The company was engaged in fund mobilising activity from public by floating/ sponsoring/ launching Collective Investment Scheme (CIS) as defined in section 11AA of the SEBI Act, 1992, according to the SEBI Order
The SEBI Order passed on Swar Agroteak and Housing (India) Private Limited (SAHIPL), Etawah, directed the company and its directors, Rajesh Awasthi, Pravesh Kumar Karowliya, Raghuvir Singh, Dharmendra Kumar Pal, Jitendra Kumar Porwal and Shiv Kumar not to collect any fresh money from the investors under its existing scheme or not to launch any new schemes or plans or float any new companies to raise fresh moneys; not to dispose of or alienate any of the properties/assets obtained directly or indirectly through money raised by the company; and not to divert any funds raised from public at large which are kept in bank account(s) and/or in the custody of SAHIPL.
The company was engaged in fund mobilizing activity from public by floating/sponsoring/ launching Collective Investment Scheme (CIS) as defined in section 11AA of the SEBI Act, 1992.
SEBI had received a complaint on 26 March 2013 alleging that Swar Agroteak and Housing (India) Private Limited (SAHIPL ) was collecting money from the investors by promising allotment of land and that it had collected huge sums of money by promising to pay high returns from the profits received on the land. However, as per the complainant, the company was 'neither registered with RBI nor it had any license to raise money from the investors.' SEBI then started an investigation.
The SEBI Order mentions the initial findings as “Swar Agroteak and Housing (India) Private Limited (CIN: U74999UP2004PTC029042) was incorporated on 9 September 2004 as Golden Triangle Sales Private Limited and later changed its name to Swar Agroteak and Housing (India) Private Limited with effect from 30 September 2005. The registered office of the company is at Shastri Chauraha, Near Hero Honda Show Room, Etawah -206001 (UP). Rajesh Awasthi, Raghuvir Singh, Pravesh Kumar Karowliya and Shiv Kumar are the Directors of SAHIPL. Dharmendra Kumar Pal and Jitendra Kumar Porwal had resigned from the directorship of the company with effect from 14 September 2005 and 20 November 2011 respectively.”
SEBI also found out the system for investors included, “The applicants/ investors who are interested in the scheme of development and maintenance of land offered by SAHIPL are made to file an Application cum Agreement with SAHIPL. The application form contains basic details of the applicant (like name, address etc.), plan details (giving plan number, number of land units, terms of plan, total consideration, lump-sum payment, regular instalment plan, mode of payment), etc.”
The SEBI Order finds the system in SAHIPL to be that of a collective investment scheme and points out, “In light of the above analysis and examination, prima facie, the activity of fund mobilisation by SAHIPL under its 'Scheme' with a promise of return/ estimated realizable value, when considered in light of peculiar characteristics and features of such scheme, as discussed in the preceding paragraphs satisfies all the four conditions specified in Section 11AA (2) of the SEBI Act.”
The SEBI Order continues, “the launching/ floating/ sponsoring/causing to sponsor any 'collective investment scheme' by any 'person' without obtaining the certificate of registration in terms of the provisions of the CIS Regulations is in contravention of Section 12(1B) of the SEBI Act and regulation 3 of the CIS Regulations. It is noted that SAHIPL has not obtained any certificate of registration under the CIS Regulations for its fund mobilising activity from the public, under the instant 'Scheme' offered by it.”
Further, the activity of illegal mobilisation of funds by SAHIPL through its schemes, prima facie, amounts to a fraudulent practice in terms of Regulation 4(2)(t) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market), 2003 (PFUTP Regulations), according to the SEBI Order.
Hence, the restrictions in the SEBI Order on the company and its promoters/ directors.