order against m/s sai praksah properties development ltd. and its directors/promoters

8/10/2019 Order against M/s Sai Praksah Properties Development Ltd. and its directors/promoters

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WTM/SR/CIS/WRO/ 119 / 12/2014

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA, MUMBAICORAM: S. RAMAN, WHOLE TIME MEMBER

ORDER

Dir!"i#$% &$'r S!"i#$% 11(1), 11B *$' 11(4) #+ " S!&ri"i% *$' E-!*$ B#*r' #+

I$'i* A!", 1992 r*' i" R&*"i#$% #+ " S!&ri"i% *$' E-!*$ B#*r' #+ I$'i*

(C#!"i3 I$3%"$" S!%) R&*"i#$%, 1999 **i$%" M/% S*i 5r*6*% 5r#7r"i%

D3#7$" L"'. (5AN8 AANCS1R) *$' i"% 7r##"r/ 'ir!"#r%, Mr. 5&%7$'r*

Si$ B* (5AN8AF;5B024B), M%. 5&%7*$


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d.

o'ies of a''%ications forms that are re2uired to !e su!mitted ! investors to

'artici'ate in the schemes.

e.

Sam'%e co'ies of the agreement %etter/contract re2uired to !e entered into !

investors under the schemes.

f.

Sam'%e co'ies of the registration %etter and a%%otment %etter issued to the investorsho su!scri!ed to the schemes.

g.

etai%s of the scheme ise amount mo!i%i&ed ! the com'an ti%% date a%ong ith the

num!er of investors under the schemes.

h.

ame 3 address of a%% investors ho invested their mones ith the com'an.

i.

+ist of the a%% !ranches ith their address.

4. ertified co' of audited financia% statement for the 56 "##781#, "#1#811, "#1181"

and "#1"81$.

k.

o' of detai%ed tria% !a%ance from 'ri% "#1$ ti%% date.%. o' of Income 9ax Return fi%ed ! the com'an for 56 "##78"#1# ti%% date.

m.

etai%s of an other simi%ar scheme(s), if an, f%oated ! the com'an or the

grou'/associates om'an or com'anies in hich the com'an:s directors are a%so

directors.

n.

;hether the com'an/ directors have !een charged ! *o%ice of an State herein it

o'erates in res'ect of com'%aints made ! investors of the com'an. If es, the co'

of a%% 5IRs, a%% charge8sheets fi%ed ! 'o%ice and a%% court order(s) against the

com'an/ directors.

@.1 9he co'ies of the aforesaid %etter ere a%so forarded to the directors of Sai *rakash

*ro'erties. 9he %etters sent to the com'an at its registered office ere returned

unde%ivered ! 'osta% authorities. 9hough the %etters sent to the directors ere not

returned !ack, there as no res'onse to SEBI:s %etters from them.

4.


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9he e!site refers to various com'anies of the grou'. It a%so mentions that their head

office is at 8100, Sector D$, oida, Cttar *radesh.

7. ccording%, a %etter dated 5e!ruar "?, "#1?, enc%osing a co' of SEBI:s ear%ier %etter dated

ecem!er 10, "#1$ and a co' of the a''%ication form for the !oint "entureship S#heme,,

(received a%ong ith the com'%aints forarded ! RBI mentioned in *aragra'h o. ?.1 a!ove)

a%%eged to have !een issued ! Sai *rakash *ro'erties as sent to the ead months and -0 for >? months.

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9.1

SEBI, via e8mai% dated =u% "#, "#1? re2uested RBI to 'rovide further detai%s/materia% in

res'ect of the said com'an vi$9hind 5inance +td. In the meantime, SEBI examined the

- e!site. s 'er the detai%s of the - e!site, the directors of 9hind 5inance +td.

are -r. *ush'endra Singh Baghe%, -r. Shahendra Singh Baghe% and -r. Bachan Singh

Hunta%. 9his indicates that 9hind 5inance +td. is a grou' com'an of Sai *rakash*ro'erties. 5urther, it as o!served that the name of 9hind 5inance +td., hich as

ear%ier a''earing in RBI e!site as a com'an 'ermitted to acce't de'osit, is 'resent%, no

%onger a''earing in the %ist as on =une 1, "#1?. c%arification as sought from RBI on

the same vide e8mai% dated =u% "#, "#1?. In res'onse, RBI informed that registration of

9hind 5inance +td. has since !een cance%%ed.

10.In the meanhi%e, SEBI received another com'%aint dated -a 1, "#1? against Sai *rakash

Arou' of om'anies. 9he com'%ainant 'rovided the fo%%oing information a!out Sai

*rakash grou' of com'aniesF8

(a)

9o com'anies of Sai *rakash *ro'erties are raising mone from 'u!%ic vi$Sai *rakash

*ro'erties eve%o'ment +td. and Sai *rakash


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(i)

9he commission structure offered ! the com'an is as !e%oF8

*%an R 5 -B*

C'front ommission " 1#81 0

-onth% Joucher "# 1" - 1# 0.#

*romotive Incentive 1# .#

S'ecia% Bonan&a 1# .#

(ii)

etai%s of 1"" agents/ fie%d staff of Sai *rakash *ro'erties,

(iii)

9he com'%ainant 'rovided a %ist of "1,$?" 'ersons (in soft co') c%aimed to !e

investors of the com'an as on -arch $1, "#1#. It is noted from the %ist that a%% the

investors exce't one, have invested during the end of "##7 and !eginning of "#1#.

(iv)

9he com'%ainant 'rovided co'ies of some circu%ars of "#1$ issued ! Sai *rakash

5inancia% dvisor Services *. +td., hich shos the detai%s of the commission/

incentives, offered to its agents for achieving their targets as 'rescri!ed ! the

om'an.

(v)

9he com'%ainant a%so 'rovided co' of some 'ages of an unsigned agreement on a

stam' 'a'er executed !eteen Sai *rakash *ro'erties and Sai *rakash 5inancia%

dvisor Services *. +td.

11. SEBI ,vide %etter dated =une #$, "#1? advised Sai *rakash *ro'erties to furnish a%% the desired

information sought ! SEBI. fter consistent fo%%o8u', the com'an vide %etter dated =u%

#7, "#1? and =u% 1?, "#1? gave their re'%ies. +ater, further c%arifications ere sought from

the com'an vide %etter dated =u% "1, "#1?. 9he same ere 'rovided ! the com'an vide

%etter dated ugust #", "#1?. 5o%%oing are the information/documents furnished ! Sai

*rakash *ro'erties, vide their aforesaid %ettersF

(a)

o' of the -o of the com'an

(!) +ro#hure containing the schemes of the com'an. ,



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(c)

sam'%e co' of a !ook%et containing Customer Appli#ation &orm,, %Agreement for !oint

"enture Asso#iation, and %Allo#ation Letter,

(d)

Sam'%e co' of Certifi#ate, issued ! the com'an to the investors.

(e)

Scheme8ise amount mo!i%i&ed ! the com'an ti%% date,

(f)

C-containing the %ist of investors(g)

+ist of their 7> !ranches of the com'an o'erating across India

(h)

o' of an 5IR o.>? (0) of "#1$ fi%ed against Sai *rakash grou' on -a 1, "#1$ in

*o%ice Station ua'ada,


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o. D#, arika ham, =ai% Road, Bho'a%, -adha *radesh8?D"#$#. 9he 'aid u'

ca'ita% of the com'an is `,##,###. 9he detai%s of the directors of the com'an areF8

Sri*N#.

N* #+ "Dir!"#r%

A''r%% D*" #+ !*%i$ *%'ir!"#r

1. -r. Ranva4a *rata'Singh Baghe%

Semar'akha *ondi, Beohari, Shahdo%,?>?00?, -adha *radesh

*resent irector (from-arch 1, "#11 onards)

2. -r. -ragendra SinghBaghe%

1#$, Semar'akha, gram. Reusa 9ehsi%,Beohari Shahdo%, ?>?00?, -adha *radesh


@. -r. heerendraHrishan *rata'

1#$, Semar'akha Redasa, Baahari,Shahdo%, ?>?00, -adha *radesh.


4. -r. *ushendra SinghBaghe%

B 8D#, Sector8??, *.S. Sector $7,9ehsi%adri, gautam Budh agar, oida,"#1$#1 (C.*.)

from ecem!er #$, "##7to =une 1?, "#11

. -rs. *ush'an4a%iSingh Baghe%

B 8D#, Sector8??, *.S. Sector $7,9ehsi%adri, gautam Budh agar, oida,"#1$#1 (C.*.)

from ecem!er #$, "##7to 'ri% #", "#11

. -r. Sandee' Shankar "?, -ahadev nagar, Ramnagar Extension,S Road Soda%a, =ai'ur8$#"#17

from ecem!er #$, "##7to 'ri% "", "#1#

. -r. Shahendra SinghBaghe%

Semara'akha, *ost8*odika%a, 9ehsi%8Beohari, Shahdo%8?>?00? (-.*.)

from 'ri% 1, "#1# to-arch ", "#11

ii.

-r. *ush'endra Singh Baghe% and -rs. *ush'an4a%i Singh Baghe% (detai%s of hom ere

co%%ected from the - e!site), ho%d the entire shareho%ding of Sai *rakash

*ro'erties.

iii. s 'er the memorandum of association, the main o!4ect of the com'an is to carr on,

the !usiness of deve%o'ing residentia% 3 commercia% 'ro'erties and the !usiness as

'romoters, !ui%ders, deve%o'ers, construction and maintenance.

i3.

Sai *rakash *ro'erties co%%ects funds from the 'u!%ic through its various 'ament '%ans

for their !oint "enturship S#heme,. 9he funds are co%%ected from the 'u!%ic through its

various !ranches o'erating across India. s 'er the detai%s furnished ! the com'an, it

has 7> !ranches across India.

3.

s 'er the sam'%e co' of the !rochure furnished ! the om'an, the *ament *%ans

offered ! Sai *rakash *ro'erties ere,

I$%"*004$" 70*$%( -1 e for DD months/ L ears@ -" e for 0>

months/ D L ears@ - for 0" months/ #D ears@ -80 for >? months/ 0

ears@ -? for "?# months/ "# ears)



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to invest or other wise employ the money belonging or entrusted to #ompany in movable or

immovable properties or in se#urities or in su#h other manner as may be deemed e


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business of the #ompany and the 2oint/"enture shall have no ne


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43hat M/s.HHHHH#ompany* in pursuant to the !oint "entureship agreement dated HHHHHe 6

9undred 7 alongwith the one installment of subs#ription 3he original date of #ommen#ement in this

#ase will be #hanged and advan#e to later date* so shall the amount already paid may re#over the period



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from the #hanged date to the date of a#tual revival of the 2oint venture in keeping with mode and terms

of the said 2oint venture as spe#ial #are at the dis#retion of Management

@

3he management of Company reserve the right to dis#ontinue /#hange/amend/modify or alter any of

the rules /regulations and plans at any time at its sole dis#retion with or without any noti#e

F

0n #ase of any dispute* the de#ision of Chairman of Company or any other person6s7 nominated by him*

shall be final and shall have legal binding on !oint "enture* who shall have no ob2e#tion to the

appointment of any offi#ers of %Company as the sole arbitrators, &or any #onseBuent legal remedy 6ies7

only #ompetent #ivil #ourts as Dwalior shall have 2urisdi#tion to the e,##0 $,D>,1,"7?" -1 1 7#,###$ -" >,D71 1?,?#,0D,D$#? -" e 1 "0,### -$ ">" D,?,7D -? $ $,>0,1>>0 -? " 7#,###> - 1 ,>##7 *M 1 11,">,>?#1# *$ $ D,D#,###11 *$8 D ,>,###1" *$ " 1,#,###1$ S1 ?1,7"D #,7>,#7,"#1? S" 7,$1? 1,?1,11,###1 S$ 000 1,"$,7D,###1D S? 7 17,??,###

9140 ,29,,912

-ii.

It is o!served from the soft co' () of the %ist of investors furnished ! Sai *rakash

*ro'erties, that the com'an has co%%ected an amount of ` >D."7 r. from D7,1?#

investors as booking amount,ti%% ovem!er $#, "#11.

-iii.

Sai *rakash *ro'erties funds informed that funds are !eing co%%ected through its on

em'%oees/ officers and has 'aid nomina% commission of `".0? %acs over a 'eriod of "

financia% ears "#1"81$ and "#1$81? for co%%ecting funds/de'osits from investors. It as



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a%so informed that the com'an co%%ected the funds/de'osits in gross and 'aid

commission se'arate%. 9he ear8ise detai%s of commission 'aid from "##7 to "#1?F8

*r N&r #+ 7r%#$% "## !#i%%i#$ 7*i'

A#&$" (`)

"##781# ?D> $",0>,17""#1#811 1$,#?# D,7#,>#,1"#1181" 1 $?,$,#0$"#1"81$ not se'arate% 'rovided not se'arate% 'rovided"#1$81? ?> ",0?,$#

-i3.

'erusa% of the !a%ance sheets 'rovided ! the com'an shos the fund mo!i%i&ation as

underF8

A% #$ M*r!

@1, 2010

A% #$ M*r!

@1, 2011

A% #$ M*r! @1,

2012

A% #$ M*r! @1,

201@

A% #$ M*r!

@1, 2014

(7r#3i%i#$*)

dvance received D,1?,#1,""#.?> ?,>,07,">0 0,$7,#",?>$.D0 07,D,07,1#0.D0 >?,0D,>#,1"

+and (inventor)

+and (5ixed ssets)

#

#

$$>D$?$

"#$1?###

$,$>,D,$?$

,##,7",7$

$,$>,D,$?$

,00,D,7$

$,$>,D,$?$

,00,D,7$

-3. Sai *rakash *ro'erties, in res'onse to s'ecific 2uer ! SEBI, in res'ect of an agreement

ith its grou' com'anies, informed that the have not entered into an o'erationa%

agreement either ith Sai *rakash 5inancia% dvisor Services *. +td. or ith 9hind

5inance +td. It is a%so noted that the com'an had not 'rovided an s'ecific comments

(sought ! SEBI, vide %etter dated =u% "1, "#1?), in res'ect of the circu%ars a%%eged to

have !een issued ! Sai *rakash 5inancia% dvisor Services *. +td (as 'rovided !

com'%ainant).

-3i.

It is a%so o!served from the materia% furnished ! Sai *rakash *ro'erties that an 5IR

o.>? (0) of "#1$ had !een fi%ed against Sai *rakash grou' on -a 1, "#1$ in *o%ice

Station ua'ada,


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Section 11, hich 'rovides for the conditions to determine hether a scheme or

arrangement is a .#olle#tive investment s#heme* reads as fo%%osF

%6?7 Any s#heme or arrangement whi#h satisfies the #onditions referred to in subse#tion 6'7 or sub>se#tion

6'A7 shall be a #olle#tive investment s#heme

Provided that any pooling of funds under any s#heme or arrangement* whi#h is not registered with the +oard

or is not #overed under the ese#tion 6@7* involving a #orpus amount of one hundred

Crore rupees or more shall be deemed to be a #olle#tive investment s#heme

6'7 Any s#heme or arrangement made or offered by any person under whi#h*

6i7 the #ontributions* or payments made by the investors* by whatever name #alled* are pooled and utili$ed

solely for the purposes of the s#heme or arrangement=

6ii7 the #ontributions or payments are made to su#h s#heme or arrangement by the investors with a view to

re#eive profits* in#ome* produ#e or property* whether movable or immovable from su#h s#heme or

arrangement=

6iii7 the property* #ontribution or investment forming part of s#heme or arrangement* whether identifiable or

not* is managed on behalf of the investors=

6iv7 the investors do not have day to day #ontrol over the management and operation of the s#heme or

arrangement,

[email protected] the context of the a!ovementioned Section 11 of the SEBI ct, the S#heme,offered

! Sai *rakash *ro'erties is examined as underF

i. T !#$"ri&"i#$%, #r 7*=4$"% 4*' = " i$3%"#r%, = /*"3r $*4 !*00',

*r 7##0' *$' &"i0iJ' %#00= +#r " 7&r7#%% #+ " %!4 #r *rr*$4$".

s noted from the Kbro#hure4, KAppli#ation &orm4, sam'%e KCertifi#ateK, it is c%ear that the

com'an is co%%ecting funds (Kparti#ipation money47 from genera% 'u!%ic toards its K!oint

"entureship S#heme, through various *ament *%ans as detai%ed in *aragra'h o.1".1 (iv)

3(vi) a!ove. 9he amount so co%%ected from the 'u!%ic is treated as a 'artici'ation made !

him to the com'an in the 'artici'ation '%ans of the com'an re'aa!%e to the 2oint



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venture#ustomer,/investor as 'er the terms and conditions of the certificate, Ru%e !ook 3

agreement. It is o!served from the !a%ance sheet of the om'an that funds received

from investors are 'oo%ed together as 0nvestors Advan#e,

9heKAgreement for !oint "enture Asso#iation4 states K...Company is hereby authori$ed to

enter into Agreement to se#ure the payment of money or re#eive money by way of !oint "enture or otherwisein su#h manner as the #ompany may deter mine* and further authori$ed to invest or otherwise employ the

money belonging or otherwise in su#h manner as the #ompany may determine* and further authori$ed to

invest or other wise employ the money belonging or entrusted to #ompany in movable or immovable

properties or in se#urities or in su#h other manner as may be deemed e


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K!oint "entureship S#heme4, offered ! Sai *rakash *ro'erties, it is o!servedthat in case of

the Sing%e Insta%%ment *%an KSF for H( months4* for the KParti#ipation Amount4of `D###/8, the

investor is offered an Ke


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#ompany repayable to the party of the se#ond part as per the terms and #onditions of the #ertifi#ate*

Rule book ; agreement

3he Company will look after the finan#ial side of the parti#ipation plans as well as look after the

administration of the #ompany and its said business and the party of se#ond part NinvestorsOwill

have no ne


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15.In terms of section 1"(1B) of the SEBI ct, Kno person shall sponsor or #ause to be sponsored or #ause

to be #arried on a G#olle#tive investment s#hemeG unless he obtains a #ertifi#ate of registration from the +oard in

a##ordan#e with the regulations, Regu%ation $ of the SEBI (o%%ective Investment Schemes)

Regu%ations, 1777 (hereinafter referred to as KCIS R&*"i#$%K) 'rovides that no 'erson

other than a o%%ective Investment -anagement om'an hich has o!tained a certificateunder the said regu%ations sha%% carr on or s'onsor or %aunch a G#olle#tive investment s#hemeG.

9herefore, a 'erson can %aunch or s'onsor or cause to s'onsor a G#olle#tive investment s#hemeP

on% if it is registered ith SEBI as a o%%ective Investment -anagement om'an.

9herefore, the %aunching/ f%oating/ s'onsoring/causing to s'onsor an G#olle#tive investment

s#hemeG ! an PpersonP ithout o!taining the certificate of registration in terms of the

'rovisions of the IS Regu%ations is in contravention of section 1"(1B) of the SEBI ct and

Regu%ation $ of the IS Regu%ations. In the instant case, since Sai *rakash *ro'erties has

%aunched G#olle#tive investment s#hemeGithout o!taining certificate of registration from SEBI, ithas contravened 'rovisions of Section 1"(1B) of the SEBI ct and Regu%ation $ of the IS

Regu%ations.

16.It is further noted that -r. Ranva4a *rata' Singh Baghe%, -r. -ragendra Singh Baghe% and

-r. heerendra Hrishan *rata' are the 'resent directors of Sai *rakash *ro'erties and -r.

*ushendra Singh Baghe%, -rs. *ush'an4a%i Singh Baghe% -r. Sandee' Shankar and -r.

Shahendra Singh Baghe% are the 'ast directors of the com'an. It is a%so re%evant to note

that the aforesaid 'ast directors vi$ -r. *ushendra Singh Baghe% and -rs. *ush'an4a%i SinghBaghe% ho%d the entire share ho%ding of Sai *rakash *ro'erties. 9he activit of unauthori&ed

mo!i%i&ation of funds ! s'onsoring or causing to !e s'onsored or carring on or causing to

carr on an co%%ective investment scheme ! an 'erson amounts to a fraudu%ent 'ractice in

terms of Regu%ation ?(")(t) of SEBI (*rohi!ition of 5raudu%ent and Cnfair 9rade *ractices

re%ating to securities -arket), "##$. onsidering the fact that no 'rior registration as

o!tained ! Sai *rakash *ro'erties in res'ect of the aforesaid activities in the nature of

co%%ective investment scheme, I am of the vie that Sai *rakash *ro'erties and its aforesaid

directors/'romoters are i%%ega%% mo!i%i&ing funds from the 'u!%ic, hich prima fa#ie amountsto a fraudu%ent 'ractice in terms of Regu%ation ?(") (t) of the SEBI (*rohi!ition of

5raudu%ent and Cnfair 9rade *ractice Re%ating to Securities -arket) Regu%ations, "##$.



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17.9he interests of investors is the first and foremost mandate for SEBI. Cnder the

circumstances, SEBI has to take immediate ste's to 'revent activities of com'anies or

entities defrauding investors and damaging the order% deve%o'ment of the securities market.

In order to ensure that Sai *rakash *ro'erties and its directors/'romoters do not co%%ect

further funds under its schemes and to safeguard the assets/'ro'ert ac2uired ! Sai *rakash*ro'erties and its 'romoters/directors from the funds of the investing 'u!%ic unti% fu%% facts

and materia%s are !rought and fina% decision is taken in the matter, it !ecomes necessar for

SEBI to take urgent 'reventive action ! a of an interim measure.

18.In vie of the a!ove, I, in exercise of the 'oers conferred u'on me under Section 11(1),

11(?) and 11B of the SEBI ct, 177" and Regu%ation D of IS Regu%ations, here! direct

-/s Sai *rakash *ro'erties eve%o'ment +td. (*8 S010>R) and its 'romoters/

directors, -r. *ush'endra Singh Baghe% (*85G*B#D"?B), -s. *ush'an4a%i Singh Baghe%

(*F 5G*B#0-), -r. Ranva4a *rata' Singh Baghe% (*F 99*B>"?), -r.

-ragendra Singh Baghe% (*F BH=*BD$"), -r. heerendra Hrishan *rata' (*F

Q-*B#1D), -r. Sandee' Shankar (*F **S>$D-) and -r. Shahendra Singh

Baghe% (*F99*B>"??-)F

a

not to #olle#t any fresh moneys from investors from its e


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20.9he prima fa#ie o!servations contained in this

order against m/s sai praksah properties development ltd. and its directors/promoters

Documents