According to SEBI investigation as on March 2011 Susk India had collected Rs1.29 crore from investors as advance booking for plots, however, the company acquired land worth only Rs15.19 lakh
Market regulator SEBI in an interim order cum show cause notice has asked Susk India Ltd and its directors and promoters not to collect any fresh moneys from investors from its existing scheme, not to launch any new scheme or plan and not to float any new companies or firm to raise fresh money from investors.
The company was prima facie found to be engaged in fund mobilising activity from the public, by floating, sponsoring and launching collective investment scheme (CIS) as defined in Section 11AA of the SEBI Act without obtaining a certificate of registration from SEBI as required under Section 12(1B) of the SEBI Act and the CIS Regulations.
SEBI received a complaint on 20 December 2013, alleging fund mobilisation by Susk India from the public, towards their scheme of selling of plots. The complainant also forwarded the brochure of Susk India, "Certificate" issued by it in favour of an investor, "Acknowledgment slip", blank "Application form", "Deposit Slip", etc. It was also alleged that Susk India does not own any land/property. SEBI immediately started its investigation of Susk India.
Based on its investigation SEBI observes, “It is apparent from the scheme offered by Susk as noted from the brochure, Application Form, Agreement, and the Certificate that the company is collecting funds from general public towards its scheme for the sale/purchase, development and maintenance of land through various plans (lump sum and instalment plans). Various clauses of the Application Form state that the funds are utilized for land purchase and land development expenses. As per the terms and conditions mentioned in the certificate and application, the land shall be allotted (by way of an allotment letter) in the name of the applicant in case of lump sum payment after 180 days of receipt of full payment but in case of instalment payment plans land shall be allotted after 60 days of receiving of 60% of consideration amount. It is however observed that none of the aforesaid documents of the company specify any time period within which the land/plot is to be actually transferred to the applicant/investor by way of a sale deed. It is further noted from the Certificate issued by the company (provided by the complainant) which acknowledges the receipt the 1st instalment does not contain any details of the location of the plot. The company in its replies admitted that they have mobilised money from general public for provisional allotment of plot by soliciting advance payments under its schemes of instalment payment plans and allotted the plots. It is relevant to note that the company was soliciting money without having any land in its possession. The company acquired land at Abhanpur (CG) on 22 November 2010 whereas it started pooling money from general public from May 2010 onwards. From the balance sheet for the year ending on 31 March 2011, it can be seen that the company had collected a sum of Rs1.29 crore for advance booking of plots. At that point in time, the company acquired land worth only Rs15.19 lakh. All these factors mentioned above, clearly indicate that Susk India was pooling money in the form of advance consideration for selling of plots to general public and utilising the same for the purposes of such schemes. Therefore, it is clear that the payments or the contributions collected from the applicant/investor are pooled and utilized by Susk India for the purpose of scheme. The instant 'scheme', therefore satisfies the first condition of pooling of contribution or payments, stipulated in Section 11AA(2)(i) of the SEBI Act.”
At this point, the SEBI Order points out the contravention of law on the part of Susk India by saying, “I note that in terms of Section 12(1B) of the SEBI Act, no person shall sponsor or cause to be sponsored or cause to be carried on a 'collective investment scheme' unless he obtains certificate of registration from the Board in accordance with the regulations. Regulation 3 of the SEBI (Collective Investment Schemes) Regulations, 1999 provides that no person other than a Collective Investment Management Company which has obtained a certificate under the said regulations shall carry on or sponsor or launch a 'collective investment scheme'. Therefore, a person can launch or sponsor or cause to sponsor a 'collective investment scheme' only if it is registered with SEBI as a Collective Investment Management Company. In view of this, 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.”
Hence the SEBI Order barring the company from collecting money from investors and its further restrictions: “not to dispose of any of the properties or alienate the assets of the existing scheme; not to divert any funds raised from public at large, kept in bank account(s) and/or in the custody of the company; to immediately submit the full inventory of the assets owned by Susk India out of the amounts collected from the "customers"/investors under its existing schemes; and to furnish all the information sought by SEBI.”
The SEBI Order concludes with the words, “This Order shall also be treated as a show cause notice. Susk India and its Promoters/Directors may show cause as to why appropriate directions under the SEBI Act and CIS Regulations including directions for winding up of such plans/ schemes in terms of Regulations 65 and 73 of the CIS Regulations should not be issued against them.”