Interim Order in the matter of Dhanolty Developers Ltd. and its Directors/Promoters

Under Sections 11(1), 11(4) and 11B of the Securities and Exchange Board of India Act, 1992 read with Regulation 65 of the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999 in respect of Dhanolty Developers Ltd. (PAN: AADCD8142Q) and its Promoters/Directors, viz. Mr. Sanjay Walia (DIN: 03337163), Mr. Siddharth Walia (DIN: 02775698 ), Ms. Anita Malik (PAN: ASYPM1031D), Ms. Raksha Kumari (DIN: 02761163), Mr. Shiv Pratap Singh (PAN: AVPPS2160P), Ms. Shefali Walia (PAN: AAOPW1693H) and Mr. Pankaj Bakshi (PAN : AEGPB9921H). 1. Securities and Exchange Board of India (hereinafter referred to as "SEBI") received a RTI application dated December 08, 2012, wherein the applicant sought information regarding some companies including M/s Dhanolty Developers Ltd. (hereinafter referred to as "Dhanolty Developers") which were raising money from investors as advances for purchase of land or properties in Barh sub-division in Patna Distt. in Bihar.

2. As a matter of preliminary inquiry, SEBI vide letter dated April 11, 2013 advised Dhanolty Developers to submit, inter-alia, the following details/documents with regard to the scheme(s)/plan(s) operated by it: a. Number of plans/schemes launched/proposed, b. Structure of such plan(s)/scheme(s), c. Terms and conditions of each Plan(s)/Scheme(s) launched, d. Details of the Plan(s)/Scheme(s) wise amount mobilized as on 31-01-2013 along with the number of investors under such Plan(s)/Scheme(s), e. Copies of application forms that are required to be submitted by the investors/applicants to participate in the plans/schemes and copies of brochures of the schemes, f. Sample copies of the agreements that are required to be entered into by investors/applicants at the time of joining the Plan(s)/Scheme(s) and certificates issued to the investors who subscribe to such Plan(s)/Scheme(s), g. Details of location of projects current and proposed to be developed under various Plan(s)/Scheme(s), h. Memorandum and Articles of Association (MoA and AoA), i. Annual Returns, Balance Sheets, Profit and Loss Accounts etc. since its incorporation, as filed with the concerned Registrar of Companies (RoC), j. Details of past and present promoters/directors/Key management personnel of Dhanolty Developers.

2.1 As no response was received from Dhanolty Developers a reminder, vide letter dated May 23, 2013. However, no reply was received from Dhanolty Developers.

3. In the meantime, SEBI received a copy of the order dated April 26, 2013 from Jharkhand High Court passed in W.P. (C) No. 1479 of 2013; M/s Dhanolty Developers Ltd. Vs. State of Jharkhand & Ors. The Hon'ble Court, vide the said order, inter alia directed SEBI to inquire into the affairs of Dhanolty Developers and take suitable action in accordance with law. In view of the aforesaid directions of Jharkhand High Court at Ranchi, SEBI, vide letter dated June 10, 2013, once again sent a reminder to Dhanolty Developers.

4. On June 10, 2013, SEBI received a letter dated June 04, 2013 from Dhanolty Developers in response to SEBI's letter dated May 23, 2013. Following are the documents submitted by it along with the said letter: a. Memorandum and Articles of Association, b. "Passbook", c. "Business Manual "in English & Hindi, d. Sample copy of "Certificate", e. Sample copy of booklet, "Agreement / Purchase Form", containing "Agri Plot Agreement", "Sale Agreement" and "Apiaries Rearing Contract" f. Sample copy of "Business Partner Agency Form", g. Sample copy of "Purchase form" containing "Sale Agreement", h. Separate sample of "Apiaries Rearing Contract" (ARC) of the Company, Walia Apiaries Pvt. Ltd. (company associated with Dhanolty Developers), i. "Guaranteed Declaration" (executed by Dhanolty Developers and its associate, Walia Apiaries Pvt. Ltd.), j. "Plan Brochure", k. "Commission Brochure", l. Copy of Income Tax Returns,

4.1 As, Dhanolty Developers failed to submit some vital information including the details of the amounts mobilized, details of the investors etc., SEBI issued another reminder, vide letter dated June 28, 2013 indicating non receipt of complete information/documents as sought by SEBI in its earlier communications.

