sebi:WTM/PS/51/IMD-CIS/SRO-HLO/SEPT/2015

SEBI · SEBI · 2013-05-16 · Prashant Saran, Whole Time Member

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Facts / Headnote

Directions issued: noticees restrained from collecting money/launching CIS, directed to wind up existing CIS and refund investors within three months, restrained from alienating assets, restrained from accessing securities market for 4 years (and beyond until full refund), with further consequences of criminal/civil references, winding-up reference to MCA, and attachment/recovery proceedings in case of non-compliance.

Provisions invoked

• s. 11A
• s. 24
• s. 19
• s. 11(1)
• s. 12
• s. 11(2)
• s. 11A(2)
• s. 2(1)

Regulations

• Reg. 65
• Reg. 3
• Reg. 4(2)(t)

Holding

The Company's schemes, though marketed as real estate transactions, constitute a Collective Investment Scheme under section 11AA of the SEBI Act, and by operating them without registration the Company and its directors contravened section 12(1B) of the SEBI Act, Regulation 3 of the CIS Regulations and Regulation 4(2)(t) of the PFUTP Regulations. Directions were issued requiring winding up of the schemes, refund of investor monies with returns, market restraint for four years, and asset non-alienation, with escalated consequences for non-compliance.

Full text

Page 2 of 22 “22. In view of above, I, in exercise of powers conferred upon me under Sections 11(1), 11(4) and 11B of the SEBI Act read with CIS Regulations and PFUTP Regulations, hereby direct Agri Gold Farm Estates India Private Limited (CIN: U45309AP2001PLC38237) and its Directors viz., Mr. Venkata Rama Rao Avva (DIN: 00099695), Mr. Avva Venkata Seshu Narayana Rao (DIN: 00101843), Mr. Avva Hema Sundara Vara Prasad (DIN: 00101889), Mr. Savadam Srinivas(DIN: 00316971), Mr. Moganti Bhanuji Rao (DIN: 00430884) and Mr. Emmadi Sada Siva Vara Prasad Rao (DIN: 00324611): • not to collect any fresh money from investors under its existing schemes; • not to launch any new schemes or plans or float any new companies to raise fresh moneys; • to immediately submit the full inventory of the assets including land obtained through money raised by AGFEIPL; • not to dispose of or alienate any of the properties/assets obtained directly or indirectly through money raised by AGFEIPL; • not to divert any funds raised from public at large which are kept in bank account(s) and/or in the custody of AGFEIPL; • to furnish all the information/details sought by SEBI vide letters dated May 16, 2013 and August 14, 2013 within 15 days from the date of receipt of this order, including, i. Details of amount mobilized and refunded till date, ii. Scheme wise list of investors and their contact numbers and addresses, iii. Details of commission paid on amounts mobilised above, iv. Details of agents along with t

Page 3 of 22 (a) In view of the interim directions, several of its real estate projects which included construction activities came to a halt. (b) During the past three years, there were several Police and other inquiries with respect to its business activities. (c) Based on a complaint for dishonor of cheque, the Police registered FIR against the Company and its directors for violations of RBI Act, 1934, Prize Chits and Money Circulation Scheme (Banning) Act, 1978, the APPDFE Act and the Indian Penal Code and raids were conducted in the residential premises of the some of its directors. These raids, search and seizure operations continued for more than a week. Police had collected information pertaining to the entire Agri Gold group and the information of customers and agents of the entire group were directly downloaded by the Police from the computer systems of the Company. (d) The Police action and media reports created panic amongst the customers and employees working in the real estate companies of the group, which hampered the day to day activities of the Company. (e) The Income Tax Department also conducted search and seizure operations in its Head Office and Branch offices and seized vital documents including Original title deeds of the entire group and several computers used for day to day operations. (f) The Registration Department was also instructed by the Police Department of West Godavari and Nellore District not to deal with the properties of the group. Banks w

Page 4 of 22 o Relax the conditions to allow the Company to complete the on-going registration of properties to its customers o Allow it to carry out the business activities other than those specifically opined as CIS. o Allow it to operate bank accounts to avoid inconvenience to customers. o Permit the company to file reply after receipt of all information / material. o Grant personal hearing.

Source: SecMarx — sebi:WTM/PS/51/IMD-CIS/SRO-HLO/SEPT/2015. 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.