Order in the matter of Anmol India Agro Herbal Farming and Dairies Care Company Ltd[SAT Appeal No.:133/2018]

Under sections 11(1), 11(4) and 11B of the Securities and Exchange Board of India Act, 1992 and regulation 65 of the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999 and in continuation to order dated May 19, 2016

In respect of – 1. Anmol India Agro-Herbal Farming and Dairies Care Company Limited (PAN:AAGCA6750L) and its Directors, 2. Mr. Mohammad Junaid Memon (PAN:AIHPM9537D), 3. Mr. Mohammad Umar Memon (PAN:ADUPM0907H), 4. Mr. Mohammad Javed Memon (PAN:AJUPM0965D) and 5. Mr. Mohammad Khalid Memon (PAN: AEYPM7188R).

1. Securities and Exchange Board of India (“SEBI”), vide Order dated May 19, 2016 (final order) held that Anmol India Agro Herbal Farming & Dairies Care Co. Ltd (Anmol / Company) and its directors namely, Mr. Mohammad Khalid Memon, Mr. Mohammad Junaid Memon, Mr. Mohammad Javed Memon and Mr. Mohammad Umar Memon were liable for the contraventions committed by the Company in launching and operating unregistered Collective Investment Scheme (CIS), in violation of section 12(1B) of the Securities and Exchange Board of India Act, 1992 (“the SEBI Act”), Regulation 3 of the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999 (“the CIS Regulations”) and Regulation 4(2)(t) of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practice Relating to Securities

Order in the matter of Anmol India Agro herbal

Market) Regulations, 2003 (“the PFUTP Regulations”). In view of the same, the following directions inter alia were passed against Anmol and its above mentioned directors in the final order:- (a) They shall abstain from collecting any money from the investors or launch or carry out any Collective Investment Schemes including the scheme which have been identified as a Collective Investment Scheme in this Order; (b) They shall wind up the existing Collective Investment Schemes and refund through ‘Bank Demand Draft’ or ‘Pay Order’, the money collected by the said company under the schemes with returns which are due to its investors as per the terms of offer within a period of three months from the date of this Order and thereafter within a period of fifteen days, submit a winding up and repayment report to SEBI in accordance with the SEBI (Collective Investment Schemes) Regulations, 1999, including the trail of funds claimed to be refunded, bank account statements indicating refund to the investors and receipt from the investors acknowledging such refunds. In case the Company has made refunds as claimed in its submission, it shall produce the proof for such repayment as directed above and also submit a certificate from Chartered Accountants as directed in sub-paragraph (d) below.

(c) They were permitted to sell their assets only for the sole purpose of making the refunds as directed above and deposit the proceeds in an Escrow Account opened with a nationalized Bank. (d) After completing the aforesaid repayments in terms of sub-paragraph (b) above, the company shall file a certificate of such completion with SEBI, within a period of 15 days, from two independent peer reviewed Chartered Accountants who are in the panel of any public authority or public institution. For the purpose of this Order, a peer reviewed Chartered Accountant shall mean a Chartered Accountant, who has been categorized so by the Institute of Chartered Accountants of India (‘ICAI’). (e) …….. (f) They were restrained from accessing the securities market and are prohibited from buying, selling or otherwise dealing in securities market for a period of 4 years. (g) In the event of failure by Anmol India Agro-Herbal Farming and Dairies Care Company Limited, Mr. Mohammad Khalid Memon, Mr. Mohammad Junaid Memon, Mr. Mohammad Javed Memon and Mr. Mohammad Umar Memon to comply with the above directions, the following actions shall follow:

 They shall remain restrained from accessing the securities market and would further be prohibited from buying, selling or otherwise dealing in securities, even after the period of 4 years of restraint imposed in sub-paragraph (f) above, till all the Collective Investment Schemes of the Company are wound up and all the monies mobilized through such schemes are refunded to its investors with returns which are due to them.  SEBI shall initiate attachment and recovery proceedings under the SEBI Act and rules and regulations framed thereunder against the Company and others responsible.

2. Anmol filed Appeal No – 220 of 2016 against the said order of SEBI before the Hon’ble Securities Appellate Tribunal (SAT) and the Hon’ble SAT vide order dated August 29, 2017 directed Anmol to file a representation before SEBI within 4 weeks wherein the details of money paid and mode and manner of repayment of balance amount should be stated. Further, SEBI was directed to dispose of the representation expeditiously within a period of 8 weeks thereafter.

3. Anmol through its authorized representatives submitted its representation vide a letter dated September 25, 2017, which was received by SEBI on September 26, 2017, wherein it has interalia submitted that :- a) That out of ₹ 141.44 Crores, the company has already refunded ₹ 103.12 Crores and an amount of ₹ 38.32 Crores is yet to be repaid to customers. Various annexures have been also submitted as proof of payment in cash, cheque and delivery of products. b) That Anmol has 23 branch offices worth ₹ 23.63 crores and agricultural land worth ₹ 58.70 crores. Further, the company intends to develop part of its agricultural land which would increase the value of land by approx. ₹ 10.5 crores and time of 3 months would be required for such development. c) That the company has some non-agricultural lands worth ₹ 12.75 Crores. The company states that in total it owns property of around ₹ 105 crores. d) The Company has further proposed that it intends to repay the investors by selling its agricultural lands and non-agricultural lands or by transferring its immovable properties of adequate value to customers (individually or in groups) in lieu of the amounts to be refunded to investors.

4. A hearing was sought on behalf of the company and its directors for providing further details. An opportunity of personal hearing was granted to Anmol and its directors on November 17, 2017. Anmol vide email dated November 15, 2017 sought an adjournment of personal hearing. Considering the strict timelines given by Hon’ble SAT, the request for adjournment was declined and Anmol was informed vide email dated November 16, 2017 that the representation for extension of time would be decided based on the documents on record and representation submitted by them.

5. Further, as the representation of Anmol did not indicate any clear-cut timelines within which it plans /proposes to refund all its investors as directed in the final order, an email was sent to Anmol on November 17, 2017 seeking clarification about the time frame within which the repayment of outstanding would be effected in favor of its investors. The authorized representatives of Anmol responded by email on the same date, inter alia stating that :- “…….their client have instructed them to submit that they will require at least 12 months’ time to repay the advances collected from their customers. They had omitted to mention the time limit for repayment in their representation by oversight.”

6. Subsequently, vide email dated November 20, 2017, Anmol stated that it has repaid ₹ 32,70,932 through Bank Demand draft, subsequent to the filing of its representation dated September 25, 2017 to SEBI along with a list of 143 investors with their names and respective amount.

7. I have considered the final order dated May 19, 2016 and the representation filed by Anmol and its directors. Anmol has proposed that it intends to repay the investors by selling its agricultural lands and non-agricultural lands or by transferring its immovable properties of adequate value to customers (individually or in groups) in lieu of the amounts to be refunded to investors. Anmol has submitted that a sum of ₹ 141,44,50,000 was received from the customers, out of which ₹ 103,12,20,267 was refunded as per various schemes offered by the company. Therefore, a sum of ₹ 38,32,29,733 is repayable by the company to its customers.

8. In this regard, it is noted that the final order had explicitly directed that in case the Company had made refunds as claimed in its submissions, it shall produce the proof of such repayments and also submit a certificate from Chartered Accountant as directed at paragraph 27, sub-paragraph (d) in the final order.

9. The company admitted having mobilized ₹ 141.44 crores and it claims to have refunded an amount of ₹ 103.12 crores. From their submission, it appears that Anmol is only taking into account the repayments towards the principal and is silent about the returns that are owed to the investors along with the refund of their investments. Further, the company has indicated that it has repaid the investors in cash and by way of “Products”, without mentioning what kind of products were repaid to investors. The company has also not submitted a certificate from Chartered Accountant as directed in the final order for refunds made to its investors.

10. It is noted from paragraph 20 of the final order that Anmol in its written submission had stated that it is yet to return ₹ 44 crore to the investors. Presently, the company in its representation dated September 25, 2017 has stated that the amount to be refunded stands at ₹ 38.32 crore, which means that in nearly 18 months, Anmol could repay only ₹ 5.67 crore to the investors. The time taken by Anmol for repayment is much beyond the period of 3 months granted to it vide the final order.

11. In this background, Anmol has now proposed in its latest representation, following the SAT Appeal, that it will repay the investors by selling its agricultural and non-agricultural lands or by transferring its immovable properties of adequate value to customers (individually or in groups) in lieu of the amounts to be refunded to investors in a further period of 12 months. I note that though the final order allowed Anmol to sell its immovable properties for the purpose of refund, it has now made the representation as if no such permission existed. I note that Anmol is just engaging itself in correspondence with SEBI with the idea of delaying and protracting compliance with the final order. This is also to avoid other actions being taken against it for the failure or delay in ensuring compliance with the final order. The proposal does not appear genuine and hence does not merit any consideration.

12. The alternate proposal of Anmol is to repay the investors by transferring its immovable properties of adequate value to customers (individually or in groups) in lieu of the amounts to be refunded. This proposal is not feasible as the funds mobilized have to be repaid to investors as directed in the final order and not otherwise.

13. Thus, in view of the above and in the interest of investors and in continuation of order dated May 19, 2016, it is hereby directed that Anmol India Agro-Herbal Farming and Dairies Care Company Limited and its directors namely, Mr. Mohammad Khalid Memon, Mr. Mohammad Junaid Memon, Mr. Mohammad Javed Memon and Mr. Mohammad Umar Memon shall repay the amounts within a maximum period of two months, from the date of this order failing which other enforcement actions will follow.

14. Copy of this Order shall be forwarded to the stock exchanges and depositories for necessary action.

Date: December 4, 2017 G. MAHALINGAM Place: Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA