sebi:SBM-ASR/AO/EAD-3/27-28/2016

SEBI · SEBI · 2013-07-17 · Suresh B Menon, Adjudicating Officer

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Facts / Headnote

Penalty of Rs. 1,00,00,000 each imposed on Sai Prasad Properties Limited and Sai Prasad Foods Limited for failure to comply with Interim Orders dated July 17, 2013

Provisions invoked

• s. 11
• s. 15
• s. 11(1)
• s. 15H
• s. 15J

Regulations

• Reg. 71
• Reg. 73
• Reg. 65
• Reg. 73(6)

Parties

• Sai Prasad Properties Limited
• Sai Prasad Foods Limited

Holding

Sai Prasad Properties Limited and Sai Prasad Foods Limited violated the directions in SEBI Interim Orders dated July 17, 2013 by mobilizing funds after the orders and are liable for penalty under Section 15HB of the SEBI Act, with Rs. 1 crore penalty imposed on each.

Full text

Page 2 of 18 investors under the existing schemes and to not launch any new schemes or plans. 2. Subsequently, during the first week of December, 2013, SEBI received a complaint from Mr Joginder Tuli, inter alia, alleging that the Noticees continued to mobilize funds from the public despite the directions issued to them by SEBI vide Interim Order dated July 17, 2013. The complainant had also enclosed photocopy of the receipts issued by the Noticees to some of their investors in support of his allegation. Accordingly, an inspection of the books of accounts, other records and documents of the Noticees were carried out by SEBI on January 13, 2014. It was observed by SEBI during the inspection that the Noticees continued to mobilize money from the public even after the receipt of the Interim Order. It was therefore alleged that the Noticees had contravened the directions issued to them by SEBI vide

Page 3 of 18 not be initiated against the Noticees and penalty, if any, be not imposed on them under the provisions of Section 15HB of the SEBI Act for the alleged violation by the Noticees of the non-compliance of the directions issued to them by SEBI vide Interim Orders dated July 17, 2013. It was alleged that the Noticees continued to mobilize / collect money from the investors in respect of their existing schemes and also mobilized money from new investors, which resulted in the violation of the directions issued to them by SEBI vide Interim Orders dated July 17, 2013. It was alleged that the inspection of the books and records of the Noticees by SEBI had revealed that Noticees continued to mobilize money from the investors even after the receipt of the Interim Order. A copy of the inspection report was also enclosed along with the SCN issued to the Noticees. It was therefore alleged that Noticees were liable for penalty under the provisions of Section 15HB of the SEBI Act.

Page 4 of 18 of both the parties. We further state that as per the JV Agreements, both the parties; the company and the participants, had obligations to perform their part of the contractual obligations in a time bound manner. e. We state that during the period from 12th June 2008 to 17th July 2013, we have refunded a sum of Rs. 66,34,19,544/- to 39,192 participants out of the above referred 25,03,172 participants and complied with our part of the obligation as JV partners. f. We state that on 17th July 2013, a total of 24,63,980 JV Agreements were in existence under 2 categories, viz. (i) JV Agreements where the participants have paid money either as one-time payment and no amount was due and payable by them, and (ii) agreements where participants have made partial payments and remaining portion was due and payable to complete the JV obligations. g. We state that after the order dated 17th July 2013, we have neither entered into any new JV Agreements with any participant under any of the payment category nor we have floated any new JV scheme or any other scheme. It is therefore clear that we have complied with the directions given by the Ld. WTM as interim measure. h. We state that as on the date of the order, i.e. 17th July 2013, 20,54,222 JV Agreements were pending where the participants have opted for payment under the following options and to complete the JV Agreements, they had an obligation to make the payment for the balance amount to complete the terms and agreement

Source: SecMarx — sebi:SBM-ASR/AO/EAD-3/27-28/2016. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.