5. Dhanolty Developers, vide letter dated June 28, 2013, (received by SEBI on July 8, 2013) while furnishing the details of Promoters/ Directors and also a sample copy of "Business Manual", inter alia submitted the following information: a) "…we are selling bee hives, honey, produce of bee hives, agriculture land, produce of agriculture etc. So there is no requirement of certificate from SEBI u/s 11AA of SEBI Act, ….. b) ..we are totally engaged in the business of sale & purchase, which includes sale &purchase & rearing of bee colonies, the customer can out-rightly purchase the bee colony, the price of which varies from `4500/- to `7500/- and other incidental costs. The purchaser/customer has an option for payment, either by paying as single lump sum or can pay in interest free installments. If the purchaser/customer after completing the full payment, wishes to take away the bee colony, then he can do so and if he feels that he cannot engage himself in a rearing & processing the bee hives and bee colonies, we advise the purchaser/customer to enter into a contract with other companies, who are doing rearing contract of bee colony. c) After purchasing of the bee colony, the purchaser has to send a request letter of the companies suggested by us and if such request letter is accepted by the companies doing Apiaries, then an agreement is entered into by and between the said company and the purchaser/customer. As per the agreement, the company, inter-alia, agrees to pay a projected value within a time by selling the honey which is produced from the Bee Colonies during the course of rearing time frame handed over to the purchaser. d) After purchasing of the bee colonies, it is entirely the discretion of the purchaser to enter into rearing contract of the bee colony of any Bee – Apiaries Company, which for the petitioner merely facilitates or he may produce honey by homself."

6. SEBI, vide letter dated July 15, 2013, issued another reminder to Dhanolty Developers seeking point -wise specific reply to the information sought vide its earlier letters. In addition to this, Dhanolty Developers was also advised to offer its explanation regarding the basis for "projected value"/returns as stated by it in its aforesaid letter dated June 28, 2013.

7. Dhanolty Developers, vide its letter dated July 30, 2013, stated that out of the four branches of Dhanolty Developers, three branches were sealed by local authority, all the relevant documents were seized by them and hence, it was unable to provide the accurate sales details and amount mobilized. It is noted that Dhanolty Developers did not provide its comments in respect of the basis of such "projected value"/returns. However, vide the said letter, while stating "My current projects of agriculture lands are running at Gangakheri, distt Vidisha M.P", Dhanolty Developers provided the details of state wise location of its rearing of bee colony, which are as under :

a) "Bihar -various location in Muzzafarpur b) U.P-various location in Bulandsher c) Rajashthan-various location in Kota d) Harayana-various location in Rewari. e) UttraKhand - various location in Dehradun".

8. It is noted that though sufficient opportunity has been provided to Dhanolty Developers to submit its reply, Dhanolty Developers has not submitted, till date, the following details sought by SEBI, a) Number of investors and amount collected in each such plan/scheme, b) Balance sheets, Profit and Loss Accounts of the company since incorporation as filed with RoC, c) The statement of mobilization and deployment of funds under various schemes duly certified by their Statutory Auditors, d) Details of location of projects current and proposed to be developed under various schemes have not been clearly specified. 8.1 In view of the above, I am constrained to proceed exparte with the matter on the basis of the documents and materials available on record viz., correspondence exchanged between SEBI and Dhanolty Developers along with the documents contained therein, documents and information as made available by RoC-Delhi, submissions made by Dhanolty Developers etc. The issue for determination in the instant matter is whether the activity of mobilization of funds by Dhanolty Developers falls under the ambit of ‘collective investment scheme’ in accordance with Section 11AA of the SEBI Act, 1992 (hereinafter referred to as "SEBI Act").

9. On an examination of the material available on record, it is prima facie observed that:

a) Dhanolty Developers Ltd. (CIN:U70100DL2011PLC218417) was incorporated on May 02, 2011. It has its registered office at 1-A/7767, Ground Floor, Ram Nagar, Paharganj, New Delhi 110055, India. The promoters/directors of Dhanolty Developers are Mr. Sanjay Walia, Mr. Siddharth Walia, Ms. Anita Malik, Ms. Raksha Kumari, Mr. Shiv Pratap Singh, Ms. Shefali Walia and Mr. Pankaj Bakshi.

b) As per the MoA of Dhanolty Developers, the main objects are " ….to engage in infrastructure development, real estate promoters, developers and project management association including civil, construction, electrical……However, as per the various clauses in the "Plan Brochure" and "Business Manual", the main objects of Dhanolty Developers inter alia are, to carry out sale/purchase and development of undeveloped agricultural plot/land, and, selling of bee colony and arranging rearing of Apiaries with "Apiaries Rearing Project"/Company.

c) Dhanolty Developers invites funds from the public under the following two categories of schemes, i. Scheme for "Sale and rearing of Bee Colony", ii. Scheme for "Sale/purchase and development of plot /land".

d) As per the "Plan Brochure", the various plans under the schemes offered by Dhanolty Developers are as under,

• For the "sale and rearing of Bee Colony", the schemes/plans are as under, i. Group A - "Regular Installment Sales Plan"(7 plans) ii. Group B - "Single Purchase Sales Plan" (8 plans) iii. Group C - "Single Purchase Profit Plan" iv. "Bum Bum Plan (Basic)"

• For "Sale/purchase and development of plot /land", the scheme/plan is Group D - "Single Purchase Sales Plan" (2 plans) One such plan from each category is reproduced below; GROUP - A REGULAR INSTALLMENT SALES PLAN (RISP) Purchase value of 25 MONTHLY INSTALLMENT PLAN NO.A- BC 1/25 Estimated Hn with BC ESTIMATED HONEY BC Rs. MLY QLY HLY YLY Hn(Kg) + No. of BC VALUE 2 10,000 400 1,188 2,328 4,512 70kg +1 BC 11,450 5 25,000 1,000 2,970 5,820 11,820 206kg +2 BC 28,625 10 50,000 2,000 5,940 11,640 22,560 360kg +5 BC 57,250 25 1,25,000 5,000 14,850 29,100 56,400 920kg +12 BC 1,43,125

GROUP D SINGLE PURCHASE SALES PLAN ( SPSP) PROJECTED APPRECIATED DEVELOPED LAND CONSIDERED PURCHASE VALUE INSTALLMENT VALUE AGRI TOWARDS TOTAL COST LAND COST FO DEVELOPMENT & OF 5 BI-MONTHLY SIZE RAW AGRI OTHER CHARGES CULIVATED 10 MONTHLY DISCOUNTED 72 100 112 180 /SQ/YD LAND ON AGRI LAND AGRI LAND INSTALLMENT INSTALLMENT MONTHS MONTHS MONTHS MONTHS 1000 80,000 120,000 200,000 20,000 39,200 400,000 560,000 640,000 1,450,000 2000 160,000 240,000 400,000 40,000 78,400 800,000 1,120,000 1,280,000 2,900,000 3000 240,000 360,000 600,000 60,000 117,600 1,200,000 1,680,000 1,920,000 4,350,000 4000 320,000 480,000 800,000 80,000 156,800 1,600,000 2,240, 000 2,560,000 5,800,000 5000 400,000 600,000 1,000,000 100,000 196,000 2,000,000 2,800,000 3,200,000 7,250,000 e) The "purchasers"/investors who are interested in any of the aforesaid schemes are required to enter into an agreement with Dhanolty Developers. The booklet of "Agreement/Purchase Form" contains the "Agri Plot Agreement", a "Sale Agreement" and "Apiaries Rearing Contract"("ARC").

f) The "purchasers"/investors of the scheme for "sale and rearing of Bee Colony" are required to enter into the said "sale agreement" (in the aforesaid booklet), with Dhanolty Developers. The "Apiaries Rearing Contract" ("ARC") in the booklet indicates that the "purchasers"/investors are also made to execute the said "ARC"/contract, simultaneously, for bee rearing. The bee rearing process is also done by an associate company of Dhanolty Developers, viz. Walia Apiaries Pvt. Ltd. (hereinafter referred to as "Walia Apiaries"). By executing the "ARC"/contract the "purchaser"/investor, authorizes Walia Apiaries or the Dhanolty Developers as the case may be, for bee rearing. Even though the "sale agreement" states that on executing the "sale agreement", the "purchaser"/investor confirms the receipt of the subject bee colony, the aforesaid "ARC"/contract transfers the ownership, possession etc. of the said bee colony stated to have been purchased by the "purchaser"/investor to Dhanolty Developers. Following are the clauses noted in the said "sale agreement" and "ARC"/contract,

Clauses noted in the "Sale Agreement" • "The purchaser is hereby purchasing Apiaries from the seller on his own free will and that he also hereby promises to pay the entire/total amount for the said purchase as mentioned [in the schedule] to the seller. Moreover, it is specifically understood that along with the purchaser herein there may be several co-owners of the Bee Colony, i.e. Apiaries.(Clause 1) • The seller hereby entrusts the physical custody of the said Bee colony, which are subject matter of this agreements, to the purchaser. (Clause 5) • The purchaser hereby unconditionally…confirms that the said Bee Colony…have been received and accepted by him…(Clause 7)

• The purchaser hereby unconditionally authorizes the seller to take all necessary decisions in respect of all aspects remaining untouched and which are incidental to this sale agreement and …by virtue of this sale agreement". (Clause 10) Clauses noted in the "ARC"/contract

• “The Co-owner /owner will become eligible to receive an Projected amount as per plan of Rs._____/-or the original number of Bee Colony given to the Company, only after the end of this Apiaries Rearing Contract, which being the proceeds due with the possible profits likely to be made by the Company arising due to the accretions mentioned herein above. OR • The Co-owner /owner will become eligible to receive a Projected amount as per plan of Rs._____/-every month/year till the end of this Apiaries Rearing Contract and Rs._____/- only, after the end of these, Apiaries Rearing Contract or his /her bee Colony as delivered to the company which being the proceeds due to the possible profits likely to be made by the Company arising due to the accretions mentioned herein above. (Clause 3) • All the rights ( i.e. title / Co-owner /ownernship, possession, etc) of the said Bee Colony under reference herein above shall unconditionally pass on to the Company and the Co-owner/Owner shall have no rights over the said Bee Colony and anything whatsoever in reference /context to the said Bee colony. (Clause 4) • The Co-owner /Owner hereby affirms and agrees that he/she is not at all in any circumstances /event liable /eligible to receive, any monetary proceeds before_____________, from the company except as agreed in Terms and Conditions, o f this Apiaries Rearing Contract.

(Clause 5) • The Co-owner /Owner hereby unconditionally authorizes the company to take all the necessary decisions and to perform any acts irrespective to all the aspects remaining untouched and which are incidental to this Apiaries rearing contract and/or arising by virtue of this Apiaries Rearing contract, the co-owner shall not have to say in all such matter; neither shall co-owner file any proceedings against the any decisions of the company. (Clause 8) • …... Only the company shall be entitled to all the accretions i.e. Co-owner /Owner, and physical custody of the offspring etc. of the said Bee Colony which are the subject matter of present Apiaries Rearing Contract agreement and the Co-owner /Owner shall have no claim of any nature whatsoever on the said accretions. (Clause 11) • Only after timely payment of all payments due to the company from the Co-owner /Owner, in case of any failure by the company to receive as mentioned in clause eight herein above, the Co-owner /Owner may have the right to take charge of 1000 sqft of the land for every Rs.100,000/0 receivable by the Co-owner /Owner.

(Clause 12)

• The Co-owner /Owner hereby agreed, he /she will have no right to terminate this agreement before the completion of the period mentioned in the clause 7 herein above under any circumstances. The Co-owner /Owner hereby further agreed that he/she shall have no right of refund or any installment at any circumstances, except as agreed……….”(Clause 15)

g) In cases where the "Purchasers"/investors avail the bee rearing process of Walia Apairies, Dhanolty Developers issues a "Guaranteed Declaration", undertaking that it takes full responsibility and guarantees "projected amount"/returns payable by its associate company, Walia Apairies as per the scheme to the "Purchasers"/investors. Following are the clauses notes from the said document, • “The owner shall become entitled to receive a Projected Monthly Benefit as per table till the end of this present Apiaries Rearing Contract, after the end of this Apiaries rearing contract or his /her Bee Colony as delivered to the company which being the proceeds due to the possible profit like to be made by the company arising due to the accretions mentioned herein above. The original purchase cost or Bee Colony shall be returned to the owner, whereas accreted Bees during rearing tenure shall be the property of Walia Apiaries Pvt. Ltd. • After getting the projected amount ( as per the sales plan) the owner shall have no right or claim on contracted Beehives and accreted Bee Colony along with the produce during rearing duration and it become company property of Walia Apiaries, where as Walia Apiaries has given this amount after producing honey and selling in the market along with the Bee Colonies. • DDL having full responsibility and taking guarantee of Walia Apiaries payable amount /projected amount of the sales plan to the owner." h) After the execution of the aforesaid agreement and the "ARC"/contract, Dhanolty Developers issues a "Certificate" to the "purchasers"/investors.

The "certificate" contains the details of Plan, term period, "payment module", "estimated value"/"estimated sum payable" etc. and also "General Terms and Conditions" separately for land allotment and bee colony. Following clauses are noted from the terms and conditions: For allotment of plot /land, • "The land shall be identified and allotted within a period of 90 days and sale deed shall be executed after development of said plot within a period of three years and in case of installment payment plans; the land shall be identified and allotted after receipt of 50% of the consideration amount of the Plot and charges and Sale deed shall be done within three years after the receipt of last installment of the plan. (Clause 2) • Cost of said property including the cost of lands, development charges, other inputs, saplings, plants, trees crops, planting expenses, maintenance and other miscellaneous expenses. (Clause 6)

• The management of the company reserves the right to discontinue /change /amend/modify or alter prospectively any of the rules/regulations and payment plans and introduce new payment plans….at its sole discretion …"(Clause 9) "For Bee Colony • The Purchaser shall have no right title or lien to the property, land or any other assets of the company. (Clause 12) • The Purchaser shall have no right in the management and cannot participate in the affairs /business of the company. (Clause 13)" i) It is further noted that Dhanolty Developers has not furnished any copies of allotment letter, sale deeds, etc. for the scheme of "Sale/purchase and development of plot/land" etc. From the sample copy of the "Agri Plot Agreement" as available from the aforesaid booklet, following clauses are noted, • "Sale of plots In case of Group A SIP [Single Investment Plan], the land shall be identified and allotted within a period of 90 days and Sale /Deed shall be executed after development of said plot, within a period of 3 years and in case of Installment Payment Plans, the land shall be identified and allotted after receiving of 50% of the consideration amount of the plot& charges and sale deed shall be done within three years after the receipt of last installment of the plot….

Ownership…possession will ordinarily be transferred by the company in the name of Customer by means of registered sale deed within a period of 3 years after receipt of last installment. • Irrigation system and Fertilization The company shall provide such irrigation system as it may deemed appropriate, which shall be part of the overall irrigation system, depending upon the nature of soil, crop pattern of the plot,etc. The company upon planting the saplings, plants, crops, trees, etc. over the aforesaid plot………… • Sale of produce Unless specifically otherwise directed by the customer, the company shall be responsible for arranging the sale of the produce, if any, out of the plot, on behalf of the customer. For the purposes of arranging the sale of the produce, as aforesaid, the company shall have the sole discretion to decide as to whether the produce shall be sold in the whole sale market…………….. ………………….marketing company or may decide to sell it to any other market which the company may consider appropriate for the sale of a particular grade of the produce." • Opting out (A) Group 'B' SIP Plan, the customers shall have the facility to opt out after two years from the date of purchase of plot, before or after the allotment of plot…..

(C)If the Customer decides to opt out under Group B plan after registration of the sale deed, the company shall refund to the customer, the amount paid by the customer after deducting 25% from the amount of sale price of plot so owned by the customer……."

j) From the aforesaid clauses, it is observed that the details of the land/plot are not mentioned in the said "Agri Plot Agreement". As per the terms of the agreement, Dhanolty Developers promises to purchase and develop a land/plot, which is yet to be identified. It is also agreed that the land/plot so developed by Dhanolty Developers would be transferred within a period of three years after the completion of the development. In cases of installment plans, the identification and allotment of land is made only after the receipt of 50% of the consideration amount.

k) From the sample copy of the "Commission brochure", it is observed that Dhanolty Developers is offering a huge amount as commission for promoting its schemes. For instance, in respect of 5-year plan, commission as high as 20% of the total amount collected during the initial 1-3 months is offered to the "consultants"/agents.

10. The aforementioned features of the so-called "Sale/purchase and development of plot/land/Sale and rearing of Bee Colony” offered by Dhanolty Developers appears to be a "scheme". In view of this, the "schemes"/plans offered by Dhanolty Developers have to be considered in light of Section 11AA of the SEBI Act. 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. (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 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.”

10.1 In the context of the abovementioned Section 11AA of the SEBI Act, the "schemes"/plans of "Sale/purchase and development of plot/land/ Sale and rearing of Bee Colony” offered by Dhanolty Developers, are 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.

Dhanolty Developers collects money from the public by offering various schemes for "Sale and rearing of Bee Colony” and "Sale/purchase and development of plot/land".

In respect of its scheme for Sale and rearing of Bee Colony, the "purchasers"/investors are made to execute a "sale agreement" (with Dhanolty Developers for the purchase of bee colony) and, simultaneously an "ARC"/contract (with Dhanolty Developers or its associate company; Walia Apiaries, as the case may be, for rearing of bee colony). On execution of the said agreement and the "ARC"/contract, all the rights, i.e. the ownership, possession, etc. of the bee colony shall be passed on to Walia Apiaries or Dhanolty Developers and the "purchaser"/investor shall have no rights or claim over the said bee colony. Clause 1 of the "Sale Agreement" states that along with the "purchaser"/investor, there may several co-owners of the Bee Colony. As per the agreement and the "ARC"/contract, Walia Apiaries or Dhanolty Developers, as the case may be, would rear the bee colony from the pooled amount received from the "purchasers"/investors and the "purchasers"/investors are entitled to receive only the “projected value”/profit as per the plan. Hence, it is clear that the payments/contributions collected from the "Purchasers"/investors under its various schemes for “Sale and rearing of Bee Colony”, are being pooled and utilized by Dhanolty Developers for the purpose of the scheme.

As regards, the scheme for "Sale/purchase and development of plot/land", it is observed from the various clauses of "Agri Plot Agreement" and the terms and conditions of the “Certificate” issued by Dhanolty Developers, that the amounts are collected from the "purchasers"/investors as the cost of the land/plot, its development charges, other inputs, saplings, plants, trees, crops, maintenance etc. The contribution or investment made by a 'purchaser'/ investor are in accordance with the various “Payment Plan(s)" offered under the scheme of "Sale/purchase and development of plot/land". It is stated in the said agreement, that in case of installment plan, the units of land is identified and allotted only after the receipt of 50% of the consideration amount (no specific time period is mentioned). Hence, the funds are being collected by Dhanolty Developers from the public for the so-called purchase and development of land, without even identifying the subject land/plot. This indicates that the amounts collected from the "purchasers"/investors are pooled and utilized for the scheme. I, therefore, find that the instant schemes offered by Dhanolty Developers satisfy the first condition stipulated in Section 11AA(2) (i) 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.

The various sales plans indicating “Purchase Value of BC" as well as "Estimated Honey Value" as seen from the "brochure" furnished by Dhanolty Developers indicate that Dhanolty Developers is offering an amount as profit/return to the "purchasers"/investors. From the various clauses in the "ARC"/contract, it observed that after the execution of the "ARC"/contract all the rights (i.e. ownership, possession, etc) of the said bee colony shall unconditionally pass on to Dhanolty Developers or the Walia Apairies, as the case may be. The "purchasers"/investors shall have no rights over the said bee colony and anything whatsoever in reference to the said bee colony. Clause 3 of the "ARC"/contract states that "purchasers"/investors will become eligible to receive a "Projected amount"/profit as per the plan opted after the end of the "ARC"/contract, which being the proceeds due with the possible profits likely to be made by Dhanolty Developers arising due to the accretions. It is further observed that even the "Project amount"/profit to be paid by Walia Apiaries to the "purchasers"/investors as per the "ARC"/contract is guaranteed by Dhanolty Developers by executing a "Guaranteed Declaration" with the "purchasers"/investors. In case of the scheme of "Sale/purchase and development of plot /land", for the purchase value of `2,00,000/- paid in 10 monthly installments of `10,000/- each, the profit/return offered as "projected appreciated developed land value" after 72 months is `4,00,000/ and after 100 months, the "projected appreciated developed land value" is `5,60,000/-. In view of the above, it is clear that such contracts/agreements are entered by the "purchasers"/investors, with an intention to earn profits. I, therefore, find that the instant Schemes also satisfy the second condition stipulated in section 11AA(2)(ii) 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, and iv. The investors do not have day-to-day control over the management and operation of the scheme or arrangement.

As per the terms of the "ARC"/contract, the "purchasers"/investors, unconditionally authorize Dhanolty Developers or Walia Apiaries, as the case may be, to take all necessary decisions and the "purchasers"/investors do not have any say in all such matter. As has been observed in the previous paragraph, all the rights, ownership, possession, etc. of the bee colony shall unconditionally pass on to Dhanolty Developers or Walia Apiaries and they shall be entitled to all its accretions and to sell the honey produced from bee colony. The "terms and conditions" in the "Certificate" issued by Dhanolty Developers to the "purchasers"/investors clearly stipulate that the "Purchaser"/ investor shall have no right in the management and cannot participate in the affairs/business of Dhanolty Developers (Clause 13). In view of the above, it is observed that, the "Purchasers"/ investors, do not, at any stage, manage the contribution, property or investment and they do not have day to day control over the management and operation of the schemes forming part of the "sale and rearing of Bee Colony" offered by Dhanolty Developers. Various clauses of "Agri Plot Agreement" and other available documents/materials pertaining to the scheme of "Sale/purchase and development of land/plot", stipulate that Dhanolty Developers collects funds from the public without identifying the plot. As per the said agreement, in cases of "Single Installment Plan" (SIP), the land shall be identified and allotted within a period of 90 days after the receipt of the full consideration amount and in case of installment plans, it is stipulated that the land shall be identified and allotted after the receipt of 50% of total consideration amount of the plot. No specific time period is mentioned for the identification and allotment/transfer of land/plot. This clearly indicates that the "Purchasers"/investors shall have no right in the management and cannot participate in the day to day affairs/business of the Dhanolty Developers. I, therefore, find that the instant Schemes also satisfy the conditions stipulated in Section 11AA (2)(iii) and (iv) of the SEBI Act.

10.2 From the above analysis, it is observed that schemes of "Sale/purchase and development of land/plot / Sale and rearing of Bee Colony” offered by Dhanolty Developers with a resultant promise of returns when considered in light of peculiar characteristics and features of such schemes, as discussed in the preceding paragraphs, prima facie satisfy all four conditions specified in Section 11AA (2) of the SEBI Act.

11. I, now, proceed to examine the submissions made by Dhanolty Developers in respect of its schemes. Dhanolty Developers, vide its letter dated June 28, 2013 contended ". ……we are a simple sale & purchase company, we are selling bee hives, honey, produce of bee hives, agricultural land, produce of agriculture etc. ….the customer can out rightly purchase the bee colony …. So there is no requirement of certificate from SEBI u/s 11AA of SEBI Act, 1992". In this context, it is observed that even though the sale agreement states that Dhanolty Developers entrusts physical custody of bee colony, which is the subject matter of the "sale agreement" to the "purchaser"/investor, the same agreement also states that that along with the "purchaser"/investor there may be several co-owners of the Bee Colony. In view of this, the submission made by Dhanolty Developers "the customer can out rightly purchase the bee colony" is not borne out of facts and hence not acceptable. Further, by executing the "ARC"/contract for rearing of bee colony, all the rights, ownership, possession etc. of the bee colony, stated to have been purchased by the "purchasers"/ investors, unconditionally passes to Dhanolty Developers or its associate company viz. Walia Apairies. The "purchasers"/investors are entitled, either to receive, a "projected amount"/profit/return as per the plan opted by them or the bee colony. As per the aforesaid contract, Dhanolty Developers shall be entitled for all the accretions and the "Purchasers"/ investors cannot claim any right or ownership of the same. In circumstances as aforesaid, the only reasonable conclusion that can be arrived is that the funds are collected from the "purchasers"/investors for the purpose of the scheme with a view to provide profit/return and not for delivering bee colonies. In view of this, I am unable to accept the contention put forth by Dhanolty Developers that they are doing simple business of selling bee hives.

11.1 As regards the scheme for "Sale/purchase and development of land/plot", it is observed that Dhanolty Developers collects funds from the "purchasers"/investors for the purchase of the plot/land and undertakes to develop the land forming part of various plans offered by it. The amounts are collected from the "purchasers"/investors as the cost of the land/plot, its development charges, other inputs, saplings, plants, trees, crops, maintenance etc. The contribution or investment made by a 'customer'/ investor are in accordance with the various “Payment Plan(s)" offered under the Scheme of "Sale/purchase and development of land/plot". It is observed that the "purchaser"/investor is not provided with the details of the plot/land to be purchased and promised to be allotted by Dhanolty Developers. It is important to note that no plot/land is identified and demarcated when an individual "purchaser"/investor executes the "Agri Plot Agreement". The said agreement stipulates "In case of Group A -SIP Plan the land shall be identified and allotted within a period of 90 days and Sale /Deed shall be executed after development of said plot, within a period of 3 years and in case of Installment Payment Plans, the land shall be identified and allotted after receiving of 50% of the consideration amount …" This indicates that even after the receipt of the 50% of total consideration amount of the land/plot, no specific time period is mentioned for the identification or allotment/transfer of land/plot. It is further noted from the payment schedule of the aforesaid scheme, (table reproduced in paragraph No. 10(d)) that a "projected appreciated developed land value"/profit/return is mentioned against each payment option. It is also pertinent to note that Dhanolty Developers has not furnished relevant documents/materials pertaining to its scheme for "Sale/purchase and development of land/plot", viz. copies of "Allotment Letter", sale deed etc. in order to substantiate its contention. Considering the aforesaid observations, coupled with the failure on the part of Dhanolty Developers in providing the vital information/materials, I am unable to accept the contention put forth by Dhanolty Developers that it is carrying simple sale/purchase and development of land/plot.

11.2 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 Ltd. & Ors. vs. UOI & Anr. (MANU/SC/0247/2013) (hereinafter referred to as "PGFL Case"). While analyzing the scope of sub-section (2) of Section 11AA, the Hon'ble Court held that: "..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." 12. In the context of the aforesaid observations of the Hon'ble Supreme Court of India in the PGFL Case, I find that the activity of fund mobilization by Dhanolty Developers with a resultant promise of returns, when considered in the light of other features of such scheme(s) as discussed in the preceding paragraphs Nos. 10 and 11, is nothing but a 'collective investment scheme' as defined in Section 11AA of the SEBI Act under the guise of "Sale and rearing of Bee Colony” and "Sale/purchase development of land/plot".

13. 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") provides that no person other than a Collective Investment Management Company which has obtained a certificate under the said regulations shall carry on or sponsor or launch a 'collective investment scheme'. Therefore, a person can launch or sponsor or cause to sponsor a 'collective investment scheme' only if it is registered with SEBI as a Collective Investment Management Company and launching of 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.

13.1 As has been observed in the previous paragraphs, the scheme or arrangement offered by Dhanolty Developers in the name of "Sale/purchase and development of plot/land" and "Sale and rearing of Bee Colony” is nothing but a smokescreen for its 'collective investment scheme', as defined under Section 11AA of the SEBI Act. The same has been continued by Dhanolty Developers without obtaining registration certificate from SEBI. It is further noted that Mr. Sanjay Walia, Mr. Siddharth Walia, Ms. Anita Malik, Ms. Raksha Kumari, Mr. Shiv Pratap Singh, Ms. Shefali Walia and Mr. Pankaj

Bakshi are the promoters /directors of Dhanolty Developers. Considering the fact that no prior registration was obtained by Dhanolty Developers in respect of the aforesaid activities in the nature of 'collective investment scheme', I am of the prima facie view that Dhanolty Developers and its aforesaid promoters /directors are illegally mobilizing funds from the public, which amounts to a fraudulent practice in terms of Regulation 4(2) (t) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practice Relating to Securities Market) Regulations, 2003.

14. Protecting the interests of investors is the first and foremost mandate for SEBI. Under the circumstances, SEBI has to take immediate steps to prevent activities of companies or entities defrauding investors and damaging the orderly development of the securities market. In order to ensure that Dhanolty Developers and its directors/promoters do not collect further funds under its schemes and to safeguard the assets/property acquired by Dhanolty Developers and its promoters/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. In the light of the same, I find no other alternative but to take recourse through an interim measure against Dhanolty Developers and its promoters/ directors viz. Mr. Sanjay Walia, Mr. Siddharth Walia, Ms. Anita Malik, Ms. Raksha Kumari, Mr. Shiv Pratap Singh, Ms. Shefali Walia and Mr. Pankaj Bakshi for preventing them from further carrying on with the fund mobilizing activity.

15. In view of the above, I, in exercise of the powers conferred upon me under Section 11B and 11(4) of the SEBI Act, 1992 read with Regulation 65 of CIS Regulations, hereby direct Dhanolty Developers Ltd. (PAN: AADCD8142Q) and its Promoters/Directors, viz. Mr.Sanjay Walia (DIN: 03337163), Mr. Siddharth Walia (DIN: 02775698 ), Ms. Anita Malik (PAN: ASYPM1031D), Ms. Raksha Kumari (DIN: 02761163), Mr. Shiv Pratap Singh (PAN: AVPPS2160P), Ms. Shefali Walia (PAN: AAOPW1693H) and Mr. Pankaj Bakshi (PAN : AEGPB9921H),

• not to collect any fresh money from public under its existing scheme(s); • not to launch any new scheme(s) or plan(s) or float any new companies to raise fresh moneys from public; • not to dispose of any of the properties or alienate the assets of the existing scheme(s); • not to divert any funds raised from public at large, kept in bank account(s) and/or in the custody of the company; • to immediately submit the full inventory of the assets owned by Dhanolty Developers out of the amounts collected from the "purchasers"/investors under its existing scheme(s);

• to furnish all the information sought by SEBI including, i. Details of amount mobilized and refunded till date, ii. Scheme wise list of "purchasers"/investors and their contact numbers and addresses, iii. All the relevant documents/materials, including the copies of Allotment Letters, Sale deeds etc. pertaining to the scheme of "Sale/purchase and development of plot/land".

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

17. This order is without prejudice to the right of SEBI to take any other action that may be initiated against Dhanolty Developers and its promoters/directors, in accordance with law.

18. The prima facie observations contained in this Order are made on the basis of the material available on record. Dhanolty Developers and its aforesaid promoters/directors, within 15 days from the date of receipt of this Order, file their reply, if any, to the prima facie observations made herein. Dhanolty Developers and its aforesaid promoters/directors may also indicate, in such reply, whether they wish to avail an opportunity of personal hearing in the matter.

S. RAMAN WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA Place: Mumbai Date: July 30, 2014