Order in the matter of Utkarsha Plotters & Multi Agro Solutions India Ltd[SAT Appeal No.:221/2016

WTM/PS/02/EFD/APR/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 In the matter of Utkarsha Plotters & Multi Agro Solutions India Limited In respect of: 1. Utkarsha Plotters & Multi Agro Solutions India Limited [PAN: AABCU2646N] 2. Ms. Dipali Mitharam Gurav [PAN: ANVPG7189A], 3. Mr. Mitharam Chhagan Gurav [PAN: AHDPG8821D] and 4. Mr. Pravin Chhagan Gurav [PAN: AZBPG5053D] Date of Hearing: October 20, 2015 Appearances: Mr. Mitharam Gurav, Director; Mr. Pravin Gurav, Director and Mr. Anil Dhanotiya, Consultant appeared for the Company and its directors. For SEBI: Dr. Anitha Anoop, General Manager; Mr. Pradeep Kumar, Assistant General Manager and Mr. Abhiraj Arora, Manager. 1. Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) conducted a preliminary inquiry in the activities of one Utkarsha Plotters & Multi Agro Solutions India Limited (hereinafter referred to as ‘the Company’ or ‘Utkarsha’).

Pursuant to the inquiry, SEBI vide an ex-parte interim Order dated January 14, 2015 (hereinafter referred to as ‘the interim order’), prima facie found that Utkarsha is engaged in fund mobilizing activities from the public, by sponsoring or launching 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 interim order also observed that the CIS activities were carried out by the Company under the garb of purchase/ sale/ development of plot(s) of land. The interim order was issued in order to protect the interest of investors, to ensure that the Company and its directors do not collect further funds under its schemes/ plans and to safeguard the assets/ acquired by Utkarsha and its directors from the funds of the investing public.

This Order directed Utkarsha and its Directors, namely, Ms. Dipali Mitharam Gurav, Mr. Mitharam Chhagan Gurav and Mr. Pravin Chhagan Gurav (hereinafter collectively referred to as ‘noticees’): “● not to collect any fresh money from investors from its existing scheme; ● 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 Utkarsha; ●not to dispose of or alienate any of the properties/assets obtained directly or indirectly through money raised by Utkarsha; ● not to divert any funds raised from public at large which are kept in bank account(s) and/or in the custody of Utkarsha; ●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. Details of commission paid on amounts mobilized above, iii. Details of agents along with their addresses, etc. and iv. Audited Accounts for the last financial year.” 2. 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 January 15, 2015. The letters issued to the directors of the Company were delivered. The letter issued to the Company had returned undelivered with the remark ‘door locked’/ ‘left’. Thereafter, an opportunity of personal hearing was granted to the Company and its directors on October 20, 2015. The date of hearing was communicated to the Company and its directors vide SEBI letter dated September 30, 2015. This time again the letter issued to the Company had returned undelivered. The noticee namely Mr. Mitharam Gurav vide his e-mail dated October 19, 2015 confirmed the presence for the personal hearing. On the date fixed, the noticees namely Mr. Mitharam Chhagan Gurav and Mr. Pravin Chhagan Gurav appeared along with Mr. Anil Dhanotiya, Consultant. Mr. Mitharam Chhagan Gurav also entered appearance for his wife Ms. Dipali Mitharam Gurav. The noticees submitted the lists of investors, properties, allottees and the bank account statements, sample allotment letters, financial statements for three years, etc. The noticees also requested time for filing the written submissions. The request was considered and ten days’ time was granted. The Company vide its letter dated November 18, 2015, filed the written submissions which were taken on record. The board resolution authorising Mr. Mitharam Chhagan Gurav to appear before SEBI on behalf of the Company was also forwarded along with the said letter.

4. The submissions of the Company and its directors, in brief, are as under:  The Company was incorporated on February 01, 2011, to carry on the business relating to real estate and infrastructure. The Company carries on the business of dealing in infrastructure including under developed plots in accordance with its main object. The ‘memorandum of association’ of the Company authorises it to carry on the business activity of dealing in infrastructure activity especially buying undeveloped plots and then converting the same into non-agricultural plots and develop roads, electricity, water and the basic infrastructure facilities and amenities for selling to customers. The Company is not involved in any CIS.  The board of directors had consisted of Mr. Mitharam Chhagan Gurav, Mr. Pravin Chhagan Gurav and Ms. Dipali Mitharam Gurav, at the time of incorporation. There is no change in the above composition of the board of directors.  The Company has complied with the annual filing of e-forms (i.e. Annual Return and Annual Report) requirements under the Companies Act, 1956 and the Companies Act, 2013.  The Company has honoured the interim order by stopping its acitivities of dealing in plots.

The Company has stopped collecting any fresh money from the plot applicants/ investors and has not launched any new plans/ schemes to raise money. It has also not disposed any assets nor diverted any funds raised from the public at large.  The Company has sufficient assets to repay the plot applicants/ investors, if necessary. The Company possess 10.49 ‘hector’ (sic) land situated in the areas which are yet to be developed. The Company also has farming land upon which 10,000 trees of Red Sandal wood and White Sandal food have been sowed, for generating benefit for repayment to the investors.  The two sites of the Company are undergoing development and on completion of the development work, they will fetch good value. The Company has requested SEBI for reasonable time to complete the development work on these two sites so that it can make allotment of the plots to the plot applicants/ investors with proper developments as committed. As a result of the same, the plot applicant/ investors will be in a position to receive handsome return on the investment.  The Company also requested SEBI to take lenient view against the Company as it has no intention to defraud the plot applicants/ investors.

5. I have considered the interim order, the reply received along with the documents submitted and the material available on record. The interim order has alleged that the “… activity of fund mobilization by Utkarsha under the scheme/Plans for allotment, development and maintenance and subsequent transfer of land, with a resultant promise of return/ ‘estimated realizable value at the end of the term’, when considered in light of peculiar characteristics and features of such schemes/Plans, as discussed in the preceding paragraphs, prima facie satisfies all four conditions specified in Section 11AA (2) of the SEBI Act. I find that Utkarsha is carrying on collective investment scheme under the garb of purchase/ sale/ development of plot (s) of land.” The directors of Utkarsha were also alleged to be responsible for the illegal conduct of the business of the Company. The interim order has noted the features of the alleged scheme offered by the Company. The following are the observations from the interim order: “a. Utkarsha (CIN:U70200MH2011PLC212898) was incorporated on February 01, 2011 having its registered office at 9, Basement, A wing, Shri Chhatrapati Shivaji Maharaj Jilla Krida Sankul, Opp.

State Bank of India, Jalgaon, Maharashtra 425 001. Its Directors are Ms. Dipali Mithalal Gurav, Mr. Mitharam Chhagan Gurav and Mr. Pravin Chhagan Gurav. b. Utkarsha started collecting money from the public since April 2011 and the earliest land purchased by the company was on April 16, 2012. c. Utkarsha receives applications from its customers for purchase and development of land / plot (s). The business/ scheme of Utkarsha is to collect money from public to buy undeveloped plots and then convert those into non agricultural developed plots with road, electricity, water and other infrastructure amenities. d. As per the marketing pamphlets, Utkarsha is inviting investments into its various plans with an estimated realizable value for developed plot. Plan nos. 1 to 4 are installment payment plans and Plan nos. 5 and 6 are cash down payment plans. …” a. It is also noted in the interim order that the Company was inviting investments under its various plans. Such plans were broadly categorized as ‘Installment Payment plan’ [i.e. Plan No. 1 for 5 years (60 months); Plan No. 2 for 6 years (72 months); Plan No. 3 for 7 year (84 months); Plan 4 for 6/8/10 year] and ‘Cash Down Payment plan’ (for varying number of years).

A sample of the plans offered by the Company as also noted in the interim order are as under: TABLE A Plan no. 2 for 6 year (72 Months) - Installment Payment Plan

Plot Size Consider Monthly Qtly. Half Yearly Estimated Realizable (Sq. Yd.) ation yearly Value of Developed Plot 121 18,000 250 730 1,460 2,900 26,820 180 27,000 375 1,095 2,190 4,350 40,230 240 36,000 500 1,460 2,920 5,800 53,640 300 45,000 625 1,825 3,650 7,250 67,050 360 54,000 750 2,190 4,380 8,700 80,460 420 63,000 875 2,555 5,110 10,150 93,870 480 72,000 1,000 2,920 5,840 11,600 1,07,280 540 81,000 1,125 3,285 6,570 13,050 1,20,690 600 90,000 1,250 3,650 7,300 14,500 1,34,100 660 99,000 1,375 4,015 8,030 15,950 1,47,510 720 1,08,000 1,500 4,380 8,760 17,400 1,60,920 TABLE B Plan No. 5 for Cash Down Payment Plan - 5/6/7/8/9/10/11/15/16 Year (Select Any One Option) Plot Size Considera 5 Years 6 Years 7 Years 8 Years 10 Years 11 Years 15 Years 16 Years (Sq. Yd.) tion E.R.V of E.R.V of E.R.V of E.R.V of E.R.V of E.R.V of E.R.V of E.R.V of D.P.* D.P. D.P. D.P D.P D.P D.P D.P 121 18,000 32,436 36,495 41,052 46,184 58,450 65,756 1,05,328 1,18,495 134.44 20,000 36,040 40,550 45614 51,315 64,945 73,062 1,17,035 1,31,664 168.05 25,000 45,050 50,688 57,017 64,144 81,180 91,328 1,46,294 1,64,580 201.66 30,000 54,060 60,825 68,420 76,973 97,417 1,09,593 1,75,553 1,97,496 235.27 35,000 63,070 70,963 79,823 89,801 1,13,653 1,27,859 2,04,811 2,30,412 268.88 40,000 72,080 81,100 91,226 1,02,630 1,29890 1,46,124 2,34,070 2,63,328 336.11 50,000 90,100 1,01,375 1,14,034 1,28,288 1,62,361 1,82,656 2,92,588 3,29160 504.16 75,000 1,35,150 1,52,063 1,71,051 1,92,431 2,43,542 2,73,984 4,38,882 4,93,740 672.22 1,00,000 1,80,200 2,02,750 2,28,068 2,56,575 3,24,722 3,65,312 5,85,176 6,58,320 1,008.33 1,50,000 2,70,300 3,04,125 3,42,102 3,84,863 4,87,083 5,47,968 8,77,764 9,87,480 1,344.44 2,00,000 3,60,400 4,05,500 4,56,136 5,13,158 6,49,444 7,30,624 11,70,352 13,16,640 *Note: E.R.V of D.P (Estimated Realizable Value of Developed Plot)

b. For subscribing to the plans of the Company, a customer had to submit a ‘Letter of Intent/ Offer Letter cum Agreement’. The ‘Letter of Intent/ Offer Letter reads as ‘With reference to your advertisement/ invitation to offer, … … regarding sale of agricultural plot(s) of land herein after referred to as plot(s) as per the plan mentioned below, I hereby apply for purechase of plot(s) under cash Down Payment Plan/ Installment Payment Plan and avail your Services for development maintenance of the same with due understanding of the terms and conditions ... .’. From the same, it is noted that the development was an integral part of the plan of the Company and a customer cannot enter into an agreement with the Company unless he/ she gives the development rights to it. The relevant ‘terms and conditions for purchasing the plot of land’ are as under: “… 2. The minimum booking amount of 50% of the total consideration either in one stroke or by installments must be made by cheque/ demand draft/ banker’s cheque/ cash has to be paid by the purchaser. 3. After the receipt of the First Instalment of booking amount, the purchaser shall be eligible for enrollment of his/ her name for the plot of land with the company.

4. The company shall issue receipt cum acceptance letter containing the area of plot(s) of land to be allotted to the purchaser in due course of time. 5. In case or cash down payment plant, the plot(s) of land shall be allotted to the purchaser, within a reasonable period generally not exceeding 300 days (10 months) after receipt of full payment. 6. The company shall enter into an ‘Agreement to sell’ with the purchaser, after receipt of entire booking amount. And an allotment letter will be issued specifying the location and number of plot(s). … 7. In case of installment payment plan the plots of land shall be allotted to the purchaser, within a reasonable period of generally not exceeding (150) days (5 months), after receipt of minimum booking amount of 50% of total consideration. … 13. Where fragmentation into smaller size of plot(s) lands may not be practicable feasible or permissible under the relevant revenue laws, the Purchaser shall be allotted the requisite share jointly with other purchasers/ allotters/ transferees in the particular plot(s) of land and in such case company shall execute procure, execution and Registration of agreement of sale/ sale deed, ensuring title and interest of such joint holders with other Purchasers. … 14. On execution and registration of the agreement for sale/sale deed before the concerned Sub - Registrar or Public Notary as may be feasible or practicable of the said / plot (s), either solely or jointly with other Purchaser, the said title deeds pertaining to the sale of the said plot (s) of land shall be kept in the safe custody of trustee (s) appointed by the company for the said purpose.

The name and address of the Trustee (s) shall be informed to the Purchaser at the time of issue of letter of Allotment. A certified copy of the said title deed shall be made available to the Purchaser by the said Trustee (s) on request in writing by the purchaser. 15. As per the agreement to sale the possession of the said plot(s) of land shall rest with the purchaser at all times (subject to payment of the balance consideration amount). However, Company has the right to carry out work in relation to development of the said plots(s) of land as per the terms of plan agreement. The Company or their representative shall enter upon the said plot for the limited purposes of rendering the development work only. The company or their representative shall not claim any right whatsoever over the said property. 16. Cost of plot includes, the cost of land, development charges, saplings plants, trees other miscellaneous expenses in order to make the plot(s) of land ready for cultivation purpose as mentioned in the agreement. … 18. The company shall provide to its purchaser(s) the marking service for sell of developed plots by easy liquidity i the purchaser needs, requires or wishes so, in that case the purchaser shall request in writing at least 180 days before the expiry of the term, authorizing the company to sell his/ her said developed plot at such price as may be mutually be agreed upon, such request will be entertained by the company only at the end of the tenure of this agreement.

19. The purchaser shall have a right to verify the title deed at the office trustee(s) during the normal working hours on any working day, after furnishing a formal written request atleast 15 days in advance. …” c. Other documents are ‘installment receipt’ and ‘acceptance letter’ the copies of which have been submitted by the Company. The ‘acceptance letter’ reads as ‘… In response to your letter and first booking installment amount along with consent of acceptance of terms and condition laid down by the company, we are pleased to inform you that your name is hereby enrolled and registered for the booking of plot of land, which was mentioned in your offer letter. The general terms and conditions of booking, allotment and other condition of contract printed overleaf.’ The same contains the place for registration no., plot size (sq. yd), payment plan and tenure, periodicity of installment, consideration amount, estimated realizable value of developed plot, etc. The ‘terms and condition of acceptance letter’ are as under: “1. The purchaser has to pay the minimum booking amount of 50% of the total consideration, either in one stroke or by installments.

After the receipt of first installment of booking amount, the purchaser shall be eligible for enrollment of his/ her name for the plot of land with the company. The company shall issue receipt cum acceptance letter containing the area of plot of land to be allotted to the purchaser in due course of time. … 4. In case of Installments Payment Plan, the plot of land shall be allotted to the purchaser within a reasonable period generally non exceeding 150 day, after payment of minimum booking amount of 50% of total consideration. 5. In case of Cash Down Payment Plan, the plot of land shall be allotted to the purchaser within a reasonable period generally non exceeding 300 day (10 Months), after receipt of full payment. … 11. On execution of agreement for sale/ sale deed, registered before the concerned sub registrar or public notary as may be feasible or practicable of the said property, either solely or jointly with other purchaser, the said title deed pertaining to the sale of the said property shall be kept in the safe custody of Trustee(s) appointed by vendor for purpose. A certified copy o the said title deed shall be made available to the purchaser shall the said Trustee(s).

The name and address of Trustee(s) shall be informed to the purchaser at the letter of allotment. The purchaser shall have the liberty to verify the title deed at the office of Trustee (s) during the normal working hours on any working day and to obtain certified copy after furnishing a formal written request of 30 days in advance. 12. The purchaser shall be the absolute owner-in-possession of the said property except common facilities provided by vendor which may be passing through the said property, whether over ground or underground. 13. The purchaser has every right to assigns the development work of the said property to any person or company or agency of its choice and they shall carryout the necessary preliminary development works in the said property such as to make Survey, demarcation, fencing, clearing of unwanted vegetation, leveling, providing common road and electricity at the nearest point of the said property, employ person as per their choice for carrying out its obligations under this agreement. The Purchaser shall not ordinarily interfere, with the above said rights of vendor.

However, the Purchaser shall have the right to tender suggestion, visit the land site, inspect the record in regard to the development and maintenance of the said property. The minimum period 5 to 27 years is required for development of said property and during the period if any yield of saleable produce, the Purchaser shall not have any claim on such produce till said plot is handed over to the purchaser. 14. The development work will be carried out by the company or its agents as per terms and conditions of the agreement to sell, wherever the purchaser has assigned such development right to the company. In case the purchaser wishes to carry out any development work either by himself or through any other agency full co-operation will be extended by the company. 15. … However vendor has only right to carry out work in relation to development and maintenance of the said plot of land as per the terms of plan or agreement. Vendor or its representative shall enter upon the said property only for the limited purpose of rendering the services. Vendor or their representative shall not claim any right whatsoever over the said property. … 17. The company shall provide to its purchaser(s) the marketing service for sell of development of plots for easy, liquidity if the purchaser needs/ requires or wishes so, in that case the purchaser shall request in writing at least 180 days before the expiry of the tenure, authorizing the company to sell his/ her said developed plot at such price as may mutually be agreed upon.

Such request will be entertained by the company only at the end of the tenure of this agreement. … 19. Cost of Plot includes, the cost of land, development charges, other inputs, saplings, plants, trees maintenance and other miscellaneous expenses as mentioned in the agreement. …” d. Another document is the ‘Allotment Letter of Plot(s) of Land’. I have perused the sample ‘Allotment Letter of Plot(s) of Land’ and note that the same contains the space for details of the plot allotted. The relevant part of the ‘Letter of Allotment of Plot(s) is as under: “... The Agreement in respect of said plot(s) allotted to you shall be executed and registered as per terms and conditions of Letter of Intent/ Offer Letter. Upon registration, the original clear title documents shall be handed over to the Utkarsha tech & safe services having office at 9, Basement, A wing, Shri Chhatrapati Shivaji Maharaj Jilha Krida Sankul (Stadium Complex), Jalgaon (District: Jalgaon), Maharashtra - 425 001, which shall be holding the same in trust. You shall have the right to verify the original clear title documents on any working day during the normal working hours, after sending a formal request in working 15 days in advance.

This allotment and the subsequent conveyance of the aforesaid plot(s) to you shall remain subject to the ‘General Terms and Condition’ contained in Application Form signed by you and the Terms and Conditions of the Agreement between you and UTKARSHA PLOTTERS AND MULTI AGRO SOLUTIONS INDIA LIMITED. … … … In case of installment payment plans all future installments, which are to be paid by you under the said plan, shall automatically stand appropriated by UTKARSHA PLOTTERS AND MULTI AGRO SOLUTIONS INDIA LIMITED upon receipt. These appropriation shall cover the cost of procuring the said property and conveying it to you, developing the same …. All the expenses of transfer i.e. stamp & registration charges of plot/ land will have to incurred by the purchaser at the end of the tenure. However, UTKARSHA PLOTTERS AND MULTI AGRO SOLUTIONS INDIA LIMITED reserves the right to change the location of this allotment. …” e. Next document is ‘agreement’. The relevant clauses of the same are as under: “… WHEREAS the “vendor” is engaged in the business of real estate i.e. of buying, selling and acquiring all type of lands such as agricultural and non agricultural and development of such lands situated at various place in India.

The vendor also sells the land of difference measurement by demarking and plotting the land in small segments to prospective purchaser as required. The vendor also undertakes the development work as and when necessary either solely or in joint venture with other agencies. ….. That the vendor is also in the process of making arrangements/ had made arrangement for purchasing/ procuring the land in different areas, forming part of various payments plans, launched by vendor to the prospective buyers. AND WEHREAS the purchaser has requested the vendor by letter of intent to allot/ sale of plot(s) of agricultural land in his/ her favour and to develop the same by rendering activities in order to make plot(s) suitable for cultivation purpose as per the terms and conditions mentioned therein and also in this agreement and plant. The purchaser has accordingly paid the requisite booking amount after acceptance of the terms and conditions laid down by the vendor. …. 1. … (b) The purchaser hereby agreed that wherever fragmentation into smaller size of plot(s) land may not be practicable, feasible or permissible under the relevant laws, the purchaser shall be allotted the requisite share jointly with other purchasers/ allotters/ transferees in a particular piece of land and in such case vendor shall execute/ procure, execution and registration of agreement of sale/ sale deed ensuring the title and interest of such joint holder with other purchasers.

Thereafter the possession of the respective plots shall be handed over to the purchaser immediately after execution of the relevant agreement for sale/ sale deed or by allotment letter so as to enable the vendor implement this agreement during the relevant period, in the manner contemplated herein below. The right, title interest of the purchaser in the said property shall not be affected in any case, subject to reciprocal right and obligation of the vendor. … 3. … The purchaser shall be absolute owner-in-possession of the said property. The purchaser shall not have any claim of whatsoever nature at any time over common amenities provided by the vendor such as irrigation pipeline, drainage systems, electrical lines etc. which may be passing through the said property, whether over ground or underground. The vendor shall ensure that the said common amenities shall run along the boundary of the said property. 7. Custody of Title Deeds ‘On execution of agreement for sale/ sale deed, registered before the concerned sub registrar or public notary as may be feasible or practicable of the said property, either solely or jointly with other purchaser, the said title deeds pertaining to the sale of the said property shall be kept in safe custody of Trustee(s) appointed by vendor for the purpose.

A certified copy of the said title deed shall be made available to the purchaser by the said Trustee(s). The name and address of the Trustee(s) shall be informed to the purchaser at the time of the letter of allotment. The purchaser shall have the liberty to verify the title deed at the office e of Trustee(s) during the normal working hours on any working day and to obtain certified copy after furnishing a formal written request of 30 days in advance. … 10. The Possession of the said property shall rest with the purchaser at all times (subject to the balance consideration amount receivable by the vendor). However for the purpose of development of the said propertly as per the terms of the agreement, vendor shall enter upon the said property only for the limited purpose of rendering the development work. The vendor shall not claim any right whatsoever the said property as a management/ tenant. However, the vendor shall have first charge on said property on account of its unpaid installments, dues expenses on account of development charges and other incidental expenses incurred by the vendor.

The said property cannot, in any other manner be sold assigned, mortgaged, pledged or alienated without obtaining No Dues Certificate/ No Objection Certificate from vendor, in case of installment Payment Plans. …

15. Development Work: A) The purchaser assigns the development rights of his/ her plot(s) to the vendor and accordingly they shall carry out the necessary preliminary developmental work in the said property. (i) Amount received by the purchaser is against the value of the said plot and development charges. B) The vendor or its nominee/ representative shall develop the plot(s) in such manner so that it can be ready for cultivation purpose. The development work includes the following act(s). (ii) To consult with the technical expert of their choice. (iii) To make survey, demarcation, fencing, cleaning of unwanted vegetation. (iv) Leveling of said property as per its requirement. Sapling trees, on the border of the plot and to maintain them. (v) Providing a common road and electricity, irrigation facility a may be practicable and feasible. (vi) Employ its own technical experts, advisors and such other persons, if considers necessary for carrying out its obligations under this agreement and shall pay the necessary fees/ wages and expenses incidental thereto. (vii) The purchaser shall not ordinarily interfere with the above said rights of the vendor.

However, the purchaser shall have the right to tender suggestion, visit the land site inspect the record in regard to the development of the said property. (viii) The minimum period of 3 to 27 years (as per plans and tenure) is required for development of the said property. …” f. The Company has also submitted a sample ‘Special Power of Attorney’. The same reads as under: “…… I/ We hereby nominate constitute and appoint… to be my/ our true and lawful attorney in to effect and to do all or any of the following acts, deeds, matters and things in respect of the said property viz. 1) To appear and act before Tahsildar, S.D.O., S.D.M. Prant office, Collector, Revenue Authority, Electricity Board, of company Municipal Corporation, Registrar Office and any other Government and Semi Government Authority and also to appear before all Courts, ribunal and to receive any notice, letter call, summon, to file application, reply, say, made correction, rectification, confirmation before the concerned authorities etc. And to appoint advocate, agent or any professional person as may be required in relation to the said property. … 4) To be present and lodge in the office of the Sub-Registrar of Assurance or Registrar and to admit execution of Sale Deed / Agreement to sale in my favour and to do all acts and things necessary for effectively registering the said documents on behalf of me in respect of the said property.

5) To develop and thereafter take possession of the said property from the vendor/ his/ her nominee agent attorney in such manner as may be required in the circumstances or as may be appropriate after development work is completed, to apply for revenue authority for the mutation of the said property it necessary. 6) To do all acts incidental to and collateral with above purpose. …” g. Another document is ‘application for optional return against land unit/ unit certificate’. The same is pre-printed document on the letter head of the Company with blanks for name, address details, etc. to be filed by the customers. Relevant clauses in it reads as under: “… I am the holder of the above mentioned land Unit/ Unit certificate and now I am not interested in the said land unit booked by me earlier, hence as per Company’s terms and conditions kindly arrange to pay me the optional return against the above said land Unit/ Unit Certificate. I am authorizing Mr. ….. Who is associated with you to collect the payment of the said optional return on my behalf by Cash/ Cheque. Amounting …..” From the reading of the above, I note that the customer gives the authorisation of collecting the payment to the agent associated, with the Company.

6. Considering the reply and discussion on the documents submitted by the Company, the following are my findings: a. The allotment of the plot is solely at the discretion of the Company as the ‘letter of intent/ offer letter’ does not give an option to the customer to specify the location/ details of the land they wish to apply for. The same only finds mention of the plan number, tenure and consideration. The ‘acceptance letter’ also does not provide the location of the land where the plot will be allotted to the customers which is a primary document. However, the ‘acceptance letter’ contains the ‘estimated realizable value of developed plot’. b. Development of plot was an integral part of the plan of the Company and customer cannot enter into an agreement with the Company unless he/ she gives the development rights to it. As per the ‘terms and conditions’ of acceptance letter, the minimum period of 5-27 years is required for development of the plot and during the said period the rights over any saleable produce on the such plot, is retained by the Company. c. Before allotment of the plot/ land, the customer was required to pay the minimum booking amount of 50% of the total consideration.

In ‘cash down payment’ plan, the land was promised to be allotted within a period not exceeding 300 days after receipt of the full payment. In ‘installment payment’ plan, the land was promised to be allotted within a period not exceeding 150 days, after payment of minimum booking amount of 50% of total consideration. Further, the Company reserves its right to change the location of the allotment of land. d. The Company has submitted copies of certain allotment letters and from the same, it is observed that certain plot numbers have been allocated to the customers. It is noted that there is no lay-out plan/ demarcation/ map of such plots for identification attached to the allotment letter. In the absence of such details, it can be said that the ‘allotment letter’ only indicates the location where the plot is allotted and not the unique/ identifiable plot. Further, from the perusal of the ‘allotment letter’ of one Ms. Kamlabai Sitaram Vital, it is noted that the allotment letter number and plot number are same i.e. 60. It is further noted from the said allotment letter that she had been allotted an area of 121 sq. yds. e. The ‘letter of intent/ offer letter’ and ‘agreement’ states that as the fragmentation of land/ plot into smaller sizes may not be practical/ feasible/ permissible under the relevant revenue laws, the customer shall have the requisite share jointly with other customers/ purchasers/ allottees, in a particular plot of land. f. The Company has extended the facility of ‘opting out’ only to the customers who had invested under the ‘cash down payment’ plan and provided marketing service to its customers for the sale of plots. g. As per the ‘letter of intent/ offer letter cum agreement and the acceptance letter, the Company will retain the sale deeds of the plot of land (if entered in favour of the customers) in its custody through a trustee and only a certified copy of the sale deed is promised to the customers.

The Company had also taken ‘special power of attorney’ from its customers. h. The Company along with its submissions has submitted a list of 34,408 investors, list of 347 investors who have been issued allotment letters and list of 3,988 investors who had been repaid as on March 31, 2015, upon maturity. At this stage, I note the observation made in the interim order that ‘Utkarsha submitted a list of approximately 12083 investors (as on March 31, 2013) and a list of 274 investors (as on March 31, 2013) who had entered into an agreement for sale with the Company for transfer of land in investors names, which is approximately 2.3% of the total investor base of Utkarsha. However, Utkarsha has not provided any proof of having registered sale deed or agreement of sale with investors’. It is observed that the Company along with its submissions has not submitted any sale deed executed in favour of the investors/ customers. i. From the details of the plans operated by Utkarsha, it is seen that the costs of all the plots offered by the Company are same. The value of each piece of land usually varies.

However, the plans operated by the Company suggests that the land was being sold as a homogeneous commodity at a fixed price. j. As per the acceptance letter, the minimum period of development is 5-27 years and as per the agreement, the minimum period of development is said to be 3-27 years (as per the plans and tenure). From the said details, it can be inferred that the Company fixes the development period of plot of land for its customers as per the plan opted by these.

7. Having discussed the above, now I proceed to test the characteristics of the impugned plans/ schemes floated and carried on by the Company. For concluding whether a scheme is a CIS or not, all the four conditions under Section 11AA(2) of the SEBI Act should be satisfied. 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. In this regard, I note that: - The Company accepts the money from the investors/ customers for subscribing to one of its specified plans for the purchase of plot. - At the stage of application form/ ‘letter of intent/ offer letter’, the Company does not identify the land to be sold to the customer. As discussed in the earlier paragraphs, the Company had promised to allot the plot under the ‘cash down payment’ plan within a reasonable period generally not exceeding 300 days. As regards, the ‘installment payment’ plan, the plot had to be allotted within reasonable period generally not exceeding 150 days after the receipt of 50% of the total consideration. - In the ‘allotment letter’ the Company has stated that ‘… In case of installment payment plans all future installments, which are to be paid by you under the said plan, shall automatically stand appropriated by UTKARSHA PLOTTERS AND MULTI AGRO SOLUTIONS INDIA LIMITED upon receipt. These appropriation shall cover the cost of procuring the said property and conveying it to you, developing the same …’. Further, in the ‘agreement’, the Company has stated that it is in process of ‘making arrangements/ had made arrangements for purchasing/ procuring the land in different areas’, the same suggests that the Company till the date of issue of allotment letter and agreement only makes arrangements for purchasing/ procuring the land. - The Company had also not identified the plot of land in the ‘acceptance letter’ issued by it. Though the same provides for the size of the plot and the ‘estimated realizable value of developed plot’, which is yet to be allotted.

The above discussed facts hints towards the pooling of investments made by the investors/ customers of the Company, with an aim/ object of carrying out its overall plan/ scheme. Having considered the same, one can safely conclude that the ‘contributions, or payments made by the investors, are pooled and utilised by the Company for the purposes of the scheme or arrangement’, the scheme being to accept contributions/ payments in the name of sale of plot/ land. 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. The plans of the Company and acceptance letter clearly provides for the ‘estimated realizable value of developed plot’ at the end of the term. From the same, it can be concluded that the investment/ contributions were made by the customers/ investors with a view to earn profits. Considering the same, it is concluded that the customers/ investors had made the contribution/ payment to the Company with a view to earn profits/ income/ property/ return on the initial 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 and fourth conditions under Section 11AA(2) of the SEBI Act are being discussed together. The said 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. In relation to the same, I note as under - The investor/ customer investing with the Company is mandatorily required to give authority for the development and maintenance of the plot in favour of the Company. - As per the terms and conditions of the letter of intent/ offer letter and the acceptance letter, the Company retain the right to carry on with the work in relation to the development of the plot(s) of land. The same also hints that the plot/ land was not managed by the customers, at any stage of the plan/ scheme. - The Company obtains the unconditional authority from its customers for developing and maintaining the plot intended to be purchased by the investors/ customers. In view of the same, it can be concluded that the customer does not manage his investments in the plan/ scheme rather the investments are managed and utilized by the Company, at its discretion. - As the contribution/ investment and the plot are managed by Utkarsha on behalf of its customers, they do not have any role in their management. The customer does not get any claim over the common facilities provided by the Company. The sale of produce is also arranged by the Company and the wastage is retained by the Company. The investor/ customer only has the right to tender suggestions, to visit the plot and to inspect the related records, however, the Company has not produced anything to show as to how the investor/ customer will identify the plot. - Further, the joint possession of the plot of land also hints that the customer does not have day to day control over the plot of land/ property as the same remained in the custody/ use of the Company. - The provision of retaining the sale deeds by the Company appointed trustee suggest that the complete control over the plot remains with the Company.

Considering the discussion above, it can be concluded that the plans/ schemes of the Company satisfies the third and fourth conditions under Section 11AA (2) of the SEBI Act also.

8. From the arrangement which the Company has with its customers, it is evident that the Company solicits investments from its customers in its plan of purchase of plot/ land. In this regard, I place my reliance on the following observations of the Hon’ble Supreme Court, made in the matter of PGF Limited & Ors. Vs. Union of India & Anrs. (Civil Appeal No. 6572 of 2004) “……….. sub-section (2) of Section 11 AA, which defines a collective investment scheme disclose that it is not restricted to any particular commercial activity such as in a shop or any other commercial establishment or even agricultural operation or transportation or shipping or entertainment industry etc. The definition only seeks to ascertain and identify any scheme or arrangement, irrespective of the nature of business, which attracts investors to invest their funds at the instance of someone else who comes forward to promote such scheme or arrangement in any field and such scheme or arrangement provides for the various consequences to result there from.” 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).

While proceeding further, I once again place my reliance on the observations of the Hon'ble Supreme Court, made in the matter of PGF Limited & Ors. Vs. Union of India & Anrs. (supra): “42. … ... .. as per the agreement between the customer and the PGF Limited, it is the responsibility of the PGF Limited to carry out the developmental activity in the land and thereby the PGF Limited undertook to manage the scheme/arrangement on behalf of the customers. Having regard to the location of the lands sold in units to the customers, which are located in different states while the customers are stated to be from different parts of the country it is well-neigh possible for the customers to have day to day control over the management and operation of the scheme/arrangement. In these circumstances, the conclusion of the Division Bench in holding that the nature of activity of the PGF Limited under the guise of sale and development of agricultural land did fall under the definition of collective investment scheme under Section 2(ba) read along with Section 11AA of the SEBI Act was perfectly justified and hence, we do not find any flaw in the said conclusion. ... ....

53. … therefore, hold that Section 11AA of the SEBI Act is constitutionally valid. We also hold that the activity of … the sale and development of agricultural land squarely falls within the definition of collective investment scheme under Section 2(ba) read along with Section 11AA (ii) of the SEBI Act ...” Therefore, having concluded that the activities of the Company are CIS in terms of Section 11AA of the SEBI Act, I proceed further with the matter.

9. 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.

10. Liability of the Directors: I note that the interim order was issued against the Company and its directors namely Ms. Dipali Mitharam Gurav, Mr. Mitharam Chhagan Gurav and Mr. Pravin Chhagan Gurav. The details of the appointment and resignations of the directors of the Company are as under: Name Date of Appointment Date of Cessation Ms. Dipali Mitharam Gurav February 01, 2011 Continuing as director Mr. Mitharam Chhagan Gurav February 01, 2011 Continuing as director Mr. Pravin Chhagan Gurav February 01, 2011 Continuing as director It is noted that Ms. Dipali Mitharam Gurav, Mr. Mitharam Chhagan Gurav and Mr. Pravin Chhagan Gurav are continuing as directors of the Company. Therefore, I have no hesitation in holding that the Company and its directors namely Ms. Dipali Mitharam

Gurav, Mr. Mitharam Chhagan Gurav and Mr. Pravin Chhagan Gurav 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. In view of the above findings and observations made in this Order and the violations committed by the Company, it becomes necessary for SEBI to issue appropriate directions in order to protect the interest of investors and also to secure the interest of the securities market.

11. I note that the Company along with its reply has submitted certain documents to show purchase of lands. However, the Company and its directors have not submitted the full inventory of the assets as asked vide the interim order.

12. 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. Utkarsha Plotters & Multi Agro Solutions India Limited [PAN: AABCU2646N], Ms. Dipali Mitharam Gurav [PAN: ANVPG7189A], Mr. Mitharam Chhagan Gurav [PAN: AHDPG8821D] and Mr. Pravin Chhagan Gurav [PAN: AZBPG5053D] 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. Utkarsha Plotters & Multi Agro Solutions India Limited and its directors, namley Ms. Dipali Mitharam Gurav, Mr. Mitharam Chhagan Gurav and Mr. Pravin Chhagan Gurav shall wind up the existing Collective Investment Schemes and refund through ‘Bank Demand Draft’ or ‘Pay Order’, 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. Utkarsha Plotters & Multi Agro Solutions India Limited and its directors, namley Ms. Dipali Mitharam Gurav, Mr. Mitharam Chhagan Gurav and Mr. Pravin

Chhagan Gurav shall not alienate or dispose off or sell any of the assets of Utkarsha Plotters & Multi Agro Solutions India Limited except for the purpose of making refunds to its investors as directed above. d. After completing the aforesaid repayments in terms of sub-paragraph (b) above, the Company shall file a certificate of such completion with SEBI, within a period of 15 days, from two independent peer reviewed Chartered Accountants who are in the panel of any public authority or public institution. For the purpose of this Order, a peer reviewed Chartered Accountant shall mean a Chartered Accountant, who has been categorized so by the Institute of Chartered Accountants of India (‘ICAI’). e. Utkarsha Plotters & Multi Agro Solutions India Limited and its directors, namley Ms. Dipali Mitharam Gurav, Mr. Mitharam Chhagan Gurav and Mr. Pravin Chhagan Gurav are also directed to immediately provide a complete and detailed 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. f. Utkarsha Plotters & Multi Agro Solutions India Limited and its directors, namley Ms. Dipali Mitharam Gurav, Mr. Mitharam Chhagan Gurav and Mr. Pravin Chhagan Gurav are restrained from accessing the securities market and are prohibited from buying, selling or otherwise dealing in securities market for a period of four (4) years. g. In the event of failure by Utkarsha Plotters & Multi Agro Solutions India Limited and its directors, namley Ms. Dipali Mitharam Gurav, Mr. Mitharam Chhagan Gurav and Mr. Pravin Chhagan Gurav to comply with the above directions, the following actions shall follow: - Utkarsha Plotters & Multi Agro Solutions India Limited and its directors, namley Ms. Dipali Mitharam Gurav, Mr. Mitharam Chhagan Gurav and Mr. Pravin Chhagan Gurav 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 12(f) above, till all the Collective Investment Schemes of Utkarsha Plotters & Multi Agro Solutions India 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 Utkarsha Plotters & Multi Agro Solutions India 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 appropriate action as deemed fit against the Company, Utkarsha Plotters & Multi Agro Solutions India Limited. - SEBI would also make a reference to the Ministry of Corporate Affairs to restrain the abovementioned noticee directors from being directors in other companies. - SEBI shall initiate attachment and recovery proceedings under the SEBI Act and rules and regulations framed thereunder.

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

14. 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 Utkarsha Plotters & Multi Agro Solutions India Limited and its directors, namley Ms. Dipali Mitharam Gurav, Mr. Mitharam Chhagan Gurav and Mr. Pravin Chhagan Gurav.

15. 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 Utkarsha Plotters & Multi Agro Solutions India Limited and its directors, namley Ms. Dipali Mitharam Gurav, Mr. Mitharam Chhagan Gurav and Mr. Pravin Chhagan Gurav.

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

Date: April 05th, 2016 PRASHANT SARAN Place: Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA