Mathura-based Kalpataru group's two companies were barred by SEBI for raising money illegally from investors. Yet, the group has floated another similarly named company and is collecting money under its real estate scheme
Uttar Pradesh-based Kalptaru group is again collecting money from investors through its real estate schemes using a new company. Last year, market regulator Securities and Exchange Board of India (SEBI), barred KBCL India Ltd, a unit of Kalpataru group, and its directors from raising money and directed them not to launch any new scheme. However, according to sources, the group is collecting money using its another unit,
Kalptaru Buildtech Corp Ltd (KBCL) in Uttar Pradesh and Rajasthan by promising huge returns upon investing in a plot of land.
“The protection of the interest of the investors is the first and foremost mandate and therefore steps have been taken to ensure that the Kalptaru group does not collect further funds under its scheme. However, the mastermind of Kalptaru Group is intentionally switching its illegal collective investment scheme (CIS) business under KBCL India to Kalptaru Buildtech Corp (CIN: U45400UP2009PLC038016) or KBCL. They are using the similarity between the names of KBCL India (which is barred by SEBI) and KBCL and collecting money by creating confusion,” the sources pointed out.
The sources said, “Kalptaru Buildtech Corp is inviting contributions to invest in equated monthly instalments (EMIs) in land. The investors are being given an option to withdraw from the delivery of land and take their money with promised returns. In other words, this company is conducting CIS activities under the garb of real estate operations. This company raises deposits in the disguise of advances for unknown real estate projects. The weirdest fact in this case is, the investors are not even aware of the location of the plot and are not sure whether the land has been purchased or not by the company. As land is a physical asset, there should always be clear holding to prove ownership. A person can only own the land once physical possession is taken. Promoters of KBCL are allegedly siphoning the monies collected and are using a sales network comprising local persons who are offered hefty commissions. The agents of these companies recruit more agents and they in turn recruit more agents.”
Kalptaru group, however, had denied running a CIS without taking permission from SEBI. It states that KBCL India is a public limited, listed company and the group is engaged in construction, development and management of agricultural land, townships, shopping malls and group housing society in various states in India and did not run any collective investment scheme.
Last year, SEBI in its order barring KBCL India and the company directors, Rakesh Kumar, Vishvnath Pratap Singh and Shashi Kant Mishra, had said, “KBCL is prima facie engaged in fund mobilizing activity from the public, by floating/ sponsoring/ launching 'collective investment scheme' 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.”
“I find that the instant 'Scheme' offered by KBCL under the guise of 'business of real estate/ sale-purchase' is nothing but a smokescreen for its fund mobilizing activity. I find that such fund mobilizing activity falls within the ambit of 'collective investment scheme' as defined under Section 11AA of the SEBI Act and the same has been carried on by KBCL without due registration from SEBI. In this context, I note that protecting the interests of investors is the first and foremost mandate for SEBI and therefore, steps have to be taken in the instant matter to ensure only legitimate investment activities are carried on by KBCL and no investors are defrauded,” S Raman, Whole Time Member of SEBI said in his order issued on 12 September 2013.
SEBI had also asked KBCL India and its directors not to dispose of properties and assets acquired through its CIS and also not to divert the funds raised from such schemes. The company has also been restrained from launching any new schemes.
However, this was not the first time, the Mathura-based Kalpataru group faced the wrath of the market regulator. Earlier in 2003, SEBI debarred Kalptaru Agro India Ltd (KAIL) and its concerned officials from operating in the capital market for five years for failing to return money to investors as per regulators orders.
Few months ago, the Bombay High Court restrained Kalptaru Buildtech Corporation from directly or indirectly using the name or mark 'Kalptaru' or any other deceptively similar mark as part of its corporate or trading name. Mumbai-based real estate company, Kalpataru Properties Pvt Ltd had dragged Kalptaru Buildtech Corp to court for violating its intellectual property rights over its trademark and name. “Kalpataru Properties came across the other company using the name Kalptaru Buildtech Cor Ltd in 2013 and asked it to cease using the name. But since the defendant continued with the use of the same name, the matter landed in court and the court is satisfied that ...the mark is solely and exclusively associated with the Plaintiff (Kalpataru Properties),'' the HC had said in its order.