Order in the matter of Asurre Agrowtech LimitedSAT Appeal No.218/2016][SAT Appeal No.:254 /2019]

WTM/PS/25/IMD-CIS/SRO/MAY/2016

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: PRASHANT SARAN, WHOLE TIME MEMBER ORDER Under sections 11(1), 11(4), 11B and 11D of the Securities and Exchange Board of India Act, 1992 In respect of – 1. Asurre Agrowtech Limited (CIN: U51213TN2007PLC064744) and its Directors 2. Mr. Sengan Thangappalam (PAN: AFUPT3687B/ DIN: 01709534), 3. Mr. Shanmugam Rajendran (PAN: ALAPR1414Q/ DIN: 01656296), 4. Mr. P. Saravanan (DIN: 06467396), 5. Mr. R. Devadoss (PAN: AUCPD0859J/ DIN: 07097648) and 6. Dr. V. Venkataramanujam (PAN: AABPV3976F/ DIN: 07097641).

Date of personal hearing: January 13, 2016 Appearance- 1. Company was represented by Mr. P. Subba Reddy, Advocate 2. Mr. Sengan Thangappalam appeared in-person. 3. Dr. V. Venkataramanujam appeared in-person. For SEBI: Mr. G. Ramar, General Manager, Mr. E. Balasubramanian, Assistant General Manager, Mr. R.Anand, Assistant General Manager and Mr. T. Vinay Rajneesh, Assistant General Manager Date of personal hearing: March 03, 2016 Appearance- Ms. K. Aparna Devi, Advocate represented the Company For SEBI: Dr. Anitha Anoop, General Manager, Mr. E. Balasubramanian, Assistant General Manager and Mr. T. Vinay Rajneesh, Assistant General Manager.

1. Securities and Exchange Board of India (“SEBI”), vide ex-parte interim Order dated July 03, 2015 (“the interim order”), prima facie observed that the fund mobilization activity of the company, Asurre Agrowtech Limited (“the Company” or “AAL”) is a Collective Investment Scheme in terms of section 11AA of the Securities and Exchange Board of India Act, 1992 (“the SEBI Act”). It was alleged that the Company did not obtain a certificate of registration as required under section 12(1B) of the SEBI Act and regulation 3 of the SEBI (Collective Investment Schemes) Regulations, 1999 (“the CIS Regulations”) prior to the launch and operation of such schemes. The Company was also alleged to have contravened regulation 4(2)(t) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 ("the PFUTP Regulations").

2. In order to protect the interest of investors who had subscribed to such schemes launched and carried out by the Company and also to prevent the Company and its directors from further carrying with their fund mobilization activity in the nature of CIS without registration from SEBI, the Company and its past and present directors were directed as follows: “In view of the foregoing, I, in exercise of the powers conferred upon me under Sections 11(1), 11(4)(b), 11B and 11D of the SEBI Act read with CIS Regulations and PFUTP Regulations, hereby direct Assure Agrowtech Limited (CIN: U51213TN2007PLC064744) and its Directors viz., Mr. Sengan Thangappalam (DIN: 01709534), Mr. Shanmugam Rajendran (DIN: 01656296), Mr. P. Saravanan (DIN: 06467396), Mr. R. Devadoss (DIN: 07097648) and Dr. V. Venkataramanujam (DIN: 07097641): a. to cease and desist and not to solicit or undertake such activity or any other activities in the securities market, directly or indirectly, in any matter whatsoever till the time the proceedings in respect of AAL is disposed of; b. not to divert any funds raised from the investors. c. not to collect any fresh money from investors under its existing schemes; d. not to launch any new schemes or plans or float any new companies to raise fresh moneys; e. to immediately submit the full inventory of the assets acquired through money raised by AAL; f. not to dispose of or alienate any of the properties/assets obtained directly or indirectly through money raised by AAL; g. not to divert any funds raised from public at large which are kept in bank account(s) and/or in the custody of AAL; h. to furnish the following information:  Details of amount mobilized till date,  Scheme wise list of investors and their contact numbers and addresses,  Details of investors repaid if any, with full addresses and telephone numbers etc.,

 Details of charges created on its assets by the company,  Details of commission paid on amounts mobilized above,  Details of agents along with their addresses, etc.,  Audited Accounts for FY 2014-15.  full details of project development expenses of Rs.19.90 crores mentioned in the financial statements of AAL for FY 2013-14, alongwith the position for FY 2014-2015.  PAN of abovementioned Directors”.

3. The interim order advised the Company and its directors mentioned above (collectively referred to as “noticees”) to treat the interim order as a show cause notice and advised them to show cause why directions under the SEBI Act and the CIS Regulations should not be issued against them. The interim order advised the noticees to file their replies and also indicate whether they desire to avail an opportunity of personal hearing in the matter.

4. The interim order was delivered on the Company and its directors. The Company and its Directors have made their submissions to the interim order, vide their letter dated July 22, 2015. Without providing the information sought in the interim order, they had inter alia mentioned as follows: (a) The collection of money under the schemes by Company had been stopped completely since six months. (b) The Company has no malafide intention to cheat or defraud the money of investors. (c) The Company did take advance from customers and invested their money in acquiring land for farm and capital expenditure on Goat Farming. (d) In the last 8 years, the Company never failed in paying maturity amounts to its customers. The customers have full access to project progress reports of the Company’s various projects, Balance Sheets and other documents of the company. (e) Further, the Company is not currently mobilising any fresh funds from investors, through existing schemes or launching any new schemes/plans to fresh funds. (f) The Company assured that it would not dispose off /alienate the any property/assets belonging to it and would also not divert any funds raised from public. (g) The Company also requested for an opportunity of personal hearing in the matter.

5. Mr. Venkataramanujam V., vide letter dated July 28, 2015, stated that he holds a doctorate in veterinary sciences and retired as a Professor and Head of Dept, of Madras Veterinary College. As he possessed domain knowledge, he had consented to act as the director of the Company on February 14, 2015. He has no knowledge of the proceedings initiated by SEBI prior to the date of his joining the board. He neither was aware nor part of any decision taken by the Company to raise funds as the fund raising activities was prior to his joining as a director of the Company. He submitted that he did not attend any board meeting so far. The noticee stated that he had since resigned. A copy of his resignation letter dated July 21, 2015 was enclosed. The noticee requested full discharge in relation to any proceedings in the future.

6. The noticees were afforded an opportunity of personal hearing on September 24, 2015 and were informed of the same vide SEBI letter dated August 21, 2015. However, this hearing was adjourned in view of administrative exigency and fixed on December 10, 2015.

7. Further, the Company, vide letters dated August 27, 2015, September 05, 2015 and October 13, 2015, requesting SEBI to expedite in disposing off its application seeking registration as Collective Investment Management Company. The Company submitted that it does not have any intention of defrauding its customers and that it had repaid Rs.6.11 crore pertaining to 6050 customers. The Company provided details of properties and requested SEBI to permit them to disburse one property so that money may be utilized in repayments to investors. They have also stated that they are willing to abide by any Guidelines issued by SEBI in this regard. A writ petition was also filed by the Managing Director of the company, Mr. Sengan Thangapalam, before Hon’ble High Court of Madras in W.P. no. 39046 of 2015 on November 30, 2015. In the writ petition, it was inter alia prayed that the Hon’ble Court may issue a writ of mandamus directing SEBI to register the company as Collective Investment Management Company and pass such order as it deems fit.

8. Thereafter, vide letter dated November 27, 2015, Asurre Farmers Welfare Society (“Farmers society”) filed an application stating that the society consists of members of farmers and subscribers to the various schemes of the Company and requested SEBI to implead it as a party to the proceedings. On a consideration of the same, the Farmers Society was allowed to participate in the proceedings. Thereafter, on December 07, 2015, the Company requested SEBI to adjourn the personal hearing fixed on December 10, 2015 on the ground of heavy rains and floods in the city of Chennai. Considering the request, the personal hearing was re-scheduled to January 13, 2016. All the noticees were informed accordingly.

9. Subsequently, the counsel for the Farmers Society stated that the society was registered as ‘Salem Farmers Welfare Society and requested SEBI to take the same on record.

10. SEBI had on January 11, 2016, sent a letter to the Company with respect to its repeated request including the letter dated January 07, 2016 for consideration of its application seeking registration as a Collective Investment Management Company. In the letter, it was reiterated that SEBI has passed the interim order against the Company and its directors and that in Para 17 of the said Order, the fact that they have applied for registration as Collective Investment Management Company has been recorded and the Order inter-alia noted that registration with SEBI is a pre-condition for launching any collective Investment Scheme and collecting money from the public. It was also stated that the interim order had inter alia directed the Company and directors to cease and desist and not to solicit or undertake such activity or any other activities in the securities market, directly or indirectly, in any matter whatsoever till the time the proceedings in respect of the Company was disposed of.

11. In the personal hearing held on January 13, 2016, Company was represented by Mr. P. Subba Reddy, Advocate, Mr. Sengan Thangappalam and Dr. V. Venkataramanujam appeared in-person. The following is brief record of the proceedings of the said hearing:

1. The Company was represented by its Advocate, who requested for deferring the personal hearing on the ground that the Company had filed a Writ Petition in the Hon’ble High Court at Madras seeking a writ of mandamus directing SEBI to dispose off its application seeking registration for launching CIS. As there was no stay of the present proceedings pursuant to the interim order dated 03.07.2015, as stated by the Advocate himself, the Advocate was advised to make submissions in the matter. The Advocate then requested that the personal hearing may be held after the application is decided by SEBI. The Advocate was not keen on making submissions and persistently requested for another date. In view of the same, another opportunity of personal hearing was afforded to the Company for making submissions.

2. The Company was also directed to submit the list of investors with complete details (name of investor, full address, contact numbers, amount mobilized from them along with scheme, date when such amounts were collected) by January 14, 2016.

3. Salem Farmers Welfare Society, which was allowed to participate in the proceedings, appeared through its representatives. The representatives submitted that the Society has around 1500 members who are the customers/investors in the Company and that such members wish to continue with the Schemes at their own risk. The representatives also stated that there are around 1 lakh customers/investors who have subscribed to the Schemes offered by the Company. The representatives submitted that the Society would submit the ‘consent’ form from all investors stating that they wish to continue with the Schemes of the Company at their own cost and risk. Liberty was granted to file such consent forms within a period of 45 days. They were directed that such list/forms should contain full details of the investors (name, full address, amounts paid to the Company etc) along with proof of identity (Govt. issued identity cards/documents). As further requested, the Society was granted liberty to file its written submissions within a period of 10 days.

4. Noticee, Mr. Venkataramanujam appeared in-person. He filed his submissions dated July 28, 2015 along with copies of resignation letter dated July 21, 2015 and the Company’s letter dated August 31, 2015 acknowledging the resignation letter.

12. Thereafter, the Company on January 13, 2016 filed the following information: a. Details of amount collected till June 30, 2015 in CD including Name of investor, address, scheme in which investments are made and amount invested; b. Details of commission paid on amount mobilised; c. Details of agents along with addresses; d. Audited Accounts for 2014-15; e. Details for Project Development Expenses for FY 2013-14 and 2014-15; f. PAN numbers of Directors

From the details provided by the company, it is observed that the total amount collected by the Company was ` 69.30 Crores and the amount refunded till December 31, 2015 is `11.74 Crores and the balance payable is `57.55 Crores.

As per the last Audited Balance Sheet dated March 31, 2015, the Share Capital of the Company as on March 31, 2015 is `2.29 Crores and Other Long Term Liabilities obtained by the company in the form of advance for purchase of live-stock is `58.40 Crores. The Company has given Land Purchase Advances to the tune of `7.68 Crores and the company has Land equivalent to `18.57 Crores in their Balance Sheet for Period Ending March 31, 2015 and Inventories of Livestock around `3.29 Crores.

13. Salem Farmers Welfare Society did not provide any ‘consent’ forms from the investors. It had forwarded its written submissions on January 21, 2016, wherein the following submissions were inter alia made: a. Salem Farmers Welfare Society (formerly called as Asurre Farmers Welfare Society), is a registered Society. The society consists of members of farmers who have subscribed to the various schemes of the AAL and they are aggrieved with the interim order of SEBI against AAL.

b. The society was formed with the objective to solve common problems, grievances, and misunderstandings of all members including safeguarding the legitimate interests of the farmers and subscribers to the various schemes framed by the company.

c. SEBI order dated July 03, 2015 has definite civil consequences also on the farmers, who have contributed their hard earned money and life savings for implementation of the project, which is under progress.

d. The society, being the representatives of farmers and their combined resources, has deployed resources in Animal Husbandry project under a common platform by incorporating the respondent company, therefore the society should have been allowed to intervene and to take part in the proceedings initiated by SEBI and they should be allowed to make their submissions in the personal hearing and to make written submissions.

e. The society has given its detailed opinion about the difficulties faced by farmers and challenges in carrying on animal husbandry businesses and stated that the problem associated with the farmers /producers could be eradicated through common platform and collective strength. Since the Farmers/ producers have limited capacity to engage trained and experienced persons of relevant experience to manage their business, which is admittedly beyond their reach and means and hence associated voluntarily under a common platform through the promoters, in line with Section 581B of the Companies Act, 1956 (Producer Company), with the co-operative principles of self-help through mutual help.

f. The society understood that the Company has been carrying on the business in compliance with applicable rules and regulations. The farmers have invested their hard earned money in the company and the company believes that the activities of the company are in line with the idea of producer company and does not fall within the ambit of CIS as defined under Section 11AA (1) and (2) of SEBI Act read with Regulation 65 of SEBI (Collective Investment Schemes) Regulations, 1999. Therefore, the farmers have not obtained the registration from SEBI.

g. SEBI initiated the action based on a complaint dated September 01, 2014, which was received from a person, who has nothing to do with the affairs of the company and subsequently, the complainant has withdrawn his complaint. Immediately, after receipt of a letter from SEBI, the Company held several meetings with the farmers, and after taking into their suggestion, the Company has initiated steps to register the company as CIS and accordingly amended their main object of Memorandum of Association.

h. The society stated that if the activities of the company are in the nature of CIS, the same is not prohibited and not unconstitutional and only a reasonable restriction was placed in Regulation 3 of SEBI (CIS) Regulations, 1999 and non-compliances of the same is compoundable under Section 24 and 24A of SEBI Act.

i. The society further submitted that when the company is satisfying the criteria of provisional registration, as stipulated under Chapter IX and XIA of SEBI (CIS) Regulations, SEBI should have considered the application of CIS Company, which is in the best interests of the company and farmers and all other stakeholders.

j. Society submitted that when the application for grant of registration is pending, there is no necessity and urgency for SEBI to issue impugned order and the said order is arbitrary, irrational and impractical. As it was issued, without being heard or offered an opportunity to farmers to explain, it is denial of doctrine of justice and opportunity to the farmers.

k. The society has mentioned that SEBI has not taken into account the socio-economic value of the project and its resultant benefit to the society, more particularly, to farmers. It is also requested that holistic view need to be taken by SEBI after taking into account the investment deployed so far, dedication of the promoters to revive and rehabilitate the status of farmers and producers.

l. SEBI failed to ascertain that the farmers are having immense trust and faith on the company and the complainant is not a representative of rest of the farmers and may have made the complaint with malafide intention.

m. The society submit that if according to SEBI, the company has committed the contravention, SEBI should have directed the company to register itself as Collective Investment Management Company, without affecting the business operation of the company. The entire project of Techno Based Animal Husbandry was conceived by the Promoters, based on estimation and same was originally placed to be funded out of farmer’s contribution. The project is in advanced stage of completion and will be ready for commercialization in next 12 months. By the interim order, SEBI has restrained the company and its promoters from collecting fresh money. Under such circumstances, the company will be confronted by severe financial crisis and will not be able to implement/complete the projects in time and if the situation continues for long time, the entire assets and infrastructure will deteriorate and perish, due to upkeep and maintenance and ultimately, the company will not be able to discharge the funds to the farmers. By this act, the entire project will became paralyzed and will be put into great jeopardy, without resultant benefit to farmers, whose hard earned money was being deployed in the project.

n. The impugned order is violation of Article 19(1)(g) of Constitution of India and it fails to take into account, the nature of business, place and time where it is intended to be carried on, effect on others, stage of development and many other factors that might change within the passage of time and development of society.

o. The Society further submit that as per the scheme, a farm admeasuring 258.50 Acres situated at Thuraiyur Village, Trichy Dt., have been developed as Integrated Intensive Meat Goat farm with required infrastructures. Under the scheme, the company is at the completion of the project and require to allot and transfer land with readily built-up shed along with Meat Goat Kids of the age of 45 days in the ratio of 250 Meat Goat Kids per acre of farm land at marginal cost. Now, as per the scheme, the company has to transfer and handover the farmers land in their land, however the SEBI vide its interim order restrained the company not to dispose of properties obtained through money raised by the company. As a result the company will not able to transfer the farmer’s share of land, unless the restriction of SEBI is lifted and consequently farmers will be put to great loss and the fundamental rights to carry on the business under the Article 300A is infringed.

p. The directions issued by SEBI are arbitrary and without evaluating consequential damage/ loss of the investment of the farmers. SEBI failed to understand the impact of the order on existing business and future prospect and the business of the company became stand still, thus prejudicially affecting the interest of farmers.

q. When the company is in compliance with provisions of SEBI (CIS) regulation as it submitted an application for registration which is pending SEBI would have to restrain itself from passing the exparte order. This tantamounts to gross violation of regulation 7 of SEBI (CIS) regulations which requires SEBI to give an opportunity to the applicant to remove any objection within one month before rejecting any application.

r. If according to SEBI, the company committed the contravention of SEBI (CIS) regulations, then based on company’s application, SEBI would have granted the provisional registration under regulation 71 of chapter IX read with regulation 74A of chapter IXA of SEBI (CIS) regulations by stipulating the conditions prescribed under regulation 71 of SEBI (CIS) regulations without affecting the business operations of the company.

s. As per regulation 68 of SEBI (CIS) Regulations, SEBI should have dealt with the application in the following manner- 1. Grant of provisional registration. 2. by grant of certificate of registration and 3. rejection of application for registration.

t. The company in compliance with Regulation 69 and awaiting for Certificate of registration, has stopped raising money from investors under the existing scheme and also not launched any new scheme thereafter. Further the company as per regulation 70 satisfies all the four requirements for grant of registration and hence SEBI cannot reject the application, except in case where requirements in regulation 70(1) are not fulfilled by the company.

u. Any precipitative action taken by SEBI in its interim order would tantamount to violation of Article 14 of constitution, in light of the Order passed by SAT in the matter of Highland Holiday Homes P Ltd. Vs SEBI wherein it was held as under “It is to be noted that the CIS Regulations are meant to protect the interests of the participants in the collective investment schemes floated by various entities. While applying the said Regulations, the object of the regulations should not be pushed aside giving way to mere technicalities. Any measure in the interest of the farmers which would pass the legal test provided in the Regulation should be welcome”

v. The company is engaged in the business of Intensive Breeding and Meat Goat Farm and substantial capital has been deployed in the form of land and infrastructure. The entire business from inception to commercialization will take minimum five to six years’ time and premature selling of farm land and infrastructure will not fetch adequate returns. The farms lands and infrastructure therein are a composite asset and finding a suitable buyer in short term is impossible. Therefore, SEBI order is violative of Article 4 of the Constitution.

w. The company is in the middle of implementation of the project which need further and continuous flow of contribution of farmers under the existing schemes as per original estimation to successfully complete the project. Failing which, the project will close even before commencement of commercialization operation and farmers will sustain huge loss.

x. The society submitted that impugned order should not been passed as the company is co-operating with SEBI and the impugned order fails to set out any reason for urgency and is in breach of natural justice. Further, as the allegation is only floating collective investment scheme without obtaining registration, the same is punishable with fine and the same can be compounded.

y. The order does not point towards any kind of injustice, damage, fraud caused to any of the farmers. There is no complaint regarding default in repayment. Hence SEBI cannot claim any justifiable reason to pass an exparte order. No grievances of the farmers has come to light which warrant passing of impugned order. SEBI cannot be allowed to harass the farmers purely to satisfy the whims and fancies of the complainant, who has nothing to do with the affairs of the company. The discretion conferred by sections 11(1), 11(4)(b), 11(b), and 11(4) of the SEBI Act ought to be exercised in the appropriate cases. In the instant case, SEBI has arbitrarily passed the order without following the prescribed procedure contemplated under regulation 59 of SEBI collective investment Regulations 1999.

z. As per regulation 73 of SEBI CIS regulations, the farmers of the requisite majority have given the positive consent and/ or desires of continuing with the scheme at their own risk and responsibility. Even after SEBI’s proceedings, the company’s activities have not undergone any change and the company continues to carry on its activity, with full knowledge and involvements of farmers and the company is continuously bringing to the knowledge of farmers, all development that is happening between SEBI and company.

aa. The farmers are aggrieved with the interim order of SEBI under following grounds:

i. SEBI totally ignored the interest of farmers whose resources and efforts having deployed in the business and also ignored the result and damage, loss and consequences due to impact of SEBI’s order which will ultimately be burdening the farmers.

ii. The company is in the implementation of the project which was originally planned to be funded out of the contribution from the farmers. Due to the restraint order, the company is unable to collect further subscription under the existing scheme from the farmers and is confronted with severe financial crisis and the project became standstill, resulting in continuous deterioration of company’s assets. The company is unable to undertake commercialisation and generate income as per original estimation, in which case, the company will fail to repay the investments which will prejudice the farmers. Till now the company and the promoters have not defaulted in discharging the duties and responsibilities. SEBI should have appreciated bonafide efforts of the company and would have accorded the registration in accordance with the regulations.

iii. SEBI in the pretext of farmers’ protection has unreasonably encroached into the personal rights of the farmers. When the farmers themselves voluntarily associated with the company and consented to deploy for development of the project, there is no necessity for SEBI to step into the shoes of the farmers. A reasonable opportunity should have been given to the farmers by directing the company to call a meeting of the farmers. SEBI proceeded to issue the order based on unknown complainant without assessing the consequent effect of the order. Later on, the complainant has withdrawn the complaint. The imposition of fines and penalties is not acceptable, as these would be paid out of farmers’ funds. SEBI cannot enrich itself out of penalties/fines out of investor’s money. When the company is not in default and no farmer has complained against the company, SEBI’s arbitrary actions, without consent of the farmers, is not justifiable and is not warranted.

iv. SEBI vide its order restrained the company ‘to not to dispose of its assets/properties and not to collect fresh money from the farmers under existing scheme’. In such case, how would the company develop the project with necessary infrastructure and allot the farm land, develop and supply the goats to farmers on continuous basis. If SEBI does not allow them to transfer the farm land with necessary infrastructure to farmers, then how would the farmers carry on the business of meat goat rearing. SEBI order will force the company to resort to distress and premature sale of assets and it will not able to realise the real value of assets and ultimately farmers have to sacrifice the hard earned money. Even though substantial parts of the assets comprises of farmland, it still cannot be sold as empty land, as other infrastructures already created over the land and it cannot be sold in piece and part.

v. The interim order of SEBI will create rumours in the market about the company and will create a panicky situation and uncertainty among the farmers on apprehension of losing their money and would force them to take drastic steps, without understanding the consequences.

vi. In this manner, SEBI cannot protect the interest of the farmers. SEBI’s action will ultimately result in farmers suffering huge losses. Even assuming the company is in contravention of section 11AA of SEBI Act, SEBI should have restrained itself from passing the severe order, where alternative remedies are available like grant of provisional registration, getting consent of the farmers to continue with the scheme at their own risk and responsibility and giving direction to the company to dispose of the others and distribute the sale proceeds among the farmers.

vii. Statutory authority like SEBI is bound to exercise their discretion, in every case and they cannot automatically refuse all CIS applications but hear and determine the case on merits.

viii. In case of CIS schemes, SEBI should have extended the similar benefit as in the case of compounding applications, in the case of listed companies and should not show step-motherly attitude. In CIS schemes also, SEBI should have initiated effective steps to regularize non-compliances of companies, by imposing penalties and fines. By this process, large number of CIS companies having sound business, are forcibly closed down by SEBI where there are alternative remedies available.

bb. Stating the above, the society has made following prayers: a) To set aside interim order of SEBI and other proceedings. b) Direction to issue provisional registration under regulation 71 of SEBI (CIS) Regulations. c) Direction to SEBI to consider CIS applications and issue registration certificate. d) The farmers who subscribed to the Collective Investment Schemes have given their positive consent and are desirous of continuing with the scheme with their risks and responsibility. The farmers having high confidence and trust on promoters and hence, the promoters shall be allowed to complete the project as per original schedule in accordance with Regulation 3 of SEBI (CIS) Regulations. e) Direction to the promoters to furnish an undertaking not to divert funds raised from the farmers and undertaking not to divert any funds raised for public, which are kept in the bank account and in the custody of the company. f) Such other orders which is beneficial to the interest of the farmers.

14. The Company was afforded another personal hearing on March 03, 2016, when Ms. K. Aparna Devi, Advocate appeared on behalf of the company and filed written submissions dated February 29, 2016 and reiterated the relief made in such submissions. As per the written submissions, the Company had requested SEBI for the following relief: (a) To set-aside the interim order, more particularly the restraint imposed in alienating or transfer of properties/assets obtained directly or indirectly through money raised by the Company; and (b) To repay and wind-up the scheme in accordance with the CIS Regulations.

I also note that in the above said written submissions, the Company has mostly reiterated the submissions made by the Salem Farmers Welfare Society and inter alia submitted as follows: a) The written submissions is in on behalf of AAL and on behalf of Mr.Sengan Thangapalam and Mr.Shanmugam Rajendran. b) They have stated that the SEBI’s interim order have definite civil consequences not only on the business of the company but farmers, its existing customers, its employees and several intermediaries and investors at large. c) SEBI’s Interim order was passed ex-parte and without giving opportunity of being heard to the company and as a result the entire project came to a standstill and paralyzed. d) The company had submitted an interim reply dated December 20, 2014 to SEBI illustrating the background on how their project is conceived and came into existence. SEBI has failed to take note of the noble objects of the promoters and moral, social and economic value of their projects and its resultant benefits to farmers.

e) The farmers, with the sole objective to revive and rehabilitate the farmers, incorporated AAL, with the objective of co-operative principle of self-help. The resources pooled from the investors are deployed in the business. The actual commercial production was expected to commence by end of December, 2015. f) The activities of CIS as such is not prohibited and is not unconstitutional and only reasonable restrictions has been imposed by way of Regulations 3 of SEBI (CIS) Regulations, 1999. Non-compliance of the same is only a contravention and can be compoundable under Section 24 is and 24A of SEBI Act, 1992. g) SEBI has based on a complaint sought information from the company. The company has provided the information sought by SEBI vide their letter dated December 20, 2014. h) After receipt of SEBI’s letter and after considering the suggestions of the farmers, the company has initiated effective steps to register the company as a Collective Investment Management Company. The company has passed a resolution in an EGM to amend their Memorandum of Association and has inducted two more independent directors and increased their net worth to ₹ 3 Crores.

The company has then submitted their application for registration in Form A to SEBI. i) The Company had mentioned that SEBI has inserted Chapter IXA and Regulation 74A in SEBI (CIS) Regulations, 1999 vide SEBI (CIS) (Amendment) Regulations, 2014. AAL has quoted the provisions of Regulations 68, 69, 70, 71 and 78A of SEBI (CIS) Regulations, 1999 and stated that when the company is satisfying the criteria of provisional registration stipulated under Chapter IX and IXA of SEBI (CIS) Regulations, 1999, SEBI should have considered their application and issued provisional registration, in the interest of the farmers and other stakeholders. j) If according to SEBI, the company has committed the contravention, SEBI would have directed the company to register itself as Collective Investment Management Company, without affecting the operations of the company. As a result of SEBIs interim order, the entire project became stand still and the company will not go for commercialisation, as per original schedule. If the situation will continue for a long time, the entire infrastructures and assets will deteriorate and the entire project will become paralysed.

The impugned order of SEBI is in violation of Article 19 (1) (g) of the Constitution. k) SEBI’s order is in violation of Regulation 7 of SEBI (CIS) Regulations, 1999. l) The application for registration should have been dealt as in Regulation 68 of SEBI (CIS) Regulations, 1999, i.e. either provisional registration should have been granted, or certificate of registration be issued or the application form should be rejected. Further, the company satisfies the criteria mentioned in Regulation 70 of SEBI (CIS) Regulations, 1999 and is in compliance with Regulation 69. Hence, SEBI should have granted provisional registration. m) When the application for grant of CIS registration is pending, there is no urgency on the part of SEBI to issue ex-parte order, which is arbitrary and without giving opportunity of being heard, which will affect the interest of investors. There are no investor grievances. The complainant based on whose complaint SEBI has initiated inquiry has also withdrawn her complaint subsequently. n) If a Collective Investment Management Company contravenes any provisions, it has to be dealt under Regulation 59 of SEBI (CIS) Regulations, 1999 read with Regulation 25 of SEBI (Intermediaries) Regulations, 2008. o) Mr. R. Devadoss and Mr. Venkataramnujam were inducted as Independent Directors to satisfy eligibility criteria for CIS application and are not directly associated with the persons having control over the affairs of the company.

The independent Directors are not holding any shares in the company and they are not responsible for the acts and omissions of the company. AAL has also attached the copy of submissions of Mr.R. Devadoss. Further, AAL has also forwarded a copy of the Form DIR-12, filed by AAL with MCA regarding resignation of Mr.P.Saravanan from the directorship of the company on February 26, 2015. p) The company has mentioned that they have filed a Writ Petition, which is pending before Hon’ble High Court of Madras and requested SEBI to not pass any orders, till the Writ Petition is disposed. However, SEBI did not accede to their request. q) SEBI has intentionally with a pre-determined intention delayed disposal of their CIS application through practice of deliberate inaction and inordinate delay. Hence, the company has submitted an application dated February 24, 2016 to Hon’ble Prime Minister of India and Ministry of Agriculture and Farmers Welfare regarding the same. r) As already irreparable damage caused to the company, by inordinate delay in granting provisional registration to the company and subsequent damages by issuance of SEBI’s interim order dated July 03, 2015, it will not be possible for the company to restore the Animal Husbandry Project, without incurring additional expenditure.

Therefore, even the grant of provisional registration will not be of us or benefit to the company or farmers. Also due to closure of the project to comply with SEBIs order, all the sources of the earnings to the company are stopped and the project was abandoned without even going for commercialization. If the situation continues for some time, the company may have to face severe financial crisis to even discharge the liabilities of the farmers as well as investment deployed in Animal Husbandry projects. s) By SEBIs interim order, the projected cost was increased substantially and it requires further resources to fund the project escalation costs, for which the farmers will not agree. Thus, now even after grant of CIS registration, the same cannot be avoided and doing business with escalated cost will not be profitable for the company. t) Any further delay in granting permission to the company to dispose of the assets and discharge the liabilities will give origin to unnecessary litigations. Before the farmers could resort of take law in hands, out of frustration and apprehension of losing the investment, the interim order should be lifted, so that the company could discharge the liabilities to the farmers amicably and in friendly manner.

15. In the submission of Mr. R. Devadoss, which was attached by the company along with their written submissions, it is has stated that he was appointed as Independent Director on February 26, 2015, in compliance with Regulation 70 of SEBI (CIS) Regulations. 1999. He has mentioned that he is not directly associated with the persons having control over the affairs of the company, is not holding any shares in the company and he is not responsible for the acts and omissions of the company. Stating the above, he has prayed that he be discharged from all the proceedings, penalties and prosecutions in respect of all the acts and actions of the company, prior to his appointment and those that subsists as on the date.

16. Subsequently, the Company vide its letter dated March 08, 2016, while referring to the Order dated February 03, 2016 passed by the Hon’ble Securities Appellate Tribunal in Citrus Check Inn vs. SEBI requested SEBI to grant provisional certificate of registration to the Company so that the Company could operate schemes under the regulation of SEBI and that depending on the final order to be passed, SEBI may consider grant of final registration. The Company also requested SEBI to allow the Company to receive subscription amount from investors till the time provisional registration is granted. The Company also mentioned that due to the restraints imposed against it vide the interim order, cash inflows had stopped which had resulted in its business being hampered.

17. I have considered the interim order, the submissions made by the concerned noticees and the material submitted by them and other material available on record. The interim order has alleged that the Company had launched and operated CIS without obtaining registration from SEBI in violation of section 12(1B) of the SEBI Act and regulation 3 of the CIS Regulations. The mobilization was also alleged to be in violation of regulation 4(2)(t) of the PFUTP Regulations. From the submissions made by the Company, it is noted that it has not disputed the allegations and has requested SEBI to consider its application for registration as a Collective Investment Management Company.

18. The following observations/facts from the interim order are noted:

(a) As per the Rule Book of the Company, the Company engages in developing “techno based, Agro industries” on behalf of the venturer for which the venturer shall enter into an agreement with the Company. Advisors are associated for booking orders for such activity. (b) The Company may buy back the stock if the venturer opts for an ‘Estimated Realizable Value’(ERV). (c) The Company had been offering and operating the following schemes admittedly based on livestock and poultry: I (A) Down Payment Scheme (DPS) Scheme DPS 1 for 75 Months (6.3 Yrs) Sl. No. Consideration Cost Expected Realisable Accidental Death Value Compensation 1 2500 5000 NA 2 5000 10000 5000 3 10000 20000 10000

4 15000 30000 15000 5 50000 100000 50000 I (B) Down Payment Scheme (DPS) Scheme DPS 2 for 100 Months (8.4 Yrs) Sl. No. Consideration Cost Expected Realisable Accidental Death Value Compensation 1 2500 6325 NA 2 5000 12650 5000 3 10000 25300 10000 4 15000 37950 15000 5 50000 126500 50000

II(A) SYSTEMATIC PAYMENT SCHEME (SPS) Scheme SPS 1 for 66 months ( 5.6 Yrs) Sl. No. Consideration INSTALMENTS ERV ADC Cost Mly Qly Hly Yly 1. 6600 100 295 580 1150 8750 9000 2 13200 200 590 1160 2300 17500 18000 3. 19800 300 885 1740 3450 26250 27000 4. 26400 400 1180 2320 4600 35000 36000 5. 66000 1000 2950 5800 11500 87500 90000 II(B) SYSTEMATIC PAYMENT SCHEME (SPS) Scheme SPS 2 for 78 months (6.6 Yrs) Sl. No. Consideration INSTALMENTS ERV ADC Cost Mly Qly Hly Yly 1. 7800 100 295 580 1150 10925 9000 2 15600 200 590 1160 2300 21850 18000 3. 23400 300 885 1740 3450 32775 27000 4. 31200 400 1180 2320 4600 43700 36000 5. 78000 1000 2950 5800 11500 109250 90000 II(C) SYSTEMATIC PAYMENT SCHEME (SPS) Scheme SPS 3 for 60 months (5 Yrs) Sl. No. Consideration INSTALMENTS ERV ADC Cost Mly Qly Hly Yly 1. 7500 125 370 730 1450 9700 9000 2 15000 250 740 1460 2900 19400 18000 3. 22500 375 1110 2190 4350 29100 27000 4. 30000 500 1480 2920 5800 38800 36000 5. 75000 1250 3700 7300 14500 97000 90000

II(D) SYSTEMATIC PAYMENT SCHEME (SPS) Scheme SPS 4 for 75 months (6.3 Yrs) Sl. No. Consideration INSTALMENTS ERV ADC Cost Mly Qly Hly Yly 1. 6000 80 235 480 950 9550 9000 2 12000 160 470 960 1900 19100 18000 3. 18000 240 705 1440 2850 28650 27000 4. 24000 320 940 1920 3800 38200 36000 5. 60000 800 2350 4800 9500 95500 90000

II(E) SYSTEMATIC PAYMENT SCHEME (SPS) Scheme SPS 5 for 60 months (5 Yrs) Sl. No. Consideration INSTALMENTS ERV Cost Mly Qly Hly Yly 1. 6000 100 295 580 1150 8500 2 12000 200 590 1160 2300 17000 3. 18000 300 885 1740 3450 25500 4. 24000 400 1180 2320 4600 34000 5. 30000 500 1475 2900 5750 42500

II(F) SYSTEMATIC PAYMENT SCHEME (SPS) Scheme SPS 6 for 36 months (3 Yrs) Sl. No. Consideration INSTALMENTS ERV Cost Mly Qly Hly Yly 1. 3600 100 295 580 1150 4250 2 7200 200 590 1160 2300 8500 3. 10800 300 885 1740 3450 12750 4. 14400 400 1180 2320 4600 17000 5. 18000 500 1475 2900 5750 21250

II(G) SYSTEMATIC PAYMENT SCHEME (SPS) Scheme SPS 7 for 48 months (4 Yrs) Sl. No. Consideration INSTALMENTS ERV Cost Mly Qly Hly Yly 1. 4800 100 295 580 1150 4250 2 9600 200 590 1160 2300 8500 3. 14400 300 885 1740 3450 12750 4. 19200 400 1180 2320 4600 17000 5. 24000 500 1475 2900 5750 21250

II(H) SYSTEMATIC PAYMENT SCHEME (SPS) Scheme SPS 8 for 60 months (5 Yrs) Sl. No. Consideration INSTALMENTS ERV Cost Mly Qly Hly Yly 1. 6000 100 300 590 1175 7925 2 12000 200 600 1180 2350 15850 3. 18000 300 900 1770 3525 23775 4. 24000 400 1200 2360 4700 31700 5. 30000 500 1500 2950 5875 39625

II(I) SYSTEMATIC PAYMENT SCHEME (SPS) Scheme SPS 9 for 84 months (7 Yrs) Sl. No. Consideration INSTALMENTS ERV Cost Mly Qly Hly Yly 1. 8400 100 295 580 1245 12970 2 16800 200 590 1160 2490 25940 3. 25200 300 885 1740 3735 38910 4. 33600 400 1180 2320 4980 51880 5. 42000 500 1475 2900 6225 64850

II(J) SYSTEMATIC PAYMENT SCHEME (SPS) Scheme SPS 10 for 96 months (8 Yrs) Sl. No. Consideration INSTALMENTS ERV Cost Mly Qly Hly Yly 1. 12000 125 370 730 1450 19780 2 24000 250 740 1460 2900 39560 3. 36000 375 1110 2190 4350 59340 4. 48000 500 1480 2920 5800 79120 5. 60000 625 1850 3650 7250 98900 II(K) SYSTEMATIC PAYMENT SCHEME (SPS) Scheme SPS 11 for 60 months (5 Yrs) Sl. No. Consideration INSTALMENTS ERV Cost Mly Qly Hly Yly 1. 6000 100 295 580 1140 7800 2 12000 200 590 1160 2280 15600 3. 18000 300 885 1740 3420 22800 4. 24000 400 1180 2320 4560 31200 5. 30000 500 1475 2900 5700 39000

II(L) SYSTEMATIC PAYMENT SCHEME (SPS)

Scheme SPS 12 for 60 months (5.6 Yrs) Sl. No. Consideration INSTALMENTS ERV Cost Mly Qly Hly Yly 1. 6600 100 295 580 1245 8950 2 13200 200 590 1160 2490 17900 3. 19800 300 885 1740 3735 26850 4. 26400 400 1180 2320 4980 35800 5. 33000 500 1475 2900 6225 44750

III (A) HYBRID PAYMENT SCHEME (HPS) Scheme HPS 1 payment 40 months (3.4) ERV 60 months ( 5 Yrs) Sl. No. Consideration INSTALMENTS ERV ADC Cost Mly Qly Hly Yly 1. 10000 250 760 1645 3275 14500 7500 2 20000 500 1520 3290 6550 29000 15000 3. 30000 750 2280 4935 9825 43500 22500 4. 40000 1000 3040 6580 13100 58000 30000 5. 100000 2500 7600 16450 32750 145000 75000

III (B) HYBRID PAYMENT SCHEME (HPS) Scheme HPS 2 payment 60 months (5 Yrs) ERV 120 months (10 Yrs) Sl. Consideration INSTALMENTS ERV Special ADC No. Cost Mly Qly Hly Yly Incentive 1. 15000 250 740 1475 2925 21500 1500 7500 2 30000 500 1480 2950 5850 43000 3000 15000 3. 45000 750 2220 4425 8775 64500 4500 22500 4. 60000 10000 2960 5900 11700 86000 6000 30000 5. 150000 2500 7400 14750 29250 215000 15000 75000 (d) Further, as per the Rule Book, every unit of `5,000/-, represents specified number of livestock/poultry, as mentioned below: Unit Cost of Livestock and Poultry No. of Units* Particulars Allotments I Dairy 1 Calf I Goat 2 Goats I Poultry 30 Birds (e) The Company had been mobilizing funds under its schemes under three payment schemes – Down Payment Schemes, Systematic Payment Schemes and Hybrid payment Schemes. The features of these Schemes are as follows: Down Payment Schemes: i. These are the “fixed investment plans”, in which the venturer/investor books livestock/poultry on day one and develops it for the minimum maturity period of 6.3 years with an option to renew the agreement upto 8.4 years based on the discretion of the venturer. ii. The venturers/investors who are interested in the schemes offered by AAL, are made to enter into an "Agreement" for developing livestock with AAL. The terms of agreement are as under: 1. "The cost of livestock/Poultry includes maintenance and administrative expenses which will be paid by the venturer to the company at the time of agreement. 2. The agreement will be fixed for a period of 75 and 100 months. 3. The agreement could not be cancelled upto 3 years. After 3years, if venture wishes to cancel the agreement then the company will charge 30% of the Booking price of livestock / Poultry agreed at the time of agreement by the venture." Systematic Payment Schemes (SPS): i. "Livestock/poultry can be booked in 60-78 easy systematic payments. ii. Livestock / Poultry will be allotted to the venturer/investor after receiving first 36 instalments and will be developed in next 30 months in Scheme-1, 42 months in Scheme -2, 24 months in Scheme-3. iii. The cost of livestock/Poultry includes maintenance and administrative expenses which has to be paid by the venturer to AAL in 60-78 monthly payments. iv. Agreements will be fixed for 60, 66, 75 and 78 months and SPS cannot be cancelled in between the term.

v. In case if the venture failed to comply with the agreement there is no lapsation and rule no. (IV) of the Rule book applies." Hybrid Payment Scheme: HPS-1 is a short term scheme in which the venturer pays cost of consideration for 40 months and develops the cattle/Poultry for a period of 60 months, HPS-2 is a long term scheme in which venturer pays instalments for a period of 5 years and develop the livestock/poultry till 10th year for which a special incentive is paid as return apart from the final ERV amount. i. "Under the scheme the venturer can book the livestock in 40-60 payment. ii. The total terms of the HPS 1 is 6 yrs and HPS 2 is 10 yrs however the venturer will have to pay instalments for livestock / Poultry only for 40 month and 60 month respectively. iii. The agreement will be fixed for 60 month and 120 month and cannot be cancelled in between the term. iv. The cost of livestock / Poultry includes the maintenance and administrative expenses which will be paid by the venture to the company in 40 to 60 monthly instalments v. Livestock / Poultry will be allotted to the venture after receiving first 36 instalments and will be developed in the next 2 years in HPS 1 and 7 years in HPS 2."

(f) The interim order had also observed the following: a) “As per the application form, the customer applies for ‘schemes’ which are based on units of Livestock Poultry. i. The application form also contains various fields including Scheme Category, Consideration amount, date of commencement/expiry date of Joint venture, Introducers code, Advisors code, etc. The following clauses are noted from the application form: 1) An applicant should be an Indian. At least one instalment amount along with an admission fee of Rs.5/-, to the customer support centre (CSC) of the company together with application form duly filled in and signed by the applicant/parent or guardian of minor. 2) The company has full authority to reject any application without giving any reasons. 3) Joint venturer must make all remittances to the concerned CSC of the company directly.

4) The company shall issue a “Certificate” form. The certificate issued by the company shall bear the seal/stamp of the company and shall be signed by the chairman or any other authorised officer of the company. 5) The joint venture certificate issued by the company should not be pledged or mortgaged or otherwise used as a security to raise loan through any bank, organization or individuals. b) AAL issues a "Certificate" after enrolling a Customer, which contains details regarding Registration number of the Customer, Scheme number, Consideration, Cost of livestock/poultry, Instalments payable, date of expiry of term, distributers code, Expected Sum Payable on Expiry of Term CC/PC. The following general terms and conditions" are noted from a 'Certificate" issued to an investor: 1) Payment of subscription: Subscriptions are payable annually in advance but the same may be paid in half yearly, quarterly or on monthly basis without any extra charges. 2) Thirty days grace period are allowed for payment of annual, half yearly and quarterly subscriptions and fifteen days for monthly subscription. 3) When the instalment is not paid within the grace period the registration letter stands discontinued but may be revived at any time within 12 months on payment of all dues together with penalty there on @ 15% per annum and appropriate late fees for delayed payments; 4) Special Revival Scheme: A discontinued joint venturer may be revived any time before expiry of the term from the date of discontinuation on an application with a nominal alteration fee of Rs. 50/- along with one instalment of subscription. 5) The details of different penalty rates of interest to different levels of discontinued period as stated in the Rule Book is as under: Serial No. Discontinued Amount payable after completion Period of Venture Period 1 1-12months Only the paid booking price 2 13-24 months Booking price received + 10% 3 25-36 months Booking price received + 15% 4 37-46months Booking price received + 20% 5 47-60months Booking price received + 25% 6 61-72 months Booking price received + 30%

6) Amount received against discontinued Joint Venturer shall be repaid by the company as per Rule Book as amended from time to time and is applicable for scheme of five years and above only. 7) The company also states that “All charges related to the agreement would be borne by the venture”. No duplicate agreement will be issued under any circumstances. 8) In case of natural death of a Joint Venturer, the Nominee/legal Representative/Successor may have the refund as specified in Rule Book, as amended from time to time. The details of refund stated in the Rule book is as under :- Serial No. Term Period for Amount payable as claim in the the claim in case of event of Natural Death during the Natural Death venturer Period 1 1-12months Only the paid booking price 2 13-24 months Booking price received + 10% 3 25-36 months Booking price received + 15% 4 37-46months Booking price received + 20% 5 47-60months Booking price received + 25% 6 61-72 months Booking price received + 30%

9) The Joint Venture(s) shall be eligible for compensation in the event of accidental death as per Rule Book, as amended from time to time. 10) The joint venture arrangement cannot be transferred/assigned/alienated in any manner whatsoever to anyone except in the circumstances and in the manner as specified in Rule book as amended from time to time. 11) The company reserves the right to discontinue/change/amend/modify or alters any of the Rules and regulations and Plans mentioned in the Rule Book(as amended from time to time) at any time at its sole discretion with or without any notice. 12) In case of dispute, the decision of Chairman of Company or any other person(s) nominated by him, shall be final and shall be legally binding on Joint Venturer, who shall have no objection to the appointment of any officer(s) of Company as the sole arbitrator / arbitrators”.

19. The Company had, vide letter dated December 20, 2014, submitted its scheme-wise contribution received from investors:

‘Sl. Plan No. Venturers Amount in Rs. Grand Total 1 HPP1 75 4,37,190 2 HPP2 4 13,880 3 SPS1 77032 26,64,52,990 4 SPS2 27968 15,13,83,541 5 SPS3 8450 3,33,82,405 6 SPS4 11481 8,64,51,860 7 SPS5 976 59,21,560 8 SPS6 255 2,82,510 9 SPS7 423 4,08,860 10 SPS8 902 7,80,855 13 DPS1 1360 2,30,70,000 14 DPS2 87 20,95,000 16 DPS4 19 18,80,000 17 DPS5 823 2,33,17,500 TOTAL 129855 59,58,78,151

The Company, in its submissions dated January 13, 2016 has informed that it had collected a total of ` 69.30 crore under its schemes and has refunded `11.74 crore as on December 31, 2015. According to the Company, it has to refund `57.55 Crores. However, it has not provided any verifiable proof regarding such claims.

20. In the light of the above facts and submissions, it is to be decided whether the scheme/activity of the Company is in the nature of CIS in terms of section 11AA of the SEBI Act. The provisions of section 11AA are referred and reproduced herein below: “Collective investment scheme. 11AA. (1) Any scheme or arrangement which satisfies the conditions referred to in sub-section (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 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 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 (2 of 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 (2 of 1934); (iii) being a contract of insurance to which the Insurance Act, 1938 (4 of 1938), applies; (iv) providing for any Scheme, Pension Scheme or the Insurance Scheme framed under the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (19 of 1952); (v) under which deposits are accepted under section 58A of the Companies Act, 1956 (1 of 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 (1 of 1956); (vii) falling within the meaning of Chit business as defined in clause (d) of section 2 of the Chit Fund Act, 1982 (40 of 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”.

21. The first condition, under section 11AA(2) of the SEBI Act, is that the contributions or payments made by the investors by whatever name called are pooled and utilized for the purposes of the scheme or arrangement. Undisputedly, the Company mobilizes funds from the investor for the purported purchase of livestock/poultry and undertakes to develop them as per the plans offered by it. The details of the plans have already been mentioned above. The investors are required to make payment in respect of the schemes offered by the Company as per the payment options they choose. The investors are made to execute an application form and thereafter the Company issues a certificate endorsing the payment received, plan opted, etc. The certificate does not contain any specific details regarding the poultry or livestock. The certificate mentions the name of plan, maturity date and the expected sum payable on completion of term of the scheme. The important point to be noted is that the certificate mentions only the scheme opted, maturity date and amount he would receive on completion of the plan. Further, the Company has not proved that it has the requisite number of livestock/poultry to satisfy the investor and therefore it becomes clear that the Company pools monies from the investors for the purposes of the scheme or arrangement. In view of the above, it is clear that the contributions or payments made by the investors by whatever name called are pooled and utilized for the purposes of the scheme or arrangement thereby satisfying the aforesaid first condition under section 11AA(2)(i) of the SEBI Act.

22. The second condition under section 11AA(2) of the SEBI Act is that 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. One plan from each of the payment modes available to the investor under the scheme of the Company is mentioned below for reference.

I (A) Down Payment Scheme (DPS) Scheme DPS 1 for 75 Months (6.3 Yrs) Sl. No. Consideration Cost Expected Realisable Accidental Death Value Compensation 1 2500 5000 NA 2 5000 10000 5000

3 10000 20000 10000 4 15000 30000 15000 5 50000 100000 50000

II(A) SYSTEMATIC PAYMENT SCHEME (SPS) Scheme SPS 1 for 66 months ( 5.6 Yrs) Sl. No. Consideration INSTALMENTS ERV ADC Cost Mly Qly Hly Yly 1. 6600 100 295 580 1150 8750 9000 2 13200 200 590 1160 2300 17500 18000 3. 19800 300 885 1740 3450 26250 27000 4. 26400 400 1180 2320 4600 35000 36000 5. 66000 1000 2950 5800 11500 87500 90000 III (A) HYBRID PAYMENT SCHEME (HPS) Scheme HPS 1 payment 40 months (3.4) ERV 60 months ( 5 Yrs) Sl. No. Consideration INSTALMENTS ERV ADC Cost Mly Qly Hly Yly 1. 10000 250 760 1645 3275 14500 7500 2 20000 500 1520 3290 6550 29000 15000 3. 30000 750 2280 4935 9825 43500 22500 4. 40000 1000 3040 6580 13100 58000 30000 5. 100000 2500 7600 16450 32750 145000 75000

From the above, it can be seen that in each of the plans, the Company has represented that after the completion of the term, the investor would be entitled for “Estimated Realisable Value’. Further, such value is more than the investment amount. It can thus be inferred that the schemes are in the nature of ‘investment schemes; whereby 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. I also note the following observations made in the interim order: “…….in respect of the scheme of "SPSA-1 (66 months)", for the "Expected Realizable Value" of Rs 8,750/- (which includes administration and maintenance charges), the total amount required to be paid by a ‘client/ venturer’ is only Rs.6,600/-(paid as monthly instalment of Rs.100 for 66 months as the investment in the Livestock/Poultry). It is stated in the Rule Book that “the company may also wish to buy back the stock if the venturer opts for, for an ‘Estimated Realizable Value’ (ERV). The ‘Certificate’, issued by AAL states that “The company shall pay in Indian currency at its Customer Service Centre through corporate office, the amount due under this certification in accordance with ‘Terms’ of the said ‘Schedule’ to the person to whom the same is herein expressed to be payable.” The Certificate issued by AAL mentions the “Estimated Sum payable” to the Client or Venturer at the end of the term…….”.

I, therefore conclude that the scheme/s floated and operated by the Company satisfies the second condition under section 11AA(2)(ii) of the SEBI Act.

23. The third and fourth conditions under section 11AA(2) are that the property, contribution or investment forming part of scheme or arrangement, whether identifiable or not, is managed on behalf of the investors, and the investors do not have day-to-day control over the management and operation of the scheme or arrangement. With respect to this condition, the interim order has alleged the following: “As has been noted in the preceding paragraphs, AAL agrees to allot the Livestock /Poultry (unidentified) to the client/ venturer upon execution of the “Application Form” and after full/part payment of consideration amount. It is further noted that the issuance of Certificate to client/ venturer’ is construed as the confirmation that the client/ venturer’ registered for the livestock/poultry booked by them. The allotment of such livestock/poultry to the client/ venture’ is at AAL's discretion.

AAL reserves the right to discontinue/change/amend/modify or alter any of the rules/regulation and payments schemes at any time at its sole discretion. Thus, even after “allotment”, neither the ownership or nor possession of the livestock/poultry is transferred by AAL to the client at any point of time. As per the Rule Book, the company shall have first charge on the said property on account of its unpaid instalments for services/development charges and for other incidental expenses incurred by the company, as the said property cannot be sold, assigned, mortgaged, pledged, alienated without obtaining no dues certificate from the company in case of instalment payment plans”.

I have perused such observations. As per the scheme, it is the Company which receives the monies from the investors. The Company pools such monies for utilization under the purported scheme of purchase of livestock/poultry. The Company reserves the right to amend the scheme/plans at any time at its discretion. The investor does not have possession of the livestock even after allotment. The Company in its submissions has only stated that it is returning the funds of the investors and has not stated that it has handed over livestock as per the schemes. From the features of the ‘scheme’, it can therefore be noticed that the Company/its management have the sole right to manage the contribution or property/investment forming part of the scheme and the investors do not have any day-to-day control over the management and operation of the scheme or arrangement. I accordingly conclude that the ‘scheme’ satisfies the third and fourth conditions stipulated in section 11AA(2)of the SEBI Act.

24. From the above findings and observations, I conclude that the ‘scheme’ offered by the Company with a promise of ‘return’ satisfies all the four conditions specified in section 11AA (2) of the SEBI Act and therefore qualify as a Collective Investment Scheme as defined under the said section read with the CIS Regulations. The Company and the society have submitted that the interim order of SEBI has prejudiced the interest of farmers who have placed their money with the Company under the schemes. In this regard, I refer to the following observation of the Hon’ble Supreme Court in the matter of PGF Limited vs. UoI and another (ref. MANU/SC/0247/2013):

"…..the Parliament thought it fit to introduce Section 11AA in the Act in order to ensure that any such scheme put to public notice is not intended to defraud such gullible investors and also to monitor the operation of such schemes and arrangements based on the regulations framed under Section 11AA of the Act."

The requirement of registration and regulation of collective investment schemes as mandated under section 11(2)(c) and 12 of the SEBI Act therefore assumes much importance. SEBI, being the regulator for the securities market cannot allow any unregistered scheme/company to solicit public funds from gullible investors. The regulations have been framed keeping in mind the interest of investors. Therefore, the submission is misplaced.

The Hon'ble Supreme Court further observed "Inasmuch as the said Section 11AA seeks to cover, in general, any scheme or arrangement providing for certain consequences specified therein vis-a-vis the investors and the promoters…….,”. The Hon’ble Supreme Court further observed "A reading of sub-Section (3) of Section 11AA also throws some light on this aspect, wherein it is provided that those institutions and schemes governed by sub-clause (i) to (viii) of sub-Section (3) of Section 11AA will not fall under the definition of collective investment scheme. ........... Therefore, by specifically stipulating the various ingredients for bringing any scheme or arrangement under the definition of collective investment scheme as stipulated under sub- Section (2) of Section 11AA, when the Parliament specifically carved out such of those schemes or arrangements governed by other statutes to be excluded from the operation of Section 11AA, one can easily visualize that the purport of the enactment was to ensure that no one who seeks to collect and deal with the monies of any other individual under the guise of providing a fantastic return or profit or any other benefit does not indulge in such transactions with any ulterior motive of defrauding such innocent investors and that having regard to the mode and manner of operation of such business activities announced, those who seek to promote such schemes are brought within the control of an effective State machinery in order to ensure proper working of such schemes."

25. To launch or carry on the activity of CIS and mobilize public funds from such schemes, it is mandatory under law to obtain a certificate of registration from SEBI. Section 12(1B) of the SEBI Act mandates that no person, shall sponsor or cause to be sponsored or carry on or caused to be carried on any CIS unless it obtains a certificate of registration from SEBI in accordance with the CIS Regulations. Regulation 3 of the 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'. 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. 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. The Company does not have a certificate of registration as mandated under law and has launched CIS without obtaining certificate of registration from SEBI, thereby contravening the provisions of section 12(1B) of the SEBI Act and regulation 3 of the CIS Regulations. Therefore, having concluded that the activities of the Company are CIS in terms of section 11AA of the SEBI Act and that the same were carried out without obtaining registration from SEBI, suitable enforcement action should necessarily follow in the interest of investors.

26. I note that the Company seems to be aggrieved as SEBI has not granted registration to it to launch and operate CIS. In this regard, it needs to be appreciated that in terms of regulation 68 (under Chapter IX of the CIS Regulations dealing with “Existing Collective Investment Schemes”) of the CIS Regulations, any person who has been operating a collective investment scheme at the time of commencement of the regulations shall be deemed to be an existing collective investment scheme and shall also comply with the provisions of this Chapter. Regulation 73(1) prescribes that an existing collective investment scheme which has failed to make an application for registration to SEBI or has not been granted provisional registration by SEBI or having obtained provisional registration fails to comply with the provisions of regulation 71 shall wind up the existing collective investment scheme. It is an admitted position that the Company was incorporated on September 13, 2007 and commenced its activities thereafter. Therefore, it cannot be said that the schemes of the Company are ‘existing collective investment schemes’ in terms of Chapter IX of the CIS Regulations. Therefore, having launched and operated CIS without obtaining a certificate of registration under section 12(1B) of the SEBI Act and regulation 3 of the CIS Regulations, the Company has to wind up its unregistered CIS schemes and repay the investors who had contributed under the schemes. There is no provision of registering such schemes or validating them after the offence has already been committed by the Company.

27. In this regard, I also refer and rely on the following observations made by the Hon’ble Securities Appellate Tribunal made in Order dated August 12, 2015 in PACL Limited vs. SEBI (Appeal no. 368/2014): “…………….a CIS floated after the CIS Regulations came into force without obtaining certificate of registration from SEBI is liable to be wound up under the regulation 65 read with regulation 73 of the CIS Regulations. Therefore, the argument that in view of the decision of this Tribunal in case of Alchemist Infra Realty Ltd. (supra) PACL has a right to seek registration under CIS Regulations cannot be accepted”. (Emphasis supplied)

In view of the above reasons, the schemes of the Company having been launched after the CIS Regulations came into force, would not be eligible for invoking the provisions under Chapter IX of the CIS Regulations.

28. The Company has also referred to the Order passed by the Hon’ble SAT in the matter of Citrus Check Inn and requested SEBI to grant provisional certificate of registration to the Company so that the Company could operate schemes under the regulation of SEBI. The Company needs to appreciate that in the matter of Citrus Check Inn, the SEBI Order that was challenged was not a final order conclusively establishing that the schemes of that entity was an unregistered CIS. However, in this case, I have already held that the Company has admittedly operated unregistered CIS activities.

Therefore, the case of Citrus Check Inn cited by the Company would not be applicable to the present matter.

29. I also note that the Company had filed a writ petition before the Hon’ble High Court at Madras in W.P. No. 39046/2015 praying for issuance of a Writ of Mandamus, directing SEBI to dispose of its representation in relation to registration of Company as a collective Investment Management Company. The Hon’ble High Court, vide Order dated March 28, 2016, had dismissed the petition while observing the following: “6. From a perusal of the materials available on record, it is seen that already there is an interim order against the petitioner to desist from collecting money to the tune of Rs.70 crores under various schemes without obtaining registration from SEBI. The Registration with the SEBI is a pre-condition for collecting money under any scheme. Though interim order was passed restraining the petitioner from collecting money under any scheme, the same was not complied with by the petitioner. Only in this situation, the petitioner has come forward with the present writ petition. Considering the nature of the business activities and conduct of the petitioner. I am of the opinion that it is not a fit case to give direction to the respondents to consider the representation of the petitioner. It is needless to say that this Court cannot mechanically give direction to the respondents to consider the representation of the petitioner in all cases. Further more, in the counter it has been stated that only after disposal of the pending proceedings before that SEBI, the issue of registration of the petitioner-company could be decided. Therefore, I am of the opinion that there is no need to give any directions sought for by the petitioner, at this juncture. Hence, the writ petition is liable to be dismissed and accordingly, the same is dismissed….”

30. I also note that in terms of regulation 4(2)(t) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003, dealing in securities shall be deemed to be a fraudulent or an unfair trade practice if it involves fraud and includes 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. This provision in the above Regulations has been brought into effect from September 06, 2013. Accordingly, it could be held that by mobilizing public funds through CIS without obtaining registration from SEBI as required under section 12(1B) of the SEBI Act read with regulation 3 of the CIS Regulations, after the provision coming into force, the Company has contravened the above provision. .

31. It has also been submitted that SEBI initiated the action based on a complaint dated September 01, 2014, which was received from a person, who has nothing to do with the affairs of the company and subsequently the complaint was withdrawn. In this regard, it needs to be noted that the said complaint may have been a trigger to examine the business activities of the Company. On examination by SEBI, the interim order was passed on the basis of material submitted by the Company. Therefore, the withdrawal of the complaint would not have any impact as far as the present proceedings are concerned.

It has been argued that the interim order has caused disruption in the business of the Company. I am of the opinion that it is most important to preserve the assets of the Company in order to pay the investors. I do not give any credence to the argument.

The Company has also contended that the interim order is in violation of Article 19(1)(g) of the Constitution of India. Article 19(1)(g) gives the right to a citizen ‘to practise any profession, or to carry on any occupation, trade or business’. However, under Article 19(6), the right under Article 19(1)(g) shall not affect the existing laws or prevent the State from making law, imposing in the interest of general public, reasonable restriction on the exercise of this right. Therefore, such right to carry on ‘any business’ is not unfettered and should be carried on only in compliance with the relevant laws that regulate such activity or business. The provisions of sections 11AA and 12(1B) of the SEBI Act read with the CIS Regulations, including the registration requirement prior to launching a CIS (and collecting public money under such CIS) mandated therein, has to be complied with by any company intending to launch and carry on a CIS. Therefore, the above argument of the Company is also without any merit.

32. Therefore, having concluded that the activities of the Company are CIS in terms of section 11AA of the SEBI Act and that the same were carried out without obtaining registration from SEBI, in violation of the SEBI Act and SEBI regulations, suitable enforcement action should necessarily follow in the interest of investors and orderly development of the securities market. Regulation 65 provides for various directions that could be issued by SEBI. The said provision is reproduced below for reference:

“65. The Board may, in the interests of the securities market and the investors and without prejudice to its right to initiate action under this Chapter, including initiation of criminal prosecution under section 24 of the Act, give such directions as it deems fit in order to ensure effective observance of these regulations, including directions: (a) requiring the person concerned not to collect any money from investors or to launch any [collective investment scheme]; (b) prohibiting the person concerned from disposing of any of the properties of the [collective investment scheme] acquired in violation of these regulations; (c) requiring the person concerned to dispose of the assets of the [collective investment scheme] in a manner as may be specified in the directions; (d) requiring the person concerned to refund any money or the assets to the concerned investors along with the requisite interest or otherwise, collected under the [collective investment scheme]; (e) prohibiting the person concerned from operating in the capital market or from accessing the capital market for a specified period.”

33. As the Company is carrying out unregistered CIS activities, it becomes necessary to direct the Company to wind up the CIS and refund its investors’ money or assets along with requisite interest along with other necessary directions. The Company, in its submissions dated January 13, 2016 has informed that it had collected a total of ` 69.30 crore under its schemes and has refunded `11.74 crore as on December 31, 2015. According to the Company, it has to refund the balance of `57.55 crore. However, the Company has not submitted supporting documents with respect to such claim. In view of the same, such claim cannot be accepted at this stage.

34. The interim order has issued directions against the past and present directors namely Mr. Sengan Thangappalam, Mr. Shanmugam Rajendran, Mr. P. Saravanan, Mr. R. Devadoss and Dr. V. Venkataramanujam.

The following table provides the details of the tenure of the above said 6 persons in the Company: Sr. Name of Director Appointment Date Cession Date No. 1 Mr. Sengan Thangappalam* 14/09/2007 Continues as director 2 Mr. Shanmugam Rajendran* 13/09/2007 Continues as director

3 Mr. P. Saravanan 09/07/2012 26/02/2015 4 Mr. R. Devadoss# 26/02/2015 Continues as director 5 Dr. V. Venkataramanujam@ 26/02/2015 21/07/2015 (as per the noticee), though Company has acknowledged, the same not updated/mentioned in the MCA portal * From incorporation of Company. # On September 30, 2015, he was re-designated as Independent Directors vide a form filed with MCA. @ On September 30, 2015, he was re-designated as Independent Directors vide a form filed with MCA. No forms were filed by the Company with MCA regarding resignation of the director. However, Company has acknowledged the receipt of resignation letter in their reply. As per MCA, he still continues as a director.

Regarding the liability of the above persons, I note that – (a) In terms of section 291 of the Companies Act, 1956, the board of directors of a company shall be entitled to exercise all such powers and do all such acts and things as the company is authorized to exercise and do. Therefore, the board of directors being responsible for the conduct of the business of a company shall be liable for any non-compliance of law and such liability shall devolve on individual directors also. Accordingly, a director who is part of a company’s board shall be responsible and liable for all acts carried out by a company unless exemptions are provided. The present case involves a Company that has mobilized public funds from gullible investors through its unregistered collective investment schemes. In this regard, the following observations made by the Hon’ble High Court of Madras in Madhavan Nambiar vs Registrar of Companies (2002 108 Comp Cas 1 Mad) are important to note: “13. …. A director either full time or part time, either elected or appointed or nominated is bound to discharge the functions of a director and should have taken all the diligent steps and taken care in the affairs of the company.

14. In the matter of proceedings for negligence, default, breach of duty, misfeasance or breach of trust or violation of the statutory provisions of the Act and the rules, there is no difference or distinction between the whole-time or part time director or nominated or co-opted director and the liability for such acts or commission or omission is equal. So also the treatment for such violations as stipulated in the Companies Act, 1956.”

(b) The Company had submitted that Mr. R. Devadoss and Mr. Venkataramanujam were inducted as Independent Directors to satisfy eligibility criteria for CIS application and are not directly associated with the persons having control over the affairs of the company. According to them, these persons do not hold any shares in the company and are not responsible for the acts and omissions of the company. The above persons have made similar submissions.

I note that as per the Company’s submissions dated December 20, 2014, the Company had mobilized Rs.59.58 crore. Thereafter, vide letter dated January 13, 2016, the Company has stated that it has collected a total of Rs.69.30 crore. It can therefore be inferred that Rs.10 crore (more than what was collected as per letter dated December 20, 2014) has been mobilized during December 2014 and January 2016. Therefore, the Company’s submission that it has stopped mobilization since 6 months made vide its letter dated July 22, 2015 is incorrect. It can also be inferred that the mobilization had continued when Mr. V. Venkataramanujam and Mr. R. Devadoss were inducted into the board of directors of the Company. Accordingly, the submissions made by the said persons cannot be accepted. They shall also be liable.

(c) The Company was incorporated on September 13, 2007 and commenced launching and operating the impugned schemes thereafter. Therefore, the persons who were the directors from such date would be liable for the contravention as found against the Company. Therefore, I find Mr. Sengan Thangappalam, Mr. Shanmugam Rajendran and Mr. P Saravanan liable for the contravention of law as found against the Company in launching and operating CIS without registration from SEBI.

(d) In view of the above observations, I therefore, find Mr. Sengan Thangappalam, Mr. Shanmugam Rajendran and Mr. P Saravanan along with Mr. V. Venkataramanujam and Mr. R. Devadoss liable for the contraventions committed by the Company in launching and operating unregistered CIS, in violation of section 12(1B) of the SEBI Act and regulation 3 of the CIS Regulations and contravening regulation 4(2)(t) of the PFUTP Regulations.

35. In view of the foregoing, in the interest of investors and the securities market, I, in exercise of the powers conferred upon me under Section 19 of the Securities and Exchange Board of India Act, 1992 and Sections 11(1), 11B and 11(4) thereof and regulation 65 of the SEBI (Collective Investment Schemes) Regulations, 1999, hereby issue the following directions:

(a) Asurre Agrowtech Limited, Mr. Sengan Thangappalam, Mr. Shanmugam Rajendran, Mr. P Saravanan, Mr. V. Venkataramanujam and Mr. R. Devadoss 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) Asurre Agrowtech Limited, Mr. Sengan Thangappalam, Mr. Shanmugam Rajendran, Mr. V. Venkataramanujam and Mr. R. Devadoss 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 Accountant as directed in sub-paragraph (d) below.

(c) Asurre Agrowtech Limited/its present management is permitted to sell the assets of the Company only for the sole purpose of making the refunds as directed above and deposit the proceeds in an Escrow Account opened with a nationalised 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) Asurre Agrowtech Limited, Mr. Sengan Thangappalam, Mr. Shanmugam Rajendran, Mr. P Saravanan, Mr. V. Venkataramanujam and Mr. R. Devadoss are also directed to provide a full inventory of all their assets and properties and details of all their bank accounts, demat accounts and holdings of shares/ securities, if held in physical form.

(f) Asurre Agrowtech Limited, Mr. Sengan Thangappalam, Mr. Shanmugam Rajendran, Mr. P Saravanan, Mr. V. Venkataramanujam and Mr. R. Devadoss are 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 Asurre Agrowtech Limited, Mr. Sengan Thangappalam, Mr. Shanmugam Rajendran, Mr. P. Saravanan, Mr. V. Venkataramanujam and Mr. R. Devadoss to comply with the above directions, the following actions shall follow:

- Asurre Agrowtech Limited, Mr. Sengan Thangappalam, Mr. Shanmugam Rajendran, Mr. P Saravanan, Mr. V. Venkataramanujam and Mr. R. Devadoss 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 would make a reference to the State Government/ Local Police to register a civil/ criminal case against the Company, its promoters, directors and its managers/ persons in-charge of the business and its schemes, for offences of fraud, cheating, criminal breach of trust and misappropriation of public funds;

- SEBI would also make a reference to the Ministry of Corporate Affairs to initiate appropriate action as deemed fit.

- SEBI would make a reference to the Ministry of Corporate Affairs to restrain above-mentioned noticee directors from being directors in other companies.

- SEBI shall initiate attachment and recovery proceedings under the SEBI Act and rules and regulations framed thereunder against the Company and others responsible.

36. This order shall come into force with immediate effect.

37. This Order shall be without prejudice to the right of SEBI to initiate prosecution proceedings under Section 24 and adjudication proceedings under Chapter VIA of the Securities and Exchange Board of India Act, 1992 against Asurre Agrowtech Limited, Mr. Sengan Thangappalam, Mr. Shanmugam Rajendran, Mr. P Saravanan, Mr. V. Venkataramanujam and Mr. R. Devadoss including other persons who are in default, for the violations as found in this Order.

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

PRASHANT SARAN WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA Date: May 09, 2016 Place: Mumbai