Order in the matter of M/s Beetal Livestocks & Farm (Pvt.) Ltd.

WTM/RKA/NRO/CIS/61/2014

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA ORDER Under sections 11 and 11B of Securities and Exchange Board of India Act, 1992 read with regulation 65 of SEBI (Collective Investment Schemes) Regulations, 1999 in the matter of Beetal Livestocks & Farm (Pvt.) Ltd. In respect of (1) Beetal Livestocks & Farm (Pvt.) Ltd. and its directors namely (2) Mr. Nizzamuddin Sabbir, (DIN 03035394) (3) Mr. Abdul Slam, (DIN 03048245) (4) Mr. Manish Girdhari, (DIN 03059548) (5) Mr. Bharat Kumar, (DIN 03080755) (6) Mr. Sarif Khan, (DIN 03045258) (7) Mr. Raju Jhunni, (DIN 03050094) (8) Mr. Santosh Kumar, (DIN 03154166) (9) Mr. Sanjeev Kumar Sharma (DIN 03163641) 1. Securities and Exchange Board of India (hereinafter referred to as “SEBI”) noticed that M/s Beetal Livestock & Farm (P) Ltd. (hereinafter referred to as “Beetal”) was soliciting contribution from general public to invest in goat farming and assuring returns up to 2% per month and promising an amount double of investment in 4 years, secured with bank guarantee. In order to examine whether the activities of Beetal falls within the ambit of SEBI Act, 1992 and SEBI (Collective Investment Scheme) Regulations, 1999 (hereinafter referred to as ‘CIS Regulations’) SEBI undertook an inquiry and vide its letter dated August 16, 2010 advised Beetal to submit the information/ documents regarding its schemes/ plans, amount collected, location of project, structure of such plans etc. Beetal on September 6, 2010, inter alia submitted a copy of its scheme's brochure, Goat Care Form, Goat Care Agreement, its Memorandum of Association and details of its directors.

2. On examination of documents / information available on record, it was prima facie observed that the scheme/arrangement floated by Beetal was in the nature of ‘collective investment scheme’ as defined under section 11AA of the SEBI Act. Since Beetal was undertaking such activities without obtaining certificate of registration as required under section 12(1B) read with section 11(2)(c) of the SEBI Act and regulation 3 of the CIS Regulation, SEBI issued a common show cause notice (SCN) dated May 10, 2012 to Beetal and its directors namely Mr. Nizzamuddin Sabbir, Mr. Abdul Slam, Mr. Manish Girdhari, Mr. Bharat Kumar, Mr. Sarif Khan, Mr. Raju Jhunni, Mr. Santosh Kumar and Mr. Sanjeev Kumar Sharma (hereinafter collectively referred to as "the noticees") separately calling upon them to show cause as to why appropriate direction under section 11 and 11B of the SEBI Act read with regulation 65 of the CIS Regulations should not be issued against them. As the SCNs issued to Beetal, Mr. Nizzamuddin Sabbir, Mr. Manish

In the matter of Beetal Livestocks & Farm (Pvt.) Ltd.

Girdhari, Mr. Bharat Kumar, and Mr. Raju Jhunni were not delivered or the delivery status could not be ascertained, the SCNs were served by way of affixture on Beetal's registered office address and on its directors' last known addresses. A public notice was also issued in The Times of India (English), Hindustan (Hindi) and Navbharat Times (Hindi) on November 4, 2012. By the said public notice the entities were advised to collect the SCNs within 10 days of publication of the notice, failing which SEBI shall proceed on the basis of material available on records. 3. Mr. Santosh Kumar and Mr. Sanjeev Kumar Sharma, vide their letters dated July 12, 2012 filed their replies to the SCNs. Both of them have submitted their reply on similar lines, inter alia as following: i. They have no relation whatsoever with Beetal. ii. They were unemployed. A person calling himself as Deepak/Deepu incidentally met them and promised them to give good job in a big company. On the pretext of giving job they were made to sign some papers and their identity proof and photographs were collected. They were appointed directors of Beetal without their express consent and by fraudulently taking their signatures on several documents, which they could not understand. iii.

When they came to know that they have been made director of Beetal, they submitted their resignation from the post of director. They submitted a copy of Form 32 in this regard. iv. They have not invested any money in Beetal nor have they any financial interest in it. 4. Vide letter dated July 23, 2012, Mr. Abdul Slam, through his advocate submitted his reply to the SCN inter alia as under – i. He is illiterate and he had never applied for directorship of Beetal. ii. He had sold his goat to one Mr. Bharat Kumar and in this connection he had handed over his ID proof to Mr. Bharat Kumar. Mr. Bharat Kumar might have illegally used his ID and documents. 5. Beetal and its other directors did not file their replies to the SCN. An opportunity of personal hearing was accorded to the noticees on May 03, 2013. The notices to that effect were issued to Beetal on its registered office address and last known address of its directions. The notice of hearing issued to Mr. Santosh Kumar was delivered and rest of the notices returned undelivered. Another opportunity of personal hearing was granted to Beetal and directors for June 17, 2013. However, neither the noticees nor their representatives appeared on the scheduled date for personal hearing.

Another opportunity of personal hearing was granted to Mr. Santosh Kumar, on June 18, 2013 when he appeared and reiterated his submissions on record. Further opportunities of personal hearing were granted to Beetal and its other directors on January 30, 2014, February 14, 2014 and March 03, 2014. The notices to that effect were sent on the registered office address of Beetal and the last known address of the directors. The notice was served upon Mr. Sanjeev Kumar Sharma and rest all the notices were returned undelivered. None of the noticees appeared for hearing on the scheduled dates. I note that sufficient opportunities have been granted to Beetal and its directors and they are not keen to avail the same. 6. Apart from Mr. Santosh Kumar, Sanjeev Kumar Sharma and Mr. Abdul Slam, no other noticees have submitted their reply to the SCNs, despite it being duly served on them. Even after the public notice to this effect was published in newspapers, these noticees did not submit their replies to the SCNs issued to them. I, therefore am of the view that these noticees do not intend to file their reply to the SCNs issued to them.

In view of these facts and circumstances, I deem it appropriate to decide the matter on the basis of material available on record. 7. I have considered the SCN, the submissions of the aforesaid three directors namely Mr. Santosh Kumar, Mr. Sanjeev Kumar Sharma and Mr. Abdul Slam, and other material on record. I note that Beetal was running a scheme/arrangement of Goat Care (the scheme) and as per the details available on Beetal's website (snapshot taken on November 19, 2010) the scheme had four plans, detail of which are as below: Plan 1 Plan Min. Invst. 1% Profit Get the ₹ Get the same Total Net ₹ 6000 per month 6000 (Value amount of final Receipts Profit (Value of 1 for 6 years of 1 Goat) payment (Value goat) (72 months) Return after of 1 Goat) after 3 years (36 6 year (72 months) months) Profits ₹ 6,000 ₹ 4,321 ₹ 6,000 ₹ 6,000 ₹ 16,320 ₹ 10,320

Plan 2 Plan Min. Invst. ₹ 2% Profit per month Get the (Value of 1 Total Net 6000 (Value for 6 years (72 Goat) Return after 4 Receipts Profit of 1 goat) months) years (48 months) Profits ₹ 6,000 ₹ 8,640 ₹ 6,000 ₹ 14,640 ₹ 8,640

Plan 3 Plan Min. Invst. ₹ 6000 1.5% Profit per Get the (Value of 1 Total Net (Value of 1 goat) month for 5 years Goat) Return after Receipts Profit 2.5 years (30 (60 months) months) Profits ₹ 6,000 ₹ 5,400 ₹ 6,000 ₹ 11,400 ₹ 5,400

Plan 4 Plan Min. Invst. ₹ 6000 (Value of 2.5% Profit per month for 10 Total Net Profit 1 goat) years (120 months) Receipts Profits ₹ 6,000 ₹ 18,000 ₹ 18,000 ₹ 12,000 8. I note that the issues for determination in these proceedings are whether the arrangement and scheme of Beetal are in the nature of collective investment scheme and if yes, then whether action as contemplated in the SCN should be taken against Beetal and its directors for carrying on the activities of collective investment scheme without obtaining certificate of registration under the SEBI Act and CIS Regulations. 9. In order to qualify for the schemes of Beetal to as a collective investment scheme, the conditions specified in section 11AA of the SEBI Act should be satisfied by those schemes. Section 11AA of the SEBI Act reads as follows: "(1) Any scheme or arrangement which satisfies the conditions referred to in subsection (2) shall be a collective investment scheme. (2) Any scheme or arrangement made or offered by any company under which, (i) the contributions, or payments made by the investors, by whatever name called, are pooled and utilized solely for the purposes of the scheme or arrangement; (ii) the contributions or payments are made to such scheme or arrangement by the investors with a view to receive profits, income, produce or property, whether movable or immovable from such scheme or arrangement; (iii) the property, contribution or investment forming part of scheme or arrangement, whether identifiable or not, is managed on behalf of the investors; (iv) the investors do not have day to day control over the management and operation of the scheme or arrangement."

10. For this purpose, it is pertinent to examine the features and characteristics of schemes/arrangements of Beetal on basis of the documents, information and material available on record, as against each conditions of section 11AA (2)(i) to (iv). 11. I note that through various advertisements in newspaper, Beetal was inviting general public to invest in the scheme by offering guaranteed return of 1% to 2% per month on a minimum investment of ₹ 6,000. I note from Beetal's website displayed that "we use your precious money in Goat Farming … our Group gives monthly return by providing Goat care services." Thus, it is clear that the contribution or payments received from investors were pooled and had to be utilised by Beetal for the schemes/arrangements of Beetal. I, therefore, find that the schemes/arrangements of the Beetal satisfy the first condition stipulated in section 11AA(2)(i) of the SEBI Act. 12. Under the schemes/arrangements of Beetal, the investors made contribution/payment with a view to receive profits, income and return promised to them. I note from the material available on record, the return offered by Beetal is payable in lump sum and recurring basis as well.

Beetal had also promised to assure returns through bank guarantee. The average return offered by Beetal is about 23% to 31% (% has been calculated on the yield to maturity basis), depending on the plan. Thus, its schemes/arrangements satisfy the second condition in section 11AA(2)(ii) also.

13. Beetal was responsible for all expenses towards maintenance for the goats, their insurance, feed etc. Beetal had control over the rearing of the goat. Further, Beetal was responsible for the management of the scheme. Therefore, the schemes/agreement satisfied the third condition stipulated in the section 11AA(2)(iii). 14. I note from the Goat Care Agreement that Beetal had sole right over the goats reproduced, proceeds of goat milk sold & proceeds of stool of the goat and any other revenue derived by Beetal from this activity. Beetal had right to effect sale through wholesale market or through some marketing agents etc in local market or exports and such price as it deems fit and reasonable depending upon the circumstances prevalent at that time and the investor would not raise any objection to the same. Investors did not take part in managing and utilization of the contribution or investment forming part of schemes of Beetal at any stage under the scheme. I, therefore, find that the schemes offered by Beetal satisfied even fourth condition stipulated in the section 11AA(2)(iv). 15. In view of the above analysis and examination, I find that the schemes /plans of the Beetal satisfy all four conditions of section 11AA of the SEBI Act.

I, therefore, find that the Beetal is engaged in the fund mobilising activity from public through investment contracts by floating/sponsoring/ launching collective investment schemes as defined in section 11AA of the SEBI Act. 16. I note that in terms of section 12(1B) of the SEBI Act, no “person” shall sponsor or cause to be sponsored or cause to be carried on a collective investment scheme unless he obtains a certificate of registration from the Board in accordance with the regulations. Regulation 3 of the CIS Regulations provides that no person other than a Collective Investment Management Company which has obtained a certificate under the said regulations shall carry on or sponsor or launch a collective investment scheme. Therefore, a person can launch or sponsor or cause to sponsor a collective investment scheme only if it is registered with SEBI as a Collective Investment Management Company. Since Beetal has launched collective investment schemes without obtaining certificate of registration from SEBI, it has contravened provisions of section 12(1B) of the SEBI Act and regulation 3 of the CIS Regulations.

17. Mr. Santosh Kumar and Mr. Sanjeev Kumar Sharma have submitted that they were appointed directors of Beetal without their consent and by fraudulently taking their signatures on several documents. I note from the Form 32 submitted by Mr. Santosh Kumar and Mr. Sanjeev Kumar Sharma as part of their reply that they were appointed director of Beetal on July 28, 2010 and they ceased to be director with effect from August 01, 2010. Mr. Santosh Kumar and Mr. Sanjeev Kumar Sharma were directors only for three days and when they came to know about that they have been made directors they acted swiftly and resigned from the post of director. I, therefore, give benefit of doubt to these two directors. 18. Mr. Abdul Slam also has submitted that he had never applied for directorship and one Mr. Bharat Kumar might have illegally used his identity card and documents. However, neither the Mr. Abdul Slam has given any evidence in support of his contention nor has he taken any legal action against Mr. Bharat Kumar for alleged illegal use of his identity card and documents. I, therefore, find that mere an allegation on others does not abdicate Mr. Abdul Slam from his liability/responsibility as a director of Beetal.

19. In view of the foregoing, I, in exercise of powers conferred upon me under Section 11B and 19 of the Securities and Exchange Board of India Act, 1992 and regulation 65 of Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999, hereby direct:- a) M/s Beetal Livestocks & Farm (Pvt.) Ltd. and its directors namely Mr. Nizzamuddin Sabbir, Mr. Abdul Slam, Mr. Manish Girdhari, Mr. Bharat Kumar, Mr. Sarif Khan and Mr. Raju Jhunni to wind up its existing collective investment schemes and refund the money collected by it under the schemes with returns which are due to the investors as per the terms of offer within a period of three months from the date of this order and submit a winding up and repayment report to SEBI in accordance with the CIS regulations failing which the following actions shall follow: i. SEBI would take action as stipulated in section 28A of Securities and Exchange Board of India Act, 1992, against M/s Beetal Livestocks & Farm (Pvt.) Ltd. and its directors; ii. SEBI would make a reference to the State Government/ local police to register a civil/ criminal case against M/s Beetal Livestocks & Farm (Pvt.)

Ltd. and its directors and its managers/ persons in charge of the business of its scheme(s) for apparent offences of fraud, cheating, criminal breach of trust and misappropriation of public funds; and iii. A reference would be made to the Ministry of Corporate Affairs, to initiate the process of winding up of M/s Beetal Livestocks & Farm (Pvt.) Ltd.

b) Beetal Livestocks & Farm (Pvt.) Ltd. and its directors namely Mr. Nizzamuddin Sabbir, Mr. Abdul Slam, Mr. Manish Girdhari, Mr. Bharat Kumar, Mr. Sarif Khan and Mr. Raju Jhunni not to access the capital market and further restrain and prohibit them from buying, selling or otherwise dealing in the securities market till all its collective investment schemes are wound up and all the monies mobilised through them are refunded to the investors.

20. Without prejudice to the above directions, SEBI may initiate prosecution proceedings under section 24 and adjudication proceedings under Chapter VI of the Securities and Exchange Board of India Act, 1992, against M/s Beetal Livestocks & Farm (Pvt.) Ltd. and its directors.

21. A copy of this order shall also be forwarded to the Stock Exchanges and Depositories for necessary action. 22. The order shall come into force with immediate effect.

Date: June 25th, 2014 RAJEEV KUMAR AGARWAL Place: Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA