Order in the matter of Popular Agro Farms Private Limited

WTM/GM/EFD/91/2017-18 SECURITIES AND EXCHANGE BOARD OF INDIA ORDER Under Sections 11(1), 11(4) and 11B of Securities and Exchange Board of India Act, 1992 read with Regulation 65 of the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999, in respect of Interim Order cum show cause notice dated September 08, 2015 in the matter of Popular Agro Farms Private Limited. In respect of: SR. No. NOTICEES PAN CIN / DIN COMPANY 1. Popular Agro Farms Private - U01409TN1992PTC023157 Limited PROMOTERS/DIRECTORS 2. Usman Pasha Usman Fayaz AADPF8520H 00890257 3. Niyaz Hyder Ali AJJPN3380J 00890228

1. Securities and Exchange Board of India (SEBI), after a preliminary enquiry, had passed an ex-parte interim order cum show cause notice dated September 08, 2015 (interim order-cum-SCN), wherein it had prima facie observed that Popular Agro Farms Private Limited (Popular Agro / the company), was involved in illegal mobilization of funds from the public through schemes in the nature of Collective Investment Scheme (CIS) without obtaining certificate of registration from SEBI and thus had contravened section 12(1B) of the Securities and Exchange Board of India Act, 1992 (“the SEBI Act”) read with Section 11AA of the SEBI Act, 1992 and Regulation 3 of the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999 (“the CIS Regulations”). The illegal fund mobilization by Popular Agro was also prima facie found to be in violation of regulation 4(2)(t) of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practice Relating to Securities Market) Regulations, 2003 (“the PFUTP Regulations”). Accordingly, the following directions inter

Order in the matter of Popular Agro Farms Private Limited alia were issued against Popular Agro and its directors, namely Usman Pasha Usman Fayaz and Niyaz Hyder Ali (the Noticees), vide the abovementioned interim order cum SCN: i. not to collect any fresh money from investors for its existing schemes; ii. not to launch any new schemes / plans or float any new companies to raise fresh moneys; iii. not to dispose of any of the properties or alienate the assets of the existing schemes; iv. not to divert any funds raised from customers / investors, kept in bank account(s) and/or in the custody of the company; v. to immediately submit the full inventory of the assets owned by Popular Agro; vi. to furnish all the information sought by SEBI vide letter dated November 06, 2014, including,  Scheme-wise amount mobilized since inception till date,  Details of scheme-wise list of customers / investors,  List of investors who have been refunded,  Audited financial statements for last three years. vii. to furnish the item-wise commission paid to agents / investors for the promotion of the scheme(s), since inception till date.

2. Popular Agro and its abovementioned directors were also advised, vide the said interim order cum SCN, to show cause as to why appropriate directions/ prohibitions under Section 11 of the SEBI Act and in terms of Regulations 65 and 73 of the CIS Regulations including the following, should not be imposed against them: i. Directing them jointly and severally to refund any moneys / assets collected from the investors under the scheme, along with the requisite interest, ii. Directing them to wind up such plans / schemes, iii. Directing them to refrain from accessing the securities market and prohibiting them from buying, selling or otherwise dealing in securities market for a particular period.

3. The said interim order came into force with immediate effect. The interim order was served on the Noticees. The Noticees did not submit any reply to the interim order cum SCN. Subsequently, the Noticees were granted an opportunity of personal hearing before the Competent Authority on September 22, 2016. The Noticees attended the said hearing through their authorized representatives and made submissions. Further, during the hearing, the Noticees also submitted their written submissions dated January 11, 2016 and furnished various other documents. The Noticee during the said hearing and through their written submissions submitted inter alia the following: a) The Noticees deny the observations and allegations contained in the interim order cum SCN. b) The observation that Popular Agro has been operating CIS at the time of commencement of the CIS Regulations (i.e. October 15, 1999) is baseless. Popular Agro was formed in the year 1992 and introduced / launched “Popular Triple Tree Bonanza” and for the same, it has just received one-time payment from the investor(s) as per the terms and conditions of the scheme. Thereafter, the company has not received any funds from the public at any point of time. The said scheme was launched well before the commencement of CIS Regulations and the Securities Laws (Amendment) Act, 1995. The said scheme has been closed in the year 1995 itself. The balance sheet of the company for the years 1995-96 and 1996-97 furnished to SEBI substantiate the same. Thereafter, the company has not carried out any CIS nor collected any funds from investors. Accordingly, the charge of indulging in fraudulent practice by illegal mobilization of funds in terms of Regulation 4(2) (t) of the PFUTP Regulations against the Noticees is false and baseless. c) Popular Agro was incorporated in July 1992 to carry on the business of agriculture, horticultural, floricultural and agricultural activity by purchase, lease, grant, licence and cultivate, grow or deal in any plantation, agricultural crops, manage and sell them. d) In the year of 1992, the company has introduced investment scheme in the name of “Popular Triple Tree Bonanza” as detailed under. The said scheme was closed in the year 1995.

Name of Cost per Unit Time of Expected Gift Scheme the Plan Maturity Returns Casuarina Rs.350 5 Years Rs.1,200 Quarterly Eucalyptus Rs.500 8 Years Rs.2,500 Quarterly Teak Rs.1,000 20 Years Rs.70,000 Monthly e) The term of investment of scheme of “Popular Triple Tree Bonanza” for the plan “Teak” has come to an end in the year of 2012. As per the said scheme, each individual investor is entitled to receive either the maturity amount or a tree duly cut at the end of its maturity date mentioned in the certificate. f) The company has already refunded the investment payment to all concerned investors who have surrendered the original certificate on maturity of the respective plan/scheme and no amount is pending from the company’s side. Since all the investors opted for the refund of maturity amount, none of the investors has any right and/or claim against any property or land of the company in which the plantation is done. g) On 05.11.2014, the company had filed an application with the Office of the Registrar of the Companies for striking off the name of the company under the Fast Exit Mode under Section 560 of the Companies Act, 1956 and the company stands dissolved vide Notice u/s 560(3) MCA/RoC-Chennai/Sec 560/2014/00024. h) At this juncture, the company has received a mail from one Mr. Raman Dogra for refund of the maturity value of teak tree which he had invested with the company.In reply to the said mail, the company has sent various mails and a letter dated 07/12/2015 thereby asking him to send/produce the original certificate so as to make payment under the scheme. However, Shri Raman Dogra has not responded nor produced the certificate till date. i) The company assures to make the payment/refund the amount under the Teak Tree Certificate in due course subject to providing the details of investor/complainant(s) so as to maintain goodwill and reputation in the industry.

4. During the personal hearing on September 22, 2016, the Noticees also submitted documents containing various information viz. Details of amount collected (consolidated

- Investor-wise, year-wise and scheme-wise), Scheme-wise consolidated amount mobilized since inception till date, List/Statement of amount refunded and the list of investors who have been refunded, Brochure / Pamphlets circulated by the company and the audited financial statements for the years 2012 to 2014.

5. As per the information furnished by the company, it had issued 1260 units under Teak plan @Rs.1000/- each, 514 units under Eucaluptus plan @Rs.500/- each and 350 units under Casuarina plan @ Rs.350/- each (total 3352 units) and had raised a total amount of Rs.20,69,300/- therefrom.

6. The Noticees vide letter dated September 29, 2016 and email dated October 03, 2016 submitted inter alia an affidavit from Shri Usman Fayaz, the Managing Director of the company, declaring that the company has already been dissolved way back in November 2014. It was further declared in the affidavit that the company has already refunded the amount on its maturity to all the concerned investors who have surrendered the original certificate. Shri Fayaz had further declared and assured in the affidavit that he was ready to make/refund the payment to the investors who are yet to be paid of the maturity value of the Teak plan on surrendering the original certificate to maintain goodwill and reputation in the industry. Vide the letter dated September 29, 2016, the Noticees also submitted a pending list of five investors who were yet to be repaid as per their records.

7. Thereafter, another opportunity of personal hearing was granted to the Noticees before me on July 17, 2017. The Noticees attended the hearing and submitted that they have already paid all their investors in all their schemes / plans after the maturity of the plan and that they do not have any such scheme at present. During the hearing, the Noticees were directed to submit a certificate from a chartered accountant verifying the repayment to investors and a winding and repayment report (WRR). Accordingly, the Noticees have submitted a WRR vide their letter dated September 25, 2017.

8. I have taken note of the charges and prima facie findings of the interim order-cum-SCN, the submissions made by the Noticees and the documents submitted by the Noticees, which are available on record. It appears that the company had launched its “Popular

Triple Tree Bonanza” scheme before the promulgation of the Securities Law (Amendment) Act, 1995 (whereby sub-section (1B) was inserted in Section 12 of the SEBI Act, 1992 w.e.f. 25.01.1995) and the CIS Regulations and had not raised any funds subsequently. I note that the Noticees vide letter dated September 25, 2017 have submitted a WRR, certified by a chartered accountants’ firm, indicating that the company has made refunds to all the investors from whom it had mobilized funds under its various. The WRR also contains a letter dated July 25, 2017 from the chartered accountants’ firm certifying that the Maturity value against all the three schemes of the company have been closed as per the statement attached and that no further amount has been mobilized by the company against the said schemes. It further states that the certificate has been issued based on the details and documents submitted by the company. I further note that the company has already been dissolved as its status on MCA21 portal is showing as struck off. Considering that the company has made refunds to all the investors and has submitted a WRR to this effect, I find it appropriate not to proceed any further in this matter, after issuing a warning to the Noticees.

DIRECTIONS 9. In view of the foregoing, 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 revoke the directions issued against the Noticees in the interim order-cum-SCN dated September 08, 2015. The instant proceedings against the Noticees shall, accordingly, stand disposed of. Further, the Noticees are hereby warned and cautioned against undertaking any fund raising activity of similar nature in future, either directly or indirectly.

10. The above directions are without prejudice to the right of SEBI to initiate enforcement proceedings against the Noticees in the event of the Noticees’ representations before SEBI including the WRR certifications regarding repayment of the due money to all the investors being found later to be false or incorrect.

11. This order shall come into force with immediate effect. A copy of this Order shall be forwarded to - (i) all the recognised stock exchanges and registered depositories for necessary compliance with the above directions; and (ii) the Ministry of Corporate Affairs for information.

Date: February 23, 2018 G. MAHALINGAM Place: Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA