Interim Order Against Past Directors of Shri Ram Real Estate and Business Solutions Limited

WTM/SR/SEBI–WRO: ILO/IMD/ 07/01/2016 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA S. RAMAN, WHOLE TIME MEMBER ORDER Under Sections 11, 11(4) and 11B of the Securities and Exchange Board of India Act, 1992, against the past Directors of Shri Ram Real Estate and Business Solution Limited, viz. Mr. Bhuvneshwar Prasad Sahu (DIN: 06405979, Mr. Rajesh Kumar Bhagat (DIN: 02240082), Mr. Vikram Singh (DIN: 02254081), Mr. Man Singh Verma (DIN: 02292062), Mr. Hemant Bhagat (DIN: 02287766) and Mr. Gyan Singh (DIN: 02303319).

1. Securities and Exchange Board of India ("SEBI") vide an interim order-cum-show cause notice bearing no. WTM/SR/CIS/WRO-ILO/47 /03/2015 dated March 17, 2015 ("Interim Order"), passed certain directions as mentioned at paragraph 20 thereof, against Shri Ram Real Estate and Business Solution Limited ("SRREBSL") and its Directors viz., Mr. Sanjay Mewada, Shri Babaloo Prajapati, Shri Gopal Meena, Shri Subhash Deshmukh, Shri Vijay Singh, Shri Sohan Kumar Patel, Shri Nirmal Dhaneliya and Shri Jagdish Meena, for violating the provisions of Section 12(1B) of the SEBI Act, 1992 (“SEBI Act”)read with Regulation 3 of the SEBI (Collective Investment Schemes) Regulations, 1999 ("CIS Regulations") and Regulation 4(2)(t) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market), 2003 ("PFUTP Regulations"), for running collective investment schemes without certificate of registration granted by SEBI. 2. Vide the above Order, it was held that the Schemes offered by SRREBSL were 'collective investment schemes' as defined in Section 11AA of the SEBI Act.

3.1 It has now come to the notice of SEBI that the following persons were also Directors of SRREBSL when the Schemes were offered to members of the public:-

Sr. Name Address DIN Date of Date of Cessation No. Appointment 1 Mr. Ward No. 52, H.No 358, 6405979 Jan 09, 2013 May 03, 2013 Bhuvneshwar Ishwar Nagar, E-8, Prasad Sahu Bharat Nagar, Bhopal, Madhya Pradesh- 462001 Dec 04, 2013 Jan 25, 2014 2 Mr. Rajesh Geeta Bhawan, Moti Baba 2240082 Sept 08, 2008 Dec 05, 2008 Kumar Bhagat Ka Bagicha, MPEB Station Road, Sehore, Madhya Pradesh- 466601 3 Mr. Vikram Village -Mugali, Tehsil- 2254081 Sept 08, 2008 Dec 05, 2008 Singh Ashta, Sehore, Madhya Pradesh, 466116 4 Mr. Man Madhyamik Shala, Mugli, 2292062 Sept 08, 2008 Dec 05, 2008 Singh Verma Tehsil- Ashta, Sehore, Madhya Pradesh, 466116 5 Mr. Hemant Nehru Colony Station 2287766 Sept 08, 2008 Dec 05, 2008 Bhagat Road, Sehore, Madhya Pradesh- 466001 6 Mr. Gyan Village Dhabla Dhir, PO- 2303319 Sept 08, 2008 July 01, 2011 Singh Dhabladhir, Tehsil- Kala Pipal, District- Shajapur, Nandini, MadhyaPradesh- 465337

3.2 In this context, it is noted that – i. In terms of Section 12(1B) of the SEBI Act "no person shall sponsor or cause to be sponsored or cause to be carried on a 'collective investment scheme' unless he obtains a certificate of registration from the Board in accordance with the regulations”. ii. In terms of Regulation 3 of the CIS Regulations “No person other than a Collective Investment Management Company which has obtained a certificate under the Regulations shall carry on or sponsor or launch a collective investment scheme.” iii. In view of the abovementioned provisions, any person who carry on, sponsor or cause to be sponsored and carried on a 'collective investment scheme' or those who mobilize funds illegally by sponsoring or causing to be sponsored or carrying on or causing to be carried on any collective investment scheme are responsible for the violations of the above mentioned provisions. In the instant case past directors having been the directors and persons in charge of the affairs of the company, are equally liable for any non–compliance with the provisions with respect to collective investment schemes.

3.3 Upon a consideration of the aforementioned paragraphs, I am of the prima facie view that the past directors of SRREBSL viz., Mr. Bhuvneshwar Prasad Sahu, Mr. Rajesh Kumar Bhagat, Mr. Vikram Singh, Mr. Man Singh Verma, Mr. Hemant Bhagat, Mr. Gyan Singh, by carrying on ‘collective investment schemes’ through various payment plans camouflaged as real estate schemes without the certificate of registration granted by SEBI, have violated the aforementioned provisions of the SEBI Act, CIS Regulations. 3.4 In addition, it is noted that Regulation 4(2) (t) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003 (“PFUTP Regulations”) came into force with effect from September 06, 2013. The same is reproduced hereunder for reference: 4. Prohibition of manipulative, fraudulent and unfair trade practices “(2) Dealing in securities shall be deemed to be a fraudulent or an unfair trade practice if it involves fraud and may include all or any of the following, namely (t) illegal mobilization of funds by sponsoring or causing to be sponsored or carrying on or causing to be carried on any collective investment scheme by any person."

In view of the abovementioned provision, I am of the prima facie view that Mr. Bhuvneshwar Prasad Sahu, who was director at the relevant period has also violated the said Regulation 4(2) (t) of PFUTP Regulations. 3.5 Protecting the interests of the investors is the first and foremost mandate of SEBI and therefore, SEBI has to take immediate steps to prevent activities, if companies or persons indulge in defrauding the investors and damage the orderly development of the securities market. In order to ensure that the above said past directors do not collect further funds through any new Company or by associating with any company and to safeguard the assets/property acquired by them from the funds of the investing public, it becomes necessary for SEBI to take urgent preventive action. In the light of the above, I find no other alternative but to take recourse to an interim order against the above said directors for preventing them from further carrying on with the fund mobilizing activity by launching 'collective investment scheme', without obtaining registration from SEBI in accordance with law.

4. In view of the alleged violations by the abovementioned past Directors, I, in exercise of the powers conferred upon me under Sections 11, 11(4) and 11B of the SEBI Act, hereby direct that Mr. Bhuvneshwar Prasad Sahu (DIN: 06405979, Mr. Rajesh Kumar Bhagat (DIN: 02240082), Mr. Vikram Singh (DIN: 02254081), Mr. Man Singh Verma (DIN: 02292062), Mr. Hemant Bhagat (DIN: 02287766), Mr. Gyan Singh (DIN: 02303319): i. shall not launch any new scheme or plan or float any new company to raise fresh money for launching CIS schemes; ii. shall not dispose of or alienate any of the properties/assets obtained directly or indirectly through money raised by SRESBL; iii. shall provide full inventory of all their assets and properties; iv. furnish their Permanent Account Number (PAN) to SEBI.

5. The above directions shall take effect immediately and shall be in force until further orders.

6. The past Directors of SRREBSL viz., Mr. Rajesh Kumar Bhagat, Mr. Vikram Singh, Mr. Man Singh Verma, Mr. Hemant Bhagat, Mr. Gyan Singh, are advised to show cause as to why suitable directions/prohibitions under Sections 11(1), 11(4) and 11B of the SEBI Act and CIS Regulations, including directions in terms of Regulations 65 and 73 of the CIS Regulations should not be issued against them.

7. Mr. Bhuvneshwar Prasad Sahu is advised to show cause as to why suitable directions/prohibitions under Sections 11(1), 11(4) and 11B of the SEBI Act, CIS Regulations and PFUTP Regulations should not be issued against him.

8. The abovementioned past Directors of SRREBSL, may, within 21 days from the date of receipt of this Order, file their reply, if any, to this Order and may also indicate whether they desire to avail themselves of an opportunity of personal hearing on a date and time to be fixed on a specific request made in that regard.

9. This Order shall be read in conjunction with the Interim Order dated March 17, 2015 referred to paragraph 1 of this order. The copy of the said interim order dated March 17, 2015 is enclosed with this Order.

Place: Mumbai S. RAMAN Date: January 14, 2016 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA