Order in the matter of M/s Dhanolty Developers Limited[SAT Appeal No.44/2016]

WTM/PS/82/CIS-NRO/NOV/2015 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: PRASHANT SARAN, WHOLE TIME MEMBER ORDER Under Sections 11(1), 11(4) and 11B of the Securities and Exchange Board of India Act, 1992 read with Regulation 65 of the SEBI (Collective Investment Schemes) Regulations, 1999 and Regulation 4(2) (t) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 In the matter of Dhanolty Developers Limited In respect of: 1. Dhanolty Developers Limited [PAN: AADCD8142Q] 2. Mr. Sanjay Walia [PAN: AAKPW0221H], 3. Mr. Siddharth Walia [PAN: AALPW3988], 4. Ms. Anita Malik [PAN: ASYPM1031D], 5. Ms. Raksha Kumari [PAN: AKZPK5102G], 6. Mr. Shiv Pratap Singh [PAN: AVPPS2160P], 7. Ms. Shefali Walia [PAN: AAOPW1693H] and 8. Mr. Pankaj Bakshi [PAN: AEGPB9921H] Date of hearing: April 20, 2015 and May 15, 2015 Appearance: For Noticees: Mr. Sanjay Walia, Managing Director Ms. Raksha Kumar, Ex-Director Mr. M.C. Sharma, Advocate For SEBI: Mr. Mohd. Atif Alvi, Deputy General Manager Mr. N. Murugan, Assistant General Manager Mr. Pradeep Kumar, Assistant General Manager, Ms. Treasa Kuriala, Assistant General Manager. 1. Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) had, vide an interim ex-parte Order dated July 30, 2014 (‘the interim order’), prima facie found that one Dhanolty Developers Limited (hereinafter referred to as ‘the Company’ or ‘Dhanolty’) is engaged in fund mobilizing activities from the public, which is in the nature of a Collective Investment Scheme (hereinafter referred to as 'CIS') as defined in Section 11AA of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as ‘the SEBI Act’), without obtaining a certificate of registration from SEBI as required under Section 12(1B) of the SEBI Act and Regulation 3 of the SEBI (Collective Investment Schemes) Regulations, 1999 (hereinafter referred to as ‘the CIS Regulations’). The mobilization of funds from the public, was also prima facie found to be a fraudulent practice in terms of Regulation 4(2)(t) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practice Relating to Securities Market) Regulations, 2003 (hereinafter referred to as ‘PFUTP Regulations’).

2. The interim order was issued in order to protect the interest of investors, safeguard the assets/ property acquired by the Company by using the funds collected from the investing public and also to prevent the Company from further carrying on with its fund mobilizing activities through the alleged CISs. This Order directed Dhanolty Developers Limited, Mr. Sanjay Walia, Mr. Siddharth Walia, Ms. Anita Malik, Ms. Raksha Kumari, Mr. Shiv Pratap Singh, Ms. Shefali Walia and Mr. Pankaj Bakshi (hereinafter collectively referred to as the ‘noticees’): “● not to collect any fresh money from public under its existing scheme(s); ● not to launch any new scheme(s) or plan(s) or float any new companies to raise fresh moneys from public; ● not to dispose of any of the properties or alienate the assets of the existing scheme(s); ● not to divert any funds raised from public at large, kept in bank account(s) and/or in the custody of the company; ● to immediately submit the full inventory of the assets owned by Dhanolty Developers out of the amounts collected from the "purchasers"/investors under its existing scheme(s); ● to furnish all the information sought by SEBI including, i. Details of amount mobilized and refunded till date, ii. Scheme wise list of "purchasers"/investors and their contact numbers and addresses, iii. All the relevant documents/materials, including the copies of Allotment Letters, Sale deeds etc. pertaining to the scheme of "Sale/purchase and development of plot/land". The aforesaid directions came into force with immediate effect and the noticees were advised to file their reply within a period of fifteen (15) days from the date of receipt of the interim order and also to indicate whether they wish to avail an opportunity of personal hearing in the matter.

3. The interim order was forwarded to the Company and its directors vide respective letters all dated September 02, 2014 and the same was delivered to all the noticees. The noticees namely Mr. Sanjay Walia vide his letter received by SEBI on September 16, 2014 submitted that the operational offices of the Company situated at Barh (sub-division in Patna), Maner, Bihar and Deoghar, Jharkhand were raided/ searched by the local administration and the entire records of the above offices were taken over and the proceedings in respect of the same are still pending with the authorities and Hon’ble High Court of Jharkhand. It was also said that certain other litigations are pending before different Courts at various places such as Hon’ble High Courts of Jharkhand, Delhi and Patna. He also said that the Company is not doing any business since April 2013 and he is not in a position to submit the details as asked vide the interim order as he is not in possession of the records. He requested for time to procure the records/ documents from the authorities so as to furnish the same to SEBI.

4. SEBI vide its letters dated September 24, 2014 and November 10, 2014, issued reminders to the noticees for replying to the interim order. Thereafter, the noticees replied as under:

a. Mr. Sanjay Walia vide his letters dated November 01, 2014 and December 01, 2014, reiterated the submissions made vide letter dated September 16, 2014.

b. Mr. Siddharth Walia vide his letters dated October 25, 2014 and December 01, 2014, submitted as under: - He had resigned from the Company on September 14, 2012. After this date, he had nothing to do with the day to day affairs of the Company. The Form 32 in support of the same was submitted which showed the date of resignation as February 14, 2013. - During his tenure as director of the Company he had not attended any board meeting or had not passed any resolution in respect of the business of the Company. - He was the promoter of the Company and he was then merely a shareholder of the Company. - The day to day affairs of the Company were looked after by the directors of the Company and the promoters had no role to play in the business of the Company.

c. Ms. Raksha Kumari vide her letters dated October 10, 2014 and November 30, 2014, submitted as under: - She had resigned from the Company on December 09, 2011. After this date she had nothing to do with the day to day affairs of the Company. The Form 32 in support of the same was submitted which showed the date of resignation as January 09, 2012.

- During her tenure as director of the Company she had not attended any board meeting or had passed any resolution in respect to the business of the Company. - She was the promoter of the Company and she was then merely a shareholder of the Company. - The day to day affairs of the Company were looked after by the directors of the Company and the promoters had no role to play in the business of the Company.

d. Ms. Shefali Walia vide her letters dated October 25, 2014 and November 30, 2014, submitted as under: - She was the promoter of the Company and had not involved in the day to day affairs of the Company. She was a mere shareholder in the Company. - The day to day affairs of the Company were looked after by the directors and promoters had no role in the business of the Company.

e. Mr. Pankaj Bakshi vide his letters dated October 10, 2014 and November 30, 2014, submitted as under: - He was the promoter of the Company and had not involved in the day to day affairs of the Company. He is a mere shareholder in the Company. - The day to day affairs of the Company were looked after by the directors and promoters had no role in the business of the Company.

5. Before proceeding further, an opportunity of personal hearing was granted to the noticees on April 20, 2015. An intimation regarding the same was sent to the noticees vide letters dated March 23, 2015. In the meantime, SEBI also forwarded certain investor complaints to Dhanolty received as against it, vide letter dated March 23, 2015. As some of the hearing notices had returned undelivered, SEBI issued a public notice in the newspapers namely ‘Navbharat Times’ and ‘The Times of India’ on April 10, 2015, regarding the date of hearing to the Company, Ms. Anita Malik, Ms. Raksha Kumari, Mr. Shiv Pratap Singh and Mr. Sanjay Walia. On the date fixed for the personal hearing i.e. April 20, 2015, the noticee namely Mr. Sanjay Walia appeared for the personal hearing for himself and the other noticees and requested for an adjournment on health grounds. He also submitted a letter dated April 20, 2015 and undertook to submit the resolution/ authority letter.

The noticee namely Ms. Raksha Kumari also appeared for the personal hearing along with Mr. M.C. Sharma, Advocate, who made oral submissions. She was granted one week’s time for giving the written submissions.

The request of Mr. Sanjay Walia for adjournment was considered and the matter was adjourned to May 15, 2015. He was asked to submit the complete list of its customers before May 15, 2015.

6. SEBI vide respective letters all dated April 23, 2015, intimated the Company, Mr. Siddharth Walia, Ms. Anita Malik, Ms. Shefali Walia, Mr. Shiv Pratap Singh, Mr. Pankaj Bakshi and Mr. Sanjay Walia about the date of personal hearing i.e. May 15, 2015. Vide these letters, the Company and the said noticees were also asked to submit the list of investors along with the name, address, place where the plot has been allotted/ bee colony has been sold and the amount mobilised from each customer towards the plot, copies of the executed registered sale deeds/ documents to show sale of bee colony to the investors and details of the location of the agricultural land and location of the bee colony. However, no reply was received from the noticees. On the date fixed for the personal hearing i.e., May 15, 2015, none of the noticees turned up. Considering that reasonable opportunities to the Company and its directors had already been afforded for making the submissions in the matter, I proceed with the matter further.

7. I have considered the interim order issued in the matter and the material available on record. The interim order had examined the alleged schemes/ plans of the Company as against the conditions mentioned under Section 11AA(2) of the SEBI Act and had prima facie observed that the schemes/ plans are in the nature of a CIS. I note that the main allegation as against Dhanolty is that the schemes/ plans operated by it were in the nature of CIS and that Dhanolty was offering these schemes without obtaining registration from SEBI in contravention of the provisions of Section 12(1B) of the SEBI Act and Regulation 3 of the CIS Regulations read with Section 11AA of the SEBI Act. The directors of Dhanolty were also alleged to be responsible for the illegal conduct of the business of the Company. The noticee namely Mr. Sanjay Walia vide his letters dated September 16, 2014, November 01, 2014 and December 01, 2014 has submitted that the operational offices of the Company were raided/ searched by the local administration (Barh and Jharkhand) and the entire record of the said offices were sealed and taken. In such circumstances, it was not possible for him to submit the details as asked vide the interim order. I have seen that the Hon’ble High Court of Jharkhand in its order dated April 26, 2013, had observed that: “… For the purposes of effectively participating in the inquiry before the Statutory Authorities, on application made before the Official Liquidator or any subordinate officers nominated by him, the petitioners will be entitled to obtain Xerox copies of such documents as are necessary, on payment of prescribed fee by the Official Liquidator, which would be furnished without unreasonably delay.” A reading of the above, makes it clear that the noticees were entitled to obtain the copies of the documents in order to submit before the statutory authorities. Inspite of the same, the noticees have failed to submit the relevant details to SEBI i.e. details of the amount mobilized, details of the investors, etc.

8. I note that the Company was incorporated on May 02, 2011. I have seen the documents submitted by the Company vide letter dated June 04, 2013, i.e. brochure, business manual, receipt, certificate, agreement/ purchase form, letter of intent, etc. As regards the plans of the Company, the interim order had observed as under: “… c) Dhanolty Developers invites funds from the public under the following two categories of schemes, i. Scheme for "Sale and rearing of Bee Colony", ii. Scheme for "Sale/purchase and development of plot/land". d) As per the "Plan Brochure", the various plans under the schemes offered by Dhanolty Developers are as under,  For the "sale and rearing of Bee Colony", the schemes/ plans are as under, i. Group A - "Regular Installment Sales Plan" (7 plans) ii. Group B - "Single Purchase Sales Plan" (8 plans) iii. Group C - "Single Purchase Profit Plan" iv. "Bum Bum Plan (Basic)"  For "Sale/ purchase and development of plot /land", the scheme/ plan is Group D - "Single Purchase Sales Plan" (2 plans)… e) The "purchasers"/ investors who are interested in any of the aforesaid schemes are required to enter into an agreement with Dhanolty Developers. The booklet of "Agreement/Purchase Form" contains the "Agri Plot Agreement", a "Sale Agreement" and "Apiaries Rearing Contract"("ARC"). …” 9. It would now be pertinent to refer to the documents submitted by the Company. The relevant portions of the brochure of the Company have been reproduced below: “… About us

… The company is also engaged in the business of real estate and the development of agricultural land at various places, where as the company organizes the sale of undeveloped agricultural land of different sizes, to prospective buyers and undertakes at the opinion of the customer, the development of the same. … DDL has now entered into Bee Keeping & Bee Farms based apiaries and manufacturer of Bee Keeping supplies with the clients spread throughout the country. … … Development Company cultivates fruit crop, develops and nurtures your farms to produce and market. Company does the monitoring during the growth period of Harvesting and Procurement and prompt payment arrangements as per the agreed price of produce. … The perspective customers are absolutely linked with sale & purchase of land as well as carrying development activities. The Contract Farming has been mentioned whilst only, expected realizable appreciable value of land after developing and marketing produce in the given after expiry of tenure of the agreement. Once your purchase/ pay advance for the purchase of Agriculture land under terms and conditions of the company, you become the dealer of the company and you are also authorized to sale the Agriculture land as well as any other company product and enjoy the benefits of the commission structure.

We foresee our self-launching an IPO by 2014-15 if the environment is conducive. It will be very interesting when these materialize since millions of dealers will benefit/ hold listed shares. The FCD will be able to convert these shares into Public Traded common shares. … GROUP - A REGULAR INSTALLMENT SALES PLAN (RISP) Purchase 25 MONTHS Installment Plan Estimated Hn with BC value of BC No. A-1/25 BC Rs. MLY QLY HLY YLY Hn(Kg) + No. of BC ESTIMATED HONEY VALUE 2 10,000 400 1,188 2,328 4,512 70 kg +1 BC 11,450 5 25,000 1,000 2,970 5,820 11,820 206 kg +2 BC 28,625 10 50,000 2,000 5,940 11,640 22,560 360 kg +5 BC 57,250 25 1,25,000 5,000 14,850 29,100 56,400 920 kg +12 BC 1,43,125 … GROUP-B SINGLE PURCHASE SALES PLAN Plan No. B-1/36 Purchase value of BC 36 Months Estimated Hn from BC BC Rs. Hn (Kg) Estimated Honey Value 1 5,000 80 Kg 7,180 2 10,000 160 Kg 14,360 3 15,000 240 Kg 21,540 5 25,000 400 Kg 35,900 10 50,000 800 Kg 71,800 15 75,000 1,200 Kg 1,07,750 20 1,00,000 1,600 Kg 1,43,600 [* Hn – Honey * B.C – Bee Colony] … GROUP D SINGLE PURCHASE SALES PLAN (SPSP) AGRI CONSIDERED PURCHASE VALUE INSTALLMENT PROJECTED APPRECIATED DEVELOPED LAND LAND VALUE SIZE/ TOWARDS DEVELOPMENT TOTAL COST 10 MONTHLY 5 BI-MONTHLY 72 100 112 180 SQYD COST FO & OTHER OF INSTALLMEDISCOUNTED MONTHS MONTHS MONTHS MONTHS RAW AGRI CHARGES ON CULIVATED NT INSTALLMENT LAND AGRI LAND AGRI LAND 1000 80,000 120,000 200,000 20,000 39,200 400,000 560,000 640,000 1,450,000 2000 160,000 240,000 400,000 40,000 78,400 800,000 1,120,000 1,280,000 2,900,000 3000 240,000 360,000 600,000 60,000 117,600 1,200,000 1,680,000 1,920,000 4,350,000 4000 320,000 480,000 800,000 80,000 156,800 1,600,000 2,240, 000 2,560,000 5,800,000 5000 400,000 600,000 1,000,000 100,000 196,000 2,000,000 2,800,000 3,200,000 7,250,000 …”

A reading of the brochure, shows that the Company is engaged in organising sale of undeveloped agricultural land and develop the same. It is also in the business of bee keeping and bee farms based apiaries. It gives expected realisable appreciable value of land to the customer after expiry of the agreement. The brochure also states that the Company has proposed an IPO in the year 2014-15.

a. The next document is the ‘business manual’, the relevant clauses of the same are as under: “… Main Objective Company’s main objective for people and their associate: 1. The company is into sale purchase for undeveloped agricultural land. After developing the land, company do farming or lease from them to sell them for farm houses & for contract farming. 2. Selling Bee Colony & Apiaries with Apiaries Rearing Project. …. DDL Bee Keeping Business Company is into sale purchase business. Company is selling bee colony and developed agricultural land to the purchaser. Cost of Description of BC Wooden Box Rs.2,500 (Hive) Frame Rs.1,500 Rani Makhi Rs.500 Minimum Cost of BC between Rs.4,500 - Rs.7,500 … BEE COLONY: The purchaser or buyer has options that he or she can pay in lump sum as per the cost of B.C and get your B.C or you can pay in interest free installments. Company will go for Sale/ Purchase transactions only once the Company has received the cost of the BC and will give the delivery of the BC within 90 to 180 days of receiving the money. After purchasing the BC, it is 100% your wish/ choice either to take away your BC or if you cannot do the required processing to get Hn from BC then company suggest or advises you that there are few companies which are providing Apiaries contract on sharing basis. How to enter Apiaries Contract (A.R.C): For A.R.C, purchaser has to send a request letter to the company that he or she is interested in entering into contract with any of the three suggested companies. Then it is company’s wish to accept/ cancel your request. If any purchaser enters into A.R.C then within the agreed terms & conditions, the A.R.C Company will hand over the produced Hn to you or to the rearing Company that will offer you the best price after selling the produced Hn. What is Hn= Honey What is BC= Bee-Colony What is Estimated Value: The minimum amount of Honey produced from BC. Meaning of Accreted Hn: Value obtained by gradual accumulation of the produced Hn as well as BC. … … After the completion of the agreement, purchaser or buyer can request the company to sell out the honey and Bee-colony and can get the best price. ….

 Company only invests in agriculture and agricultural activities. Company covers all its customers with Accidental Insurance. ...  … Agreement done with the customers is legal contract for the sale of Bee-Colony and rearing. … Till the time you pay the remaining amount, rearing company will pay you half of the profits (by selling the produced pollen, honey, wax, etc.) After paying your installments, you will become the owner of the Bee Colony and according to your wish you can either take your B.C back or you can sell it to the rearing company and get good amount which is shown in the table under estimated value or you can renew you rearing contract and earn maximum profit. … Sale of Land Dhanotly Developers Limited introduces, sale, purchase and development of and according to the requirements of the customers. … Purchase of these lands can be done through any customer service center by just filling standard form along with an application form and depositing the required amount. Under the lump sum payment scheme applicants will be allotted land on priority basis. The applicants who are paying under the installment scheme, land will be allotted after receiving 50% of the cost.

Ownership transfers, names of the applicants, allotment will be done in the time destined. Land Development Company has large amount of farming experts, technology experts, ultra-modern equipment’s and agricultural tools. … We have proposed that the land purchased by our customers will be improved and made useful for cultivation. For this purpose, customers have to sign a development deed with the company. To sign deed you will have to apply filing an application form. Company has prepared a standard form of bond. This can be changed according to the need of the customers. Land Allotment After we receive the complete application form with the fees for land development allotment of the land will be done in time destined as soon as we have examined the details. Land Ownership and Requisition Land Ownership will be transferred through registered sales deed in the names of the customer. … Company employees will enter the land premises only to provide development services. Joint Ownership In the place where ownership of the land transfer is prohibited by the government or it is not viable, then the company can make more than one owner of that land (joint ownership).

In this situation joint sales deed is made and everybody will get his desired share. Verified copy of these sales deeds will be available in sub registrar’s office. Supervision of Developed Land Customers can supervise the development and research of the land mentioned in the Deed. Customers can give their valuable suggestions & the possible and beneficial suggestions will be applied. Completion of Developed Task Company will complete the task in the duration mentioned in the Deed. … Sales Developed Land To provide better facilities to our valuable customers, company has proposed to provide the services which are helpful for the development land. Every Customer has the right to wish his land according to his wish to anybody. To avail the marketing service even after the completion of the deed from the company, customers have to apply for the same 30 days prior to it. … D.D.L. FAQ … Question: How is your Company Secured? Answer: … 3. There are no chances of loss in our company as we invest in properties. ...” b. Next document is a booklet titled as ‘Agreement/ Purchase Form’ containing the ‘letter of intent for the purchase of Agri Plot and Bee Colony from the Company’, ‘Agri Plot Agreement’, ‘Sale Agreement’, ‘letter of intent for entering into an apiaries rearing contract’, letter of the Company regarding the ‘apiaries rearing contract’ to customer and ‘Apiaries Rearing Contract’.

The same have been discussed in seriatim as under: - The ‘Agri Plot Agreement’ is a pre-printed document asking for the name and address of the customer. The relevant clauses of the same are as under: “WHEREAS THE COMPANY is engaged in the business of Real Estate and development of agricultural land at various places in India. AND WHEREAS THE COMPANY organises the sale of undeveloped Agricultural Land of different sizes, to prospective buyers and undertakes, at option of the customer, the development of the same. AND WHEREAS THE COMPANY has made arrangements for purchasing/ procuring the said land with clear and marketable title with possession, which forms a part of the various plans launched by THE COMPANY. AND WHEREAS THE COMPANY has agreed to arrange for the sale of the PLOT in favour of the CUSTOMER, and to develop the same at its expense, by undertaking various development activities in which the Company possess the requisite expertise and skill. 1. SALE OF PLOTS In the case of Group A SIP Plan the land shall be identified and allotted within 90 days and Sale/ Deed shall be executed after development of the said plot, within a period of 3 years in case of Installment Payment Plans, the land shall be identified and allotted after receiving a 50% of the consideration amount of the Plot & charges and Sale Deed shall be done within 3 years after the receipt of last installment of the Plot.

Subject to the foregoing, the land ownership along with its possession will ordinarily be transferred by the Company in the name of the Customer by means of registered sale deed within a period of 3 years after the receipt of the last installment. 2. DEVELOPMENT OF LAND: The Customer has exercised the option to get the Plot developed by the Company and the Agreement shall be construed as a confirmation therof. … 4. POSSESSION: The Customer shall be owner in vacant physical possession of the plot at all times, after execution of the registered sale deed. During the Development period of the Plot, the ownership shall remain with the company, till registration of Sale Deed in the name of the Customer. The Company shall enter upon the plot only for the limited period for the purpose of undertaking development of plots, as per the terms of this agreement between the Customer and the Company in that regard. The Company shall have no rights whatsoever over the plot as a manager/ tenant and not shall the Company be deemed to be a manager/ tenant. The overall security of the Plot shall, however, be the responsibility of the Company till the expiry of the development period of Plan opted for by the Customer.

5. IRRIGATION SYSTEM AND FERTILIZATION: The company shall provide such irrigation system as it may deem appropriate which shall be part of the overall irrigation system, depending upon the nature of the soil, crop pattern of the plot, etc. The Company upon planting the saplings, plants, crops, trees etc. over the aforesaid plot, shall use necessary fertilizers, pesticides etc., in consonance with the expert advice received by the Company. 6. SALE OF PRODUCE: Unless specifically otherwise directed by the Customer, the Company shall be responsible for arranging the sale of the produce, if any, out of the plot, on behalf of the Customer. For the purposes of arranging the sale of the produce, as aforesaid, the Company shall have the sole discretion to decide as to whether the produce shall be sold in the wholesale market and/ or in the semi-wholesale market, and or to one or more marketing Company, or may decide to sell it any other market with the Company may consider appropriate for sale of a particular grade of the produce. … 9. BREACH BY COMPANY: (a) In case the Company commits a breach of agreement by not allotting the plot of Customer, as agreed, the Customer/ his nominee shall be entitled to seek specific performance of the agreement.

The Customer shall also be entitled to terminate the agreement, in which event, the Company shall refund the amount paid by the Customer along with the compensation towards liquidated damage @10% per annum from the date of agreement. … 11. OPTING OUT: (A) Group ‘B’ SIP plan, the Customers shall have the facility to opt out after two years from date of purchase of plot, before or after allotment of the plot. The option can be exercised by the Customer by submitting a written request to the Company and the payment received by the Company from the Customer, shall be refunded after deducting 20% of the consideration on account of various costs and other incidental expense incurred by the Company. (B) However, if the Customer chooses to opt out after allotment of the plot in his/ her favour, he may do so before the execution and registration of the sale deed, he/ she will have to submit a specific written request to that effect to the Company. In such cases, the Company will cancel allotment and Customer will be refunded after deducting 20% of the consideration on account of various costs and other incidental expenses incurred by the Company.

(C) If the Customer decides to opt out under Group ‘B’ Plan after registration of the sale deed, the Company shall refund to the Customer, the amount paid by the Customer after deducting 25% from the amount of sale price of plot so owned by the customer on account of the registration expenses, cost of development charges and other incidental expenses are incurred by the Company in this behalf. …” - The relevant clauses of the ‘Sale Agreement’ are as under: “… WHEREAS the Seller is engaged in the business of trading in 1. Agriculture Plots of various location 2. Bee Colony i.e. Apiaries etc. … 1. The purchaser is hereby Apiaries from the seller on his own free will and that he also hereby promises to pay the entire/ total amount for the said purchase as mentioned herein below. To the Seller. Moreover it is specifically understood that along with the Purchaser herein there may be several co-owners of Bee Colony, i.e. Apiaries. …” The ‘sale agreement’ do not identify the plot or the bee colony and provides the details of the payment made by the customer.

- The interim order with regard to these documents has observed as under: “… f) The "purchasers"/investors of the scheme for "sale and rearing of Bee Colony" are required to enter into the said "sale agreement" … with Dhanolty Developers. The "Apiaries Rearing Contract" ("ARC") in the booklet indicates that the "purchasers"/investors are also made to execute the said "ARC"/contract, simultaneously, for bee rearing. The bee rearing process is also done by an associate company of Dhanolty Developers, viz. Walia Apiaries Pvt. Ltd. (hereinafter referred to as "Walia Apiaries"). By executing the "ARC"/contract the "purchaser"/investor, authorizes Walia Apiaries or the Dhanolty Developers as the case may be, for bee rearing. Even though the "sale agreement" states that on executing the "sale agreement", the "purchaser"/investor confirms the receipt of the subject bee colony, the aforesaid "ARC"/contract transfers the ownership, possession etc. of the said bee colony stated to have been purchased by the "purchaser"/investor to Dhanolty Developers….” - The following clauses of Apiaries Rearing Contract (ARC) are relevant to be noted: “… WHEREAS the Company is also engaged in the business of Apiaries Rearing i.e. Bee Keeping and Queen Rearing Project in addition to other business activities/ project. … AND WHEREAS the Co-owner/ Owner has inspected the said lands and …, the Company has developed the infrastructure and has the operational expertise to handle these Apiaries rearing activities, hence, the Co-owner/ Owner is desirous of entering into a contract with the “Company” for the Apiaries/ rearing of the Bee Colony belonging to the Co-owner/ Owner, to be done by the Company. … 1. The Co-owner/ Owner on his own free will is hereby entering into an Apiaries Rearing Contract on his own free will for the rearing Bee Colony Rearing & Keeping.

2. … Company shall allot one Bee Colony to the Co-owner after receipt of 50% of the sale amount in case of installment plan and Physical Custody of the Bee Colony shall rest with the company for rearing Bee Colony, Rearing & Keeping and Co-owner shall become the owner of the said Bee Colony after the payment of balance 50% of the sale amount. … 4. The Co-owner/ Owner hereby entrusts the physical custody of the Bee Colony …, which are the subject matter of this contract agreement, to the Company so as to avail the relevant expertise of the company’s in economical Bee rearing and Queen Rearing belonging to the Co-owner/ Owner. The Company will maintain the said Bee Colony from the said funds received from Co-Owner/ Owner vide this present contract agreement and the Co-owner/ Owner shall not be liable to pay/ give any additional funds to the Company for rearing. … 6. In case of any default in payment of installment/s by the Co-owner/ Owner of the Company, the Co-owner/ Owner will not have any claims of any nature whatsoever, on/ against the Company/ Apiaries. … … 8. … The Co-Owner/ Owner shall become entitled to receive a Projected amount of Rs. …./- every month/ year till the end of this present Apiaries Rearing Contract, and Rs. …./- only, after the end of these Apiaries rearing contract or his/ her Bee Colony as delivered to the Company which being the processed due to the possible profits likely to be made by the Company arising due to the accretions mentioned herein above.

9. All the rights (i.e. title Co-Owner/ Ownership, possession, etc.) of the said Bee Colony under reference hereinabove shall unconditionally pass on to the Company and the Co-Owner / Owner shall have no rights over the said Bee Colony and anything whatsoever in reference/ context to the said Bee Colony. 10. The Co-Owner/ Owner hereby affirms and agrees that he/ she is not at all in any circumstances/ event liable/ eligible to receive, any monetary proceeds before … from the Company except as agreed in Terms & Conditions, of this Apiaries Rearing Contract. The Co-owner/ Owner also hereby affirms that he/ shall not demand any monetary proceeds/ payments from the Company before this said date and any/ each and every such demand before this said date, shall only constitute violation/ breach of the terms and conditions of this Bee Colony Rearing Contract, by virtue of which all the rights of the Co-owner/ Owner pertaining to the said Bee Colony and the amount if any, receivable by the Co-owner/ owner from the Company shall be terminated automatically another Co-Owner/ Owner shall have no claim whatsoever against the Company. … 12. The Co-Owner/ Owner hereby agrees and accepts that he/ she shall not in any circumstances either directly/ indirectly, intentionally/ unintentionally do/ commit any such act’s due to which any provision/s is/ are violated.

In any event of the breach/ violation of any of the provision/ clause of this present Bee Colony rearing contact … this present Bee Colony rearing contract shall automatically become null, void and invalid and the Company shall have no liability whatsoever towards the Co-owner/ Owner. 13. The Co-owner/ Owner hereby unconditionally authorizes the Company to take all the necessary decisions and to perform any acts irrespective to all the aspects remaining untouched and which are incidental to this Apiaries rearing contract aid/ or arising by virtue of this Apiaries Rearing Contract, the Co-owner/ Owner shall not have to say in all such matter neither shall Co-owner/ Owner file any proceedings against the any decisions of the Company. … 15. The Co-owner/ Owner hereby unconditionally authorizes the company on his/ her behalf to make the necessary payments of all taxes, levies and other charges including penalties to the concerned Government Departments … and receive all subsidies, financial grants, tax exemptions and all other benefits and concessions likely to be provided by the Government, Government Departments and Institutions,

Organization, Semi Government Undertakings/ Institutions … the Co-owner/ Owner shall have no claim whatsoever to any such benefits. 16. The Co-owner/ Owner also hereby agrees to pay to the Company any such expenses borne by the Company on behalf of the Co-owner/ owner. Only the company shall be entitled to all accretions i.e. Co-owner/ Ownership and physical custody of the off spring etc. of the said Bee Colony which are subject matter of present Apiaries Rearing Contract Agreement and the Co-Owner/ Owner shall have no claim of any nature whatsoever on the said accretions. 17. Only after timely payment of all payments due to the Company from the Co-owner/ owner in case of any failure by the Co-owner/ Owner to receive as mentioned in the clause eight herein above, the Co owner/ Owner may have the right to take charge of 1,000 sq. ft of the land for every Rs.1,00,000/- receivable by the Co-owner / Owner. 19. The said Company shall not in any circumstances/ events be liable for payment of any damages and/ or compensation etc. in case of failure to perform any act or acts stated hereinabove wherein the said failure of has possibly occurred due to unforeseen circumstances ….

20. The Co-Owner/ Owner hereby unconditionally authorizes the Company to take all necessary and appropriate decisions in respect to all the aspects remaining untouched and which are incidental to the Apiaries rearing contract and/ or arising by the virtue of this Apiaries rearing contract. The Co-owner/ Owner shall not have any say in all such matters; neither shall the Co-owner contest any decision of the Company. 21. The Co- Owner/ Owner hereby agreed that he/ she will have no right to terminate this agreement before the completion of the period mentioned in the clause 7 hereinabove under any circumstance. The Co-owner/ Owner hereby further agreed that he/ she shall have no right to refund any installment at any circumstance except as agreed …? 22. The Co-Owner/ Owner hereby agrees and confirms that the Company has reserved all rights pertaining to this present Apiaries Rearing Contract. …” c. The customer availing the bee rearing process was issued with a ‘Guaranted Declaration’, stating therein the projected monthly benefits. The relevant clauses of the same are as under: “1. The owner shall become entitled to receive a Projected Monthly Benefit as per table till the end of this present Apiaries Rearing Contract, ….

The original purchase cost or Bee Colony shall be returned to the owner, whereas accreted Bees during rearing tenure shall be the property of Walia Apiaries Pvt. Ltd. 2. After getting the projected amount (as per the sales plan) the owner shall have no right or claim on contracted Beehives and accreted Bee Colony along with the produce during rearing duration and it become company property of Walia Apiaries, where as Walia Apiaries has given this amount after producing honey and selling in the market along with the Bee Colonies. 3. DDL having full responsibility and taking guarantee of Walia Apiaries payable amount/projected amount of the sales plan to the owner.” d. The Company had also issued a certificate to the customers on execution of the agreements and the ‘Apiaries Rearing Contract’ (ARC). I have seen a sample of such certificate as submitted by the Company. The same inter alia contains the name, address of the customer, nominee details, plan number, purchase value, estimated value, expected sum payable, finalized date, etc.

“Certified that the person described in the schedule here in entered into Sale Agreement of Agri Land/ Bee colony, of consideration as shown in schedule under sale plan of the company. Subject to terms & Conditions as per the Marketing Manual. Sale Agreement printed overleaf may be amended from time to time and subject to regular payment of the installments as mentioned in the Schedule. The terms and conditions written on the reverse of the sample certificate are as under: “… 2. The land shall be identified and allotted within a period of 90 days and Sale Deed shall be executed after development of said Plot, within a period of 3 years and incase of Installment Payment Plans; the land shall be identified and allotted after received of 50% of the consideration amount of the Plot & charges and Sale Deed shall be done within 3 years after the receipt of the last installment of the plan. … 5. The Customer shall be the owner-in-possession of the said property. The possessions of the said property shall rest in the hands of DDL for the limited purpose of developing and/ or, wherever considered appropriate by DDL for cultivating raising crops, trees, plants, saplings etc. Harvesting and for carrying out all such activities as are allied and ancillary there to, DDL shall have no rights whatsoever the said property as a manager/ tenant nor shall DDL be deemed to be a manager/ tenant.

6. Cost of the said property includes, the cost of lands, development charges, other inputs, saplings, plants trees, crops, planting expenses, maintenance and other miscellaneous expenses. 7. The Customer has the right to retain or sell the said property, and he/ she may deem fit, on expiry of the tenure of Agreed Payment Plan, Agreement to facilitate easy liquidity, DDL provides to Customer(s) the marketing service for sale of developed plots. In case the Customer decides to avail DDL’s aforesaid services, he/ she must notify DDL to the effect at least 180 days before the expiry of the period of the agreement. The sale can be made at the end of the tenure of this Agreement at such prices which may mutually agreed between the parties. In the opinion of the company, based on current market situation and related factors, a developed plot of land upon completion of the development period and owning to value addition may fetch a price as mentioned overleaf. The expected price is indicative only and not assured and is also subject to then prevailing policy of the company. 8. DDL shall have first charge on the said property on account of its unpaid installments for service/ development charges and for other incidental expenses incurred by DDL.

The said property cannot, in any manner be sold, assigned, mortgaged, pledged or alienated without obtaining NO DUES CERTIFICATE, from the company in case of installment Payment Plans. 9. The management of Company reserves the right to discontinued/ change/ amend/ modified or alter prospectively any of the rules/ regulations and payment plans and introduce new payment plans at any time at is sole discretion with or without any notice. 10. In case of joint sale deeds, the title deeds pertaining to the sale of the said property shall be kept in the safe custody of Co-owner(s) appointed by DDL for the purpose. A certified copy of the said title deed, issued by the sub registrar or by a public notary, as may be feasible all practicable, shall be made available to the customer by the said Co-owner(s). The name and address of the Co-owner(s) shall be informed by the Customer by the letter of the Allotment. The Customer shall have the liberty to verify the title deed at the office of Co-owner(s) during the normal working hour on any working day, after furnishing of formal written request therefore 15 days in advance.

11. For Bee Colony

A. The Bee Colony(s) will be given only after receiving the full amount of considered Bee Colony Cost with number of frames. B. The amount received against discontinued Sale Agreement shall be repaid by the Company as per Rules & Regulations of the discontinued Sale Agreement… C. All other terms & conditions apply as per general terms and conditions in the application form, Marketing Manual and Sale Agreement … … 12. The Purchaser shall have no right, title or lien in the property, land or any other assets of the Company. 13. The Purchaser shall have no right in the management and cannot participate in the affairs/ business of the Company.” 10. From the discussion above, it is observed that Dhanolty was inviting applications from the customers for the purchase of plot/ farm land plot. Dhanolty had two schemes i.e. (a) sale/ purchase and development of agricultural land and (b) sale and rearing of Bee Colony. It had various plans mainly categorized as ‘regular installment sales plan’ and ‘single purchase sales plan’. I also note the following in respect of the schemes of the Company i.e.: (i) sale/ purchase and development of agricultural land - As per the ‘agreement’, the Company had made arrangements for purchasing/ procuring the land.

This suggests that Dhanolty did not own the land on the date of application/ agreement. - Under the single purchase plan, the land had to be allotted to the customer within a period of 90 days and sale deed was promised to be executed after the development of the land. Under the installment payment plan, the land was allotted within 3 years after the receipt of 50% of the consideration amount of the plot, charges and sale deed. - As per the ‘Agri Plot Agreement’, the possession of the land remains with the Company and the customer had to sign a development deed with the Company. The land allotment is at the choice of the Company. - The customer was said to be the owner in vacant physical possession of the plot, after execution of the sale deed, however, nothing has been placed on record to show that the Company had executed sale deeds or had issued allotment letters. - The Company provides the marketing services for the sale of developed plots to its customers. However, from the available records, it is difficult to reach a conclusion that the Company had handed over the plot/ land to its customers.

The Company had provisions for executing joint sale deeds.

- The Company had provided the estimated returns in the brochure itself and had assured its customers that there was no chance of loss. The same suggest that the schemes of the Company were investment schemes. - The facility of 'opting out' was extended only to the customers who had made the investment under the single instalment plan. - Dhanolty reserved its right to discontinue/ change/amend/ modify the rules and plans. The security of the plot was the responsibility of the Company. The sale of produce was also at the discretion of the Company. All these factors indicate that the possession of the property if and when it comes into existence is more with Dhanolty than with that customer. - The Company had provided the accidental insurance cover to its customers.

(b) sale and rearing of Bee Colony - The Company sells the Bee Colony within 90-180 days of the receipt of the money from the customers. The customer has option to make payment in instalments also. - The estimated value of the Bee Colony and Honey was provided by the Company, in its brochure, itself. The same suggest that the schemes of the Company were investment schemes. - As per the business manual the customer had choices either to take away the Bee Colony or enter into a rearing contract with one of the three companies suggested by the Dhanolty. The Company has not submitted any list to show the details of the persons (i) who had taken the delivery of the bee colony and (ii) who had entered into rearing contract. - It is seen that the Dhanolty itself is engaged in the business of apiaries/ Bee Colony keeping/ rearing (the ‘apiaries rearing contract’) in its own name and in the name of its associate Company namely Walia Apiaries Pvt. Limited (as per the details available on MCA portal, the directors and the registered office address of Dhanolty and Walia Apiaries Pvt. Limited are the same). As per the ‘apiaries rearing contract’, the customer entrusts the physical custody of the Bee Colony to the Company. On execution of the ‘apiaries rearing contract’, the ownership/ possession of the Bee Colony passed on to the Company and the customer had no right over such Bee Colony. Further, the Company takes the authorization from the customers to take decisions and perform all acts relating to the Bee

Colony. Also, the Company retains the custody of the offsprings of the Bee Colony. - The customer had no right to terminate the agreement before the completion of the term of contract. In case the customer raises certain demand/ payment from the Company before the specified date, then all the rights of the customer in Bee Colony were said to be terminated. Further, in the case of default in payment of the installments, the customer gets no claim against the Company. - The customer receives specified projected amount as stated in the ‘apiaries rearing contract’ - Bee colony was also given in joint ownership. As per the Apiaries Rearing Contract (ARC), the physical custody of the bee colony remains with the Company for rearing.

I also note from the interim order that the Company had offered huge commissions for promoting its schemes

11. Having considered the above, now I proceed to deal with the charges levelled against Dhanolty and also to test the characteristics of the impugned schemes/ plans floated and carried on by the Company against the four conditions under Section 11AA(2) of the SEBI Act as alleged in the interim order. To conclude whether a scheme is a CIS or not, all the four conditions under Section 11AA(2) of the SEBI Act should be satisfied.

a. The first condition 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. Dhanolty took the contribution/ investments from the investors/ customers for the purchase of ‘agricultural plot’ and bee colony. Till the stage of application form and agreement, Dhanolty did not identify the plot of land to be sold to the customer. The 'agreement' only states that Dhanolty had ‘made arrangements for purchasing/ procuring the land'. The certificate issued by the Company also does not identify the land and only provides the plan number, its term and estimated/ expected sum payable for the land which is not even allotted. Further, as also discussed in the earlier paragraphs, Dhanolty had allotted the land under the ‘single purchase plan’ with a period of 90 days of the ‘Agri Plot Agreement’, while under the ‘installment payment plan’ the land was to be allotted within 3 years after the receipt of 50% of the consideration amount of the plot, development charges and sale deed. These facts show that the Company pools the investment made by the customers, for carrying out the overall plan/ scheme.

With regard to the plan for ‘Sale and rearing of Bee Colony’, the customer/ investor had to execute a ‘sale agreement’ with the Company and an Apiaries Rearing Contract (ARC) with the Company or its associate company for the rearing of the Bee Colony. On execution of the same, all the rights including the ownership, possession, etc. of the Bee Colony passed on to the Company or its associate as the case may be. However, the customer/ investor shall not have any rights or claim over the Bee Colony except the benefit as noted in the ‘Guaranted Declaration’. The clause in the sale agreement that ‘along with the Purchaser herein, there may be several co-owners of the Bee Colony, i.e. Apiaries’ suggests that the customer/ investor is allocated bee colonies from the pool along with co-owners. Under the Apiaries Rearing Contract (ARC), the Company or its associates would rear the ‘bee colony’ from the amounts received from the customer/ investors (the ARC contract also talk of money being paid to the Apiaries Rearing Company, the same suggests that the rearing of the bee colony would be done by the Company out of the proceeds paid by the customers).

These facts suggests that Dhanolty pools the investment from the customers, with an aim/ object of carrying out the overall scheme/ plan. The above facts are sufficient to conclude that the 'contributions, or payments made by the investors, are pooled and utilised by Dhanolty for the purposes of the scheme or arrangement', the scheme being to accept contributions/ payments in the name of sale of agricultural plot/ land and rearing of bee colony. Thus, satisfying the first condition as stipulated in Section 11AA(2)(i) of the SEBI Act.

b. The second condition 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. As discussed above, the customer/ investor had made payment towards the plans/ schemes promoted by Dhanolty. The brochure of the Company had mentioned about the estimated honey value/ honey with bee colony and the projected appreciated developed land value. The certificate issued by the Company to its customer/ investor had also provided the ‘estimated sum payable’ on the investment made i.e. the purchase value. I note that the very promise of ‘estimated value’ higher than the amount invested suggests that the investment/ contributions were made with a view to earn profits. The Apiaries Rearing Contract (ARC) also states about the profit/ income in the form of ‘projected amount’ payable every month/ year till the end of the contract and certain amount after the end of the ARC.

Further, the Company also provides for accidental insurance cover to its customers as an additional facility. The same makes it clear that the investors made contribution/ payment with a view to receive the profits/ income/ property/ return on their investments that may accrue to them as applicable, thus attracting the second condition as stipulated in Section 11AA(2)(ii) of the SEBI Act.

c. The third condition is that the property, contribution or investment forming part of scheme or arrangement, whether identifiable or not, is managed on behalf of the investors. The fourth condition is that the investors do not have day to day control over the management and operation of the scheme or arrangement. In this regard, I note that as per the ‘agreement/ purchase form’ the possession of the agricultural plot/ land remains with the Company. The customer does not manage the investment in the plan rather his investments are managed by the Company. The Company has not submitted any allotment letter or sale deed to show that the land was ever allotted or handed over to the customer/ investor. In view of the same, it can be stated that the agricultural plot/ land is not managed by the customer/ investor at any stage of the plan, as the customer/ investor is never made aware of the location of the land. As per the ‘agreement/ purchase form’ the land remains in the possession of the Company. Further, the irrigation system/ fertilization and the sale of the produce out of the said plot of land is also arranged by the Company.

The Company and its associate company (i.e. Walia Apairies Pvt. Limited) were engaged in the business of apiaries/ bee colony keeping and rearing. As per the clauses of the Apiaries Rearing Contract, such companies used to take the physical custody of the bee colony on execution of the Apiaries Rearing Contract (ARC). With this contract, the Company had taken all authorization from the customers to take decisions and perform all acts relating to the bee colony. The custody of the off-springs of the bee colony were also retained by the Company.

This makes it clear that the contribution, investment and property, if any, pertaining to the schemes/ plans were managed by the Company. In view of the same, the customer/ investor does not have any day to day control over the management and operation on the agriculture land and bee colony. Considering the above discussions, it can be concluded that the day to day control over management and operations of the plans/ schemes were also looked after by the Company and its directors. Thus, the scheme of the Company satisfies the third and fourth conditions under section 11AA (2) of the SEBI Act also.

12. As all the four conditions specified under Section 11AA(2) of the SEBI Act are satisfied in this case, the schemes/ plans promoted, launched, carried on and operated by the Company are in the nature of CIS in terms of Section 11AA(1) of the SEBI Act. I note that the activities of the Company are not exempted under the clauses under Section 11AA(3) of the SEBI Act. 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. 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. The Company has clearly failed to do so. 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 'CIS'. A person can launch or sponsor or cause to sponsor a CIS 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. I note that Dhanolty launched CIS without obtaining certificate of registration from SEBI, it contravened the provisions of Section 12(1B) of the SEBI Act and Regulation 3 of the CIS Regulations.

13. 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. I note that by mobilizing public moneys through a CIS, without obtaining registration from SEBI, the Company and its directors have contravened the above said provision and are liable for action.

14. I note that the interim order was issued against the Company and its directors namely Mr. Sanjay Walia, Mr. Siddharth Walia, Ms. Anita Malik, Ms. Raksha Kumari, Mr. Shiv Pratap Singh, Ms. Shefali Walia and Mr. Pankaj Bakshi. From the details as available at the MCA-21 portal it is seen that Mr. Sanjay Walia, Mr. Shiv Pratap Singh and Ms. Anita Malik are the present directors of the Company and responsible for carrying on unregistered CIS activities.

I note that Mr. Sanjay Walia, Mr. Siddharth Walia, Ms. Raksha Kumari, Ms. Shefali Walia, Ms. Anita Malik, Mr. Shiv Pratap Singh, and Mr. Pankaj Bakshi were the subscribers to the Memorandum of Association and Articles of Association of the Company. From the details submitted i.e. Form 32, it is noted that the noticees namely Mr. Siddharth Walia and Ms. Raksha Kumari had resigned from the Company on February 14, 2013 and January 09, 2012. I note that the resignation of Mr. Siddharth Walia and Ms. Raksha Kumari do not absolve them from the charges levelled in the interim order in the light of the incorporation of the Company on May 02, 2011 and period during which these were the directors of the Company. Further, these persons continue to be the promoters of the Company. Therefore, I have no hesitation in holding that the Company and its directors namely Mr. Sanjay Walia, Mr. Siddharth Walia, Ms. Anita Malik, Ms. Raksha Kumari, Mr. Shiv Pratap Singh, Ms. Shefali Walia and Mr. Pankaj Bakshi were engaged in the illegal fund mobilising activity by floating/ sponsoring/ launching, unregistered/ unauthorised CIS, as defined in the Section 11AA of the SEBI Act.

15. In view of the observations and findings made in this Order, 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. Dhanolty Developers Limited [PAN: AADCD8142Q] and its directors/ promoters namley Mr. Sanjay Walia [PAN: AAKPW0221H; DIN: 03337163]; Mr. Siddharth Walia [PAN: AALPW3988; DIN: 02775698]; Ms. Anita Malik [PAN: ASYPM1031D]; Ms. Raksha Kumari [PAN: AKZPK5102G; DIN: 02761163]; Mr. Shiv Pratap Singh [PAN: AVPPS2160P]; Ms. Shefali Walia [PAN: AAOPW1693H] and Mr. Pankaj Bakshi [PAN: AEGPB9921H] 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. Dhanolty Developers Limited and its directors/ promoters namley Mr. Sanjay Walia, Mr. Siddharth Walia, Ms. Anita Malik, Ms. Raksha Kumari, Mr. Shiv Pratap Singh, Ms. Shefali Walia and Mr. Pankaj Bakshi shall wind up the existing Collective Investment Schemes and refund 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. c. Dhanolty Developers Limited and its directors/ promoters namley Mr. Sanjay Walia, Mr. Siddharth Walia, Ms. Anita Malik, Ms. Raksha Kumari, Mr. Shiv Pratap Singh, Ms. Shefali Walia and Mr. Pankaj Bakshi shall not alienate or dispose off or sell any of the assets of Dhanolty Developers Limited except for the purpose of making refunds to its investors as directed above. d. Dhanolty Developers Limited and its directors/ promoters namley Mr. Sanjay Walia, Mr. Siddharth Walia, Ms. Anita Malik, Ms. Raksha Kumari, Mr. Shiv Pratap Singh, Ms. Shefali Walia and Mr. Pankaj Bakshi 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. e. Dhanolty Developers Limited and its directors/ promoters namley Mr. Sanjay Walia, Mr. Siddharth Walia, Ms. Anita Malik, Ms. Raksha Kumari, Mr. Shiv Pratap Singh, Ms. Shefali Walia and Mr. Pankaj Bakshiare restrained from accessing the securities market and are prohibited from buying, selling or otherwise dealing in securities market for a period of four (4) years. f. In the event of failure by Dhanolty Developers Limited and its directors/ promoters namley Mr. Sanjay Walia, Mr. Siddharth Walia, Ms. Anita Malik, Ms. Raksha Kumari, Mr. Shiv Pratap Singh, Ms. Shefali Walia and Mr. Pankaj Bakshi to comply with the above directions, the following actions shall follow: - Dhanolty Developers Limited and its directors/ promoters namley Mr. Sanjay Walia, Mr. Siddharth Walia, Ms. Anita Malik, Ms. Raksha Kumari, Mr. Shiv Pratap Singh, Ms. Shefali Walia and Mr. Pankaj Bakshi 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 four (4) years of restraint imposed in paragraph 15(e) above, till all the Collective Investment Schemes of Dhanolty Developers Limited 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 Dhanolty Developers Limited, 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; and - SEBI would make a reference to the Ministry of Corporate Affairs, to initiate the process of winding up of the company, Dhanolty Developers Limited. - SEBI shall initiate attachment and recovery proceedings under the SEBI Act and rules and regulations framed thereunder.

16. 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 Dhanolty Developers Limited and its directors/ promoters namley Mr. Sanjay Walia,

Mr. Siddharth Walia, Ms. Anita Malik, Ms. Raksha Kumari, Mr. Shiv Pratap Singh, Ms. Shefali Walia and Mr. Pankaj Bakshi, including other persons who are in default, for the violations as found in this Order.

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

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

Date : November 04, 2015 PRASHANT SARAN Place : Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA