sebi:WTM/PS/57/CIS/NRO/DEC/2014
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Facts / Headnote
MVL Limited and its directors held to be operating an unregistered Collective Investment Scheme; directed to wind up the schemes, refund investor monies with returns within three months, submit inventory of assets, refrain from alienating assets, and restrained from accessing the securities market for four years; SEBI may examine initiating proceedings under Sections 11(4) and 11B of the SEBI Act read with Regulation 65(e) of the CIS Regulations and Chapter VI A of the SEBI Act
Provisions invoked
- s. 11A
- s. 11
- s. 19
- s. 12
Regulations
- Reg. 65
- Reg. 3
- Reg. 199
- Reg. 65(e)
- Reg. 4(2)(t)
Parties
- MVL Limited
- Mr. Prem Adip Rishi
- Mr. Praveen Kumar
- Mr. Rakesh Gupta
- Mr. Vinod Malik
- Mr. Vinod Kumar Khurana
- Mr. Vijay Kumar Sood
- Ms. Kalpana Gupta
Holding
MVL Limited and its directors were found to be engaged in fund mobilising activity from the public by floating/sponsoring/launching an unregistered Collective Investment Scheme as defined in Section 11AA of the SEBI Act, 1992, in contravention of Section 12(1B) of the SEBI Act read with Regulation 3 of the CIS Regulations. The IBC project's assured return and buy back schemes satisfy all four conditions of Section 11AA(2) and are therefore a CIS.
Full text
Page 2 of 23 return scheme" and "buy back scheme", details regarding money collected from the buyers (investors), the purpose of utilization of money, number of buyers and amount collected in each such plan or scheme, details of land purchased by MVL for the said project(s), etc. from MVL. However, MVL failed to provide the details/ documents sought for by SEBI.
Page 3 of 23 January 23, 2014. On the date fixed for personal hearing, Mr. Sushil Aggarwal (V.P. (Legal), MVL) and Mr. Kapil Kher (Legal Consultant of MVL) appeared before me along with Mr. R.S. Loona and Mr. Ankur Loona from Alliance Corporate Lawyers and made submissions. They also filed certain documents like recent photographs of the project, 'list of clients/ investors', mutation record of land, loan documents of banks, etc. During the course of hearing, MVL and its directors were asked to submit the documents such as floor plans, etc. of the project to mark the units allotted to the clients w.r.t. IT/ Cyber space no./ unit number. MVL was also asked to submit the complete details/ documents in respect of the clients mentioned at serial numbers 118, 119 (instances where there is no buy back agreement) and 156, 157 (instances where there are buy back agreements) of the 'list of clients/ investors' as submitted by it, during the course of personal hearing. MVL and its directors were granted fifteen (15) days' time to submit the details/ documents. MVL vide its letter dated February 18, 2014, inter alia submitted the details/ documents (i.e. copies of the application form and assured return agreement) for client no. 156 and 157 (instances where there are buy back agreements) and floor plans. It is noted that MVL along with this letter has not submitted any documents for the clients no. 118 and 119 (instances where there is no buy back agreement).
Page 4 of 23 space allotted to him. On payment, allotment letter/ buyer's agreement is issued to the intending purchaser. It has been said that the buyer's agreement provides for the allotment of the area, location and number of IT/cyber space which are tentative as the building plans approved by the competent authorities are subject to change depending on additional needs of the project. The right, title and interest in the premises will be transferred on execution of the sale deed in favour of the buyer after receipt of occupation certificate by MVL and on receipt of full price and other dues/ charges from the allottee. c. It has sold IT/ cyber spaces with different sizes to 232 buyers at an aggregate consideration of 54,67,39,100 under assured return plan. There are about 17 allottees who have invested under construction link installment scheme, without any assured return obligation on the part of MVL, for an aggregate amount of 11,25,98,825. d. For the purpose of construction of IBC Project, MVL has availed financial assistance aggregating to 128 crore from Canara Bank and UCO Bank. The banks have determined the project cost as 216 crore out of which the cost of the land was determined as 32 crore which was acquired by MVL in the year 2008. e. The allottees of IT/ cyber space are at all times entitled to transfer their allotment to any persons as they may intend to do. Further, the option to surrender the unit allotted to the investors and receiving their money back
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Source: SecMarx — sebi:WTM/PS/57/CIS/NRO/DEC/2014. 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.