The Securities and Exchange Board of India (SEBI) found that the company had garnered over Rs 18 crore from more than 400 investors via issuance of non-convertible debentures (NCDs) and through such activity had "prima facie" violated various norms.
SEBI observed that Silicon Projects India Ltd (SPIL) issued NCDs to over 50 persons which under the rules made it a public issue of debt securities and hence would require a compulsory listing on a recognised stock exchange.

The company was also required to file a prospectus, among others, which it failed to do. " ... SPIL is prima facie engaged in fund mobilising activity from the public, through the Offer of NCDs", and as a result of such activity has violated the provisions of Companies Act, SEBI Whole Time Member S Raman said in an interim order.
"... there is no other alternative but to take recourse through an interim action against SPIL and its directors alongwith its debenture trustee, viz Afzal Hussain, for preventing that company from further carrying on with its fund mobilising activity under the Offer of NCDs," he added.
SEBI has asked SPIL not to "mobilise any fresh funds from investors through NCDs or through the issuance of equity shares or any other securities, to the public and/or invite subscription, in any manner whatsoever, either directly or indirectly till further directions."
Further, the company and its directors -- Jugal Kishor Gupta, Bijay Pratap Mishra, Swarup Kumar Dutta, Biswajit Bera Tushar Jana, Asesh Mitra, Debashis Dey, Tapan Sahoo—are barred from issuing any offer document or advertisement for soliciting money from the public for the issue of securities.

The company and its directors are restrained from accessing the securities market till further directions. SEBI has also asked the entities not to dispose any of the properties or assets acquired by that company through the issue of redeemable preference shares, without prior permission from the regulator as well as not to divert the funds raised from public.
While asking SPIL to provide a full inventory of all its assets and properties, SEBI has also asked the company to within 21 days from the date of receipt of the order submit all relevant and necessary particulars sought by the watchdog.
Further, Hussain has been prohibited from continuing with his present assignment as a debenture trustee in respect of SPIL's NCD and also from taking up any new assignment in a similar capacity.
These "directions shall take effect immediately and shall be in force until further orders." According to SEBI, SPIL issued NCDs to more than 406 investors and mobilised about Rs 18.03 crore during 2009-10 to 2011-12.

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