Interim Order in the matter Garima Real Estate & Allied Limited

WTM/SR /CIS-ILO/WRO/ 89 /11/2014 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: S. RAMAN, WHOLE TIME MEMBER ORDER Under Sections 11(1), 11(4) and 11B of the Securities and Exchange Board of India Act, 1992 read with Regulations 65 of the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999 in the matter of Garima Real Estate & Allied Limited (PAN-AADCG0853B) and its Directors viz., Mr. Banwari Lal Kushwah (PAN-AAGPF1976L), Mr. Balkishan Kushwah (PAN- AVQPK4360A), Mr. Shivram Kushwah (DIN: 02338542), Mr. Banabarilal Lodhi (DIN: 01759136), Mr. Bijendra Pal Singh (DIN: 01781312) and Mr. Jitendra Kumar (DIN: 06719377).

1. Securities and Exchange Board of India ("SEBI") received an order dated July 13, 2012, passed by the Hon‟ble High Court of Madhya Pradesh (Gwalior bench), in the matter of Dharmvir Singh and Another Vs. Union of India & Others (Writ Petition No. 3332 of 2010) which was forwarded by the Department of Financial Services, Ministry of Finance, Govt. of India, vide their letter dated September 21, 2012. The Petitioner therein viz., Dharmvir Singh had filed a Public Interest Litigation seeking order of enquiry against various financial companies including Garima Real Estate & Allied Limited ("Garima"). The petitioner had alleged that thousands of residents of State of Madhya Pradesh have been cheated by various companies/finance companies under the garb of various schemes, inducing investors/public to make deposits promising higher return of interest ranging from 15-20%. The Hon'ble Court directed that copy of the Order dated July 13, 2012 shall be forwarded to the various authorities including SEBI to take appropriate action in accordance with law. 2. As a matter of preliminary enquiry into whether or not Garima was carrying on activities of 'collective investment scheme' in terms of Section 11 AA of the SEBI Act, 1992 ("SEBI Act"), SEBI vide letter dated November 22, 2012, sought the following information from Garima in relation to its business activity, viz.:

i. Memorandum and Articles of Association (" MoA" and "AoA") of the company as filed with the Registrar of Companies, ii. Details of the past and present directors of the company. Details should contain name, address, PAN and contact details (Email/fax/contact no) of the directors, iii. Brochures/offer document pertaining to the schemes/arrangements, iv. Copies of application forms that are required to be submitted by investors / applicant to participate in Garima's schemes, v. Sample copies of the registration letter/ allotment letter or any other document issued to the investors who subscribe to Garima's schemes, vi. Sample copies of the agreement letter / contract required to be entered into by investor /applicant under Garima's schemes, vii. Details of the scheme wise and year wise amount mobilized by Garima till date along with the number of investors under the schemes, viii. Certified copy of audited financial statement for the last three financial years, ix. Copy of Income Tax Return filed by Garima for the last three financial years, x. Details of the regulatory approvals obtained by Garima, if any, for provision of accidental death/ disability benefits to investor, under Garima's schemes, xi. Details of any other similar scheme(s), if any, floated by group/associates of Garima.

3. The said letter was however returned undelivered with the remarks "left". SEBI issued another letter dated August 5, 2013 to Garima and its past and present Directors viz., Mr. Banabarilal Lodhi, Mr. Bijendra Pal Singh, Mr. Shivram Khuswah, Mr. Balkishan Kushwah and Mr. Banwari Lal Kushwah. The letters to Garima and two Directors viz. Mr. Balkishan Kushwah and Mr. Banabarilal Lodhi were acknowledged. In response, Garima vide letter dated September 18, 2013 (received on September 24, 2013) sought extension of time for additional 15 days. The same was allowed by SEBI till October 12, 2013. Copy of the said letter was also addressed to Directors of Garima. It is noted that letters addressed to Garima and one of its Directors viz., Mr. Shivram Khuswah were returned undelivered. However, Mr. Bijenderpal Singh(Director of Garima) acknowledged the letter. No response/ acknowledgment was received from other Directors. Another reminder vide separate letters dated November 07, 2013 were sent to Garima and its Directors. The said letters were returned undelivered except for Mr. Banabarilal Lodhi who acknowledged receipt of the letter.

4. Subsequently, on November 28, 2013, a complainant visited SEBI's Indore Local Office and informed about fund raising activity of Garima in their area by assuring high returns through investment in land. The Complainant provided Garima‟s “Career & Rule Book for agents”, which contained various schemes offered by Garima and commission structure to agents for funds mobilized and a copy of registration certificate issued by Garima to an investor. The complainant has also alleged about the fund mobilization activities carried out by the group companies of Garima.

5. In response to SEBI's letter dated August 05, 2013, Garima vide letter dated December 05, 2013 inter alia, furnished the following documents:- a) MoA and AoA of the company as filed with the Registrar of Companies, b) Details of the past and present directors of the company. c) Brochures/offer document pertaining to the schemes/arrangements, d) Copies of application forms e) Sample copies of allotment letter issued to the investors who subscribe to the schemes f) Sample copies of the agreement letter / contract required to be entered into by investor /applicant under the schemes g) Details of the scheme wise amount mobilized by Garima till date along with the number of investors under the schemes h) Certified copy of audited financial statement for the FY 2009-10, 2010-11, 2011-12 and 2012- 13, copies of IncomeT ax Returns filed by Garima for the last three financial years.

6. I have carefully considered the material available on record such as correspondence exchanged between SEBI and Garima along with the documents contained therein, submissions made by Garima and information and documents furnished by the Complainant, etc. In this context, the issue for determination is whether the mobilization of funds by Garima under its schemes fall under the ambit of "Collective Investment Scheme" provided in Section 11AA of the SEBI Act.

7. On an examination of the material available on record, it is prima facie observed: (a) Garima (CIN: U70100MP2007PLC019955) was incorporated on October 29, 2007 having its registered office at 403-Souraw Plaza, Gole Ka Mandir, Gwalior - 474001. Its present Directors are Mr. Banabarilal Lodhi, Mr. Shivram Kushwah and Mr. Jitendra Kumar. As per the details furnished by Garima two of its earlier Directors viz., Mr. Banwari Lal Kushwah and Mr. Balkrishan Kushwah resigned from the directorship with effect from July 20, 2010 and April 15, 2013 respectively.

(b) As per the brochures containing the schemes, the plans offered by Garima were Plan B1 (for 5 years), Plan B2 (for 5 years & 6 months), Plan B3 (for 8 years and 4 months), Plan C1 (for 6 years), Plan C2 (for 8 years & 11 months) and Plan C3 (for 10 years and 6 months). Each plan offered investment in plot of land of size from 800 sq. ft. onwards. Garima offers an exit option to the applicants after the expiry of terms of the respective plans with a refund of estimated realizable value as per the opted plans. If the applicant opts to continue with the plan at the end of 15 years(term) investor needs to make payment of specified amount for effecting registration of plot. For instance, the details provided in respect of plan B1 is as under:-

Plot size No of Instalments Exit option 5 At the end of 15 yr. Payment due in sq. ft. Monthly Quarterly Half-yearly Yearly years Estimated for registration of plot 60 20 10 5 Realizable Value in ` 800 110 325 640 1265 9400 993400 + Registration charges 1200 220 650 1280 2530 18800 1486800 + Registration charges 1600 330 975 1920 3795 28200 1980200 + Registration charges 2000 440 1300 2560 5060 37600 2473600 + Registration charges 2400 550 1625 3200 6325 47000 2967000 + Registration charges (c) It is noted from the above table that Garima is collecting funds from the public under its various Lumpsum Payment Plans and Instalment Payment Plans. The 'applicant'/investors who are interested in the aforesaid schemes are required to execute an 'Application form along with an Agreement' with Garima. Upon execution of the same, Garima issues a 'Registration Letter'.

