SEBI asks HBN Dairies not to collect money from investors
SEBI has asked HBN Dairies & Allied to submit proof including trail of funds, bank statements to support its contention that it has refunded the monies to its investors. SEBI would also initiate attachment and recovery proceedings under the SEBI Act and rules and regulations
Market regulator Securities and Exchange Board of India (SEBI) has barred HBN Dairies & Allied Limited and its current and former directors not to collect money from investors using its various schemes. In addition, SEBI said it would also initiate attachment and recovery proceedings under the SEBI Act and rules and regulations.
The directors named by SEBI are Harmender Singh Sran, Satnam Singh Randhava, Amandeep Singh Sran, Gajraj Singh Chauhan, Manjeet Kaur Sran, Jasbeer Kaur, Rakesh Kumar Tomar, Sukhdev Singh Dhillon and Sukhjeet Kaur. The company has been also asked to provide proof including trail of funds, bank statements to support its contention that it has refunded the monies to its investors.
SEBI had received a reference from Reserve Bank of India (RBI) along with a complaint against HBN Dairies & Allied. HBN is a company with its registered office at IIIrd Floor, Vardhman Chamber, Sonia Complex, Vikas Puri, New Delhi - 110 018). The complaint alleged that HBN is illegally mobilising funds from the public. SEBI started an investigation and wrote to HBN for detailed information. HBN instead of replying to the SEBI letter, filed an application for registration as CIS (Collective Investment Scheme) on 30 June 2010. With the application, HBN also submitted the copies of certificate of incorporation, notice to its shareholders, minutes of the Extra-ordinary General Meeting, Trust Deed and 'Rule Book'. SEBI in its letter dated 23 July 2010, sought certain documents/ details from HBN, as the information submitted was incomplete. HBN failed to provide the information within the time specified.
While HBN claims that it is a genuine cattle business, it has some liquidity problems which it explains as “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 price much below the expected market price. HBN had also entered into 'transaction service agreement' with JLL to sell the properties located at Bhatinda.”
“Subsequent to the publishing of advertisement, public notice in search of prospective buyers, a panic has been spread amongst the investors of HBN,” was the explanation from HBN management for its woes.  Over time, HBN found it difficult to attract new investors.
While HBN is found to operate a CIS without prior permission from SEBI, the company has a further explanation that the amounts taken from its customers are not solely utilised 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 and associate companies. The same has not been referred in any of the documents viz., application, certificate, agreement, and receipt, points out SEBI in its Order.
The SEBI order is clear in its indictment of HBN by saying, “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 any CIS unless it obtains a certificate of registration from SEBI in accordance with the CIS Regulations. HBN has clearly failed to do so. Regulation 3 of the CIS Regulations 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'. 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. 
Therefore, 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. I note that HBN has launched CIS without obtaining certificate of registration from SEBI, it has contravened the provisions of Section 12(1B) of the SEBI Act and Regulation 3 of the CIS Regulations.” Hence, HBN shall not collect any more money.
Coming to the refund of money already collected, “I note that HBN, in its letter dated 8 August 2013, had forwarded a repayment proposal/ schedule and a list of its properties. The said proposal/ schedule was examined by SEBI and a detailed procedure for making repayments was forwarded to HBN, in its letter dated 6 January 2014, for necessary compliance,” observes the SEBI Order.
Finding that there were many small investors, SEBI in its Order has highlighted the nature of complaints it received with respect to refunds: “I note that in the recent past SEBI has received more than 1,200 complaints. These complaints alleged are 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 post-dated cheques to its investors. Certain investor complaints have also alleged that the cheques received from HBN are getting bounced.
- That the agents of HBN are asking for fresh deposits and are threatening investors of not getting their money back unless money is deposited in new scheme.
These complaints are serious in nature and have been forwarded to HBN for early resolution.”
There were also allegations that HBN may not be in a position to refund and fulfil its obligations. The most serious one was: “The Chartered Accountant appointed by the Delhi High Court, in his report dated 16 September 2014 had highlighted diversion of funds by HBN to its sister concern. The report also states that the net worth of HBN is in negative by Rs75.35 crore due to losses of Rs85.45 crore.”
Based on these difficulties in refund, SEBI has asked HBN for bank statements. SEBI has also made it clear that “HBN and its directors namely Harmender Singh Sran, Amandeep Singh Sran, Manjeet Kaur Sran and 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.” HBN is also directed to provide a full inventory of all its assets and properties and details of all their bank accounts, demat accounts and holdings of shares/securities, if held in physical form.
In the event of breach of its Order, SEBI would make a reference to the State Government/ Local Police to register a civil/ criminal case against HBN Dairies & Allied, its promoters, directors and its managers/ persons in-charge of the business and its schemes, for offences of fraud, cheating, criminal breach of trust and misappropriation of public funds, concludes the SEBI Order. SEBI shall also initiate attachment and recovery proceedings under the SEBI Act and rules and regulations.




1 year ago

[email protected]

I am one of the investor and my policy matured on end of This year June-2015 from HBN Dairy India Limited

I have not yet received my maturity amount ( more than 4 months) and not getting any valid response from the local HBN office.

Kindly suggest me how to proceed to get my money back. by way our E mail


2 years ago


I am one of the investor and my policy matured on end of last year Dec 2014.

I have not yet received my maturity amount ( more than 8 months) and not getting any valid response from the local HBN office.

Kindly suggest me how to proceed to get my money back.

When will the National Fertiliser Policy be announced?
Both the farmers and the manufacturers of fertilisers are eagerly looking forward to a positive and practical provision in the ensuing budget
The domestic fertiliser industry has continued to suffer due to low or restricted availability of gas, the production of which has not increased in recent months with the chances of its increase continuing to be dim. In fact, the three urea makers in the South, which had used naphtha as feeder stock, shut down in October last year, when the union government stopped its subsidy, and restarted their plant on the assurance that subsidy will continue for the next three months!
This is an act of folly by the government. The reason they stopped the subsidy was that these units had not laid the pipelines to connect them with gas, without admitting that there is no gas in the first place to supply! Instead of doling out subsidy in this manner, first step should be to reassure these three units continue to get the subsidy until they are able to provide the required quantum of gas. The only stipulation that the government may impose, is a timeframe within which these units ought to be able to have their pipelines ready for the gas connection. At the same time, the government must also assure them the time within which this gas supply would be made possible!
In the meantime, as we come closer to the Budget announcement, both the farmers and the manufacturers of fertilisers are eagerly looking forward to a positive and practical provision in the ensuing budget, exactly 10 days from now!
Will this be part of the key economic reforms that the Finance Minister, Arun Jaitley has promised in his maiden budget, almost one year ago? This remains to be seen.
It may be remembered that the basic policy of National Democratic Alliance (NDA) government has been to keep itself pro-farmer and this has been reiterated by one and all, including, Ananth Kumar, the Union Minister for Fertilisers. He has been assuring a National Fertiliser Policy, but so far, nothing has been announced, though, we now have a lurking suspicion that this may about, after the Budget presentation.
There has been speculation that as a sequel to the Budget, certain major changes in the current fertiliser policy, like the phased withdrawal of maximum retail price (MRP) for urea or even an incremental increase in its price may be brought about.
It may be remembered that for almost  eight years, between 2008 and 2010 the urea price was constant at Rs4,830 per tonne and this was increased to Rs5,310 in the later part of 2010 and revised to Rs5,360 in 2012. Because of its subsidised price, urea is the cheapest fertiliser in the market.  Because of this, farmers tend to use this excessively, as per some soil experts, who claim that this has caused erosion and soil fatigue.
Soil experts, it is reported, feel that in the interest of soil protection, farmers need to apply the essential and balanced use of NPK - nitrogen, phosphate and potash nutrients to retail its natural qualities.
The most commonly used fertiliser continues to be urea which alone has the statutory price control and the MRP is fixed by the government. This is based on the ‘actual’ cost of production of each producer and the subsidy, being the difference in cost of production and the MRP is paid by the government. The Fertiliser Ministry, in consultation, with the individual manufacturer determines the production cost for each plant.
But the general feeling of the industry has been that it is time that the government seriously considers the decontrol of the urea price, though the Centre wants an administered price control is essential, because it wants to be ‘farmer friendly!’.
Another issue that has been brought to the notice of the government, by soil experts, is the indiscriminate and reckless use of urea, being the cheapest source of fertiliser available. Educating the farmer has become imperative and one way of controlling this excessive usage is to either decontrol the price completely or introduce some sort of slab rated increase in price.
If an increase in the MRP is considered not feasible, why not bring about a formula by which, the manufacturer is able to sell the excess produced in his plant, over the installed production capacity, at a free market determined price? In other words, if a plant has an installed capacity of say 1.3 million tonnes, which is considered a viable unit, any excess production over 1.3 million tonnes be free of MRP! For this quantity, government need not give any subsidy!
Since MRP has not had any change since 2012, a marginal upward revision could be effected to ascertain the market reaction. In any case, the subsidy element should be directly credited to the bank account of farmers, who by now, thanks to Aadhaar Card, may have opened bank accounts!  Let the revised formula work at least for one year and can be reviewed before the next Budget.  At the same time, through the medium of TV channels, the correct use NPK should be publicised and stocks of NPK fertilisers should be available in all village panchayats and similar bodies.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)


RBI exempts core investment companies from becoming members of credit bureaus
Core investment companies registered as NBFCs mainly invest in assets of group companies rather than lending to borrowers. Therefore exempting them from providing borrowers’ data to credit bureaus is a welcome relief for such companies
The Reserve Bank of India (RBI) through a notification dated 28 January 2015, exempted non-banking financial companies (NBFCs), which are registered as core investment companies (CoreICs) and those not having any customer interface from providing current and historical data on borrowers to credit information companies or credit bureaus (CICs).
It must be noted that this provision (NBFCs to provide data on borrowers) was already redundant for CoreICs. This is because CoreICs mainly invest in assets of group companies rather than lending to borrowers. Hence, the exemption was the need of the hour and it’s good news for CoreICs. The intent of the Credit Information Companies (Regulation) Act, 2005 (Act) was undoubtedly noble, however, for companies such as CoreICs and investment NBFCs, this was an additional burden since the question of having any customer interface does not arise at all. 
In India, Credit Information companies are regulated under Credit Information Companies (Regulation) Act, 2005 (‘Act’), which lays down the registration, management etc. of CICs. The intent of mandating NBFCs to become members of CICs was to ensure a centralized pool of information on customers. 
As per Section 2(f) of the Act “Credit institution” means a banking company and includes— 
(i) a corresponding new bank, the State Bank of India, a subsidiary bank, a co-operative bank, the National Bank and regional rural bank; 
(ii) a non-banking financial company as defined under clause (f) of Section 45-I of the Reserve Bank of India Act, 1934 (2 of 1934); 
(iii) a public financial institution referred to in Section 4-A of the Companies Act, 1956 (1 of 1956); 
(iv) the financial corporation established by a State under Section 3 of the State Financial Corporation Act, 1951 (63 of 1951); 
(v) the housing finance institution referred to in clause (d) of Section 2 of the National Housing Bank Act, 1987 (53 of 1987); 
(vi) the companies engaged in the business of credit cards and other similar cards and companies dealing with distribution of credit in any other manner; (emphasis supplied)
Since NBFCs are covered under the definition of credit institution as is obvious from the definition of ‘credit institution’ above, all NBFCs were required become a member of at least one credit information company as per section 15 of the Act. 
Presently, four CICs have been granted Certificate of Registration by RBI, viz. Credit Information Bureau (India) Ltd, Equifax Credit Information Services Pvt Ltd, Experian Credit Information Company of India Pvt Ltd and CRIF High Mark Credit Information Services Pvt Ltd.
Further, the RBI vide notification dated 15 January 2015  mandated all credit institutions to become members of all CICs which are in existence. Hence, all NBFCs were required to become member of all four CICs. 
Why Was the Exemption Needed?
An NBFC fulfilling the following conditions is a core investment company: 
a. 90% of its net assets are invested in securities or loans/debts in group companies. 
b. 60% of its net assets are in form of equity investment (including convertible instruments convertible within a period of 10 years) in group companies. 
c. The company is not trading in its investments except through block sale for the purpose of dilution or disinvestment. 
d. The company is not carrying on any other financial activities as mentioned in section 45(I) of RBI Act except activities of investment, granting loans and issuing guarantees for its group companies.
(Aman Nijhawan works for Vinod Kothari & Co)


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