sebi:WTM/PS/13/CIS/ERO/JULY/2013
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Facts / Headnote
Held SIL's potato purchase/storage/sale scheme is an unregistered Collective Investment Scheme in contravention of Section 12(1B) SEBI Act and Regulation 3 CIS Regulations; directed SIL not to collect money or launch CIS, to wind up existing CIS and refund investors with returns within three months, restrained SIL from securities market till compliance, with promoters/directors to be similarly restrained on failure, plus contingent prosecution/adjudication/police/MCA references.
Provisions invoked
- s. 11A
- s. 11
- s. 24
- s. 19
- s. 12
Regulations
- Reg. 73
- Reg. 65
- Reg. 3
- Reg. 199
Parties
- Sumangal Industries Limited
- Mr. Subrata Adhikary
- Mr. Sajal Bhattacharya
- Mr. Kaushik Roy
- Mr. Indushekhar Chakraboty
- Mr. Soumen Ghosh
- Ms. Madumita Adhikary
- Mr. Somnath Adhikary
- Mr. Gopal Chandra Adhikary
- Mr. Sarbani Adhikary
- Mr. Astick Kumar Roy
- Ms. Debika Adhikary
Holding
SIL's potato purchase, storage and sale arrangement is a Collective Investment Scheme under Section 11AA SEBI Act operated without registration in violation of Section 12(1B) and Regulation 3 CIS Regulations. SIL was directed to stop mobilization, wind up schemes and refund investors with returns within three months and was restrained from the securities market till compliance.
Full text
Page 2 of 13 2. SIL vide its letter dated October 20, 2012 replied to the letter of SEBI and submitted that it is not engaged in the activities of mobilization of funds from public and is doing the trading business. It has a valid trade license and is dealing with agricultural and non- agricultural product inside and out of India. However, SIL failed to provide the details/ documents as asked for by SEBI.
Page 3 of 13 6. On the date fixed for the personal hearing, Mr. Subrata Adhikary, Managing Director of SIL, Mr. Sajal Bhattacharya, Director of SIL and Mr. Venkateswaran, an employee of SIL appeared and made submissions. SIL also filed its written submissions dated June 27, 2013 along with the documents relied upon, which were duly taken on record. Further, during the course of hearing, SEBI asked SIL to submit the copies of 25-50 purchase orders which were stated as submitted by the customers. SIL sought three days’ time, which was duly granted. SIL vide its letter dated June 28, 2013, submitted the samples of 50 purchase order, samples of cold storage receipts and balance sheet for the year 2012-2013.
Page 4 of 13 g. SIL while referring to the CIS Regulations has stated that it does not fulfill the condition of CIS as the CIS Management Company is required to launch only close ended schemes and the duration of the schemes shall not be of less than three calendar years. SIL’s business had no close ended period and anyone could purchase and sell potatoes at any point of time. Further, the maximum duration between the purchase and sales of the potato was not more than 15 months.
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Source: SecMarx — sebi:WTM/PS/13/CIS/ERO/JULY/2013. 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.