act relating to matters specified therein. Contention raised by Saharas that without regulations being framed under Section 642(4) of the companies Act, SEBI cannot exercise powers of administration, is totally unfounded and is rejected81. I fail to see, if the investors were associated with Sahara Group, as declared, then where was the necessity of an Introducer and Introduction. If the offer was made only to persons associated, related or known to Sahara Group, then they could have furnished those details before the fact finding authorities. Further, in the IM, Saharas had stated that if the number of interested parties to the issue exceeds fifty they should approach the RoC to file RHPs as per Section 67(3) of the Companies Act, which clearly indicates that Saharas knew, by virtue of the first proviso to Section 67, if the number of persons exceeds fifty, then the same would be a public issue. Facts indicate that, through this dubious method, that SIRECL had approached more than thirty million investors, out of which 22.1 million have invested in the OFCDs and it had raised nearly 20,000 crores, for which it had utilized the services of its staff in 2900 branches/service centers and utilized the services of more than one million agents/representatives. Court can, in such circumstances, lift the veil to examine the conduct and method adopted by Saharas to defeat the various provisions of the Companies Act, already discussed, read with the provisions of the SEBI Act82. I, in the above facts and circumstances, fully endorse the findings recorded by SEBI (WTM) and SAT that the placement of OFCDs by Saharas was nothing but issue of debentures to the public, resultantly, those securities should have been listed on a recognized stock exchange90. I may, therefore, indicate, subject to what has been stated above, in India that any share or debenture issue beyond forty nine persons, would be a public issue attracting all the relevant provisions of the SEBI Act, regulations framed thereunder, the Companies Act, pertaining to the public issue. Facts clearly reveal that Saharas have issued securities to the public more than the threshold limit statutorily fixed under the first proviso to Section 67(3) and hence violated the listing provisions which may attract civil and criminal liabilities94. Listing is, therefore, a legal responsibility of the company which offers securities to the public, provided offers are made to more than 50 persons. In view of the clear statutory mandate, the contention raised, based on Rule 19 of the SCR Rules framed under the SCR Act, has no basis. Legal obligation flows the moment the company issues the prospectus expressing the intention to offer shares or debentures to the public, that is to make an application to the recognized stock exchange, so that it can deal with the securities. A company cannot be heard to contend that it has no such intention or idea to make an application to the stock exchange. Companys option, choice, election, interest or design does not matter, it is the conduct and action that matters and that is what the law demands. Law judges not what is in their minds but what they have said or written or done. LordDiplock in Gissing v. Gissing (1971) 1 AC, has said, As in so many branches of English Law, in which legal rights and obligations depend upon the intention of each party, the relevant intention of each party is the intention which was reasonably understood by the other party to be manifested by that partys words or conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party.Simon in Crofter Hand Woven Harris Tweed Co. Ltd. v. Veitch [1942] AC, opined that in some branches of law, intention may be understood to cover results which may reasonably flow from what is deliberately done, the principle being that a man is to be treated intending the reasonable consequences of his acts95. The maxim acta exterior indicant interiora secreta (external action reveals inner secrets) applies with all force in the case of Saharas, which I have already demonstrated on facts as well as on law. Conduct and actions of Saharas indicate their intention, we have to judge their so called intention from their subsequent conduct. Subsequent illegality shows that Saharas contemplated illegality. A persons inner intentions are to be read and understood from his acts and omissions. Whenever, in the application of an enactment, a persons state of mind is relevant, the above maxim comes into play. (Ref. Bennion on Statutory Interpretation, 5th Edn., p. 1104)96. We have to apply the various provisions of the Companies Act and SEBI Act and the rules and regulations framed thereunder to Saharas conduct and their inner intentions are to be understood from their acts and omissions, by applying the above maxim. Saharas acts and omissions have clearly violated the provisions of Section 73, their failure to list the securities offer to the public was, therefore, intentional and the plea that they did not want their securities listed, is not an answer, since they were legally bound to do so. The duty of listing flows from the act of issuing securities to the pubic, provided such offer is made to fifty or more than fifty persons. Any offering of securities to fifty or more is a public offering by virtue of Section 67(3) of the Companies Act, which the Saharas very well knew, their subsequent actions and conducts unquestionably reveal so98. The above discussion clearly indicates that from the years 1988 to 2000, private placement of preferential allotment could be made to fifty or more persons if the requirements of Clauses (a) and (b) of Section 67(3) are satisfied. However, after the amendment to the Companies Act, 1956 on 13.12.2000, every private placement made to fifty or more persons becomes an offer intended for the public and attracts the listing requirements under Section 73(1). Even those issues which satisfy Sections 67(3)(a) and (b) would be treated as an issue to the public if it is issued to fifty or more persons, as per the proviso to Section 67(3) and as per Section 73(1), an application for listing becomes mandatory and a legal requirement. Reading of the proviso to Section 67(3) and Section 73(1) conjointly indicates that any public company which intends to issue shares or debentures to fifty persons or more is legally obliged to make an application for listing its securities on a recognized stock exchange99. Saharas, in my view, have not followed any of those statutory requirements. On a combined reading of the proviso to Section 67(3) and Section 73(1), it is clear that the Saharas had made an offer of OFCDs to fifty persons or more, consequently, the requirement to make an application for listing became obligatory leading to a statutory mandate which they did not followUnlisted Public Companies (Preferential Allotment) Rules, 2003 and theUnlisted Public Companies (Preferential Allotment) Amendment Rules 2011101. I find that no such contention was seen urged either before SEBI or SAT, nor do I find any substance in that contention. 2003 Rules are not applicable to any offer of shares or debentures to more than 49 persons. 2003 Rules was framed by the Central Government in exercise of the powers conferred under Section 81(1A) read with Section 642 of the Companies Act to provide for rules applicable to the unlisted public companies. Section 81 of the Companies Act deals with further issue of securities and only gives pre-emptive rights to the existing shareholders of the company, so that subsequent offer of securities have to be offered to them as their rights. Section 81(1A), it may be noted, is only an exception to the said rule, that the further shares may be offered to any persons subject to passing a special resolution by the company in their general meeting. Section 81(1A) cannot, in any view, have an overriding effect on the provisions relating to public issue. Even if armed with a special resolution for any further issue of capital to person other than shareholders, it can only be subjected to the provisions of Section 67 of the Company Act, that is if the offer is made to fifty persons or more, then it will have to be treated as public issue and not a private placement. A public issue of securities will not become a preferential allotment on description of label. Proviso to Section 67(3) does not make any distinction between listed and unlisted public companies or between preferential or ordinary allotment. Even prior to the introduction of the proviso to Section 67(3), any issue of securities to the public required mandatory applications for listing to one or more stock exchanges. After insertion of the proviso to Section 67(3) in December 2000, private placement allowed under Section 67(3) was also restricted up to 49 persons. 2003 Rules apply only in the context of preferential allotment of unlisted companies, however, if the preferential allotment is a public issue, then 2003 Rules would not apply. 2003 Rules are only meant to regulate the issue of the shares and debentures by unlisted public companies and prevent the misuse of the private placement. Section 81(1A), as I have already indicated, says that a preferential allotment can be made by passing a special resolution which is an exception to the rules of rights issue, since that requires new shares or debentures to be offered to the existing members/holders on a pro rata basis. But when offer is made to more than 49 persons, then apart from compliance with Section 81(1A), other requirements regarding public issue have to be complied with. 2003 Rules, in my view, cannot override the provisions of Section 67(3) and Section 73. The definition of preferential allotment in 2011 Rules only made what was implicit in 2003, more explicit. In my view, both 2003 Rules and 2011 Rules are subordinate regulations and are to be read subject to the proviso to Section 67(3) and 73(1) and other related provisions105. I find that Saharas conveniently omitted the reference to SEBI in the declaration given in the prospectus. OFCDs were, therefore, issued by Saharas in contravention of the DIP Guidelines, ICDR 2009, notification dated 17.9.2002 and also overlooking the statutory requirements stipulated in Section 73(1) of the Companies Act112. OFCDs issued have the characteristics of shares and debentures and fall within the definition of Section 2(h) of SCR Act, which continue to remain debentures till they are converted. In other words, OFCDs issued by Saharas are debentures in presenti and become shares in futuro. Even if OFCDs are hybrid securities, as defined in Section 2(19A) of the Companies Act, they shall remain within the purview of the definition of securities in Section 2(h) of SCR Act. Further, it may be noted that Saharas have treated OFCDs only as debentures in the IM, RHP, application forms and also in their balance sheet. The terms Securities defined in the Companies Act has the same meaning as defined in the SCR Act, which would also cover the species of hybrid defined under Section 2(19A) of the Companies Act. Since the definition of securities under Section 2(45AA) of the Companies Act includes hybrids, SEBI has jurisdiction over hybrids like OFCDs issued by Saharas, since the expression securities has been specifically dealt with under Section 55A of the Companies ActSection 28(1)(b) makes it clear that the Act will not apply to the entitlement of the buyer, inherent in the convertible bond. Entitlement may be severable, but does not itself qualify as a security that can be administered by the SCR Act, unless it is issued in a detachable format. Therefore, the inapplicability of SCR Act, as contemplated in Section 28(1)(b), is not to the convertible bonds, but to the entitlement of a person to whom such share, warrant or convertible bond has been issued, to have shares at his option. The Act is, therefore, inapplicable only to the options or rights or entitlement that are attached to the bond/warrant and not to the bond/warrant itself. The expression insofar as it entitles the person clearly indicates that it was not intended to exclude convertible bonds as a class. Section 28(1)(b), therefore, clearly indicates that it is only the convertible bonds and share/warrant of the type referred to therein that are excluded from the applicability of the SCR Act and not debentures which are separate category of securities in the definition contained in Section 2(h) of SCR Act. Section 20 of SCR Act, which was omitted, by Securities Laws (Amendment) Act, 1995, with effect from 25.1.1995, stated that all options entered into after the commencement of the Act would be illegal. The introduction of Sections 28(1)(b) and 28(2) became necessary because of the provisions of Sections 13, 16 and 20. Section 20 was deleted in the year 1995, but SEBI notification No. 184 dated 1.3.2000 continued to prohibit options. Consequently, OFCDs issued by Saharas to the public cannot be excluded from the purview of listing requirements, any interpretation to the contrary would contravene the mandatory requirements contained in Section 73(1) and proviso to Section 67(3) of the Companies Act115. I have found that Saharas having failed to make application for listing on any of the recognized stock exchange, as provided under Section 73(1) of the Companies Act, become legally liable to refund the amount collected from the subscribers in pursuance to their RHPs, along with interest as provided under Section 73(2) of the Act. Rule 4D of the Companies (Central Government) General Rules and Forms 1956 prescribes the rates of interest for the purposes of sub-sections (2) and (2A) of Section 73, which shall be fifteen per cent per annum. Section 73(2) says that every company and every director of the company who is an officer in default, shall be jointly and severally liable to repay that money with interest at such rate, not less than four per cent and not more than fifteen per cent, as may be prescribed. The scope of the above mentioned provisions came up for consideration before this Court in Raymond Synthetics Ltd. & Ors. V. Union of India (supra), wherein the Court held that in a case where the company has not applied for listing on a stock exchange, the consequences will flow from the companys disobedience of the law, the liability to pay interest arises as from the date of receipt of the amounts, for the company ought not to have received any such amount in response to the prospectus. I am, therefore, of the view that since Saharas had violated the listing provisions and collected huge amounts from the public in disobedience of law, SEBI is justified in directing refund of the amount with interest116. I have found, in this case, that Saharas had not complied with the legal requirements of Section 56 and hence the second proviso to Section 56(3) may apply and it is also stated in sub-section (6) of Section 56 that the liability under the General Law has been excluded. Section 62 casts civil liability for mis-statement in prospectus and Section 63(1) speaks of criminal liability. Section 68 speaks of penalty for fraudulently inducing persons to invite, which also leads to imprisonment and fine. Section 68A prescribes punishment for violation of what is provided under Sections 68A(1)(a) and (b), with imprisonment for a term of five years. Section 73(3) also speaks of imposition of fine. Over and above the penal provisions, Section 628 of the Companies Act also proposes imprisonment and fine, for making false statements. Further, furnishing false evidence may also attract punishment with imprisonment for a term which may extend to seven years and also fine under Section 629 of the Companies Act. The provisions for imposing civil and criminal liability and refund of the amount with interest would indicate that, of late, economic offences in India like the one committed by Saharas be treated with an iron hand, or else we may land in another security market pandemoniumI, therefore, answer the questions of law raised as follows:a) SEBI has the powers to administer the provisions referred to in the opening part of Section 55A which relates to issue and transfer of securities and non-payment of dividend by public companies like Saharas, which have issued securities to fifty persons or more, though not listed on a recognized stock exchange, whether they intended to list their securities or notb) Saharas were legally obliged to file the final prospectus under Section 60B(9) with SEBI, failure to do so attracts criminal liabilityc) First proviso to Section 67(3) casts a legal obligation to list the securities on a recognized stock exchange, if the offer is made to fifty or more persons, which Saharas have violated which may attract the penal provisions contained in Section 68 of the Actd) Section 73 of the Act casts an obligation on a public company to apply for listing of its securities on a recognized stock exchange, once it invites subscription from fifty or more persons, which Saharas have violated and they have to refund the money collected to the investors with intereste) Saharas have violated the DIP Guidelines and ICDR 2009 and by not complying with the disclosure requirements and investor protection measures for public, and also violated Section 56 of the Companies Act which may attract penal provisionsf) 2003 Rules or the 2011 Rules cannot override the provisions of Section 67(3) and Section 73, being subordinate legislations, 2003 Rules are also not applilcable to any offer of shares or debentures to more than forty nine persons and are to be read subject to the proviso to Section 67(3) and Section 73(1) of the Companies Actg) OFCDs issued by Saharas have the characteristics of shares and debentures and fall within the definition of Section 2(h) of SCR Act. The definition of securities under Section 2(45AA) of the Companies Act includes hybrids and SEBI has jurisdiction over hybrids like OFCDs issued by Saharas, since the expression securities has been specifically dealt with under Section 55A of the Companies Acth) Section 28(1)(b) of the SCR Act indicates that it is only convertible bonds and share/warrant of the type referred to therein, which are excluded from the applicability of the SCR Act and not debentures, which are separate category of securities in the definition contained in Section 2(h) of SCR Act. Contention of Saharas that OFCDs issued by them are convertible bonds issued on the basis of the price agreed upon at the time of issue and, therefore, the provisions of SCR Act, would not apply, in view of Section 28(1)(b) cannot be sustainedi) SEBI can exercise its jurisdiction under Sections 11(1), 11(4), 11A(1)(b) and 11B of SEBI Act and Regulation 107 of ICDR 2009 over public companies who have issued shares or debentures to fifty or more, but not complied with the provisions of Section 73(1) by not listing its securities on a recognized stock exchangej) Saharas are legally bound to refund the money collected to the investors, as provided under Section 73(2) of the Companies Act read with Rule 4D of the Companies (Central Governments) General Rules and Forms, 1956 and the SEBI has the power to enforce those provisionsk) Saharas conduct invites civil and criminal liability under various provisions like Sections 56(3), 62, 68, 68A, 73(3), 628, 629 and so on117. The above discussion will clearly indicate that OFCDs issued by Saharas were public issue of debentures, hence securities. Once there is an intention to issue shares or debentures to the public, it is/was obligatory to make an application to one or more recognized stock exchanges, prior to such issue. Registration of RHPs by the Office of the Registrar does not mean that the mandatory provisions of Sections 67(3), 73(1) and DIP Guidelines be not followed. Saharas could not have filed RHP or any prospectus with RoC, without submitting the same to SEBI under Clauses 1.4, 2.1.1. and 2.1.4 of DIP Guidelines. Unlisted companies like Saharas when made an offer of shares or debentures to fifty or more persons, it was mandatory to follow the legal requirements of listing their securities. Once the number forty nine is crossed, the proviso to Section 67(3) kicks in and it is an issue to the public, which attracts Section 73(1) and an application for listing becomes mandatory which fall under the administration of SEBI under Section 55A(1)(b) of the Companies Act118. SEBI, I have already indicated, has a duty under Section 11A of the SEBI Act to protect the interests of investors in securities either listed or which are required to be listed under the law or intended to be listed. Under Section 11B, SEBI has the power to issue appropriate directions in the interests of investors in securities and securities market to any person who is associated with securities market119. I have already referred to the power of SEBI under the SEBI Act in the earlier part of this judgment. SEBI Act, it may be noted, is a special law, distinct in form, but related to the Company Law, 1956. Purpose and object behind establishing a body like SEBI under the SEBI Act has also been highlighted by us. The impugned orders, as already stated, were issued by SEBI in exercise of its powers conferred under Sections 11, 11A and 11B of SEBI Act and Regulations 107 of ICDR 2009. DIP Guidelines, as already indicated, did apply to both listed and unlisted companies. Clause 2.1.1 of DIP Guidelines had made it mandatory to file draft prospectus only before SEBI, not before the Central Government. Obligation was also cast on initial public offerings by unlisted companies and the issue of OFCDs was a public issue under Regulation 1.2.1 (xxiii) which also indicated that DIP Guidelines would apply to Saharas as well. Issuing of convertible debentures in violation of those guidelines gives ample powers on SEBI to pass orders under Sections 11A and 11B of the SEBI Act as well as Regulation 107 of ICDR 2009 and direct refund of the money to investors