TMI Blog2015 (2) TMI 1287X X X X Extracts X X X X X X X X Extracts X X X X ..... s investors with returns that were assured. The auditor has also observed that HBN did not provide full chain of repayments and also that it has used the stationery of group companies for making payments. These statements therefore create a doubt as to whether the claim of partial repayments made by the Company, is genuine. Noticee were the directors of HBN at the relevant period time and have resigned later-on. In view of the same, these five notices are also liable and responsible along with Mr. Harmender Singh Sran, Mr. Amandeep Singh Sran, Ms. Manjeet Kaur Sran and Ms. Jasbeer Kaur, for the violations committed by HBN in running CISs without obtaining registration from SEBI as required under law, during the period when they were the directors. Company had all the opportunity to sell its properties since July 12, 2013 (except for the period July 30, 2014 to December 09, 2014, when the restraint order of Hon'ble Delhi High Court was operative) and make repayments to its investors. Also note that there was no restraint on recalling the loans and advances so as to make the repayments. No hesitation in holding that HBN failed to comply with the directions of SEBI read with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Singh Sran, Mr. Amandeep Singh Sran, Ms. Manjeet Kaur Sran and Ms. Jasbeer Kaur shall not alienate or dispose off or sell any of the assets of HBN Dairies Allied Limited except for the purpose of making refunds to its investors as directed above. f. HBN Dairies Allied Limited and its directors/ former directors namely Mr. Harmender Singh Sran, Mr. Satnam Singh Randhava, Mr. Amandeep Singh Sran, Mr. Gajraj Singh Chauhan, Ms. Manjeet Kaur Sran, Ms. Jasbeer Kaur, Mr. Rakesh Kumar Tomar, Mr. Sukhdev Singh Dhillon and Ms. Sukhjeet Kaur are also directed to provide a full inventory of all their assets and properties and details of all their bank accounts, demat accounts and holdings of shares/securities, if held in physical form. g. In the event of failure by HBN Dairies Allied Limited and its directors namely Mr. Harmender Singh Sran, Mr. Amandeep Singh Sran, Ms. Manjeet Kaur Sran and Ms. Jasbeer Kaur to comply with the above directions on or before March 09, 2015, the following actions shall follow: - HBN Dairies Allied Limited and its directors namely Mr. Harmender Singh Sran, Mr. Amandeep Singh Sran, Ms. Manjeet Kaur Sran and Ms. Jasbeer Kaur shall remain restra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter dated July 23, 2010, sought certain documents/ details from HBN, as the information submitted was incomplete. HBN failed to provide such information/ details within the time specified. SEBI vide its letters dated September 22, 2010 and December 02, 2010, also sent reminders to HBN. Later, HBN vide its letter dated December 23, 2010, withdrew its application for registration, while submitting that it does not wish to initiate the activities covered under the CIS. 3. Thereafter, SEBI again vide its letter dated February 01, 2011, advised HBN to submit the information/ documents sought earlier vide letter dated February 09, 2009. SEBI vide its letters dated March 11, 2011, April 20, 2011 and December 07, 2011, issued reminders to HBN for submitting the information/ documents. Meanwhile, SEBI also sought information from the Registrar of Companies (hereinafter referred to as 'RoC'), Delhi vide letter dated December 07, 2011, in order to ascertain whether HBN has filed annual accounts for the financial years 2009-10 and 2010-11. HBN vide its letter dated December 20, 2011, requested for time for furnishing the information/ documents, as asked by SEBI. Vide another lett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013, submitted a common reply, which was taken on record. The submissions made by HBN, in brief are as under: a. The present management of HBN consists of Mr. Harmender Singh Sran, Mr. Amandeep Singh Sran, Ms. Manjeet Kaur Sran and Ms. Jasbeer Kaur. Other noticees i.e. Mr. Satnam Singh Randhawa, Mr. Gajraj Singh Chauhan, Mr. Rakesh Kumar Tomar, Mr. Sukhdev Singh Dhillon and Ms. Sukhjeet Kaur have ceased to be the directors of HBN and their names may be dropped from the present proceedings. b. The schemes/ plans of HBN are not in the nature of CIS. The money is provided by the customers of HBN to facilitate its business. The said amounts are not solely utilized for the purpose of purchase and rearing of cattle and maintenance of dairy farms but a part of this amount is also used for investment in acquisition of fixed assets and investment of properties through its subsidiary/ associate companies. The properties so purchased commands a good market value and also enhances the security cover of the customers, in case of exigency. c. The agreement entered into with the customer is not with the intention of sharing profits or income of the Company. There exists no share in pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rim order dated July 12, 2013 (hereinafter referred to as 'interim order') was issued with the following directions: a. HBN and its directors Mr. Harmender Singh Sran, Mr. Satnam Singh Randhawa, Mr. Amandeep Singh Sran, Mr. Gajraj Singh Chauhan, Ms. Manjeet Kaur Sran, Ms. Jasbeer Kaur, Mr. Rakesh Kumar Tomar, Mr. Sukhdev Singh Dhillon and Ms. Sukhjeet Kaur, shall not solicit or collect any further money/ investments from investors/ customers into its schemes or launch or carry out any money collection schemes. b. HBN and its aforesaid directors shall submit to SEBI, a reasonable proposal including firm time lines with regard to the manner in which it proposes to wind up its schemes and make payments along with the returns which are due to its investors. This proposal shall be submitted within a period of 30 days from the date of this Order. c. HBN and its aforesaid directors shall not dispose of any of the properties including the properties mentioned ..., except for the purpose of winding up of its schemes and repaying the money to its investors/ customers with returns that have been promised to them, ... .... It was also said that the order is without prejud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e venue of the hearing to Delhi. The request was acceded to and the matter was rescheduled to January 16, 2015. On the date fixed, Ms. Anju Jain, Advocate; Mr. Hitesh Sachar, Advocate; Mr. Punkaj Jain, FCA and Mr. Sunil Arora, FCA appeared for the noticees namely HBN, Mr. Harmender Singh Sran, Mr. Amandeep Singh Sran, Ms. Manjeet Kaur Sran and Ms. Jasbeer Kaur and made oral submissions that it has repaid about ₹242 crore to its investors. The representatives also relied upon the written submissions filed on January 15, 2015. During the course of personal hearing, the Company and its directors were asked to explain as to why SEBI should not consider that the Company has failed to fulfill the SEBI order dated July 12, 2013, as it has failed to repay the investors as per the proposal? The Company was also asked to submit the bank account statements from where the about ₹242 crore were disbursed. For replying to the question and submission of documents, fifteen days time was granted to HBN. On persistent requests of the representatives appearing for the noticees, another opportunity of personal hearing was fixed for February 03, 2015. 12. I note that as the hearing no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,307 investors. d. HBN has been regularly reporting to SEBI about the development vis-a-vis the repayment to the investors and has been adhering to each and every communication/ direction received from SEBI. e. HBN has sold various assets and have also liquidated the investments of the group companies to repay to its investors. It is still in search of prospective buyers for its various properties. However due to the depressed market conditions/ liquidity crunch HBN is facing lack of interest from the buyers towards various properties held by it. The same was also brought to the notice of SEBI on various occasions. SEBI vide its letter dated July 10, 2014, had directed HBN to look into the possibilities of selling its properties through auction or tender process. For the said purpose, HBN had also approached UTI, however, it did not get any positive response in this regard. Further, to repay the investors, HBN also thought it wise to avail loan and for the same it sought clarification from SEBI. f. Due to the stress to repay the investors, HBN is faced with compelling circumstances to sell the properties hurriedly giving rise to a situation to sell the properties at a pric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Delhi vide its order dated July 30, 2014 passed an ex parte directions to HBN whereby the Company was restrained from selling, alienating, transferring or parting with the possession and creating any third party rights in the immovable assets of the Company and its subsidiaries. The alleged claim has been settled on September 6, 2014 and HBN has moved an application seeking recalling of the directions of Hon'ble High Court. As per the order dated December 09, 2014, Hon'ble Court has directed HBN that in case of any further assets of HBN are sought to be sold, intimation with regard to the book value of the assets and proposed sale consideration along with the details of recorded owner of the asset shall be furnished to the Hon'ble Court, prior to the transaction being completed. k. HBN has also said that its intentions are good and it would like to pay all its investors. It is financially sound to repay its liabilities. However, it has not been able to adhere to the time lines given by SEBI to repay the investors. HBN has proposed to make repayments as under: TABLE A Financial Year ₹ (in Crore) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o produce / cultivate / market agricultural products, like tea, pulses, rice, flour, spice, juices, wheat, in packed / loose in any form and derivatives. ... ... 4. To further the dairy activity purchase, sell, resell, livestock, its breeding and development, besides also carrying out the same activities on or behalf of individual or organization on a contractual / joint venture basis. A reading of the objects as stated in the Memorandum of Association shows that the Company is also in the business of breeding and development of livestock and dairy products. b. I have perused the copy of 'rule book' and 'certificate' as submitted by HBN. HBN while applying for registration as CIS had provided a copy of the 'rule book'. - The salient features/ clauses of 'rule book' are being discussed below: 1. Introduction ... ... The demand of quality milk its allied products has always remained higher than supply. Therefore, the company decided to develop and manage scientific and Modern Dairy Farms with mass participation of public by way of joint-ventures. The joint-venturer shall enter into an agreement with the company on a non-jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ths (9 years) Plan E 75 months (6 1/4 years) Plan No. C1 80 months (6 years 8 months) Plan F 108 months (9 years) The main difference in Category I and II is that under Category I plans, the payments by the customers are made in lump-sum. Under Category II plans, the payments by the customers are made in installments. Other difference in the plans floated by HBN is with regard to the tenure of the plan and returns thereof. - An illustration of plans under Category I is as under: TABLE D Plan No. 'C' for 108 months (9 years) S. No. Consideration cost of Cattle/ Ghee Expected Cost of Developed Cattle/ Ghee Accidental Death Compensation (₹) 1 5,000 11,500 5,000 2 10,000 23,000 10,000 3 15,000 34,500 15,000 4 20,000 46 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11,500 85,500 90,000 * Part of the Installments is also payable. Under this category joint venturer can book the cattle in easy 60 to 75 installments. i. After receiving first 36 installments, the cattle will be allotted to the joint venturer and will be developed in the next 2 1/2 year in plan D and 3 1/4 years in plan E 6 years in plan F by the (Company), first party itself in its dairy farms. ii. The cost of cattle includes the maintenance expenses, which will be paid by the joint venturer to the company in 60 to 75 easy monthly installments. iii. The agreement will be fixed for 5 1/2 years in plan D, 6 1/4 years in plan E and 9 year in plan F in category - II. iv. The total term of the plan F is 9 years. However, joint venturer will have to pay installments for cattle/ ghee 5 years only. - As can be seen the plans provide for the consideration of cost of cattle/ ghee, expected cost of the developed cattle/ ghee and the 'accidental death compensation'. c. Though HBN vide its letter dated March 21, 2012, had specifically denied that it does not have any brochures/ application forms, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty. ... ... Under Plan No. B NSC and KVP equivalent to 50% of cost of the cattle will be provided in the name of the second party and remaining amount shall be paid to 2nd party in shape of dairy products. I note that the 'Joint Venture agreement' mentions of investment in NSC and KVP, however, the application or the rule book does not mention about the said investment. I also note that the agreement cannot be cancelled upto three (3) years. Further, if an investor cancels the agreement before three (3) years, the investments are retained by the Company, till the end of the scheme. e. Certificate: It is seen that the Company issues 'a certificate' against the investment taken from the customers/ investors. The sample certificate mentions as under: CERTIFIED that the person described in Schedule hereto is Registered Joint Venturer of Consideration as shown in Schedule under Plan of Company, subject to the regular payment of Subscription(s) as mentioned in the said Schedule and also subject to General Terms and Conditions printed overleaf and Terms and Conditions as per Rule Book, as may be amended from time to time, ... .... It is hereby declare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te as 'expected sum payable on expiry of the term'. iv. The cattle remains with the Company and the same is reared/ developed in the dairy farm of HBN only. The customer/ investors only gets a fixed amount at the end of the 'joint venture'. From the observations as noted above, it can be inferred that the transactions of the Company are not in the nature of the 'joint venture' rather it can be said to be an investment scheme. h. Having considered the above, now I proceed to deal with the charges leveled against HBN. The main allegation leveled against HBN is that it is operating CIS without obtaining registration from SEBI. Before proceeding further in the matter, it is necessary to note the background of CIS Regulations and how the provisions came to be framed. Several entities were mobilizing huge money by issuing various instruments and offering very high rates of return inconsistent with the normal rate of returns and then misutilising these funds, for the purposes not disclosed at the time of inviting the investments, thereby not only causing loss to the investors who lost their life savings to such unscrupulous entities, but also eroding the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in Section 11 AA of the SEBI Act, which provides as under: (1) Any scheme or arrangement which satisfies the conditions referred to in subsection (2) or [sub-section (2A)] Inserted by Securities Laws (Amendment) Ordinance, 2014 shall be a collective investment scheme. [Provided that any pooling of funds under any scheme or arrangement, which is not registered with the Board or is not covered under the exemptions from CIS sub-section (3), involving a corpus amount of one hundred Crore rupees or more shall be deemed to be a collective investment scheme.] Inserted by Securities Laws (Amendment) Ordinance, 2014 (2) Any scheme or arrangement made or offered by any [person] Substituted for 'company' by The Securities Laws (Amendment) Ordinance, 2014 under which, (i) the contributions, or payments made by the investors, by whatever name called, are pooled and utilized solely for the purposes of the scheme or arrangement; (ii) the contributions or payments are made to such scheme or arrangement by the investors with a view to receive profits, income, produce or property, whether movable or immovable from such scheme or arrangement; (iii) the property, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y ... after 12 months of receipt of application under category - I plans and after three years in case of category - II plans... . The 'rule book' also states that ... To further the dairy activity purchase, sale-resale, livestock, its ... ... on or behalf of individual or organization on a contractual/ joint venture basis. The 'rule book' further contains the details of various plans offered by HBN. As per the 'application form' and 'certificate', the joint venturer/ investor applies for certain category/ plan number as mentioned in the 'rule book'. Thus, the objective for a customer is to subscribe to one of the plans offered by the Company for purchase and rearing of cattle. Further, the certificate as provided by HBN, does not contain any column to specify the details of cattle allocated to the joint venturer/ investors. The above representations by HBN in its 'rule book' and observations are sufficient to find that the 'contributions, or payments made by the investors, are pooled and utilised by HBN for the purposes of the scheme or arrangement', the scheme being to further the dairy activity. Thus, satisfying t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt venturer to the first party (company) at the time of agreement . HBN in its reply dated July 08, 2013 to SCN has stated that the so called property (cattle in the present context) always remains with the Company and the customer has option to buy, in case, if so desired by him. It is noted that the 'rule book' clearly states that the 'joint venturer' wants to purchase the cattle from the Company's dairy farm and bring up the cattle in the same dairy farm. The cost of the cattle includes maintenance expenses. From the same, an inference can be drawn that the cattle always remained in the custody of HBN and the same are managed by the Company only. I also note that in the plans of HBN, at the time of making the initial contribution/ payment, the customer/ investor decides inter alia the category, plan number, term of the plan, etc. It can be said that the customer/ investor does not take part in the acquisition, development or management of the cattle and its rearing. The customer/ investor also does not manage his investments in the plans/ schemes rather his investments are managed and utilized by the Company. The above discussion and the general sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . ... 40. It will have to be stated with particular reference to the activity of the PGF Limited, namely, sale and development of agricultural land as a collective investment scheme, the implication of Section 11AA was not intended to affect the development of agricultural land or any other operation connected therewith or put any spokes in such sale-cum-development of such agricultural land. It has to be borne in mind that by seeking to cover any scheme or arrangement by way of collective investment scheme either in the field of agricultural or any other commercial activity, the purport is only to ensure that the scheme providing for investment in the form of rupee, anna or paise gets registered with the authority concerned and the provision would further seek to regulate such schemes in order to ensure that any such investment based on any promise under the scheme or arrangement is truly operated upon in a lawful manner and that by operating such scheme or arrangement the person who makes the investment is able to really reap the benefit and that he is not defrauded ... ... It is, therefore, apparent that all other schemes/arrangements operated by all others, namely, other tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, namely, the sale and development of agricultural land squarely falls within the definition of collective investment scheme under Section 2(ba) read along with Section 11AA (ii) of the SEBI Act and consequently the order of the second respondent dated 06.12.2002 is perfectly justified and there is no scope to interfere with the same. In the light of our above conclusions, the PGF Limited has to comply with the directions contained in last paragraph of the order of the second respondent dated 06.12.2002 ... ... l. To carry on CIS, the entity needs to be registered with SEBI in that capacity. Therefore, I have no hesitation in holding that HBN and its directors namely Mr. Harmender Singh Sran, Mr. Satnam Singh Randhava, Mr. Amandeep Singh Sran, Mr. Gajraj Singh Chauhan, Ms. Manjeet Kaur Sran, Ms. Jasbeer Kaur, Mr. Rakesh Kumar Tomar, Mr. Sukhdev Singh Dhillon and Ms. Sukhjeet Kaur were engaged in the fund mobilising activity by floating/ sponsoring/ launching, unregistered/ unauthorised CIS, as defined in the Section 11AA of the SEBI Act. m. Section 12(1B) of the SEBI Act mandates that no person, shall sponsor or cause to be sponsored or carry on or caused to be carried on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one week of appointment of RTA. - HBN to publish an advertisement regarding repayment in an English newspaper having nationwide circulation and in a local daily at the places where investors are situated within 10 days of appointment of RTA. - HBN to appoint a reputed concurrent auditor with the approval of SEBI to look into the details of day-to-day repayment to the investors within 30 days. HBN has to get its books of account and other relevant documents/ records in respect of its CIS activities audited by the said auditor. - Before initiating the process of selling the properties, HBN and its group companies have to get the valuation of the assets counter checked by an independent Government approved valuer. Such valuer may be appointed by HBN after receiving the due approval of SEBI. - After appointment of RTA, the independent valuer and the concurrent auditor, the details of procedure/ modalities of repayment of money to the investors are required to be finalized in consultation with the RTA, concurrent auditor and SEBI. - HBN has to deposit the money as per the following time lines so that the money can be repaid to the investors within a time of one year: T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to the asset realization, HBN informed that as on April 2014, HBN has been able to realize assets worth ₹24,89,09,767. HBN vide its letter dated April 17, 2014, submitted details of its bank accounts as on November 30, 2012. Vide another letter dated April 29, 2014, HBN informed that Mr. Amandeep Singh Sran, Managing Director of HBN has been appointed as the nodal officer and in his absence Mr. Pankaj Tetarway, President (Corporate Governance) will act as a nodal officer. d. Thereafter, SEBI vide its letter dated May 08, 2014, asked HBN to confirm whether cash/ deposits in any form with bank or other institutions and 33% of the remaining total money due to the investors have been deposited in the escrow account or not, as stated in the procedure for repayment. While replying, HBN vide its letter dated May 13, 2014, informed that it would be depositing the cash and other deposits, if any, in the escrow account. HBN also stated that it is in the process of filing another representation in relation to the repayment procedure as the existing procedure would put it in unnecessary hardship, as about 15 lakh of its investors are holding deposits in the range of ₹1,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹4,242 5 ₹4,001 - ₹5,000 98,100 ₹4,450 Total 15,38,992 ₹20,023 HBN has said that most of such investors are located in far flung villages/ rural/ semi urban areas and are mostly illiterate. Therefore, intimating these through the publication of advertisement/ registered post would not serve the purpose and the same will create an unnecessary burden on the Company. It was also said that the investors without understanding the intent of such intimation would make a run on the branch offices/ field staff and create a situation of panic. HBN requested SEBI to dispense it with the requirement of the publication of advertisement/ sending intimation through registered post and also requested to allow it to make the payment in one go to these investors. - HBN is facing severe liquidity crunch because of the lack of interest from the buyers towards various properties held by the it/ its associate companies as their being glut in the market of similar properties. The Company is unable to sell its prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with this letter, HBN also submitted copies of the bank statements evidencing the transfer of funds from its several accounts to the escrow account maintained with the Bank of Baroda. Thereafter, a meeting was held between SEBI, HBN and the RTA on June 03, 2014, wherein HBN was suggested to issue an advertisement with regard to the repayment and also to look into the possibility of selling its properties through auction/ tender process. It was also informed by HBN that the escrow account has a balance of ₹31 lakh and that by June 12, 2014, they are expecting a credit of about ₹40 crore. Upon consideration, the request of HBN of making repayments through its branch offices and agents, under the supervision of RTA was accepted and it was said that all the payment must be through the banking channel. g. HBN then issued a public notice in June 2014, in local newspapers of Raipur, wherein, inter-alia it was stated that HBN will repay matured amount through SEBI registered RTA and it has sufficient assets to repay. HBN vide its letter dated June 26, 2014, HBN intimated that it has placed advertisement in four (4) newspaper of Chhattisgarh on June 13, 2014 and it is in proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed January 06, 2014 and July 10, 2014, from HBN. The details of the amounts credited by HBN in the escrow account was also sought. However, SEBI did not receive any reply to this letter from HBN. Later, vide another letter dated December 18, 2014, HBN informed SEBI that it has repaid ₹242.17 crores to 2,36,307 investors. Thereafter, before the date of personal hearing on January 16, 2014, HBN submitted written submissions, copies of various letters and the orders of Hon'ble High Court of Delhi. Vide another letter dated February 02, 2015, HBN again submitted written submissions. On the date of hearing i.e. February 03, 2015, HBN submitted copies of the bank statements as asked during the course of personal hearing dated January 16, 2014. j. I note that in the recent past SEBI has received more than 1,200 complaints. These complaints inter alia alleged as under: - HBN is not paying the matured amount. In certain cases, HBN has not repaid even after 18-24 months of the maturity date. - Phone calls have been received by SEBI, alleging therein that the branch office of HBN has informed them that the payment of matured amount shall be made by SEBI. - HBN has issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, an attempt was made to cross verify the claim of repayment by HBN and investor complaint on sample basis. For the same, two samples were selected i.e. Mr. Virendra Kumar Loniya and Mr. Ram Dayal Loniya, according to the Company their details are as under: TABLE I S. No. Name of investor Date of investment Amount of investment Maturity date Promised return on maturity Date of repayment Proportionate promised return Mode of payment 1. Virendra Kumar Loniya 29/01/2007 ₹11,040 29/04/2013 ₹18,000 24/01/2014 14,126 Cheque/ DD 2. Ram Dayal Loniya 16/03/2007 ₹9,400 16/06/2013 ₹18,000 24/01/2014 11,522 Cheque/ DD I note that these investors while complaining to SEBI vide their letters dated October 31, 2014 have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt and the investor complaints received by SEBI, my observations in this regard are as under: - HBN had not transferred the entire cash/ deposits in the escrow account within two days of opening of the same. The escrow account was opened on April 29, 2014. HBN vide its letter dated May 13, 2014, intimated SEBI that ₹193.73 crores have been repaid to 2,00,517 investors. It is clear that such repayment, if done were made not through the escrow account. Further, as on December 18, 2014, HBN has claimed to have repaid ₹242.17 crores to 2,36,307 investors again not from the escrow account. - HBN has failed to intimate SEBI about the petition filed by Pier-one Construction Pvt. Limited before the Hon'ble Delhi High Court and the order of Hon'ble Court dated July 30, 2014 i.e. the direction to HBN to restrain from selling, alienating, transferring or parting with the possession and creating any third party rights in the immovable assets of the Company and its subsidiaries. HBN and its directors vide the said order were also restrained from selling, alienating or transferring any of its stock or investment. I note that such directions had direct bearing on the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been able to adhere to the timelines given by SEBI to repay the investors, I note that HBN has clearly failed to follow the procedure laid down for the repayment and failed to call back the loans and advances given by it to its subsidiaries and others. As per the submissions dated February 02, 2015, HBN had initiated the process of repayment from August 2013 i.e. after filing of the proposal dated August 08, 2013 to SEBI. As on January 27, 2014, it has brought to the notice of SEBI that pursuant to the submission of proposal, it had already paid about ₹140 crores. From the same, it is interesting to note that HBN had repaid about ₹140 crore within a period of five months (i.e. during August 2013 - January 2014). In the second period of one year (i.e. February 2014 - January 2015), HBN has stated to repay only ₹102 crore (i.e. ₹242 crore - ₹140 crore). During the second period i.e. February 2014 - January 2015, HBN had issued various advertisements and in common parlance it should have returned more money than it paid during August 2013 - January 2014. This raises serious doubt about the claim of HBN and the authenticity of the payments made. Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repay the investors has arisen out of its illegal manner of fund mobilization from them. Therefore, wherever such deductions were made, HBN shall make full payments to its investors with returns that were assured. The auditor has also observed that HBN did not provide full chain of repayments and also that it has used the stationery of group companies for making payments. These statements therefore create a doubt as to whether the claim of partial repayments made by the Company, is genuine. 19. Now let me deal with the liability of its directors both past and present. The SCNs have been issued to Mr. Harmender Singh Sran, Mr. Satnam Singh Randhava, Mr. Amandeep Singh Sran, Mr. Gajraj Singh Chauhan, Ms. Manjeet Kaur Sran, Ms. Jasbeer Kaur, Mr. Rakesh Kumar Tomar, Mr. Sukhdev Singh Dhillon and Ms. Sukhjeet Kaur. HBN in its reply dated July 09, 2013, has submitted that Mr. Satnam Singh Randhava, Mr. Gajraj Singh Chauhan, Mr. Rakesh Kumar Tomar, Mr. Sukhdev Singh Dhillon and Ms. Sukhjeet Kaur have ceased to be the directors of HBN the details of their resignation are as under: Table - J Name Date of ceasing Satnam Sing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a Collective Investment Scheme in this Order. b. HBN Dairies Allied Limited and its directors/ former directors namely Mr. Harmender Singh Sran, Mr. Satnam Singh Randhava, Mr. Amandeep Singh Sran, Mr. Gajraj Singh Chauhan, Ms. Manjeet Kaur Sran, Ms. Jasbeer Kaur, Mr. Rakesh Kumar Tomar, Mr. Sukhdev Singh Dhillon and Ms. Sukhjeet Kaur are restrained from accessing the securities market and are prohibited from buying, selling or otherwise dealing in securities market for a period of four (4) years. c. HBN Dairies Allied Limited and its directors namely Mr. Harmender Singh Sran, Mr. Amandeep Singh Sran, Ms. Manjeet Kaur Sran and Ms. Jasbeer Kaur shall forthwith wind up the existing Collective Investment Schemes and refund the money collected by the said company under the schemes with returns which are due to its investors as per the terms of offer, on or before March 09, 2015 and thereafter within a period of fifteen days, submit a winding up and repayment report to SEBI in accordance with the SEBI (Collective Investment Schemes) Regulations, 1999, including the trail of funds claimed to be refunded, bank account statements indicating refund to the investors and receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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