Order in the matter of M/s Karmbhoomi Real estate Ltd[SAT Appeal No.143/2016][SAT Appeal No.143/2016]

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 Practice Relating to Securities Market) Regulations, 2003

In respect of – 1. Karmbhoomi Real Estate Limited (CIN - U70102UP2010PLC040423 / PAN : AAECK1255G) and its Directors, 2. Mr. Devendra Pal Singh (PAN: BJVPS0029N / DIN : 01832091), 3. Mr. Sardar Singh (PAN: ABDPS2787C / DIN : 02477583), 4. Mr. Nirmal Kumar Singh (PAN: ATHPS3605F / DIN: 03031024), 5. Mr. Manoj Kumar Sengar (PAN: BBIPS1965G / DIN: 03031042) and 6. Mr. Mahipal Singh (PAN: ATSPS3033N / DIN: 05308568)

Date of hearing: May 22, 2015 Appearance: For the noticees: Mr. Ajay Kumar Chopra appeared on behalf of the Company and its directors. For SEBI: Mr. Mohammad Atif Alvi, Deputy General Manager, Ms. Jyoti Sharma, Assistant General Manager and Mr. T. Vinay Rajneesh, Assistant General Manager.

1. Securities and Exchange Board of India (hereinafter referred to as “SEBI”) vide an interim ex-parte Order dated December 30, 2014 (“the interim order”) prima facie observed that the company, Karmbhoomi Real Estate Limited (hereinafter referred to as “the Company” or “Karmbhoomi”) is prima facie engaged in fund mobilizing activity from the public, by floating or sponsoring or launching 'collective investment scheme' as defined in Section 11AA of the SEBI Act without obtaining a certificate of registration from SEBI as required under section 12(1B) of the SEBI Act, 1992 and SEBI (Collective Investment Schemes) Regulations, 1999 (“the CIS Regulations”). In order to protect the interests of the investors and to prevent the Company from carrying on with its fund mobilizing activity through its alleged CISs, SEBI issued the following directions vide the interim order:

“14. In view of above, I, in exercise of powers conferred upon me under Sections 11(1), 11(4) and 11B of the SEBI Act read with CIS Regulations and PFUTP Regulations, hereby direct Karmbhoomi Real Estate Limited (CIN: U70102UP2010PLC040423) and its Directors viz., Mr. Devendra Pal Singh (DIN : 01832091), Mr. Sardar Singh (DIN : 02477583), Mr. Nirmal Kumar Singh (DIN: 03031024), Mr. Manoj Kumar Sengar (DIN: 03031042), Mr. Mahipal Singh (DIN: 05308568): • not to collect any fresh money from investors under its existing schemes; • not to launch any new schemes or plans or float any new companies to raise fresh moneys; • to immediately submit the full inventory of the assets including land obtained through money raised by Karmbhoomi; • not to dispose of or alienate any of the properties/assets obtained directly or indirectly through money raised by Karmbhoomi; • not to divert any funds raised from public at large which are kept in bank account(s) and/or in the custody of Karmbhoomi. i. to furnish all the information/details sought by SEBI within 15 days from the date of receipt of this order, including, i. Details of amount mobilized and refunded till date, ii. ii. Details of commission paid on amounts mobilised above, iii. Details of agents along with their addresses, etc., iv. Scheme wise list of investors and their contact numbers and addresses, v. PAN of the aforementioned Directors and vi. Audited Accounts for the last three years.”

2. The interim order was passed without prejudice to the right of SEBI to take any other action that may be initiated against the Company and its directors, Mr. Devendra Pal Singh, Mr. Sardar Singh, Mr. Nirmal Kumar Singh, Mr. Manoj Kumar Sengar, Mr. Mahipal Singh (for convenience the company and the above said individuals are collectively referred to as ‘noticees’), in accordance with law. The interim order advised the noticees to file their response and also indicate whether they wish to avail an opportunity of personal hearing in the matter.

3. Copies of the interim order was sent to the noticees vide letter dated January 06, 2015. Karmbhoomi vide its letter dated January 29, 2015 sought an extension of fourteen days’ time for filing of reply. A request for granting an opportunity of personal hearing was also made vide the said letter. The Company vide letter dated March 11, 2015, submitted the written submissions on behalf of all the noticees, wherein the following submissions were inter alia made:

(a) The interim order was passed under wrong belief based on false and fabricated documents submitted by the complainant. (b) The Company is not running any CIS nor it had launched any CIS in the past and does not wish to launch any CIS in the future. (c) The Company is involved in the outright sale and purchase of land and does not pool money from any investors under any schemes. (d) The Company’s endeavor is to develop township, shopping malls, flats and plots. The Company also contemplates to convert barren land into fertile land. (e) The Company has made good progress and had developed various projects. The promoters of the Company initially brought in capital and the Company also took loans to purchase agricultural land and after development of the same had offered to various purchasers who were interested to purchase. The allotment/registry was executed thereafter. (f) The Brochure of the Company was a testament for the same. (g) The Company also provided assistance in further sale and purchase of plots/units at the prevailing market price. (h) The Company has total transactions substantially less than Rs.100 crore since incorporation.

(i) The Company offers various options for payment to the customers as is being done by each and every real estate company in the country. (j) The Company first purchases the land or enter into an agreement to sale and purchase, take possession of the land, develop the same or start the development activities and prepares proper site plan/map of the project and then offers the same to the customer for purchase. The customers are given option of earmarking their preferences on the plots on the map. (k) The Company does not maintain or offer to maintain the plots/units of the land which it had developed/allotted and handed over possession. After possession, the purchasers are responsible for upkeep or maintenance of their units and plots. The Company has no say or interference in the same. The customers enjoy absolute and undisturbed ownership/possession of the units purchased by them. (l) The Company gives two options to the customer to make payments – (1) Single Installment Payment plan, wherein the purchaser pays a single installment for purchase of the plot in the form of sale consideration and the company thereafter allots the same to the purchasers.

Plots are allotted to the purchasers within 365 days of the purchase and generally done within few weeks from payment. The purchaser, at the time of purchase of land, is given various options according to the availability of plots as per map and plan of the Company.

(2) Multiple Installment Scheme or Regular Installment Plan, wherein the purchasers are given option of making payments in fixed installment as per the size of the units/plots purchased by them. In such plan, the allotment is done only after 50% of the sale consideration is received by the Company and the possession of the land will be offered after the registry and after completion of payment of sale consideration.

(m) The Company do not and did not offer to develop any floriculture/plantation activities etc on these plots/units as it had to do nothing after selling the same. (n) Customers of units/plots were free to sell them in open market as per their choice and the company had no control over the same. On failure/refusal of the buyer to complete/submit necessary documents/papers/photographs to complete necessary formalities and execute the documents required for the purposes of effective transfer of title of the said plots/units in the name of buyers/purchasers and development of the same by the Company was construed as a case of opting out and in that event the Company was entitled to invoke the terms of the agreement and the case of buyer was treated as a case of default.

The Company also forwarded – o A Brochure, o Copies of letter requesting customer to take possession of plot, Letter of Allotment and Plotting map of Karmbhoomi Town, Gwalara, Khair, Aligarh, o Copies of letter requesting customer to take possession of plot, Letter of Allotment and Plotting map of Karmbhoomi City, Bhadarpur Khurd, Bijnor, o Land unit cum Agreement containing General Terms & Conditions, o Copies of letter requesting customer to take possession of plot, Letter of Allotment and Plotting map of Karmbhoomi Garden, Palcheck, Lakhimpur, o Copies of letter requesting customer to take possession of plot, Letter of Allotment and Plotting map of Karmbhoomi Enclave, Palimukimpur, Aligarh.

Vide another letter dated March 11, 2015, the Company requested for documents relied upon by SEBI while passing the interim order.

4. SEBI, vide letter dated March 17, 2015, forwarded the documents. In response, the Company, vide letter dated March 24, 2015, while acknowledging the receipt of documents forwarded by SEBI, submitted that the documents were similar to its documents but were not its documents and had noticed glaring differences between its documents and those forwarded by SEBI. The Company further contended that the documents were manipulated by somebody in collusion with some rival group who is competing with it and that the same depicted the mischief played upon by the rival entity. According to the Company, the documents submitted by SEBI vide letter dated March 17, 2015 were not remotely similar to the documents submitted by it vide letter dated March 11, 2015. The Company also requested for an opportunity of personal hearing.

5. The noticees were afforded an opportunity of personal hearing (informed vide SEBI letter dated April 24, 2015) on May 15, 2015, when Mr. Ajay Kumar Chopra, Advocate represented them. The advocate sought time of three weeks on the ground that he was engaged in short notice. The request was considered and the personal hearing was adjourned to May 22, 2015. The fresh date of hearing was informed to all the noticees by SEBI vide letter dated May 15, 2015. Additionally, vide SEBI letter dated May 15, 2015, the Company and its directors were also asked to submit complete list of investors containing the name, address, details of plot allotted, the project in which the plot was allotted, whether the plot has been sold to the customer, whether registration has been done in the name of the investor, the amount received from the investor as consideration towards the plot, etc.

6. Mr. Ajay Kumar Chopra, the authorised representative appeared on May 22, 2015 and filed written submissions inter alia submitting the following:

(a) The present proceeding initiated by SEBI is ill-founded and have no substance to prove that the Company is involved in any CIS as envisaged under section 11AA(2) of the SEBI Act.

(b) Some false and malicious complaints by some unscrupulous people has led to the initiation of the proceedings against the Company and is liable to be dropped.

(c) The Company is purely engaged in the business of real estate like so many other real estate players like DLF, Omaxe and Parsvanth etc.

(d) The Company has not pooled the payments made by customers for any such common objective. Apart from selling land to the customers, the Company also maintains and develops the land for its customers.

(e) The Company is the registered owner of agricultural land measuring hundreds of acres in different locations in U.P. and these lands were sold to prospective clients for sale consideration payable in lump-sum as well as in installments.

(f) The projects (of selling and developing lands) are being carried out in different locations in U.P. i.e. Palcheck (Lakmipur), Bhadapur Khurd Bijnor, Palimukimpur Aligarh and Gwalra Khair in Aligarh.

(g) The business of selling and developing land for its customers does not satisfy all the ingredients/characteristics enumerated in section 11AA(2) of the SEBI Act. The scheme has to satisfy all conditions before branding the same as CIS.

(h) Firstly, the money paid by its customers is not pooled for collective investment in the business activity of the Karmbhoomi. The allotment letter and sale agreement (filed earlier with the SEBI in response to their notices) demonstrate that the relationship between Karmbhoomi and its customers / investors is of outright sale of agricultural land (by the Karmbhoomi of its customers / investors. The aforesaid documents further establish that the Karmbhoomi passes on a clear marketable title to its customers/ investors by way of sale of agricultural land in units of 100 sq.ft.

(i) Secondly, Karmbhoomi offers its customers/ investors an option to seek its assistance for the development of the land purchased.

(j) Alternatively, it is also open to the customers/ investors to develop the purchased land of their own. In case a customer / investor opts for the development of land through the Karmbhoomi, he has to pay a defined contribution for the said purpose.

(k) Further, the customers/ investors are absolute owners of the unit of agricultural land purchased by them, as well as in exclusive possession thereof. The Company, on receipt of consideration from the customers / investors, is bound to issue an allotment letter, within a reasonable period of payment of the consideration amount depending upon the cash down payment and under the installment plan after developing the land. The units being sold are well demarcated and individually approachable by the customers as it has well defined road and access. Further, the Company is under an obligation to execute a sale deed and thereby transfer the title of the plot of land in the name of every customers/ investors.

(l) It is further provided in the agreement and application for purchase of land that in case of breach of any of the conditions stipulated in the agreement executed with the customer / investor, by the Company, the customer / investor is entitled to terminate the agreement executed with the Company. In case a customer /investor chooses to terminate his contract with Karmbhoomi, he is entitled to a refund of the money paid by him to the company together with the simple interest at the rate of 15% per annum, from the date of the agreement. A customer/ investor is likewise authorized to terminate the contract in case Karmbhoomi does not complete the development work within the ‘stipulated time’.

(m) Karmbhoomi is not engaged in any such CIS activities as can be gathered from the circumstances and the terms of the agreement to the effect that customer / investors, has the option to retain or sell the unit of land purchased by him. In case customer/ investor chooses to sell the unit of land purchased by him, he can also seek the assistance of the Karmbhoomi by making a written request to Karmbhoomi.

(n) The business activity of Karmbhoomi is not in the nature of a “Collective Investment Scheme” as defined under section 11AA(2) of the SEBI Act as the Company is involved in sale and purchase of agricultural land. The investment/ installment made by the customer/ investor cannot be described as “contributions” and therefore it is not possible to conclude that the contributions made by the customer / investor are “pooled” and “utilized” for the purpose for which the scheme is made. The investments / consideration amount paid in instalments made by a customer/ investor, is not utilized collectively for any financial / monetary gains or utilized for carrying on any collective objective. Interaction between the Karmbhoomi and its customer/investor is no more than that between an ordinary seller and buyer.

(o) It is categorically pointed out here that the Karmbhoomi assures its customer/ investor of neither any profit, nor any income or produce. The customer/ investor are sold a piece of agricultural land with no further incentive and definitely, no right to any profit / income/ produce, whatsoever. That the activities of Karmbhoomi are not in nature of a Collective Investment Scheme” as the parameters specified in section 11AA(2) of the SEBI Act are not at all satisfied.

(p) The property sold by the Karmbhoomi to its customer / investor, which is in the nature of agricultural land, come in exclusive possession of the customer/ investor, immediately after the execution of allotment letter. The terms and conditions of the contract entered into between the Karmbhoomi and its customer / investor envisage, that the Karmbhoomi may develop the unit of land allotted to the customer/ investor but not the right to manage the same.

(q) The Company does not have day to day control and management of the property sold by it to its customer / investor. It was stated that Karmbhoomi only develops agricultural land and sell the same after getting all required permission from the concerned local authorities to the customer/ investor and that it does not manage the same for or on behalf of the customer/investor.

(r) Karmbhoomi had earlier also very promptly provided the details as demanded by SEBI and filing the additional new details of information as required vide letter dated 15th May 2015 required some more time in the interest of justice and further keeping in view the principles of natural justice which requires one should be given due opportunity to put his or her case.

The Advocate also filed an application seeking time for filing documents/informations as sought by SEBI vide letter dated May 15, 2015. The noticees were accordingly directed to submit the additional documents within a period of 15 days along with further written submissions, if any.

7. Thereafter, vide letter dated July 22, 2015, the Company submitted copies of few Sale deeds that pertained to sale of the flats in a project named ‘Salasar एवोड्स Shankar Vihar क्वास्री’ situated in Aligarh and stated that these documents were submitted to demonstrate the nature of business carried on by the Company.

8. I have considered the interim order, the submissions made by the noticees, material submitted by them and other material available on record. The interim order has prima facie observed that the scheme offered by the Company fulfills the conditions of a CIS as defined under section 11AA of the SEBI Act and has alleged that the Company is operating a CIS without registration from SEBI as required under section 12(1B) of the SEBI Act and regulation 3 of the CIS Regulations. The interim order has captured the salient features of the nature of the alleged scheme offered by the Company. It would therefore be pertinent to refer to such facts and observations:

(a) The Company was incorporated on April 30, 2010. Its directors are Mr. Devendra Pal Singh, Mr. Sardar Singh, Mr. Nirmal Kumar Singh, Mr. Manoj Kumar Sengar and Mr. Mahipal Singh.

(b) SEBI had, while issuing the interim order, perused the advertisement pamphlets, Rule book ('Niyamavali'), Career Guide ("Career Margdarshika") and 'Registration letter and receipt cum acceptance letter provided by the Complainant.

(c) The Pamphlets issued by the Company contained advertisements about its investment plans viz., Single Investment Plans ('SIP') and Recurring Investment Plans ('RIP'). As per such plans, an investor who invests a contributory amount of `1,00,000/- in SIP is offered an assured return of ` 4,04,000/- after 10 years. In case of an RIP, the investor is required to invest ` 1,000/- monthly to get an assured return of `1,40,000/- after 7 years. The advertisements mentioned that on making such investments, the investor will get free ownership of land and accident policy cover.

(d) As per the 'Rule Book', the Company offers two types of schemes on the basis of payment option to the investors, namely, Single Investment Scheme ("SIS") for lump-sum investment and Multiple Investment Scheme ("MIS")' for investment in installments. There are eleven plans in SIS i.e. Nos. 1-9 and 19-20 and eight plans in MIS. Under the above mentioned two schemes, the Company offer/invite investments in respect of sale of plots of variable sizes and the investor is entitled to an estimated realizable value for the plots as per the opted schemes.

(e) The details of MIS and SIS plans provided in the brochure are illustrated as under: Single Installment Scheme No. (1-9 and 19-20) Accidental Risk Estimate Realizable Value Coverage 1 2 3 4 5 6 7 8 9 19 20 Purchase 1.6 6 Plot Considerat years 3 y ears 4 years years 7 Y e a rs 8 years 9 years 1 0 y e a rs 1 2 y e a rs 15 years Size in ion (18 (36 (48 5 years ( 7 2 (84 (96 (108 (120 (144 (180 sq.yds. amount mths) mths) mths) (60 mths) mths) mths) mths) mths) mths) mths) mths) 5 1000 1200 1400 1550 2000 2100 2320 2560 2900 4040 4600 8100 2000 10 2000 2400 2800 3100 4000 4200 4640 5120 5800 8080 9200 16200 4000 15 3000 3600 4200 4650 6000 6300 6960 7680 8700 12120 13800 24300 6000 20 4000 4800 5600 6200 8000 8400 9280 10240 11600 16160 18400 32400 8000 25 5000 6000 7000 7750 10000 10500 11600 12800 14500 20200 23000 40500 10000 50 10000 12000 14000 15500 20000 21000 23200 25600 29000 40400 46000 81000 20000 75 15000 18000 21000 23250 30000 31500 34800 38400 43500 60600 69000 121500 30000 100 20000 24000 28000 31000 40000 42000 46400 51200 58000 80800 92000 162000 40000

Multiple Installment Scheme No. 12 (5 years) In ` Plot Size Purchase Estimated Accidental Consideration Realizable Risk Sq.Yds. amount MLY QLY HLY YLY Value Profit Coverage 30 6000 100 290 575 1140 9020 3020 12000 60 12000 200 580 1150 2280 18040 6040 24000 90 18000 300 870 1725 3420 27060 9060 36000 120 24000 400 1160 2300 4560 36080 12080 48000 150 30000 500 1450 2875 5700 45100 15100 60000 180 36000 600 1740 3450 6840 54120 18120 72000

210 42000 700 2030 4025 7980 63140 21140 84000 240 48000 800 2320 4600 9120 72160 24160 96000 270 54000 900 2610 5175 10260 81180 27180 108000 300 60000 1000 2900 5750 11400 90200 30200 120000 (f) As per the Rule Book, plot allotment letters in favour of the purchaser/investor shall be issued within 365 days in case of SIS and within 60 days of the payment of the 50% installments in case of MIS.

(g) It is also noted that the 'Career guide' for agents of the Company contains commission structure for its agents of SIS and MIS schemes. It is noted that the total commission offered to employees/agents is as much as 49.75% in MIS schemes and 23.75% in SIS schemes. A separate Accidental Risk Coverage is also provided for the agents which forms part of the commission structure.

(h) It is noted from the 'Registration letter' that the complainant has invested `20,000/- as lump-sum amount in SIS-4 of the Company on November 12, 2012. Tenure of agreement is mentioned as 5 years i.e. till November 12, 2017 and the same is also mentioned as date of termination of agreement in the receipt cum acceptance letter. The documents also mention 100 Sq. Yards as size of plot. The Estimated realizable cost which is printed in the document is `40,000/-. This is as per the chart of the SIS scheme of the Company. The letter also contains a note stating that Estimated Realizable Cost at the end of the term denotes composite offer for value of Land, Standing Crops, saplings, plants trees and allied items thereon. (i) The interim order also observed : “From the Balance Sheet and Profit and Loss accounts of Karmbhoomi for the financial year 2012- 13, the following are noted: a. Karmbhoomi has taken advance from customers against allotment of plots to the tune of `13.61 crores and the same is shown as other current liabilities. This has increased from the previous year, wherein the advance taken against allotment of plots was `11.26 crores.

b. Karmbhoomi has allotted land to its customers/investors by way of sales and has earned sales revenue of `3 crores. It may be noted that the Auditor has written in the Notes on Accounts that Karmbhoomi has not allotted land in some cases but has added the same as sales. c. Karmbhoomi has land stock of `9.61crores. During financial year 2012-13, Karmbhoomi purchased land and incurred development expense to the tune of `6.89 crores.”

9. I wish to deal with a contention which would be necessary as the same is preliminary in nature. The Company has contended that the documents sent to it by SEBI vide letter dated March 17, 2015 is not its documents, but were similar to it. The Company has also stated that it had noticed glaring differences between its documents and those forwarded by SEBI. The Company further contended that the documents were manipulated by somebody in collusion with some rival group. In this regard, I note that the Company has not pointed out what the glaring differences were. Further, the Company vide letter dated March 11, 2015, had forwarded the following documents– o Brochure, o Copies of letter requesting customer to take possession of plot, Letter of Allotment and Plotting map of Karmbhoomi Town, Gwalara, Khair, Aligarh, o Copies of letter requesting customer to take possession of plot, Letter of Allotment and Plotting map of Karmbhoomi City, Bhadarpur Khurd, Bijnor, o Land unit cum Agreement, o Copies of letter requesting customer to take possession of plot, Letter of Allotment and Plotting map of Karmbhoomi Garden, Palcheck, Lakhimpur, o Copies of letter requesting customer to take possession of plot, Letter of Allotment and Plotting map of Karmbhoomi Enclave, Palimukimpur, Aligarh.

On perusal of such documents, I note the following:

(a) Brochure:

The Company represented that it is in the business of land development, sale/purchase, real estate, insurance, marketing and agriculture.by converting barren land into agricultural land.

The Company has solicited investments from public and has offered Single Installment Scheme (SIS) as well as Multiple Installment Scheme (MIS). The customer would be allotted land within 365 days from the date of payment of the consideration. In the MIS scheme, the customer is allotted land after 60 days of receipt of 50% of installments.

In a SIS, the customer can get 50% of amount paid as loan after one year. In MIS, the customer can, after paying 50% installments, get 60% of the amount as loan. The loan should be repaid with 6 months @ 18% p.a. If amount is not repaid, interest would increase to 24% (compound interest) and the same would be deducted/adjusted from the ‘realisable value’. After completion of the term, the amount invested by the customer would be refunded.

As per ‘Note’ in the Brochure, the expenses for sale deed shall be borne by the customer. In case, the company was not able to change the nature of land (barren to agri), it would have no responsibility.

The Company has solicited investments under the following schemes in its Brochure:

1. SIS – Single Installment Scheme No. (4-9 and 19-20):

Single Installment Scheme No. (4-9 and 19-20) ESTIMATED REALISABLE VALUE 4 5 6 7 8 9 19 20 Purchase 6 years (72 7 years (84 8 years (96 9 years 10 years 11 years 12 years 16 years Accidental Plot Consideration months) months) months) (108 (120 (132 (144 (192 Risk Size Amount months) months) months) months months) Coverage)

Sq. Yd Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. 25 5000 10000 10500 11600 12800 14500 20200 23000 40500 10000 50 10000 20000 21000 23200 25600 29000 40400 46000 81000 20000 75 15000 30000 31500 34800 38400 43500 60600 69000 121500 30000 100 20000 40000 42000 46400 51200 58000 80800 92000 162000 40000 125 25000 50000 52500 58000 64000 72500 101000 115000 202500 50000 150 30000 60000 63000 69600 76800 87000 121200 138000 243000 60000 175 35000 70000 73500 81200 89600 101500 141400 161000 283500 70000 200 40000 80000 84000 92800 102400 116000 161600 184000 324000 80000 225 45000 90000 94500 104400 115200 130500 181800 207000 364500 90000 250 50000 100000 105000 116000 128000 145000 202000 230000 405000 100000

300 60000 120000 126000 139200 153600 174000 242400 276000 486000 120000 350 70000 140000 147000 162400 179200 203000 282800 322000 567000 140000 400 80000 160000 168000 185600 204800 232000 323200 368000 648000 150000 450 90000 180000 189000 208800 230400 261000 363600 414000 729000 150000 500 100000 200000 210000 232000 256000 290000 404000 460000 810000 150000 1000 200000 400000 420000 464000 512000 580000 808000 920000 1620000 150000 1500 300000 600000 630000 696000 768000 870000 1212000 1380000 2430000 150000 2000 400000 800000 840000 928000 1024000 1160000 1616000 1840000 3240000 150000 2500 500000 1000000 1050000 1160000 1280000 1450000 2020000 2300000 4050000 150000

From the above, it can be noticed that if an investor pays the purchase consideration amount of Rs.5000/- for a 25 sq. yd. plot, he would be receiving Rs.10,000/- after 72 months; Rs.10,500/- after 84 months; Rs.11,600/- after 96 months, Rs.12,800/- after 108 months, Rs.14,500/- after 120 months; Rs.20,200/- after 132 months; Rs.23,000/-after 144 months and Rs.40,500/- after 192 months. The Company also provides Accidental Risk coverage of Rs.10,000/-. The maturity amount after the specified tenure is termed as “Estimated Realisable Value”.

2. MIS – MIS No. 12 (5 years), MIS No. 13 (6 years), MIS No. 14 (7 years), MIS no. 15 (8.3 years), MIS no. 16 (10 years), MIS no. (12 years) and MIS no. (15 years). As an illustration, MIS no. 17 for 12 years is reproduced below:

Multiple Installment Scheme No. 17(12 years) Plot PURCHASE MLY QLY HLY YLY ESTIMATED ACCIDENTAL Sale CONSIDERATION REALIABLE DEATH AMOUNT VALUE CLAIM

Sq.yd Rs. Rs. Rs. Rs. Rs. Rs. Rs. 360 72000 500 1450 2875 5700 160000 144000 432 86400 600 1740 3450 6840 192000 150000 504 100800 700 2030 4025 7980 224000 150000 576 115200 800 2320 4600 9120 256000 150000 648 129600 900 2610 5175 10260 288000 150000 720 144000 1000 2900 5750 11400 320000 150000 1080 216000 1500 4350 8625 17100 480000 150000 1440 288000 2000 5800 11500 22800 640000 150000

1800 360000 2500 7250 14375 28500 800000 150000 2160 432000 3000 8700 17250 34200 960000 150000

In the above scheme, an investor who pays Rs.72,000/- in monthly instalments of Rs.500/-; quarterly installments of Rs.1450/-; half yearly installments of Rs.2875/- and yearly installments of Rs.5700/- would receive Rs.1,60,000/- on completion of the plan specified period of 12 years. The Company also assures Accidental Death claim of Rs.1,44,000/-.

It is noticed that in all of the above 8 schemes, the investor is assured return of his investment along with profits. It is important to recall here that the Company, in this Brochure, has promised return of investments. The Company has not provided any sale deeds. It has merely provided few copies of allotment letters and notice requesting investor to take possession of the plot. In such circumstances, it can be definitely concluded that the Company is not selling plots through a ‘sale deed’, rather operating investments schemes in the garb of selling plots.

From the above discussion, I note that except for difference in the figures in the brochure submitted by the complainant and that submitted by the Company, the other features are the same.

(b) Allotment Letters: The Company has provided allotment letters in respect of its projects as mentioned above. In respect of its ‘Karmbhoomi Town, Gwalara’ project, the Company had forwarded 5 allotment letters. The allotments are claimed to be in respect of plot nos. 1-5. However, the accompanying plot map does not however show any such plot numbers except for a yellow shading stated to be the plots that were allotted. The same is the case with the other projects also.

(c) Land unit cum agreement: This Booklet contains the application form which the customer would fill before subscribing to the schemes of the company, general terms and conditions, the agreement which inter alia provides for development of plot, transfer of title to buyers in joint holding, possession etc. The agreement also stated that if the Company breaches the agreement by not allotting the plot to the buyer, the buyer could terminate the agreement and the company shall refund amount paid by the buyer along with 15% simple interest p.a. from the date of contract. If the company does not complete the development in the manner agreed, the buyer could terminate the agreement and the company shall, after deducting cost of land, registration expenses and the balance amount would be refunded with simple interest of 15% p.a.

The agreement also stipulates that if the breach is caused by the buyer in failing to pay one or more installments for a period of 12 months from the due date, the amount shall be refunded if such breach happens before the allotment. In case of default after allotment, the company shall deduct 4% of the total consideration for cost, development and other charges and refund the balance amount @ 12% p.a.

The company also provides marketing services to the buyer for sale of developed plots.

10. From the above, it becomes very clear that the schemes as noticed from the brochures and documents submitted by the Company are similar in nature to those identified in the Brochure relied upon by SEBI while passing the interim order. In respect of the schemes/plans, it is noticed that only the area of plot and the consideration amount (i.e. investment) differs. The Company was specifically asked to mention the differences as noted by them vide SEBI letter dated April 10, 2015. Further, vide the said letter, the Company was also asked to submit brochure, payment plans, registration letter and other documents issued by the Company to its investors. However, till date, the Company has neither informed the glaring differences in the documents nor submitted a copy of the Registration letter.

11. Without prejudice to the consideration of whether the complaint is false or not, I would be relying only on the documents submitted by the Company. Therefore, in view of these observations, the contention of the Company regarding the documents relied upon by SEBI have no merit.

12. The Company’s contention is that it is engaged in the sale of plot/unit and does not operate any CIS as alleged in the interim order. I wish to deal with this contention before proceeding further. SEBI vide letter dated May 15, 2015 had advised the Company and its directors to submit – (a) Complete list of investors containing name, address, details of plot allotted, (b) the project in which plot was allotted (c) whether plot was sold to customer (d) whether registration was done in the name of the investor (e) the amount received from investor as consideration towards the plot.

The Company was also advised to provide its brochure, payment plans, sample filled in registration letter and other documents issued by it. During the personal hearing, the Advocate on behalf of the noticees requested time for filing documents/informations as sought by SEBI vide letter dated May 15, 2015. Also, the noticees were directed to submit the additional documents within a period of 15 days along with further written submissions, if any. Vide Company’s letter (letter signed by Manoj Kumar Sengar for and on behalf of the Company) dated July 22, 2015 submitted copies of few sale deeds. On a perusal of these sale deeds, the following are noted: (a) Sale deeds pertain to sale of flats in a project named ‘Salasar एवोड्स Shankar Vihar क्वास्री’ situated in Aligarh. (b) While the Company has submitted a few sample sale deeds executed for a flat project, no sale deeds pertaining to plots appear to have been executed so far. The sale of flats appears to be entirely unrelated to the schemes of ‘sale of land’ launched by the Company as detailed in the brochures submitted by it. The Company vide its letter dated March 11, 2015 submitted five sample allotment letters issued to investors with respect to allotment of plot in Gwalara project (Karmbhoomi Town) situated in Aligarh. From a perusal of the allotment letter issued to Mrs.Sushila, it is noted that the Company has vide allotment letter 14/07/2012 allotted to the customer/investor Plot No.02 measuring 100 sq.yard land in Khasra/gat No.175/4. The following clauses were noted from the sample allotment letter: a. The Company reserves the right to change the location of this allotment and allot an alternate site. b. The document submitted by the investors/customer has defects in them which need to be removed within 30 days failing which the allotment would stand cancelled. c. You shall have the right to verify the allocation of land after sending a formal request in writing 30 days in advance. d. This allotment and the subsequent conveyance of the aforesaid land shall remain subject to the ‘Rule’ contained in the rule book and the ‘General terms & Conditions’ contained in the application form, and the terms & conditions of agreement between customer and Company.

e. A sum of Rs.20,000 paid by you under Single Instalment Scheme No.4 has now been appropriated towards the cost which are to be met in procuring the said property and conveying it to you, developing the same, planting the required saplings, plants, trees, crops, etc.

(c) The Company also submitted a site map/plan layout of Gwalara project (Karmbhoomi Town) situated in Aligarh. While the map demarcates individually 100 square yards of land, no plot number has been assigned to each plot giving no identification to an investor regarding the plot allotted to him. The application form submitted by the Company shows Plot no.2 assigned to one Mrs. Sushila, but the same is not being identified in the site map. Further, the site map has not been approved by any concerned/appropriate authority.

(d) Even though the Company entered into an Agreement as early as October 2010 (as observed from Allotment letter issued to Mr. Abdul Waris) and allotted a plot in July 2012, the Company has not produced any registered sale deed as on this date, nor any legally valid documents to show that it was in the business of selling lands or plots to the ‘buyers’.

(e) The Company has contended that the allotment letter and agreement forwarded by it to SEBI demonstrate that it sells agricultural land to its customer. However, it has not produced a single registered sale deed to prove sale of any land to customer. It should be appreciated that allotment letter and agreement between the company and customer cannot be regarded as documents of title of any land/property.

(f) From the above, it is clear that the Company has not provided any evidence to show that it sold ‘plots’ to investors as contended by it.

13. Given the above observations, it is to be tested whether the scheme of the Company is a CIS as alleged in the interim order. The Scheme/plans offered by the Company is to be tested whether they satisfy all the four conditions enumerated under section 11AA(2) of the SEBI Act in order to categorize the business/activities of the Company as a CIS. In this regard, the provisions of section 11AA(1) and (2) are mentioned below: “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.”

14. The first condition under the said section is that 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. i. The Company has not denied soliciting or receiving money from its customers/investors. Its contention is that the allotment letter and sale agreement demonstrates that it is engaged in outright sale of agricultural land in units of 100 sq.ft. However, as observed above, it is noted that the Company has not produced any documents to substantiate the said contention. No sale deeds were produced for any “outright sale”. ii. I have perused the material forwarded by the Company and note the following: (a) As per the Brochure submitted by Company, the Company has made advertisement regarding 8 plans – 7 multiple installment schemes and one single installment scheme. (b) In all these schemes, the Company solicits money from investors with a promise of return (Estimated Realizable Amount/Profit) on investment. (c) All the schemes have plot sizes mentioned therein, though area of such plots are variable depending on the plan and scheme chosen. (d) In few schemes (i.e. MIS Nos. 12, 13, 14, 15 and 16) the profit from the investment is clearly mentioned along with the Estimated Realizable Amount.

(e) The Company also has in place a very lucrative commission structure for its agents who promote/solicit investments for the Company. (f) As per the Registration Letter dated 12.11.2012 issued to one Raji Hasan, the following details are recorded therein: o Date of commencement – 12.11.2012 o Scheme No. and Term – SIS-4 and 5 years o Plot size – 100 sq. yds o Consideration – Rs.20,000/- o Date of realizable cost at end of term – 12.11.2017 o Estimated Realizable cost at the end of terms – Rs.40,000/-. Estimated realizable cost denoted composite offer value of land, standing crops, saplings, plants, trees and allied items thereon. The above registration was mentioned in the interim order and the Company has not disputed the same nor contended that it did not have any Raji Hasan as its customer.

(g) As mentioned above, the Company has forwarded allotment letters in respect of 5 investors pertaining to its Gwalara project (Karmbhoomi town). It is surprising to note that having accepted Rs.20,000/- from such investors under the SIS plan towards 100 sq yd. plot., the Company has not executed any sale deed. The allotment letters though shows plot nos., the same are not reflected or earmarked in the site-map submitted by the Company.

iii. It is important to note that nowhere in such document, the customer was informed the location of the plot and its identity. Only the area of 100 sq.yds was mentioned.

iv. I also note that the Company has circulated Brochures soliciting and promising the investors/customers the following – (a) If a customer invests Rs.1,00,000/- in the scheme, the value of the same would be Rs.4,04,000/- in 10 years; Rs.16,32,160/- in 20 years; Rs.65,93,926/- in 30 years and Rs.1,31,87,853/- in 35 years. The scheme is a SIP captioned “Kaun Banega Crorepati” in Hindi. (b) Under a scheme (SIP) for meeting wedding expenses of daughters, the Company solicited investments of – o Rs.50,000/-, promising Rs.2,02,000 in 10 years; Rs.4,04,000/- in 15 years and Rs.8,08,000/- in 20 years o Rs.1,00,000/-, promising Rs.4,04,000 in 10 years; Rs.8,08,000 in 15 years, Rs.16,16,000 in 15 years and Rs.32,32,000 in 20 years. It is pertinent to note that the Company has promised to give Rs.16,16,000/- and Rs.8,08,000 in 15 years on investment of Rs.1,00,000/-. (c) Under a scheme (RIP) for meeting the education expenses, the Company has solicited investment of Rs.7980/- annually {Rs.665/-per month} and promised Rs.98,000/- return in 7 years; Rs.1,70,800 in 10 years and Rs.2,73,000 in 15 years. The Company has also represented that even if the installments are not paid from the 15th year, the investor would get a return of Rs.5,46,000 in 20 years and Rs.10,92,000 in 25 years. (d) The Company has similar plans for ‘senior citizens’.

v. As mentioned above, the Brochure, agreement and allotment letters submitted by the Company along with its reply dated March 11, 2015 also provide for return on the consideration amount invested by the investor with the Company in its schemes. The Company is pooling investments for the purposes of giving return to investors under the garb of sale of plots.

vi. The scheme of the Company is to pool investments from customers/investors on the guise of allotment of plot with a promise of return to them on completion of the period as per the plans/schemes opted for by such customer.

vii. In view of the above discussions, I find that the contributions or payments made by the investors in the schemes/plans offered by the Company are pooled and utilized for the purposes of the scheme or arrangement.

15. 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. (a) It can be noted from the above discussions that the Company has promised return/profit on investment in all the Schemes/plans launched/operated by it.

(b) It is clearly proved even by the documents submitted by the Company that it provides profits (termed as ‘estimated realizable value’ in the brochure) to the investors on the amounts invested by them in the schemes operated by the company. (c) The noticees have contended that the consideration amount paid by customers in installments is not utilized for any financial gains and that the Company’s interaction with its customers is not more than that between a seller and buyer. However, this contention does not have any merit or reliability in view of the features of the schemes offered and operated by the Company as can be made out from the scheme brochures. (d) Therefore, I conclude that the second condition is also satisfied by the schemes/arrangement offered/launched/carried on by the Company.

16. The third and fourth conditions under section 11AA(2) of the SEBI Act can be discussed together. These conditions 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. (a) It is noted that the interim order had made the following observations with respect to the satisfaction of the alleged schemes with the above conditions: “………. the investor is not provided with details in respect of the plot/land purchased and supposed to be allotted by Karmbhoomi in future. This indicates that there is no certainty as regards the plot of land which an investor is going to get on making the payments as contracted. In light of these facts and circumstances, it is clear that the property, contribution or investment forming part of the scheme/Plans are managed by Karmbhoomi on behalf of applicants/investors and they do not have any day-to-day control over the management of the schemes/Plans. It is pertinent to mention here that SEBI has repeatedly sought specific details of its scheme from Karmbhoomi but they have chosen not to give any details despite being given several opportunities”.

(b) Various clauses in the General Terms & Conditions of the “Land Unit Cum Agreement” {submitted by the Company vide letter dated March 11, 2015} show that the possession of the property will be with the Company for development and/or cultivation, plantation, cropping, maintenance and marketing of produce during the tenure of the agreement. As discussed earlier, the development of the plot is not at the option of the investor as claimed by the company because in the Plot buyer agreement it is seen that the investor in every case exercised the option for the development of the plot by the company. Therefore the scheme provides for mandatory development by the company as shown by clause 4 of the said Agreement. The same reads as follows:- "DEVELOPMENT : KREL shall in conformity and in accordance with the opted scheme by the Buyer, develop and maintain the Buyer plot from the date of signing of this AGREEMENT, in consultation with agro consultants and experts taking into consideration such factors such as soil, climate etc. All matters pertaining to development including survey, demarcation, cleaning, cultivation, planning tand raising crops, trees, plants, saplings etc. use of fertilizer and pesticides irrigation harvesting and all other activities allied or incidental thereof shall be finally decided by KREL...."

The General Terms and Conditions also state that the possession of the ‘said property’ shall rest in the hands of the company for development and maintenance and marketing of produce during the tenure of agreement.

The perusal of the above clause clearly shows that the management of the development activities were to be done by the Company on behalf of the investors. In what manner the development activities were to be done by the company is "finally" decided by the company.

(c) The Company has solicited funds/investments from investors promising higher returns in the guise of investments in plots. However, the Company has not identified the location or whereabouts of the 100 sq.yds. promised to the customer. Therefore, when the customer does not know the identity of the plot which is promised to him, there can be no question of him having any say on the funds pooled from investors including him and the manner the Company’s business is managed. More importantly, the Company has not produced a single sale deed for sale of plots in terms of the schemes offered in the brochures, in support of its contention that it is engaged in the sale of agricultural plots to customers.

(d) Therefore, the third and fourth condition specified under section 11AA(2) of the SEBI Act are also satisfied in the instant case.

17. From the above discussion, I conclude that the schemes offered by the Company with a promise of returns satisfy 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. At this juncture, it is important to note that the Hon’ble Supreme Court in the matter of PGF Limited vs. UoI and another (ref. MANU/SC/0247/2013, has observed "…..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 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."

18. The activities of the Company are not exempt under the clauses under section 11AA(3) of the SEBI Act. To carry out 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.

19. In view of such unregistered CIS activities carried on by the Company, it becomes necessary to issue suitable directions in the interest of investors and the securities market. In this regard, regulation 65 provides for issuance of various directions 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.”

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. As per the Balance Sheet for the financial year ending 2014, the Company has mobilized Rs.15.41crore as advance from customers against allotment of plots. This amount was Rs.13.61 crore for the FY ending 2013.

20. The interim order has been issued against Mr. Devendra Pal Singh (DIN: 01832091), Mr. Sardar Singh (DIN: 02477583), Mr. Nirmal Kumar Singh (DIN: 03031024), Mr. Manoj Kumar Sengar (DIN: 03031042) and Mr. Mahipal Singh (DIN: 05308568). With respect to these noticees, I observe the following: (a) As per information available in the website of the MCA, the following are the present directors in the Company: DIN/DPIN/PAN Full Name Present residential address Designation Date of Appointment SARDAR CHHATIKARA, MATHURA, 281006, Uttar 02477583 Director 25/03/2014 SINGH Pradesh, INDIA MANOJ HN.190, CHATIKARA, MATHURA, 03031042 KUMAR Director 30/04/2010 281001, Uttar Pradesh, INDIA SENGAR MAHIPAL CHHATIKARA, MATHURA, 281006, 05308568 Director 25/03/2014 SINGH Uttar Pradesh, INDIA (b) The Company was incorporated on April 30, 2010 and has commenced its business of mobilization of public funds under its CIS thereafter.

(c) Mr. Devendra Pal Singh (DIN: 01832091) and Mr. Nirmal Kumar Singh were the directors in the Company from April 30, 2010 (i.e. from incorporation of company) till March 28, 2014. Both these persons were the directors when the Company had mobilized funds from the public under the collective investment scheme of the Company. Therefore, they are liable for the violations as found in this Order for the period when they were the directors in the Company.

(d) It is noted that noticee, Mr. Manoj Kumar Sengar was appointed as a director on April 30, 2010 and continues in that position till date. Further, noticees, Mr. Sardar Singh and Mr. Mahipal Singh were appointed as directors on March 25, 2014 and continue till date. Therefore, these persons, being the directors of the Company, are responsible for the violations committed by the Company as found above. Accordingly, they are responsible for winding up the unauthorized CIS launched and operated by the Company in contravention of the applicable law and making refunds to the investors, and also for other regulatory action.

21. 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 alleged 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 and its directors have contravened the above provision and liable for suitable regulatory action.

22. In view of the foregoing observations and findings, 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:

1. Karmbhoomi Real Estate Limited (CIN: U70102UP2010PLC040423) and its present and past directors, namely, Mr. Sardar Singh (DIN: 02477583), Mr. Manoj Kumar Sengar (DIN: 03031042), Mr. Mahipal Singh (DIN: 05308568), Mr. Devendra Pal Singh (DIN: 01832091) and Mr. Nirmal Kumar Singh (DIN: 03031024) shall abstain from collecting any money from the investors or launch or carry out any Collective Investment Schemes including the schemes which have been identified as a Collective Investment Schemes in this Order.

2. Karmbhoomi Real Estate Limited and its present directors, namely, Mr. Sardar Singh, Mr. Manoj Kumar Sengar and Mr. Mahipal Singh 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.

3. Karmbhoomi Real Estate Limited, its promoters and present directors, Mr. Sardar Singh, Mr. Manoj Kumar Sengar and Mr. Mahipal Singh shall not alienate or dispose off or sell any of the assets of the Company except for the purpose of making refunds to its investors as directed above.

4. Karmbhoomi Real Estate Limited and its present and past directors, namely, Mr. Sardar Singh, Mr. Manoj Kumar Sengar, Mr. Mahipal Singh, Mr. Devendra Pal and Mr. Nirmal Kumar Singh 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.

5. Karmbhoomi Real Estate Limited and its present and past directors, namely, Mr. Sardar Singh, Mr. Manoj Kumar Sengar, Mr. Mahipal Singh, Mr. Devendra Pal and Mr. Nirmal Kumar Singh 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.

6. In the event of failure by Karmbhoomi Real Estate Limited and its present and past directors, namely, Mr. Sardar Singh, Mr. Manoj Kumar Sengar, Mr. Mahipal Singh, Mr. Devendra Pal and Mr. Nirmal Kumar Singh to comply with the above directions, the following actions shall follow:

(i) Karmbhoomi Real Estate Limited and its present and past directors, namely, Mr. Sardar Singh, Mr. Manoj Kumar Sengar, Mr. Mahipal Singh, Mr. Devendra Pal and Mr. Nirmal Kumar Singh 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 5 above, till all the Collective Investment Schemes of Karmbhoomi Real Estate Limited are wound up and all the monies mobilized through such schemes are refunded to its investors with returns which are due to them.

(ii) SEBI would make a reference to the State Government/ Local Police to register a civil/ criminal case against the Company, Karmbhoomi Real Estate 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 (iii) SEBI would make a reference to the Ministry of Corporate Affairs, to initiate the process of winding up of the company, Karmbhoomi Real Estate Limited.

(iv) SEBI shall initiate attachment and recovery proceedings under the SEBI Act and rules and regulations framed thereunder.

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

24. 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 Karmbhoomi Real Estate Limited and its present and past directors, namely, Mr. Sardar Singh, Mr. Manoj Kumar Sengar, Mr. Mahipal Singh, Mr. Devendra Pal and Mr. Nirmal Kumar Singh, including other persons who are in default, for the violations as found in this Order.

25. With respect to the contravention of regulation 4(2)(t) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003, SEBI may examine whether to initiate appropriate proceedings under Sections 11(4) and 11B of the SEBI Act read with Regulation 65(e) of the CIS Regulations and Chapter VI A of the SEBI Act against the Company and its directors (present and past, as may be applicable) and promoters.

26. 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: November 30th, 2015 Place: Mumbai