TMI Blog2020 (3) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... as defined in Section 11AA of the SEBI Act. Consequently, Section 12 (1B) of the SEBI Act, 1992 as well as Regulation 3 of the CIS Regulations prohibits carrying on CIS activities without obtaining Certificate of Registration from SEBI. VBDP had not obtained a certificate of registration from SEBI for offering the 'Scheme' which has been found to be CIS in the previous paras. Therefore, VBDP has violated Sections 12(1B) of the SEBI Act, 1992 and Regulation 3 of the CIS Regulations. Noticee 2 and 3 are directors of VBDP with effect from August 03, 2010 and continues to be directors till date and thus Noticee nos. 2 and 3 are responsible for the violations of provisions of law by VBDP. Regulation 4 (2) (t) was inserted in the PFUTP Regulations 2003 with effect from September 13, 2013 and as per the said provision the raising of funds by VBDP under its 'Scheme' without seeking registration from SEBI or filing any offer document as required under the CIS Regulations amounts to illegal mobilisation of funds and therefore the Noticees have also violated Regulation 4 (2) (t) of the PFUTP Regulations, 2003. Directions a. VBDP and its Directors, viz. Yogendra Bis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m an interim order cum show cause notice dated November 09, 2018 (hereinafter referred to as Interim Order ) passed by Securities and Exchange board of India (hereinafter referred to as SEBI ) against Noticee No.1, Vayaa Builder and Developers Pvt. Ltd. (hereinafter referred to as VBDP or the company ) and its two directors, i.e. Noticee 2 and 3. 2. In the said Interim Order the following directions were issued: 17. In view of the foregoing, I, in exercise of the powers conferred upon me under section 19 read with Sections 11(1), 11(4), 11B and 11AA of the SEBI Act read with Regulation 65 of the CIS Regulations and Regulation 11 of PFUTP Regulations, 2003, hereby direct VBDP and its Directors, viz. Yogendra Bisay and Jitendra Bisay : (i) Not to collect any fresh money from investors under its existing schemes; (ii) Not to launch any new scheme/plan or float any new companies/firm to raise fresh moneys; (iii) Not to dispose of any of the properties or alienate the assets obtained directly or indirectly through the money raised by VBDP; (iv) Not to divert any funds raised from public at large, kept in bank account(s) and/or in the custody of VBDP; (v) To im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I within 7 days of completion of the refund); and (ii) VBDP to be restrained/prohibited from accessing the securities market and buying, selling or otherwise dealing in securities in any manner whatsoever, directly or indirectly, for a period of four years from the date of effecting the refund. 5. In terms of the interim order, the Noticees were also provided an opportunity to file their reply, if any, to the Interim Order within 21 days from the date of receipt of the Interim Order and to also indicate whether they desired to avail themselves an opportunity of personal hearing on a date and time to be fixed on a specific request made in that regard. 6. The Noticees have not filed any reply to the Interim Order despite the service of the Interim Order to them through newspaper publication and email. Further, none of the Noticees have appeared for the personal hearings granted to them first on August 19, 2019 for which the hearing notice was served through newspaper publication and second on December 9, 2019 for which the hearing notice was served through the email address obtained from the MCA website. In view of this, I will proceed to deal with the matter on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Insurance Scheme framed under the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (19 of 1952); (v) under which deposits are accepted under section 58A of the Companies Act, 1956 (1 of 1956); (vi) under which deposits are accepted by a company declared as a Nidhi or a mutual benefit society under section 620A of the Companies Act, 1956 (1 of 1956); (vii) falling within the meaning of Chit business as defined in clause (d) of section 2 of the Chit Fund Act, 1982 (40 of 1982); (viii) under which contributions made are in the nature of subscription to a mutual fund; (ix) such other scheme or arrangement which the Central Government may, in consultation with the Board, notify, shall not be a collective investment scheme. ** ** ** Section 12(1B): (1B) No person shall sponsor or cause to be sponsored or carry on or caused to be carried on any venture capital funds or collective investment schemes including mutual funds, unless he obtains a certificate of registration from the Board in accordance with the regulations: Provided that any person sponsoring or causing to be sponsored, carrying or causing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght from VBDP but no reply was received. Therefore, the information provided by VBDP, the complainants, the chartered accountant associated with the company and documents available with MCA were examined. Based on the same, the following was observed - (i) The certificate provided by one of the complainant (titled 'Registration Letter') included the name of the investor, nominee name, plan, term, date of commencement, final payment date, cost of product, mode of payment, instalment amount, agreed cost of product, and assumed cost of product. (ii) The reverse side of the certificate provided Terms and Conditions . Some of the terms provided therein are as under: a. The land shall be allotted in the name of Customer in case of cash down/lump sum payment after 180 days of receipt of full payment. In instalment plan, allotment in the name of Customer shall be done after 60 days from date of receipt of 60% amount as per plan opted by the Customer. In both lumpsum plan and instalment plan, the sale deed will be executed in the name of Customer after the receipt of the full consideration amount. b. If the Customer after duly subscribing to a plan of VBDP fails and ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FY 15-16 Non-current assets NIL NIL ₹ 139,551/- (Tangible assets) ₹ 811,481/- (Tangible assets ₹ 644,690/- (Tangible assets ₹ 504,473/- (Tangible assets NIL NIL ₹ 16,000/- (Long tern loan and advances) ₹ 21,000/- (Long term loan and advances) ₹ 2,15,000/- (Long term loan and advances) NIL ₹ 20,000/- (other non-current assets) ₹ 15,000/- (other non-current assets) ₹ 10,000/- (other non-current assets) NIL NIL NIL Current Assets NIL NIL ₹ 13,080,210/- (inventories ₹ 13,080,210/- (inventories) ₹ 13,080,210/- (inventories) ₹ 13,080,210/- (inventories) ₹ 75,000/- (cash Cash equivalents) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 35,391,404/- (other current liabilities) NIL NIL NIL ₹ 88,383/- (Short term provisions) ₹ 24,900/- (Short term provision) NIL ₹ 5,000/- ₹ 6,000/- ₹ 13,363,278/- ₹ 40,949,065/- ₹ 36,080,833/- ₹ 36,698,626/- Total Liability ₹ 95,000/- (including capital Reserve and Surplus) ₹ 85,000/- (including capital Reserve and surplus) ₹ 13,372,358/- (including capital Reserve and Surplus) ₹ 41,221,794/- (including capital Reserve and Surplus) ₹ 36,242,077/- (including capital Reserve and Surplus) ₹ 36,754,009/- (including capital Reserve and Surplus) 11. The Interim Order noted from the balance sheet that the Other current liabilities of VBDP had increased from NIL (2010-11) to ₹ 40,20 8,822/- (FY 2013-14). Therefore, it appeared t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- 12-11-2013 Gram : Bachora, Rani Mandal-02, Shivpuri Ward No. 01, Madhy Pradesh (2000 Sq. ft) 7,75,000/- 3,75,000/- 4,00,000/- 18-10-2013 Gram : Bachora, Rani Mandal-02, Shivpuri Ward No. 01, Madhy Pradesh (2500 Sq. ft) 10,00,000/- 5,90,400/- 4,09,600/- 13. The Interim Order noted that since the company's primary activity as per its Memorandum of Association is with respect to real estate and real estate development, therefore the figures related to 'inventory' indicated acquisition of land using money mobilized from investors. The same was confirmed by looking at the land purchase details. Moreover, the bank account statement of VBDP showed that VBDP had received cash deposits from Madhya Pradesh, Chhattisgarh, New Delhi, Haryana etc. Therefore, it is understood that these would be the fund collected from the investors in cash and later deposited in the bank account of VBDP. The Interim Order also noted that each of the land purchase/land development records were closely preceded by incr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns mentioned on the reverse side of certificate(registration letter), the land will remain in the name the company till the payment of full consideration. Only after payment of certain percentage of consideration amount, the land allotment (not the transfer of land title) will take place. Significantly there is no record of any agreement to sell and the Registration letters merely mention allotment of a value of property but not any specific bounded/identified property in the name of the investor. Also, the right of the company to discontinue/change/amend/modify or alter prospectively/retrospectively any of the rules/regulation plans and introduce new payment plan at any time at its self-discretion with or without any notice, indicates that the investors do not have day to day control over management and operation of scheme for which amount has been collected by company. Therefore, in my prima facie view, the aforesaid aspects satisfy the conditions stipulated in Section 11AA(2)(iii) (iv) of the SEBI Act. 14. I observe that the name of Noticee no.1 is Vayaa Builder and Developers Pvt. Ltd. I also note that there was a registration of land purchased in the name of VBDP. Furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resaid observations and findings, I, in exercise of the powers conferred upon me under Sections 11(1), 11B, 11(4) read with Section 19 of the SEBI Act, 1992 and Regulation 65 of CIS Regulations and Regulation 11 of the PFUTP Regulations, 2003, hereby issue the following directions: a. VBDP and its Directors, viz. Yogendra Bisay and Jitendra Bisay shall wind up its existing CIS and refund the contributions or payments collected from investors under the schemes with returns due to the investors within a period of three months from the date of this order. The refund and interest payment to the investors shall be effected only through 'Bank Demand Draft' or 'Pay Order' (both of which shall be crossed as Non-Transferable ) or through internet banking channels such as NEFT or RTGS, with appropriate audit trail. b. Upon completion of the refund as directed above, within a further period of fifteen days, the Noticees shall submit a winding up and repayment report to SEBI in the format provided under regulation 73 of the CIS Regulations. The report shall be supported by the proof of the trail of funds claimed to be refunded, bank account statements of the company indi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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