In a rare and relieving move for a falsely implicated individual, the Securities and Exchange Board of India (SEBI) has disposed of proceedings against Taslim Arif Khan, a former daily wage office attendant, who was wrongfully held jointly liable for nearly ₹37 lakh plus interest. This penalty stemmed from a fundraising violation through non-convertible debentures (NCDs) committed by his former employer, Greenbang Agro Limited (GAL).

Khan, who had worked as a peon performing odd jobs such as serving water, was erroneously listed as a non-executive director in the company’s records. The SEBI order, dated April 9, 2025, finally brings an end to his prolonged legal distress that began in June 2018, when SEBI had originally passed a collective order against 13 individuals including him.

How a Peon Was Roped in as a Director

Khan’s defense sheds light on a disturbing malpractice prevalent in some companies—misusing employee digital signatures to fraudulently list them as directors. Khan stated that he had no clue he had been designated as a non-executive director, nor had he ever attended board meetings, met top management, or received any director's compensation.

Compliance experts say that this unethical practice involves creating digital signatures for unsuspecting junior staff, often without their informed consent, during the onboarding process. These are then used for official filings, including those that list such employees as directors or decision-makers, enabling promoters to shield actual controllers from scrutiny.

Violation Details and SEBI’s Initial Action

SEBI’s original 2018 order stated that Greenbang Agro Limited (GAL) had raised ₹36.97 lakh through NCDs during FY12 to FY14, without complying with mandatory provisions under the:

• SEBI (Issue and Listing of Debt Securities) Regulations, 2008

• Companies Act, 1956

Since the NCDs were issued to over 200 investors, it qualified as a public offer, and the company was required to seek listing permissions from stock exchanges and meet other regulatory norms. Failing to do so meant the raised funds had to be refunded—and SEBI made all directors jointly and severally liable, including Khan, who was technically listed as a director from March 6 to December 26, 2012.

Appeal to SAT and Fresh SEBI Review

Khan appealed to the Securities Appellate Tribunal (SAT), which directed SEBI to re-examine his actual role. In his defense, Khan made the following key arguments:

• He worked on a no-work-no-pay basis.

• He had no permanent position or formal role in the company’s operations.

• He never met the CMD, did not attend board meetings, and didn’t sign any financial document.

• He was not involved in any fund mobilisation.

• He had no idea he was listed as a director, hence couldn’t contest official filings with the Ministry of Corporate Affairs.

Reference to Similar Case Helped Clear Khan’s Name

While reviewing Khan’s case, SEBI also took note of another similar appeal by a person named Subhra Jyoti Sardar, a former director of GAL, whose liability was quashed by the SAT. The tribunal held that Sardar was not an "officer in default" and was not part of the day-to-day operations, meaning he couldn’t be held liable.

Applying the same legal reasoning, SEBI concluded that Khan too was not accountable, and disposed of the proceedings against him.

What This Means for Corporate Governance

This case brings into sharp focus a critical governance loophole—companies exploiting low-level staff by listing them as directors without consent, effectively using them as scapegoats.

It also raises serious concerns about the ease of assigning directorships in India’s corporate filing system and highlights the urgent need for stronger KYC checks before allowing digital signature-based appointments.

A Relief for Khan, a Wake-up Call for Regulators

After nearly seven years of legal uncertainty, Khan can now breathe a sigh of relief. His case is likely to be cited in future compliance discussions, especially around the need for:

• Stricter checks on director appointments

• Better awareness during employee onboarding

• SEBI and MCA coordination to prevent identity misuse

It’s a human interest story that also acts as a case study in policy gaps, where legal liability was nearly pinned on a man serving water, simply because he trusted his employer with digital forms.

Conclusion

The SEBI order dated April 9, 2025, not only clears an innocent man’s name but also sets a precedent for protecting low-level workers from corporate misdeeds. This is a wake-up call to companies, regulators, and compliance professionals alike.

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