(d) As per the details submitted by Garima vide letter dated December 05, 2013, Garima stated that an amount of `55,22,35,396/- was collected under its Plans B1, B2, B3, C1, C2 and C3 from 1,08,791 investors and repaid an amount of `45,87,20,787/-. Further, an amount of `9,35,14,609/- is stated to be the payment outstanding towards 15,683 investors. There was no proof of repayment attached in this regard.

(e) Garima stated that no regulatory approvals were taken for accidental death/disability benefits to investors. It also informed that no other scheme was floated by the company.

8. On an examination of the documents provided by the complainant the following are noted :- a) Nature of activity- Garima is stated to be engaged in buying and selling of land. It is contended that company develops the land and shares the profit with its customers/investors. In case all the formalities are completed, the land is later transferred to the customer. In case the customer does not want the land, money will be returned as per rules/plans. b) Branches: The head office of Garima is at 'Garima', Shri Kalyan Tower, Opp. Basant Talkies, Thatipur, Gwalior (M.P.). It has various branches at Gwalior(M.P.), Dholpur (Rajasthan), Jaura (M.P.), Champa (Chhatisgarh), Rajgarh (M.P.), Korba (Chhatisgarh), Raipur(Chhatisgarh), Shivpuri (M.P.), Bharatpur (Rajasthan), Shahdol (M.P.), and Agra (U.P.). c) Plans offered:- Garima is offering Plan B1 (for 5 years), Plan B2 (for 5 years and 6 months), Plan B3 (8 years and 4 months), plan B4 ( 3 years and 6 months), Plan B5 (for 6 years). The details of Plan B1 (for 5 years) is as under:- Land Amount Monthly Quarterly Half- Yearly Expected cost A/R size in ` 60 20 yearly 5 of land Benefit* (sq. ft.) 10 132 6600 110 325 640 1265 9400 9900 264 13200 220 650 1280 2530 18800 19800 396 19800 330 975 1920 3795 28200 29700 528 26400 440 1300 2560 5060 37600 39600 660 33000 550 1625 3200 6325 47000 49500 d) It is noted that there were various plans launched by Garima such as plan D1(5 years), Plan D2(6 years), Plan D3( 7 years), Plan D4(8 years), Plan E1(6 years), Plan E2( 7 years), Plan E3(8 years), Plan E4 (9 years). For example, the details of plan D1 and E1 are given below:- Plan D1 Land size A mount Monthly Quarterly Half-yrly Yearly Expected cost A/R (sq. ft.) in ` 60 20 10 5 of land Benefit* 240 11500 200 590 1160 2300 17100 18000 480 23000 400 1180 2320 4600 34200 36000 720 34500 600 1770 3480 6900 51300 54000 960 46000 800 2360 4640 9200 68400 72000 1200 57500 1000 2950 5800 11500 85500 90000

Plan E1 Land size A mount Monthly Quarterly Half-yrly Yearly Expected cost A/R (sq. ft.) in ` 72 24 12 6 of land Benefit* 200 10000 147 433 853 1667 15500 18000 400 20000 294 866 1706 3334 31000 36000 600 30000 441 1299 2559 5001 46500 54000 800 40000 588 1732 3412 6668 62000 72000 1000 50000 735 2165 4265 8335 77500 90000 e) Apart from the above stated instalment payment plans, there were other lump-sum payment plans such as Plan C1 (6 years), Plan C2 ( 8 years & 11 months), Plan C3 (10 years & 6 months), Plan C4 ( 1 year) & Plan C5 special (6 years). For example, the details of plan C3 are as under:- Plan C3 Land size (sq. Amount Expected cost of land A/R ft.) (Rs.) Benefit* 20 1000 4000 1500 100 5000 20000 7500 200 10000 40000 15000 400 20000 80000 30000 1000 50000 200000 75000 2000 100000 400000 120000 f) Commission offered by Garima is tabulated as under: Plan B1, B2, B3, B5, D all, E all Rank Year A/R I II III IV V+ Benefit* Agent 22 10.5 7.27 5.25 5.25 21000 Field Officer 5 0.5 0.5 0.5 0.5 21000 Development Officer 4 0.5 0.5 0.25 0.25 21000 Organizer 3 0.5 0.5 0.25 0.25 30000 Zonal Officer 2 0.5 0.5 0.25 0.25 30000 Sr.

Zo. Officer 2 0.5 0.5 0.25 0.25 30000 Development Advisor 2 0.5 0.5 0.25 0.25 35000 Inspector 2 0.5 0.5 0.25 0.25 40000 Regional Manager 2 0.25 0.25 0.25 0.25 50000 Zonal Manager 2 0.25 0.25 0.25 0.25 80000 Executive Manager 2 0.25 0.25 0.25 0.25 100000 Total commission 48 14.75 11.52 8 8 *the details and nature of A/R benefits are not provided by Garima till date. g) It is noted from the 'Rule book for agents' that Garima is offering very high commission which is as much as 48% in the first year to its agents and other officials for mobilisation from public opting for instalment Plans. This amount reduces to 14.75% in 2nd year, 11.52% in 3rd year and 8% from 4th year onwards. In respect of investors opting for lump sum payment and also for instalment plan of 3 years 6 months, the commission structure is as under:- Other Plans Rank CI C2 C3 C4 C5 B4 Agent 6 7 9 2 6 11 Filed Officer 1 1 1 0.1 1 2.5 Development Officer 1 1 1 0.1 1 2 Organizer 1 1 1 0.1 1 1.5 Zonal Officer 0.5 0.5 0.5 0.1 0.5 1 Sr. Zo. Officer 0.5 0.5 0.5 0.1 0.5 1 Development Advisor 0.5 0.5 0.5 0.1 0.5 1 Inspector 0.5 0.5 0.5 0.1 0.5 1 Regional Manager 0.5 0.5 0.5 0.1 0.5 1 Zonal Manager 0.5 0.5 0.5 0.1 0.5 1 Executive Manager 0.5 0.5 0.5 0.1 0.5 1 Total 12.5 13.5 15.5 3 12.5 24 h) Accidental benefit :- Garima has created a joint venture social welfare fund, whose contribution is given by the company only.

In case the joint-venturer dies due to accident, compensation is offered out of said fund. This will be applicable after 6 months from start of scheme. Further, maximum compensation shall not be more than `1,20,000/-.

9. On comparison of documents provided by Garima and those provided by complainant the following differences were observed. (I) As per Garima‟s reply dated December 05, 2013 there were Plan B1, Plan B2, Plan B3, Plan C1, Plan C2 and Plan C3 (total 6 plans). However, as per the booklet titled “Career & Rule Book for agent” issued by Garima 13 Instalment Payment Plans were offered. Plan B1 (5 years), B2 (5 years and 6 months), B3 (8 years & 4 months), B4 (3 years & 6 months) & B5 ( 6 years), Plan D1( 5 years), Plan D2 ( 6years), Plan D3 (7 years), Plan D4(8 years), Plan E1(6 years), Plan E2(7 years), Plan E3(8 years), Plan E4 ( 9 years). All these plans have monthly, quarterly, half-yearly and yearly options. Further there were 5 lump sum payment plans viz., Plan C1 (6 years), Plan C2 (8 years 11 months), plan C3 (10 years 6 months), Plan C4 (1 year) and Plan C5 Special (6 years).

(II) As per the data provided by Garima, in respect of Plan C3 it is indicated that the plot sizes offered were of 800 sq. ft, 1200 sq. ft. and 1600 sq. ft. However, as per the registration certificate issued by Garima to one of its investors viz., Shri Bhan Vati Maravi (registration no. C30110027205 dated 30-4.2011) the land size is stated to be 200 sq. ft. Similarly, Plan C3 provided in “Career & Rule Book for agent” mentions the land size as 20 sq. ft. There are thus too many inconsistencies in respect of land area of different schemes as mentioned in various documents viz., data provided by Garima, registration certificate issued to an investor, Career and Rule Book for agent etc.

(III) In view of the aforesaid differences, SEBI vide letter dated January 22, 2014, the following clarifications/information was sought from Garima and its Directors:- (a) to provide correct information as regards the plans launched by Garima. (b) details and nature of the A/R benefit mentioned in the Plans. (c) to provide correct details of scheme wise amount mobilized till date along with the number of investors under the schemes. (d) to provide copy of duly filed in (a) application form (b) registration certificate and (c) agreement executed in respect of any 2 investors of each plan offered by the company.

(IV) In addition to the above, Garima was also advised to provide the following details to SEBI:- a) Address of all its branches operating in India; b) Name, address of each investor and amount deposited by each of them with plan details and date of investment: i. How many investors were refunded the amount (not property) after expiry of agreement; ii. the utilization of the money collected from the investors; Amount outstanding to each investor.

c) List of all the properties acquired by Garima from the date of incorporation to till date. i. Properties transferred to the investors and duly registered with local authority; ii. List of properties held by Garima. d) Reasons for non allotment of balance properties in favour of investors.

10. The aforesaid letter sent by registered post to Garima & its Directors were returned undelivered except the letter sent at an alternate address of Garima i.e. 459. Patpadganj, Industrial Area, Delhi-110092.

11. SEBI noted the contact details of an official of Garima on the envelope containing Garima‟s reply dated December 05, 2013. An e-mail was sent to the said official of Garima enclosing the letter dated January 22, 2014. In response, vide e-mail dated

March 06, 2014 Garima stated that three of its Directors viz., Mr. Shivram Kushwah, Mr. Balkishan Kushwah and Mr. Banbarilal Lodhi were under judicial custody, hence Board meeting could not be held to consider the reply to be given for SEBI‟s letter dated January 22, 2014. Hence, an additional time of 4-6 weeks were sought to submit the reply. Since already sufficient time was given, a final opportunity was given up to March 14, 2014. However, no reply has been received till date.

12. A perusal of the annual reports of Garima for the financial years 2008-09, 2009-10, 2010-11, 2011-12 and 2012-13 shows the following: - In ` As per balance As on March As on March As on March As on March As on March sheet 31, 2013 31, 2012 31, 2011 31, 2010 31, 2009 Liabilities includes Advance for plot 9,64,32,481.25 11,48,79,107.25 17,02,94,129.46 7,20,86,405.46 6,01,54,037.46 booking Assets includes Inventories* 7,52,81,506.40 6,79,60,308.40 6,44,53,564.40 5,20,46,282 1,53,17,772 *It is noted that break up of inventory has not been provided in any of the balance sheet of Garima.

13. The details of the 'Scheme' towards the purchase and development of plot/land offered by Garima have to be considered in light of Section 11AA of the SEBI Act. The aforesaid Section 11AA, which provides for the conditions to determine whether a scheme or arrangement is a „collective investment scheme‟, reads as follows: “(1) Any scheme or arrangement which satisfies the conditions referred to in subsection (2) or sub-section (2A) shall be a collective investment scheme. Provided that any pooling of funds under any scheme or arrangement, which is not registered with the Board or is not covered under the exemptions from CIS sub-section (3), involving a corpus amount of one hundred Crore rupees or more shall be deemed to be a collective investment scheme. (2) Any scheme or arrangement made or offered by any person under which, (i) the contributions, or payments made by the investors, by whatever name called, are pooled and utilized solely for the purposes of the scheme or arrangement; (ii) the contributions or payments are made to such scheme or arrangement by the investors with a view to receive profits, income, produce or property, whether movable or immovable from such scheme or arrangement;

(iii) the property, contribution or investment forming part of scheme or arrangement, whether identifiable or not, is managed on behalf of the investors; (iv) the investors do not have day to day control over the management and operation of the scheme or arrangement. (2A) Any scheme or arrangement made or offered by any person satisfying the conditions as may be specified in accordance with the regulations made under this Act. (3) Notwithstanding anything contained in sub-section (2) or sub-section (2A)], any scheme or arrangement— (i) made or offered by a co-operative society registered under the Co-operative Societies Act, 1912 or a society being a society registered or deemed to be registered under any law relating to co-operative societies for the time being in force in any State; (ii) under which deposits are accepted by non-banking financial companies as defined in clause (f) of section 45-I of the Reserve Bank of India Act, 1934; (iii) being a contract of insurance to which the Insurance Act, 1938 applies; (iv) providing for any Scheme, Pension Scheme or the Insurance Scheme framed under the Employees Provident Fund and Miscellaneous Provisions Act, 1952; (v) under which deposits are accepted under section 58A of the Companies Act, 1956; (vi) under which deposits are accepted by a company declared as a Nidhi or a mutual benefit society under section 620A of the Companies Act, 1956; (vii) falling within the meaning of Chit business as defined in clause (d) of section 2 of the Chit Fund Act, 1982; (viii) under which contributions made are in the nature of subscription to a mutual fund; (ix) such other scheme or arrangement which the Central Government may, in consultation with the Board, notify, shall not be a collective investment scheme."

14. In the context of the abovementioned Section 11AA of the SEBI Act, the “Scheme” offered by Garima is examined as under:

(i) The contributions, or payments made by the investors, by whatever name called, are pooled and utilized solely for the purposes of the scheme or arrangement.

As per the schemes offered in the brochure, sample application form, sample registration letter provided by Garima and the Complainant, it is noted that Garima is collecting money from the general public under its schemes of development and maintenance of the land. It is noted from the copy of registration certificate issued to one of the investors that there is no identified and demarcated plot/land. The location of the plot is also not mentioned. The 'Registration Certificate' issued to the applicant/ investor and the 'General Terms and Conditions' forming part of the said certificate does not indicate the ownership aspect of the plot/land under the schemes offered by Garima. Point 11 of the Rules & Regulations of the sample registration letter provided by Garima states that “these plots which are developed by the company in various parts of the country and will be of similar sizes (i.e. 800 sq. ft. & 1200 sq. ft. respectively). The plots would be numbered and identified by the company and thereafter be allotted to the applicants, the said plot may be allotted to the applicants anywhere and in any location, at the discretion of the management.” It is noted from the financial statements of Garima that funds received from the applicants/investors are pooled together as “Advance for Plot booking.” As on March 31, 2013, Garima has collected `9,64,32,481.25 towards advance for plot booking. As per the details of mobilization furnished vide its reply dated December 05, 2013 mentioned at para 7 (c) above, Garima collected an amount of `55,22,35,396/- under its Plans B1, B2, B3, C1, C2 and C3 from 1,08,791 investors and repaid an amount of `45,87,20,787/-. Further, an amount of `9,35,14,609/- is claimed to be the payment outstanding towards 15,683 investors. In view of the aforesaid it is evident that Garima is collecting funds from the applicants/ investors under its various schemes/Plans and the contributions/funds so collected are pooled and utilized for the purpose of the 'Scheme/Plan' offered by Garima. Hence, it is clear that the instant scheme/Plans of Garima satisfies the first condition stipulated in Section 11AA(2) of the SEBI Act.

(ii) The contributions or payments are made to such scheme or arrangement by the investors with a view to receive profits, income, produce or property, whether movable or immovable from such scheme or arrangement.

It is noted from the Schemes/Plans offered by Garima that an investor who opts for Lump-sum Payment Plan or Instalment Payment Plan to purchase land, an amount is indicated as 'estimated realizable value' if exit option is exercised by an investor as per the said plan. Similarly, it is noted from the booklet of Garima titled “Career & Rule Book for agents” (At page 18 para 5) that in lieu of the money deposited by the investors,

Garima assures to give duly registered land. In case the investor is not interested in the land, Garima guarantees the payment of money as per the plan. Apart from the same Garima also offers Accidental benefit as compensation to investors. For instance, if an applicant/investor opts for Plan B1 (mentioned at para 7(b) above)and invested ` 1265 per year for 800 sq. ft plot for 5 years, at the end of 5 years the investor is offered an exit option at `9400. This implies `3075 (`9400- `6325) is the profit. Similarly, it is noted from booklet of Garima titled “Career & Rule Book for agents”, wherein the expected cost of land after certain period is tabulated. For example, in Plan B1, a plot of area 132 square feet worth `6600 shall have expected cost of land increased to `9400 after 5 years. The difference is the expected profit for the investor. Similarly, different returns have been offered in different plans launched by Garima. Hence, it is apparent that contributions by applicants/investors (either by instalments or lump sum payment) are made to such scheme or arrangement with a view to receive expected sum payable in form of cash/ or land and also accidental benefit in time of need from such scheme or arrangement. Therefore, the instant scheme/Plan of Garima satisfies second condition stipulated in Section 11AA (2) of the SEBI Act.

(iii) The property, contribution or investment forming part of scheme or arrangement, whether identifiable or not, is managed on behalf of the investors. (iv) The investors do not have day-to-day control over the management and operation of the scheme or arrangement.

It is apparent from brochure, application form and registration certificate that contributions made by the applicant/investors in either instalment or lump sum payment plans are collected by Garima who in turn manage these funds on behalf of investors during agreed term of Plan. It is noted from Clause 2(a) of the „Proforma of Agreement‟ that “Garima shall carry out necessary works by conducting the survey, demarcation, clearing and related jobs/ works on behalf of the customer. Further, it shall procure and install bore wells, open bells and other water points and install motors, pump sets and other facilities main pipelines, electrical installations and temporary sheds/ structures required for the development of property. Garima shall keep accounts with reference to the income and expenditure incurred /to be incurred, pertaining to the development and maintenance of the entire project site, which includes the said property.” As per clause 3 of proforma of agreement “Garima shall have the rights to develop and maintain the said property in consultation with Engineers/ experts, customer shall not ordinarily interfere with the method and mode of development and maintenance of the said property.”As per clause 14 of general terms & condition of registration letter, “Garima shall have first charge on said property on account of the unpaid instalments for services / development / maintenance charges and for other incidental expenses incurred by Garima. The said property cannot, in any other manner be sold, assigned, mortgaged, pledged or alienated without obtaining No dues certificate from the Garima by the applicant.” Point 11 of the Rules & Regulations of the sample registration letter provided by Garima states that “these plots which are developed by the company in various parts of the country and will be of similar sizes (i.e. 800 sq. ft. & 1200 sq. ft. respectively). The plots would be numbered and identified by the company and thereafter be allotted to the applicants, the said plot may be allotted to the applicants anywhere and in any location, at the discretion of the management.” It is not clear whether applicants/investors even know which part of the country would they be allotted plots in case they opt for allotment of plots.

In light of these facts and circumstances, it is clear that the property, contribution or investment forming part of the scheme/Plans are managed by Garima on behalf of applicants/investors and they do not have any day-to-day control over the management of the schemes/Plans. In view of above, I find that the instant scheme/Plans satisfies third and forth conditions stipulated in Section 11AA (2) of the SEBI Act.

15. The activity of fund mobilization by Garima under the scheme/Plans for allotment, development and maintenance and subsequent transfer of land, with a resultant promise of return/"estimated realizable value at the end of the term', when considered in light of peculiar characteristics and features of such schemes/Plans, as discussed in the preceding paragraphs, prima facie satisfies all four conditions specified in Section 11AA (2) of the SEBI Act.

16. In this context, it is relevant to refer to the observations of the Hon'ble Supreme Court of India in the matter of P.G.F Limited & Ors. vs. UOI & Anr. (MANU/SC/0247/2013)"..sub-section (2) of Section 11 AA, which defines a collective investment scheme disclose that it is not restricted to any particular commercial activity such as in a shop or any other commercial establishment or even agricultural operation or transportation or shipping or entertainment industry etc. The definition only seeks to ascertain and identify any scheme or arrangement, irrespective of the nature of business, which attracts investors to invest their funds at the instance of someone else who comes forward to promote such scheme or arrangement in any field and such scheme or arrangement provides for the various consequences to result there from."

17. In view of the abovementioned analysis and examination, I, find that Garima is engaged in fund mobilizing activity from public which clearly falls within the ambit of 'collective investment schemes' as defined in Section 11AA of the SEBI Act.

18. I note that 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”. Regulation 3 of the SEBI (Collective Investment Schemes) Regulations, 1999 (hereinafter referred to as "CIS Regulations") also prohibits carrying on CIS activities without obtaining registration from SEBI. Therefore, the launching/ floating/ sponsoring/causing to sponsor any 'collective investment scheme' by any 'person' without obtaining the certificate of registration in terms of the provisions of the CIS Regulations is in contravention of Section 12(1B) of the SEBI Act and regulation 3 of the CIS Regulations.

19. Taking into consideration of the above and the fact that Garima has failed to furnish the details of land allotted/transferred in the name of investors, it appears that the instant scheme/Plan offered by Garima is nothing but a smokescreen for its fund mobilizing activity under a "collective investment scheme' without obtaining a certificate of registration from SEBI as required under Section 12(1B) of the SEBI Act read with Regulation 3 of the CIS Regulations. From the materials available on record, it is noted that Mr. Banabarilal Lodhi, Mr. Shivram Kushwah and Mr. Jitendra Kumar are the present Directors and the persons in charge of and responsible for the day to day affairs of Garima. Further, it is also noted that Mr. Banwari Lal Kushwah and Mr. Balkrishan Kushwah and Mr. Bijendra Pal Singh were the former Directors of Garima.

20. I also find that the activity of illegal mobilization of funds by Garima through its schemes, prima facie, amounts to a fraudulent practice in terms of Regulation 4(2)(t) of SEBI( Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market), 2003 ("PFUTP Regulations").

21. 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 defrauding the investors and damaging the orderly development of the securities market. In order to ensure that Garima and its Directors (past and present) do not collect further funds under its scheme/Plans and to safeguard the assets/property acquired by Garima and its Directors from the funds of the investing public until full facts and materials are brought and final decision is taken in the matter, it becomes necessary for SEBI to take urgent preventive action by way of this interim measure. In the light of the above, I find no other alternative but to take recourse to an interim order against Garima and its past and present 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.

22. In view of the above, I, in exercise of the powers conferred upon me under Sections 11(1), 11B and 11(4) of the SEBI Act read with Regulation 65 of CIS Regulations, hereby direct Garima Real Estate & Allied Limited and its past and present Directors viz., Mr. Banwari Lal Kushwah (PAN-AAGPF1976L), Mr. Balkishan Kushwah (PAN-AVQPK4360A), Mr. Shivram Kushwah (DIN: 02338542), Mr. Banabarilal Lodhi (DIN: 01759136), Mr. Bijendra Pal Singh (DIN: 01781312) and Mr. Jitendra Kumar (DIN: 06719377):- (i) not to collect any fresh money from investors under its existing schemes; (ii) not to launch any new schemes or plans or float any new companies to raise fresh moneys; (iii) to immediately submit the full inventory of the assets including land obtained through money raised by Garima; (iv) not to dispose of or alienate any of the properties/assets obtained directly or indirectly through money raised by Garima; (v) not to divert any fund raised from public at large which are kept in bank account(s) and/or in the custody of Garima.

(vi) to furnish all the information/documents sought by SEBI vide letter dated January 22, 2014, within 15 days from the date of receipt of this order, including: i. Scheme wise list of investors and their contact numbers and addresses; ii. PAN of the aforementioned Directors and iii. Details of agents along with address, money mobilized and commission paid

23. The above directions shall take effect immediately and shall be in force until further orders in this regard.

24. This Order is without prejudice to the right of SEBI to take any other action that may be initiated against Garima Real Estate & Allied Limited and its Directors (past & present) in accordance with law.

25. The prima facie observations contained in this Order are made on the basis of the material available on record. In this context, Garima Real Estate & Allied Limited and its abovementioned Directors 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 an opportunity of personal hearing on a date and time to be fixed on a specific request made in that regard.

Place: Mumbai S. RAMAN Date: November 24, 2014 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA