Order in the matter of M/s Nicer Green Housing And Infrastructure Limited[SAT Appeal No.86/2017]

WTM/PS/86/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 Nicer Green Housing and Infrastructure Developers Limited In respect of: 1. Nicer Green Housing and Infrastructure Developers Limited [PAN: AACCN5652N] 2. Mr. Pipal Singh Sidhu [PAN: BVEPS9613M], 3. Mr. Ranjit Singh [PAN: BZWPS3360K], 4. Ms. Surinder Kaur [PAN: ASGPK7961G] and 5. Mr. Karanjit Singh [PAN: CRCPS3999H] Date of hearing: May 18, 2015 Appearance: For Noticees: Mr. R.S. Loona, Managing Partner, Alliance Corporate Lawyers Ms. Swati Sethi, Research Associate, Alliance Corporate Lawyers For SEBI: Dr. Anitha Anoop, Deputy General Manager Mr. N. Murugan, 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 28, 2014 (‘the interim order’), prima facie found that one Nicer Green Housing and Infrastructure Developers Limited (hereinafter referred to as ‘the Company’ or ‘Nicer’) 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 existing fund mobilizing activities through the alleged CISs. This Order directed Nicer and its directors namely Mr. Pipal Singh Sidhu, Mr. Ranjit Singh, Ms. Surinder Kaur and Mr. Karanjit Singh (hereinafter collectively referred to as the ‘noticees’): “● not to collect any fresh money from investors under its existing scheme; ● not to launch any new schemes or plans or float any new companies and raise fresh moneys; ● to immediately submit the full inventory of the assets owned by NGHIDL; ● not to dispose of any of the properties or alienate the assets of the existing scheme; ● not to divert any funds raised from public at large, kept in bank account(s) and/or in the custody of the company; ● not to substitute the Certificates issued by NGFL with its bonds or any other instruments by whatsoever name called; ● 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. Scheme wise list of investors and their contact numbers and addresses.” The aforesaid directions came into force with immediate effect and the noticees were advised to file their reply within a period of twenty one (21) 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 letters dated August 4, 2014. The letters issued to the noticees namely Mr. Pipal Singh Sidhu, Mr. Ranjit Singh, Ms. Surinder Kaur and Mr. Karanjit Singh returned undelivered. The Company and the noticees vide their letter dated August 28, 2014, requested for extension of time upto October 15, 2014, for submitting the reply to the interim order. This letter on behalf of all the noticees was signed by Mr. Karanjit Singh. SEBI vide letter dated September 15, 2014, forwarded the copies of the interim order to the Company for onward delivery of these to the noticees namely Mr. Pipal Singh Sidhu, Mr. Ranjit Singh, Ms. Surinder Kaur and Mr. Karanjit Singh. Vide this letter, the Company was also granted extension of time for replying to the interim order upto September 30, 2014. SEBI vide its letter dated October 16, 2014, issued a reminder to the noticees for replying to the interim order. The Company vide its letter dated October 17, 2014, again requested for an extension of one month’s time for submitting the reply on the ground that the director of the Company namely Mr. Karamjeet Singh, who is well conversant with the matter is seriously ill. In the meantime, SEBI had received certain investor complaints, which were forwarded to the Company on March 05, 2015.

4. As no reply was forthcoming from the noticees, SEBI proceeded further and granted an opportunity of personal hearing to the Company and its directors on April 20, 2015. An intimation regarding the same was sent to the noticees vide separate letters dated March 17, 2015. The Company vide its letter dated April 06, 2015, requested for rescheduling of the personal hearing. The request was considered and the personal hearing was postponed to May 18, 2015.

5. In the meantime, the Company vide its letter dated May 13, 2015, submitted the reply to the interim order. Ms. Surinder Kaur also vide letter dated May 13, 2015, submitted her reply to the interim order. On the date fixed for the personal hearing, i.e. May 18, 2015, Mr. R.S. Loona and Ms. Swati Sethi from Alliance Corporate Lawyers appeared as authorized representatives of the noticees and made oral submissions.

6. The submissions of the noticees in the brief, are as under: a. The Company is not engaged in the business of running CIS. It is in the business of sale and purchase of real estate and properties and development of the lands. Any person who desires to purchase agricultural land from the Company is required to give an application in a prescribed format and also sign an agreement. b. The Company enters into an agreement with each customer for selling specified pieces of land and subsequently the said piece of land is transferred in the name of the customer by way of registered sale deed. The piece of land for sale is fully identified and the customer becomes an absolute owner of the said piece of land on registration of the sale deed in his favour. The land is identified with reference to khasra no. name of village, State etc. The buyer is required to pay certain amount as a part of the consideration for purchasing the plot for agricultural purposes. The buyer has an option to choose any one of the two payment plans i.e. Cash Down Payment Plan and Installment Payment Plan. Thereafter, the buyer is issued a registration letter informing thereby that he has been registered for the plot(s) booked by him, as per the details furnished. c. In accordance with the terms of the agreement, allotment letter is issued on receipt of the prescribed amount. Allotment letter gives description of the allotted land.

d. The jurisdiction of SEBI is restricted to the CISs who are operating in the securities market as stated in the press release dated November 26, 1997 and December 18, 1997, issued by SEBI. The intention of law to regulate CIS which were/ would be operating in the securities market by issuing securities in the form of the unit certificate. With a view to confer jurisdiction on SEBI to regulate such unit certificates, the Securities Contracts (Regulations) Act, 1956 was also amended by inserting clause (ib) in Section 2(h) to treat such unit certificates as ‘securities’. e. The Company has not issued any unit certificate or plantation/ agro bond which can be treated as ‘securities’ within the meaning of section 2(h)(ib) of the Securities Contracts (Regulations) Act, 1956 or unit certificate within the meaning of the CIS Regulations. f. The land purchase scheme launched by the Company cannot be viewed as CIS within the meaning of Section 11AA and Section 12(1B) of the SEBI Act, as the said schemes do not satisfy any of the four conditions as stipulated under section 11AA of the SEBI Act. g. There is no scheme which envisages pooling of investment from the investors and investment of such amount into common asset to be acquired in the name of any scheme.

The standard agreement has not used the expression ‘scheme’ and refers to the expression ‘plan’ which means Cash Down Payment Plan and Installment Payment Plan. h. The agreement envisages development of the land for which the Company is required to provide irrigation system and undertake plantation etc., and using the fertilizers and pesticides. The Company undertakes the development activities as per the option exercised by the customers/ buyer under the clause 3 of the agreement. i. The Company does not enter into any buy back agreement (repurchase of plot). The noticees does not issue any certificate wherein the customer is promised the higher amount on maturity under the buyback agreement. The scheme indicates ‘expected’ increased value of land, it nowhere promises such return. j. As per the terms of agreement, allotment letter is issued to the customer in case of Cash Down Payment Plan after completion of 9 months from the date of agreement and in case of the Instalment Payment Plan within a period of 540 days after the receipt of the 50% of the cost of the plot and development charges. k. The customer only has right to get the specific piece of land and has no right on the other assets of the Company.

Payment by the customer is also not made to run the business of the Company, nor there is any arrangement under the present scheme to share the profits of the Company from such business, like shareholders who share the profits of the Company. l. The agreement entered/ to be entered between the Company and customers clearly provide for subsequent transfer of title and exclusive physical possession of such plot of land (by means of registered sale deed) from the Company to the customers. m. In the present case, however, there is hardly any question of management. It is rather a case of development of the land which has been purchased by the customer from the Company. The Company is expected to develop it and handover it to the customer. The land under development does not form part of any scheme or arrangement or ‘scheme property’ but remains as identifiable separate piece of land over which only the allottee or company exercise certain rights as per Agreement and no other allottee has any right whatsoever over such land. n. The customer may not have a day to day control over the development activities of the land but that does not mean that the customer has no right over the specific piece of land. o. The corpus amount as on July 18, 2013 (date of the amendment of Section 11 AA of SEBI Act) was also less than ₹100 crores and as such the plans/ schemes of the company cannot be viewed as deemed CIS. p. The noticee have submitted majority information to SEBI till date and SEBI has wrongly concluded that the noticees had not provided any information to SEBI.

NGHI, Nicer Green Forests Ltd and the company are separate and distinct legal entities. q. The mobilization of funds by the company cannot be treated as fraudulent practice under Registration 4(2)(t) of the PFUTP Regulations. r. Ms. Surinder Kaur was the director for a limited period of 3 years and 9 months and not actively involved in the management of the company.

7. The noticee namely Ms. Surinder Kaur vide her letter dated May 13, 2015 submitted the additional reply and requested to remove/ lift the directions given vide the interim order. The same in brief, are as under: a. She is a housewife and was appointed as a director of the Company at the time of incorporation and had resigned on November 30, 2010. She was the director of the Company for about 3 years and 9 months. b. She had no role in the activity of mobilization of funds and was never an active director of the Company.

8. I have considered the interim order issued in the matter and the material available on record. The main allegation as against Nicer is that the schemes/ plans operated by it were in the nature of CIS and that Nicer 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 Nicer were also alleged to be responsible for the illegal conduct of the business of the Company. The issue that now arises for my consideration is: Whether Nicer was operating a CIS without obtaining registration from SEBI?

9. Whether Nicer was operating a CIS without obtaining registration from SEBI?

a. I note that the Company was incorporated on February 08, 2007. I have seen the documents submitted by the Company vide letter dated May 13, 2015, i.e. application form, agreement, registration letter and the letter of allotment of plot.

b. The sample application form, is a pre-printed document asking for the details of the name, address of the investor, nominee details, scheme details (i.e. scheme number and its term), investment details, etc. The same reads as under: “I hereby apply for the allotment of a Scheme No. …. of your company. I request you to allot me the said Scheme of Current Rules & Regulations of your company. I am sending herewith a sum of Rs. …. Vide cash/ cheque/ Bank draft No. … dated … drawn on … favouring Nicer Green Housing & Infrastructure Developers Ltd. for purchase of land to be owned and possessed by the Company upto the period of my scheme.” The relevant terms and conditions printed on the reverse of the application form are as under: “… Once the agreement for the deposit made between the applicant & the company or application is accepted, the applicant cannot withdraw his/ her/ their application & deposit without the written approval of the Company. … The Company will arrange personal accidental risk coverage for the applicant. … The management of NGHID reserves the right to discontinue/ change/ amend/ modify or alter prospectively any of the rules/ regulations and plans and introduce new plans at any time at its sole discretion with or without any notice.” The customer applies for the land allotment, owned and possessed by the Company till the expiry of the scheme. The terms and conditions refers to ‘agreement for the deposit’ and the right to discontinue/ change/ modify the rules/ regulations and plans is reserved by the Company.

c. A separate set of document titled as ‘Agreement’ has also been submitted by the company. This set also contains an ‘application form’ for the purchase of farm land plot and its development. However, the format of the same is different from the sample ‘application form’ as discussed in sub-paragraph ‘b’ above. It asks for the name, address, nominee details, plan and payment details, development option, preference of state, etc. The relevant clauses of the ‘agreement’ are as under:

“WHEREAS THE COMPANY is engaged in business of real estate and development of agriculture and at various places; AND WHEREAS THE COMPANY organizes 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 WHERE AS THE COMPANY has made arrangements for purchasing/ procuring the land with clear and marketable title and with possession, which forms a part of the various plans launched by THE COMPANY. AND WHERE AS THE COMPANY, by means of an Application, which is the basis of this Agreement and which contains the salient terms and conditions of the various Plan, has/ have expressed his / her/ their desire of buying the said agricultural land and also opted to have the same developed by the Company. AND WHERE AS THE COMPANY has agreed to arrange for sale of Farm Land 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; … AND WHEREAS the “Plan” shall mean cash down payment (CDPP) and installment payment plan (IPP). AND WHEREAS IPP means payment in easy installment by customer for a particular time period as described in the agreement. … 1. SALE OF AGRICLUTURE FARM LAND PLOTS The land shall be allotted in the name of the Customer in case of Cash Down Payment Plan after completion of nine months from the date of agreement and in Installment Payment Plans after having receipt of 50% of the cost of plot and development charges with the period of 540 days. Subject to foregoing, the land ownership along with its possession will ordinarily be transferred by the Company in name of Customer by means of registered sale deed within a reasonable period after allotment. 2. PRELIMINARY WORK THE COMPANY or its nominee shall procure and install bore wells, open wells and other water points and install motors, pump sets, irrigation and main pipelines, electrical installations and temporary sheds/ structures, subject to the terms and conditions laid down elsewhere in this Agreement. 3. Development of Land The Customer has exercised the option to get the Farm Land Plot developed by the Company and this Agreement shall be construed as a confirmation thereof. …

5. POSSESSION The Customer shall be owner in vacant physical possession of the plot at all times, after execution of registered sale deed. The Company shall enter upon the plot only for the limited period for the purpose of undertaking development of the plot, as per the terms of this agreement between the customer and the company in that regard. … The overall security of the Plot shall, however, be the responsibility of the Company till the expiry of the development period Plan opted for by the customer. The plot can not, in any other manner be sold, assigned, mortgaged, pledged or alienated without obtaining NO DUES CERTIFICATE, from the Company in case of Installment Payment Plans till payment of full consideration attributable to the cost of the land and execution of the registered sale deed. 6. IRRIGATION SYSTEM The Company shall provide such irrigation systems as it may deem appropriate, which shall be part of the overall irrigation system, depending upon the nature of soil, crop pattern of the plot, etc. in consonance with the expert advice received by the Company 7. FERTILIZATION The Company shall upon planting the saplings, plants, crops, trees, etc., over the aforesaid plot shall use necessary fertilizers, pesticides etc., as it may deem appropriate.

8. EMPLOYMENT OF PERSONNEL The Company shall employ its own technical experts, advisors and such other personnel, as it may consider necessary, for the purpose of carrying out its obligations as per this agreement. And shall pay their fees/ salary/ wages and the entire expenses incidental thereto. 9. 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 purpose 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 which the Company may consider appropriate to the sale of a particular grade of the produce. 10. SALE PRICE The task of sale of produce, undertaken by the company under the provisions of the aforesaid clause 9, shall be subject to the condition that depending upon the grade of the produce harvested from the plot market conditions and other relevant factors, the Company may decide to sell the produce at such price which it may deem fit and reasonable in the circumstances prevailing at that point of time.

It shall be the endeavour of the company to sell the product at the best prevailing prices and terms. The customer shall accept the net sales proceeds, so obtained by the company from the sale produce. As final and no dispute shall be raised in respect of the same. 11. CUSTOMER’S OWNERHSIP OF PROPERTY On execution and registration of the sale deed, the Customer shall become and the absolute owner-in-possession of the plot and the saplings, plants, trees, crops, standing/ planted thereon, and the produce out of it, as set out in clauses 9 and 11 herein above. The customer shall not have any claim over common facilities provided by the company, such as, irrigation pipelines, drainage systems, and electrical lines, etc. Which may by passing through the plot, whether over the ground or underground. The company shall ensure that the said common facilities run along the boundary of the plot. 12. LAND TAX AND PUBLIC DUES The company shall pay the land tax and other public dues/ levies, payable in respect of PLOT to the appropriate authorities for and on behalf of the Customer and the Company shall be entitled to get the same reimbursed from the Customer.

13. ACCOUNTS

The Company shall keep accounts with reference to the income and expenditure incurred, pertaining to the development of the entire project site, which includes the plot of the customer. The company shall keep such percentage or wastage at such nominal levels as practicable and this shall be applicable every harvest is general without any reference to the produce harvested. 14. WASTAGE Both the Company and the customer agree that in process of arranging for sale of the produce, if any, pursuant to the aforesaid clause 9, there will normally be a percentage of wastage at the time of harvesting, grading and handling before the delivery/ sale. The Company shall keep such percentage of wastage at such nominal levels as practicable and this shall be applicable to every harvest in general without any reference to the produce harvested. … 18. BREACH BY THE COMPANY a. In case the Company commits a breach of agreement by not allotting the plot in favour of the 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 which simple interest @ 10% per annum from the date of agreement. b. In case the Company, after registration of sale deed, commits a breach of the agreement by not completing the development of the aforesaid plot in the manner as agreed, the Customer shall be entitled to seek specific performance of the agreement.

The Customer shall also have the option to terminate the agreement, in which case, the Company shall refund the amount paid by the customer, after deducting registration expenses and other incidental expenses. The balance amount will be refunded by the Company together with simple interest @ 10% per annum. c. It is clearly understood by the parties to the Agreement that, the Company shall not in any event be liable to pay any cost/ expense/ damages whatsoever other than to refund the money to the customer as specified in sub clauses (a) & (b) hereinabove. … 20. OPTING OUT a. Under Cash Down Payment Plans, the Customer shall have the facility to opt out after 36 months from the Customer of purchase of Farm Land Plot, before or after the allotment of the Farm Land 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 cost of Farm Land Plot on account of various costs and other incidental expenses incurred by the Company. b. In Cash Down Payment Plan, if the Customer chooses to opt out after allotment of the plot in his/ her favour, he may do so after completion of six years but 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 a case, the company will cancel the allotment and the customer will be refunded the amount paid. The company reserves its right to claim such incidental/ administrative expenses on such from customers as the company may deem fit and appropriate. c. If the Customer decides to opt under cash down payment 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 Farm Land Plot so owned by the customer on account of registration expenses, cost of development charges and other incidental expenses incurred by the company in this behalf. … 22. AGREEMENT PERIOD The parties to the agreement clearly understand that all the provisions in this agreement, pertaining to the rights and obligations of the parties shall become operative on its execution, and that this agreement shall stand automatically terminated upon the expiry of the period of plan opted by the customer, and after such termination company shall have no rights whatsoever hereunder. The company shall remove all its machinery and equipment’s from the said plot within 60 days after the expiry of the tenure of this agreement. …" From the above, it is also noted that the Company had two plans i.e. ‘Cash Down Payment Plan’ and ‘Installment Payment Plan’.

d. The next document is a ‘Registration Letter’. The same is a pre-printed document containing the space for plan and payment details, days of subscription, nominee details, installment amount, bonus, estimated realisable value at the end of the terms, etc. The same reads as under: “In response to your application, we are pleased to inform you that you have registered for the Plot(s) booked by you as per details furnished here under. The Terms of booking and allotment shall be governed by the terms of Rule Book, agreement and General Terms and Conditions printed overleaf. … Estimated Realisable value of the end … denotes composite offer for value of land, standing crops, sapling plants, trees and allied items thereon.” The ‘General Terms and Conditions’ with the ‘Registration Letter’ as submitted by the Company are not legible. I note that the ‘Registration Letter’ is more in the nature of a statement, recording the investment made by the customer and the appreciated value available (estimated realisable value) on completion of the term.

e. Another document is the ‘Letter of Allotment of Plot(s)’. I have perused the sample ‘Letter of Allotment of Plot(s) of one Ms. Amarjit Kaur having her place of residence at Punjab. It is noted that she had made an application to the Company on October 31, 2008 and the allotment letter had been issued to her on April 01, 2011 (i.e. after 40 months). The same contains the details of plot allotted to such customer at Gwalior, Madhya Pradesh. The relevant part of the ‘Letter of Allotment of Plot(s) is as under: “... NGHID Limited reserves the right to change the location of this allotment and allot you an alternate site at any other place. The Sale Deed in respect of Plot(s) allotted to you, shall be executed and registered shortly. Upon registration, the original title deeds shall be handed over to the custodial services company, Skynet Land Developers Pvt. Limited, having its registered office at vill. Dillaram Distt. Ferozpur, which shall be holding the same as trustee. A certified copy of the registered sale deed shall be supplied to you by the said custodial services company. You shall have the right to verify to the original title deeds on any working day during the normal working hours, after sending a formal request in writing 15 days in advance. … A sum of Rs.10000 [Ten Thousand Only] Paid by you to NGHIDL under Cash Down Payment Plan no. 2/ 5 yrs has now been appropriated by (NGHID LTD.) towards the cost which are to be met in procuring the said property developing the same by planting the required saplings, plants, trees crops etc. management fees and other ancillary expenses incidental thereto.”

f. The agreement booklet submitted by the Company along with its letter dated March 20, 2012, had contained one more document i.e. ‘Special Power of Attorney’. The relevant extract of the same had been reproduced below: “… I … do hereby appoint …. as my attorney to do the following acts, deeds and things in my name & on my behalf in respect of the plot measuring … sq. yds, comprised in survey no. … in respect of which a sale deed has to be executed and registered in my favour:- 1. To be present before Sub-Registrar or Registrar for getting sale deed in respect of above said Plot executed in my favour and for getting the same registered. 2. To do all such things as may be necessary for such execution and registration. 3. To apply to the revenue authorities for the mutation of the said plot in my name. 4. To take possession of the said Plot from the vendor or his/ her nominee/ agent / attorney in such manner as may be required in the circumstances or as may be appropriate. 5. To sign applications, plaints, affidavits, indemnities and such other papers and documents pertaining to the said plot, and appear and act before all courts, civil, revenue and criminal, whether original or appellate, and represent me and act on my behalf in the registration office, and other office of Government or district board, Municipal Board or notified area, housing board, income tax and income tax appellate office, tribunal, urban land tax and ceiling officers, town planning officer or any local municipal authority or corporation or any other office(s) of similar nature.” g. From the discussion above, it is observed that Nicer was inviting applications from the customers for the purchase of plot/ farm land plot. I also note the following:

i. As per the ‘agreement’, the Company had made arrangements for purchasing/ procuring the land. This suggests that Nicer does not own the land on the date of application/ agreement. ii. Nicer had two plans i.e. cash down payment plan and installment payment plan. As per the agreement, the customer has an option to choose from the aforesaid two plans. iii. Under the cash down payment plan, the land had to be allotted to the customers after completion of nine months from the date of the agreement. Under the installment payment plan, the land had to be allotted within a period of 540 days after the receipt of 50% of the cost of the plot. iv. Nicer had no provision for taking any identity proof from the applicants at the time of accepting the application in order to check the basic identity, which is most essential for identification throughout the scheme. v. Nicer, as per the agreement, had extended the facility of 'opting out' only to the customers who had made the investment under the cash down payment plan.

vi. Nicer reserved its right to discontinue/ change/ modify the rules and plans. vii. The land is owned and possessed by the Company till the expiry of the scheme. viii. The application form speaks of agreement of deposit between the customer and the Company. ix. Though the application form gives an option for development and choice of State, however, the development is integral in the agreement and the land allotment is at the choice of the Company. x. The customer is said to be the owner of plot after execution of the sale deed, however, no sale deed has been placed on record to show that the Company had executed sale deeds. xi. The security of the plot is retained by the Company. The sale of produce along with wastage is retained by the Company. xii. All these factors indicate that the possession of the property if and when it comes into existence is more with Nicer than that with customer. xiii. The primary initial document i.e. the application form and the agreement contains the clauses that the customer is applying for the ‘farm land plot’ and for development of the same by Nicer. I note that the customer cannot enter into an agreement unless he/ she gives the development rights to Nicer. xiv. Customer does not get any claim over the common facilities provided by the Company. xv. The Company provides the accidental insurance cover to its customers/ investors.

From the observations as noted above, it can be inferred that the transactions of the Company were not mere real estate transactions rather these can be said to be an investment scheme.

h. Having considered the above, now I proceed to deal with the charges levelled against Nicer. The main allegation levelled against Nicer is that it is operating CIS without obtaining registration from SEBI. CIS means any scheme or arrangement which satisfies the conditions specified in Section 11 AA of the SEBI Act, which provides as under: "(1) Any scheme or arrangement which satisfies the conditions referred to in subsection (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 solely for the purposes of the scheme or arrangement; (ii) the contributions or payments are made to such scheme or arrangement by the investors with a view to receive profits, income, produce or property, whether movable or immovable from such scheme or arrangement; (iii) the property, contribution or investment forming part of scheme or arrangement, whether identifiable or not, is managed on behalf of the investors; (iv) the investors do not have day to day control over the management and operation of the scheme or arrangement.

(2A) Any scheme or arrangement made or offered by any person satisfying the conditions as may be specified in accordance with the regulations made under this Act. (3) Notwithstanding anything contained in sub-section (2) [or sub-section (2A)], any scheme or Arrangement: i. made or offered by a co-operative society ii. under which deposits are accepted by non-banking financial companies iii. being a contract of insurance iv. providing for any scheme, Pension Scheme or the Insurance Scheme framed under the Employees Provident Fund v. under which deposits are accepted under section 58A of the Companies Act, 1956 vi. under which deposits are accepted by a company declared as a Nidhi or a mutual benefit society vii. falling within the meaning of Chit business as defined in clause (d) of section 2 of the Chit Fund Act, 1982(40 of 1982); viii. under which contributions made are in the nature of subscription to a mutual fund; ix. such other scheme or arrangement which the Central Government may, in consultation with the Board, notify, shall not be a collective investment scheme." The term ‘securities’ in section 2(h) of the Securities Contracts (Regulation) Act, 1956 was amended vide the Securities Laws (Amendment) Act, 1999, w.e.f. February 22, 2000, to include units or any other instrument issued by any collective investment scheme to the investors in such schemes.

i. Let me now, proceed 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.

i. 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. Nicer took the contribution/ investments of the customers in accordance with its plans for the purchase of ‘farm land plot’. The amount paid by the investors remain with the Company till the end of the term. It is noted that at the stage of application form and agreement, Nicer do not identify the land to be sold to the customer. The 'agreement' only states that Nicer has ‘made arrangements for purchasing/ procuring the land', the same suggests that the Company on the date of agreement only makes arrangements for procuring the land.

The registration letter also does not identify the land and only provides for the size of the plot and the 'expected value' of the land which had to be allotted. By its own admission, Nicer allots the land under the ‘cash down payment plan’ after completion of nine months from the date of the agreement, while under the ‘installment payment plan’, the land was to be allotted within a period of 540 days after the receipt of 50% of the cost of the plot and development charges. Further, while allotting the land vide the allotment letter, Nicer reserves its right to change the location of the allotment of land. These facts suggests that Nicer pools the investment made by the customers, with an aim/ object of carrying out the overall scheme/ plan.

Further, from the ‘notes on accounts’ of the Statutory Auditor of the Company for the Financial Year ending 2011, it has been noted that the Company had purchased land from the collections made from customers. These are sufficient to find that the 'contributions, or payments made by the investors, are pooled and utilised by Nicer for the purposes of the scheme or arrangement'. Thus, satisfying the first condition as stipulated in Section 11AA(2)(i) of the SEBI Act.

ii. 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. In the registration letter, the customer is provided with the ‘estimated realizable value’ on the investment made. Nicer in its reply has submitted that ‘estimated realizable value’ is only an expected appreciation in the value of the land without any obligation on the part of the Company to pay such amount. I note that mere promise of ‘estimated realizable value’ higher than the amount invested shows that the investment/ contributions were made with a view of earning profits. Further, the Company also provides for ‘personal accidental risk’ cover as an additional facility to its customers. 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.

iii. 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 the Company takes the consent of the customer/ investor for the Company itself to look after the day to day maintenance of the ‘farm land plot’. It is noted that the customer does not manage his investment in the plan rather his investments are managed and utilized by Nicer. Thus, it is clear that the land as mentioned in the allotment letter is not managed by the customers at any stage of the plan.

The Company by its reply to the interim order had submitted that “the customer may not have day to day control over the development activities of the land”. I note that the land remains in the possession of Nicer. Nicer provides irrigation system, employs its own technical experts/ advisors, arranges the sale of the produce, if any, out of the plot. 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 ‘farm land plot’. Such day to day control over management and operations of such plans were also looked after by the Company.

j. 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.

10. 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 Nicer 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.

11. I note that the interim order was issued against the Company and its directors namely Mr. Pipal Singh Sidhu, Mr. Ranjit Singh, Ms. Surinder Kaur and Mr. Karanjit Singh. Mr. Pipal Singh Sidhu, Mr. Ranjit Singh and Mr. Karanjit Singh continue to be the directors and are responsible for carrying on unregistered CIS activities.

The noticee namely Ms. Surinder Kaur vide her letter dated May 13, 2015, had submitted that she had resigned from the Company on November 30, 2010. It has also been submitted that she was the director of the Company for about 3 years and 9 months. I note that the resignation of Ms. Surinder Kaur does not absolve her from the charges levelled in the interim order in light of the incorporation of the Company on February 08, 2007 and period during which she was the director of the Company. Therefore, I have no hesitation in holding that Nicer and its directors namely Mr. Pipal Singh Sidhu, Mr. Ranjit Singh, Ms. Surinder Kaur and Mr. Karanjit Singh 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.

12. I also note that in terms of the Regulation 4(2)(t) of the PFUTP Regulations, 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 said regulations has been brought into effect from September 06, 2013. Accordingly, it could be held that by mobilizing public funds through CIS without obtaining registration from SEBI as required under Section 12(1B) of the SEBI Act read with Regulation 3 of the CIS Regulations, after the provision coming into force, the Company has contravened the above provision and is liable for action.

13. Now, let me deal with the argument of the noticees that the jurisdiction of SEBI is restricted to the CISs who are operating in the securities market. It has also been said that the intention of law was to regulate CIS which were/ would be operating in the securities market by issuing securities in the form of unit certificate and the Company has not been issuing any unit certificate or plantation/ agro bond which can be treated as ‘securities’ within the meaning of Section 2(h)(ib) of the Securities Contracts (Regulations) Act, 1956.

In paragraph 9(i) above, I have already discussed as to how the schemes of the Company are in the nature of CIS and fulfills the conditions as specified under Section 11AA(2) of the SEBI Act. As the schemes of the Company are found to be in the nature of CIS, the Company would be under the jurisdiction of SEBI under Section 11(2)(c) of the SEBI Act. Irrespective of whether a Company launching or carrying on CIS issues units or any other instrument it would be amenable to the jurisdiction of SEBI, if it satisfies all the four conditions as stated in the Section 11AA(2) of the SEBI Act.

SEBI had framed the CIS Regulations to regulate the activities of CISs, in exercise of the powers conferred under Sections 11 and 30 of the SEBI Act. 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. Therefore, launching/ floating a CIS by any person without obtaining a 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. As discussed above, the plans of Nicer are in the nature of CIS and it has failed to comply with the applicable provisions of the SEBI Act and the CIS Regulations. In view of the above, the submissions of Nicer are without any merit and it is amenable to the jurisdiction of SEBI.

14. I note that the Company has failed to submit the complete information/ details as sought by SEBI vide the interim order. Nicer has also submitted that Nicer, NGHI Developers India Limited and Nicer Green Forest Limited are separate and distinct legal entities. It has also been said that the directions passed in the matter of NGHI developers Limited have been challenged before the Hon’ble Supreme Court and the appeal is pending. As regards, Nicer Green Forest Limited it has been said that the company has been voluntarily wound up and all the investors have been duly paid.

I note that the noticee namely Mr. Pipal Singh is the common link among the Company, NGHI Developers India Limited and Nicer Green Forest Limited. Further, the address of the head office of NGHI Developers Limited and Nicer are same. These facts have not been denied by the noticees. I note that SEBI had passed order against NGHI Developers Limited and Nicer Green Forest Limited on November 06, 2012 and March 12, 2013, respectively. Vide the order dated March 12, 2013, inter alia Mr. Pipal Singh and Ms. Surinder Kaur were restrained and debarred from accessing the securities market. The above stated connection of the Company with NGHI Developers India Limited and Nicer Green Forest Limited and restraint order passed against Mr. Pipal Singh and Ms. Surinder Kaur, shows that these persons are habitual repeated offenders. It is seen that these persons are continuing with the illegal fund mobilization activities through new companies, by circumventing the directions of SEBI, in the said matters. In view of the same, it is necessary that strict action be taken against Nicer Green Housing and Infrastructure Developers Limited, Mr. Pipal Singh and Ms. Surinder Kaur.

15. I note that SEBI has also received various investor complaints against the Company and its directors making serious allegations regarding the non-payment even after completion of the term or the plan against the Company.

16. In view of the observations 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. Nicer Green Housing and Infrastructure Developers Limited [CIN U45200PB2007PLC030879] and its directors, namley Mr. Pipal Singh Sidhu [DIN-00751858], Mr. Ranjit Singh [DIN-00922498], Ms. Surinder Kaur [DIN- 00922478] and Mr. Karanjit Singh [DIN – 02986346] 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. Nicer Green Housing and Infrastructure Developers Limited and its directors, namley Mr. Pipal Singh Sidhu, Mr. Ranjit Singh, Ms. Surinder Kaur and Mr. Karanjit 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. c. Nicer Green Housing and Infrastructure Developers Limited and its directors, namley Mr. Pipal Singh Sidhu, Mr. Ranjit Singh, Ms. Surinder Kaur and Mr.

Karanjit Singh shall not alienate or dispose off or sell any of the assets of Nicer Green Housing and Infrastructure Developers Limited except for the purpose of making refunds to its investors as directed above. d. Nicer Green Housing and Infrastructure Developers Limited and its directors, namley Mr. Pipal Singh Sidhu, Mr. Ranjit Singh, Ms. Surinder Kaur and Mr. Karanjit 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. e. Nicer Green Housing and Infrastructure Developers Limited and its directors, namley Mr. Pipal Singh Sidhu, Mr. Ranjit Singh, Ms. Surinder Kaur and Mr. Karanjit Singh are restrained from accessing the securities market and are prohibited from buying, selling or otherwise dealing in securities market, directly or indirectly, in any manner and launching any scheme for mobilization of funds in any manner for a period of four (4) years. f. In the event of failure by Nicer Green Housing and Infrastructure Developers Limited and its directors, namley Mr. Pipal Singh Sidhu, Mr. Ranjit Singh, Ms. Surinder Kaur and Mr. Karanjit Singh to comply with the above directions, the following actions shall follow: - Nicer Green Housing and Infrastructure Developers Limited and its directors, namley Mr. Pipal Singh Sidhu, Mr. Ranjit Singh, Ms. Surinder Kaur and Mr. Karanjit 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 four (4) years of restraint imposed in paragraph 16(e) above, till all the Collective Investment Schemes of Nicer Green Housing and Infrastructure 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 Nicer Green Housing and Infrastructure 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, Nicer Green Housing and Infrastructure Developers Limited.

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

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

18. 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 Nicer Green Housing and Infrastructure Developers Limited and its directors, namley Mr. Pipal Singh Sidhu, Mr. Ranjit Singh, Ms. Surinder Kaur and Mr. Karanjit Singh, including other persons who are in default, for the violations as found in this Order.

19. For the reasons stated in paragraph 14, SEBI is directed to initiate appropriate proceedings against Mr. Pipal Singh and Ms. Surinder Kaur.

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

Date : November 09, 2015 PRASHANT SARAN Place : Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA