WTM/PS/187/CIS-NRO/MAR/2015 BEFORE THE SECURITIES AND ... · Durga Prasad Dubey, Mr. Anup Aggarwal,...

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WTM/PS/187/CIS-NRO/MAR/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 Peers Allied Corporation Limited In respect of:

1. Peers Allied Corporation Limited [PAN: AAECP5032C] 2. Mr. Durga Prasad Dubey [PAN: AIYPD6009L], 3. Mr. Anup Aggarwal [PAN: AFVPA8971N], 4. Mr. Ashish Kumar Tripathi [PAN: AGEPT4844K], 5. Ms. Indu Dubey [PAN: AKYDP8151B], 6. Ms. Manju Upadhyay [PAN: AAZPU1224F], 7. Mr. Alok Kumar Tripathi [PAN: AEUPT1819A], 8. Mr. Sadhu Sharan Upadhyay [PAN: AAZPU1225E], 9. Mr. Sandeep Kumar Mishra [PAN: AXHPM2750M] and 10. Mr. Ajay Kumar Pandey [PAN: AXLPP7767R]

Date of Hearing: February 10, 2015 and May 25, 2015 Appearances: Mr. Sandeep Kumar Mishra, Director; Mr. Durga Prasad Dubey, Director;

Mr. Nishat Alam, Manager; Mr. Prakash Shah, Advocate; Raj Kumar, Chartered Accountant and Mr. Sanjay Tiwari appeared for the Company and its directors.

For SEBI: Ms. Anitha Anoop, Deputy General Manager; Mr. Pradeep Kumar, Assistant General Manager; Mr. T. Vinay Rajneesh, Assistant General Manager; Ms. Kanchan Yadav, Manager

Date of Hearing: July 14, 2015 Appearances: Mr. Alok Kumar Tripathi, Director; Mr. Ashish Kumar Tripathi, Director;

Mr. Manish Kumar, Company Secretary For SEBI: Ms. Anitha Anoop, Deputy General Manager and Mr. Pradeep Kumar,

Assistant General Manager Date of Hearings: August 07, 2015, January 07, 2016 and January 19, 2016; None appeared for the directors namely Mr. Alok Kumar Tripathi and Mr. Ashish Kumar Tripathi

1. Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) conducted a

preliminary inquiry in the ‘investment scheme’ of one Peers Allied Corporation Limited

(hereinafter referred to as ‘the Company’ or ‘Peers’). Pursuant to the inquiry, SEBI vide

an ex-parte interim Order dated April 23, 2014 (hereinafter referred to as ‘the interim order’),

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prima facie found that Peers 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 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 Peers and its directors from the

funds of the investing public. This Order directed Peers and its Directors, namely, Mr.

Durga Prasad Dubey, Mr. Anup Aggarwal, Mr. Ashish Kumar Tripathi, Ms. Indu Dubey,

Ms. Manju Upadhyay, Mr. Alok Tripathi, Mr. Sadhu Sharan, Mr. Sandeep Kumar Mishra

and Mr. Ajay Kumar Pandey (hereinafter collectively referred to as ‘noticees’):

“● not to collect any money from investors from its existing "scheme" or to launch any new schemes; ● to immediately submit the full inventory of the assets owned by Peers out of the amounts collected from the "Customers"/investors under its existing "Schemes"; ● not to dispose of any of the properties or alienate the assets of the existing "Schemes"; ● not to divert any funds raised from public at large, kept in bank account(s) and/or in the custody of Peers; ● to furnish all the information/details sought by SEBI, till date including the details of scheme wise list of investors and their contact numbers and addresses, within 15 days from the date of receipt of this Order.”

2. The aforesaid directions came into force with immediate effect and the noticees were

advised to file their reply within a period of fifteen (15) days from the date of receipt of

the interim order and also to indicate whether they wish to avail an opportunity of personal

hearing in the matter. The interim order further advised that it shall be treated as a show

cause notice and that the noticees may show cause as to why appropriate directions under

the SEBI Act and the CIS Regulations, including directions in terms of the Regulations 65

and 73 of the CIS Regulations, should not be issued against them.

3. The interim order was forwarded to the Company and its directors vide letters dated May

02, 2014. The letters issued to the Company and its directors were delivered except those

to the noticees namely Mr. Ashish Kumar Tripathi and Mr. Alok Tripathi. SEBI vide letter

dated June 17, 2015, forwarded the copies of the interim order to the Company for onward

delivery to Mr. Ashish Kumar Tripathi and Mr. Alok Tripathi.

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4. The Company vide its letter dated May 19, 2014, while submitting the new address of the

registered office of the Company replied to the interim order and requested for stay of the

proceedings. Later the Company vide its letter dated May 24, 2014 and August 11, 2014,

requested time for filing a detailed reply to the interim order and asked for the copies of

the documents relied upon by SEBI while passing of the interim order. Accordingly, SEBI,

vide letter dated September 17, 2014, afforded an opportunity of inspection of documents

to the noticees on September 22, 2014. The Company vide its letter dated September 20,

2014, requested for rescheduling of the date of inspection. The request of the Company

was acceded to and the date was rescheduled to October 13, 2014. The Company vide its

e-mail dated October 07, 2014, again requested for rescheduling of the date. The date of

inspection was later fixed for October 15, 2014, when the inspection of the relied upon

documents was conducted. The Company was provided with the copies of the brochure

and the complaints received by SEBI.

5. Thereafter, an opportunity of personal hearing was afforded to the Company on January

16, 2015 and the same was communicated to the noticees vide SEBI letter dated December

26, 2014. The noticees vide email dated January 06, 2015 through one R.K. Chhabra &

Co., Chartered Accountants requested for an adjournment. The request of the noticees

was acceded to and another opportunity of personal hearing was granted on February 10,

2015. On such date, the noticee namely Mr. Sandeep Kumar Mishra appeared along with

Mr. Prakash Shah, Advocate; Mr. Raj Kumar, Chartered Accountant; Mr. Nishat Alam

and made oral submissions. The noticees vide letter dated August 11, 2014, submitted the

list of land available with the Company along with the area and sample allotment letter and

the option-wise list of persons who paid money as advance against the plot booking.

During the course of personal hearing, the noticees were asked to submit the complete

case file/ set of documents of all the customers who had been allotted/ sold the land at

Sikanderpur, Pargana- Koda, Tehsil- Bindaki, Distt. Fatehpur, U.P. on the total area of

2,87,737 sq. ft. (as per the ‘lay out map’) (starting with the respective application forms,

respective agreements, respective details of payment made/ installment receipts,

respective allotment letters, respective sale deeds, respective possession letters, etc.) and

demarcate and identify the plot on the ‘lay out map’ for all such customers. The noticees

were also asked to provide the copies of all the sale deeds executed by it in favour of its

customers, within a period of three weeks.

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6. The Company vide its letter dated March 10, 2015, submitted the following:

a. Copy of the layout map of land at R.N. No. 591 at Village – Sikanderpur, Pargana -Koda,

Tehsil- Bindaki, Distt. Fatehpur, U.P. comprising of the total area of 2,87,737 sq. ft.

b. Copy of 2 sale deeds executed by the Company in favour of its two customers namely Mr.

Vinod Kumar and Mr. Sachin Kumar Gupta along with the respective application form,

respective registration letter, customer ledger, respective allotment letter, letter of the

Company to the customers for registration of the land and letter from the customers to

the Company requesting for registration of the land.

c. Copies of documents of investors who were allotted land at R.N. No. 591 at Village –

Sikanderpur Pargana - Koda, Tehsil- Bindaki, Distt. Fatehpur, U.P. including the

respective application form, registration letter, payment receipt, allotment letter, letter of

the Company to the customers for registration of the land, reply of the customers,

calculation sheet (for repurchase of developed plot) and copy of cheque of repayment

amount.

7. Thereafter, one more opportunity of personal hearing was granted to the noticees on May

15, 2015, which was later rescheduled to May 25, 2015. On such date, the noticees namely

Mr. Sandeep Kumar Mishra and Mr. Durga Prasad Dubey appeared along with Mr.

Prakash Shah, Advocate and Mr. Sanjay Tiwari and made oral submissions. The following

documents were also submitted during the course of personal hearing:

a. Details of the directors (including the persons named as directors in the interim order and

the present directors),

b. Copy of the resolution dated February 02, 2015, passed in the meeting of the board of

Directors of the Company,

c. Copy of the first page of the Memorandum of Association of the Company,

d. Informal guidance of SEBI dated May 05, 2014, in the matter of Purvankara Projects

Limited.

The documents submitted by the noticees were taken on record and the hearing was

concluded.

8. In the meantime, the noticees namely Mr. Alok Kumar Tripathi and Mr. Ashish Kumar

Tripathi vide respective letters both dated May 25, 2015, submitted the reply to the interim

order and requested for the complete details of the proceedings and an opportunity of

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personal hearing. In compliance with the principles of natural justice, Mr. Alok Tripathi

and Mr. Ashish Kumar Tripathi were granted an opportunity of personal hearing on July

14, 2015 and the same was communicated to them vide letters dated June 05, 2015. On

the date fixed Mr. Alok Tripathi and Mr. Ashish Kumar Tripathi appeared along with Mr.

Manish Kumar, Company Secretary and requested for a copy of the interim order and an

adjournment for replying to the interim order. Mr. Alok Tripathi and Mr. Ashish Kumar

Tripathi were provided with the copy of the interim order and the matter was adjourned to

August 05, 2015. The date of hearing was later rescheduled to August 07, 2015.

On the date fixed, Mr. Alok Tripathi and Mr. Ashish Kumar Tripathi failed to appear for

the personal hearing, inspite of due intimation. Considering the absence, the matter was

proceeded further in respect of these noticees, on the basis of the material available on

record. Later, Mr. Alok Tripathi and Mr. Ashish Kumar Tripathi vide an undated letter

received by SEBI on August 11, 2015, requested for an adjournment of the personal

hearing dated August 07, 2015. Considering the request, one last opportunity of personal

hearing was granted to these on January 07, 2016. In reply to the communication of SEBI,

one Mr. Ramesh Kumar vide e-mail dated January 04, 2016 (e-mail address:

[email protected]), intimated that Mr. Ashish Kumar Tripathi is hospitalized from

December 25, 2015 and he will not be able to attend the personal hearing. Later, Mr.

Ashish Kumar Tripathi while using the same e-mail address intimated SEBI that his

daughter is not well and requested for another opportunity of personal hearing.

The request of Mr. Ashish Kumar Tripathi was considered and another opportunity of

personal hearing was granted to him and Mr. Alok Tripathi on January 19, 2016. This time

again both these persons failed to appear for the personal hearing. Later, Mr. Ashish

Kumar Tripathi again requested for an adjournment on the ground of his inability to

appear for the personal hearing due to bad weather and delay in departure of the train. I

note that reasonable opportunities of personal hearing have already been afforded to these

two directors of the Company for making the submissions in the matter. However, both

these persons have continuously failed to appear under one pretext or the other. The same

appears to be a delaying tactic being used by these noticees. Considering the same, I

proceed further in the matter on the basis of the material available on record.

mailto:[email protected]

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9. The submissions of the noticees in brief are as under:

a. Peers vide its letter dated May 19, 2014, May 24, 2014 and August 11, 2014 submitted as

under:

The Company is engaged in the business of procuring and developing agriculture land.

It had received funds from the public for the purpose of developing plots of land only

under two options i.e. ‘Installment based plan’ and ‘Single installment plan’.

The Company has not floated any scheme after 2010 and has no program for

introduction of any investment scheme henceforth without due approvals from all the

authorities concerned. It has not accepted any deposit from its members after March 31,

2010, except the already existing renewals.

The Company had not illegally mobilised funds or had started the schemes of

investments. The Company had certain internal differences amongst the directors and

the board of directors had decided to repay the entire amount to its customers as soon

as possible and had started repaying to its members.

The Company had collected funds from the members who were part and parcel of the

Company.

The interim order has been passed without giving an opportunity of being heard.

The contributions/ payments made by the persons against the plot booking was mostly

accepted after identifying the plot/ land with a right of its development. The Company

has not unilaterally changed the location of the land/ plot allotted to the customer.

The Company provided for a ‘safety net’ in order to protect the capital investment of

the customers i.e. if they desire to surrender the plot/ land within a stipulated time,

return calculated on fixed interest basis is provided by the Company. The customer had

the option to hold the plot or to surrender it.

The business of the Company is conducted like a joint venture whereby all the customers

regularly participated in various activities and the schemes thereby knowing the exact

status of their investment in the Company. The customers on the basis of the individual

capacity and needs, were involved in the day-to-day operation and management of the

Company, to protect their own interest/ capital.

b. The noticees namely Mr. Alok Tripathi and Mr. Ashish Kumar Tripathi vide separate letters

both dated May 25, 2015, had submitted as under:

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They are neither related/ connected/ associated with the Board of Directors of the

Company nor are they associated with the management of affairs / business plans and

policies / decisions related with day to day or overall management of the Company.

They have ceased to be the members of the Company by operation of law and had made

requests to the members of the board of the Company to file the necessary forms/

documents regarding the resignation, disassociation and cessation from the board by

operation of law. However, the Company and the existing board of directors never filed

the required papers of their cessation.

Later, they personally filed the forms/ documents related to their cessation.

The directors namely Mr. Durga Prasad Dubey, Ms. Indu Dubey, Mr. Sadhu Sharan, Ms.

Manju Upadhyay, Mr. Sandeep Kumar Mishra, Mr. Ajay Kumar Pandey, Mr. Shailesh

Kumar Upadhyay and Mr. Vishwambher Nath Dubey are operating, managing and

controlling the overall affairs of the Company and they have full control over the assets

(fixed and current) and funds (cash, liquid money, etc.) of the Company.

10. While proceeding further with the matter, I have considered the interim order cum show

cause notice, the replies received along with the documents submitted and the material

available on record. The interim order has alleged that the plans/ schemes operated by the

Company are in the nature of CIS and that the Company was offering these plans/

schemes without obtaining the 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 Peers 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) Peers (CIN No. U70109DL2008PLC172452) was incorporated on January 9, 2008 and has its registered office at New Delhi. Mr. Durga Prasad Dubey, Mr. Anup Aggarwal, Mr Ashish Kumar Tripathi , Ms Indu Dubey, Ms Manju Upadhyay, Mr Alok Tripathi, Mr Sadhu Sharan, Mr. Sandeep Kumar Mishra , and Mr. Ajay Kumar Pandey are the present Directors of Peers. b) Main objectives of Peers are inter alia to carry on business of procuring agricultural or waste land, developing the said land, growing of saplings, or other crops over the land, construction over the land for value addition and leasing of the land along with various other objects. Peers has offered various plans/ schemes for the "purchase and development/ maintenance of land" (hereinafter referred to as "the scheme") for growing agricultural produce through its "Brochures" circulated to the public.

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c) The contribution or investment to the "Scheme" is made by a "customer"/investor as per the “Payment Schedule(s)”, which differ on the basis of monetary payment either through “Instalment Payment Plan” or “Single Instalment Payment Plan”. An "estimate of the approximate value"/ estimated realizable value at the end of the term is also indicated in the “Payment Schedule(s)”. The "schemes"/plans offered by Peers are for periods ranging 36 months, 48 months & 60 months. …”

a. I note that the plans of the Company can broadly be categorized as ‘Installment based

plan’ and ‘Single installment plan’. It is seen from the ‘brochure’ of the Company that

under the head ‘installment based plan’, the Company had various other plans for different

periods i.e. for 36 months, for 48 months, for 60 months, etc. A sample of the plans

offered by the Company as also noted in the interim order are as under:

Installment Based Plan (For 60 months) Size of plot

sq. yards

Deposit Amount Approx.

INSTALMENT PAYMENT Companies Estimate of the Approximate

value

Accidental risk

coverage Monthly Quarterly Half Yearly Yearly

60 20 10 5

150 7,500 126 377 751 1,500 10,763 11,250

300 15,000 252 753 1,502 3,000 21,525 22,500

450 22,500 378 1,129 2,257 4,500 32,288 33,750

600 30,000 502 1,505 3,009 6,000 43,050 45,000

750 37,500 629 1,882 3,761 7,500 53,813 56,250

900 45,000 755 2,258 4,512 9,000 64,575 67,500

1050 52,500 881 2,634 5,263 10,500 75,338 78,000

1800 90,000 1,507 4,510 9,014 18,000 1,29,150 1,25,000

Single Installment Plan

Size of plot Sq. yards)

Consideration

Estimate of the approx. value after development at the end of the agreement

3 Yrs. 4 Yrs. 5 Yrs 6 Yrs. 7 Yrs. 8 Yrs 10 Yrs.

20 1,000 1,345 1,540 1,780 2,050 2,295 2,560 3,750

40 2,000 2,690 3,080 3,560 4,100 4,590 5,120 7,500

100 5,000 6,725 7,700 8,900 10,250 11,475 12,800 18,750

200 10,000 13,450 15,400 17,800 20,500 22,950 25,600 37,500

400 20,000 26,900 30,800 35,600 41,000 45,900 51,200 75,000

500 25,000 33,625 38,500 44,500 51,250 57,375 64,000 93,750

1000 50,000 67,250 77,000 89,000 1,02,500 1,14,750 1,28,000 1,87,500

2000 1,00,000 1,34,500 1,54,000 1,78,000 2,05,000 2,29,500 2,56,000 3,75,000

b. For subscribing to the plans of the Company, a customer had to submit an ‘application

form’. The ‘application form’ reads as ‘I here by apply to you for purchase of plot(s) and development

and maintenance to the same under your Single Instalment Payment Plans/ Instalment Based Plans …’.

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 clauses of the ‘application form’ are as

under:

“… 2. The land shall be allotted in the name of Customer, in the case of Single Installments Payments Plans, after receipt of full payment within a reasonable period generally no exceeding 270 days,

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and in the case of Installment Based Plans, within a reasonable period generally, not exceeding 90 days. Subject to forgoing, the land ownership would be ordinary transferred in the name of the customer within a reasonable period after allotment. 3. In case of Installment Base Plans, If customer makes a default by not paying one or more installment(s) for a period of 9 consecutive months from the due date, such default shall be treated as Breach of Agreement. … 5. Under single Instalment Payment Plans the Customer(s) has the facility to opt out before the allotment of said property in his/ her favour. This option can be exercised by the customer(s) by submitting a specific written request to Peers Allied Corporation Ltd. to that effect. The payment received under said plan be refundable immediately to customer(s) after deducting 10% of Consideration comprising various costs and other incidental expenses and … … 9. The Customer shall be owner in possession of the said property at all time. Peers Allied Corporation Ltd. shall enter upon the said property only for the limited purpose or rendering, the service of development and maintenance of the said property as per the terms of the agreement between the customer and Peers Allied Corporation Ltd. in that regard. Peers Allied Corporation Ltd. Peers Allied Corporation Ltd. shall have no rights whatsoever over the said property as a manager/ tenant nor shall Peers Allied Corporation Ltd. be deemed to be manager/ tenant. 10. Cost of Plot includes the cost of land, development charges, other inputs, saplings, plants, trees, crops, planting expenses maintenance and other miscellaneous expenses. 11. The customer has the right to retain or sell the said property, as he/ she may deem fit, on expiry of the tenure of this Agreement. To facilities easy liquidity, Peers Allied Corporation Ltd. provides to Customer(s) the marketing service for sale of developed plots. Customer intending to avail Peers Allied Corporation Ltd. Marketing Service For selling/ disposing off his/ her said develop property shall submit an application in writing at least 180 days before the expiry of the term authorizing company to sell his/ her said develop property at such price as may mutually be agreed upon. This may be noted that company provides such marketing services at the end of the tenure of is agreement. The payment of such sale consideration amount to customer is linked with transfer of ownership of the said developed property in favour of any body(ies), corporate unit person(s) as the case may be. … 13. The management of Peers Allied Corporation Ltd. reserve the right to discontinue/ change/ amend/ modify or after prospectively any of the rules/ regulations and plans and introduce new plans any times at its sole discretion with or without any notice. 14. In case of joint sale deeds, the title deeds pertaining to the sale of the said property shall be kept in the safe custody of Trustee(s) appointed by Peers Allied Corporation Ltd. for the purpose. A certified copy of the said title deed, issued by the sub-registrar or by a public notary , as may be feasible or practicable, shall be made available to the Customer (First Applicant only in case of joint applicants) by the said trustee(s). The name and address to Trustee(s) shall be informed to the Customer (First Applicant only in case of joint applicant) by the letter of Allotment. The Customer shall have the liberty to verify the tile deed at the office of Trustee(s) during the normal working hours on any working day, after furnishing a formal written request therefore 15 days in advance. …”

c. Another document is ‘agreement’. The relevant clauses of the same are as under:

“…

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Whereas Peers Allied Corporation Ltd. organizes the sale of agricultural land of different size, to prospective buyers and undertakes the development and maintenance of the same. Whereas PEERS ALLIED CORP. LTD. is in the process of making arrangements/ has made arrangements for purchasing/ producing the land, forming part of various plans launched by PEERS ALLIED CORP. LTD. with clear and marketable titles. AND WHEREAS the CUSTOMER, by means of an Application, which is the basis of the agreement and which contains the salient terms and conditions of the various plans, has/ have expressed his/ her/ their desire of buying the said agriculture land. AND WHEREAS the CUSTOMER has/ have requested PEERS ALLIED CORPORATION LTD. to arrange for the sale of the said agricultural land (hereinafter referred to as the SAID PROPERTY) in his/ her /their favour, and to develop and maintain the same by rendering various services in accordance with the said Plan. AND WHEREAS PEERS ALLIED CORP. LTD. has agreed to arrange for sale of the SAID PROPERTY in favour of the CUSTOMER, and to develop and maintain the same by rendering various services as aforesaid. 1. SALE OF PLOTS The customer shall be entitled for allotment of said property, and subsequent transfer of title and possession of the same in his favour by means of registered sale deed, within such period, after receipt, by PEERS ALLIED CORP. LTD., of full consideration in case of Single Installment Payment Plans/ 50% of the consideration in case of Installment Based Plans, as have been set out in terms and conditions contained in the Application Form. Since fragmentation into smaller size of Plot(s) lands may not be practicable, feasible or permissible under the relevant Revenue laws, the CUSTOMER shall have the requisite share along with other allotees/ transferees in a particulars piece of land, PEERS ALLIED CORP. LTD. shall execute/ procure execution and Registration of sale deeds/ deeds ensuring the title and interest of allottees/ transferees in the joint holdings with other registration of the relevant sale deed so as to enable PEERS ALLIED CORP. LTD. to implement this agreement during the relevant period, in the matter contemplated herein below. The right title and interest of the Customer to the land herein demised, shall remain inviolate, subject to the reciprocal rights and obligations of the customer herein and PEERS ALLIED CORP. LTD. 2. PRELIMNARY WORK (a) WHEREAS PEERS ALLIED CORP. LTD. shall carry out the preliminary work by conducting the survey, demarcation, clearing and their other related jobs/ work on behalf of the CUSTOMER. (b) WHEREAS PEERS ALLIED CORP. LTD or its nominee shall procure and install borewells, open wells and other water points and install motors, pump, sets, irrigation and main pipelines, electrical installations and temporary sheds/ structure subject to the terms and conditions laid down elsewhere in the Agreement. 3. DEVELOPMENT AND MAINTENANCE WHEREAS PEERS ALLIED CORP. LTD shall have the right to develop and maintain the SAID PROPERTY in consultation with Agro Consultants and experts, and CUSTOMER shall not ordinarily interfere, with the method and mode of development and maintenance of the SAID PROPERTY, including survey denigration, fencing, clearing, cultivation, planting and raising crops, trees, plants, saplings etc. use of fertilizers and pesticides, irrigation, harvesting and all other activities allied or incidental thereto. The customer shall have

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the right to tender suggestion in regard to the development and maintenance of the SAID PROPERTY. 4. CONSIDERATION The customer shall pay, in aggregate, sum of Rs. … Rupees … only) as per payment schedule of Plan opted for by him towards consideration for the acquisition, sale development and maintenance of the aforesaid property by PEERS ALLIED CORP. LTD. and for such other allied expenses as may be allocable, apportionable or appropriable to the SAID PROPERTY. 5. POSSESSION The Customer shall be owner in possession of the said property at all times. PEERS ALLIED CORP. LTD SHALL enter upon the said property only for the limited purposes of rendering the services of development and maintenance of the said property as per the terms of the agreement between the customer and PEERS ALLIED CORP. LTD in the regard PEERS ALLIED CORP. LTD. shall have no rights whatsoever over the said property as a manager/ tenant nor shall PEERS ALLIED CORP. LTD be deemed to be manager/ tenant. The overall security of the said property shall, however, be the responsibility of PEERS ALLIED COPR. LTD only till the expiry of the period of plan opted for by the CUSTOMER. 6. IRRIGATION SYSTEM PEERS ALLIED CORP. LTD. shall provided such irrigation system, as it may deem appropriate, which shall be part of the overall irrigation system of plans, depending upon the nature of soil, crop pattern of the SAID PROPERTY. 7. FERTILIZATION PEERS ALLIED CORP. LTD. upon planting the saplings, plants, crops, trees etc. over the aforesaid property, shall apply necessary fertilizers, pesticides etc. as it may deem appropriate. … 9. SALE OF PRODUCE Unless specifically directed by the Customer, PEERS ALLIED CORP. LTD. shall be responsible for arranging the sale of the produce, if any, out of SAID PROPERTY, on behalf of the CUSTOMER, for the purpose of arranging the sale of produce as aforesaid PEERS ALLIED CORP. LTD. shall have the sole discretion to decide as to whether the produce shall be sold to the wholesale market and/ or to semi-wholesale market, and/ or to one or more marketing company of PEERS ALLIED CORP. LTD., or may decide to sell it to any other market which PEERS ALLIED CORP. LTD. may consider appropriate for the sale of a particular grade of the produce. … 12. CUSTOMER’S OWNERHSIP OF PROPERTY The CUSTOMER shall be the absolute owner in possession of the said property and saplings, plants, trees, crops, thereon, and the produce out of it, as set out in clause 11. The CUSTOMER shall not have any claim over common facilities provided by PEERS ALLIED CORP. LTD. such as irrigation, pipelines, drainage system and electrical lines, etc. … 13. LAND TAX AND PUBLIC DUES PEERS ALLIED CORP. LTD. shall pay the and other public dues/levies, payable in respect to the SAID PROPERTY to the appropriate authorities for and on behalf of the CUSTOMER and PEERS ALLIED CORP. LTD. shall be entitled to get the same reimbursed from the CUSTOMER.

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15. WASTAGE Both PEERS ALLIED CORP. LTD. and the CUSTOMER agree that in the process of arranging for the sale of the products if any; pursuant to the aforesaid Clause 9, there will normally be percenajed of wastage at that time of harvesting, grading and handling before the delivery / sale. PEERS ALLIED CORP. LTD. 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. … 21. OPTING OUT This facility is available only under single Installment Payment Plans before the allotment of SAID PROPERTY in favour of CUSTOMER(S). Under this scheme, CUSTOMER can exercise his option to opt of plan, on his submission of a specific written request to PEERS ALLIED CORP. LTD. to that effect. The payments received under the said Plan shall be refundable immediately to CUSTOMER after deduction 10% of Consideration comprising various costs and other incidental expenses and shall be subject to the following terms and conditions…. 22. FAILURE/REFUSAL TO COMPLETE NECESSARY FORMALITIES If CUSTOMER after duly subscribing to any Plan of PEERS ALLIED CORP. LTD. fails or refuses to submit necessary documents, paper, photographs/to complete the necessary formalities and execute the documents required for the purpose of effective transfer and maintenance of the SAID PROPERTY by PEERS ALLIED CORP. LTD. the same shall be construed as case of opting out, in the event of, such failure or refusal, PEERS ALLIED CORP. LTD. shall be entitled to invoke the terms of the aforesaid clause 21, and appropriate 10% of Consideration, comprising various costs and incidental expenses. PEERS ALLIED CORP. LTD. shall give 60 days’ notice to the concerned CUSTOMER for compliance before his case is treated as a case of Opting out and dealt with accordingly. 23. 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 subsequent to the registration of the SAID PROPERTY shall become operative only after the actual registration of the said property, and that this Agreement shall stand automatically terminated upon the expiry of the period of Plan opted for by the CUSTOMER, and after such termination PEERS ALLIED CORP. LTD. shall hand over possession of the said developed property to all the customer and shall have no rights whatsoever over the said property. … 24. SALE OF DEVELOPED PROPERTY The CUSTOMER has the right to retain or sell the SAID PROPERTY, as he/ she may deem fit, on expiry of the tenure of this agreement. To facilities easy liquidity, PEERS ALLIED CORP. LTD. provides to Customer(s) the marketing service for sale of developed plots. In case of CUSTOMER decided to avail of PEERS ALLIED CORP. LTD. afforested services, he/she must notify PEERS ALLIED CORP. LTD. to the effect atleast 180 days before expiry of period of the agreement. The sale can be made only at the end of the tenure of this Agreement at such price which may be mutually agreed between the parties. Customer intending to avail PEERS ALLIED CORP. LTD. ‘Marketing Service’ for selling/ disposing off his/ her said developed property shall submit an application in writing at least 180 days before the expiry

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of the term authorizing company to sell his/ her said developed property such price as may mutually be agreed upon. … 27. CUSTODY OF TITLE DEEDS In case of joint sale deeds, the title deeds pertaining to the sale of the SAID PROPERTY shall be kept in the safe custody of Trustee(s) appointed by PEERS ALLIED CORP. LTD. for this purpose. A certified copy of the said title deed, issued by the sub-registrar or by public notary, as may be feasible or practicable shall be made available to the CUSTOMER (first Applicant only in case of joint applicants) by the said Trustee(s). The name and address of Trustee(s) shall be informed to the CUSTOMER (First Applicant only in case of joint applicants) by the letter of Allotment. The CUSTOMER shall have the liberty to verify the title deed of the office of Trustee(s) during the normal working hours on any working day after furnishing a formal written therefore 15 days in advance. …”

d. The next document is the ‘Registration Letter’. The same contains the space for

registration number, date of commencement, payment plans number and term,

consideration, plot size, date of expiry of the agreement, nominee details, instalment

amount, estimated value to be realised, etc. The ‘Registration Letter’ reads as under:

“In response to your application, we are pleased to inform you that you have been registered for the PLOT(S) booked by you as per details furnished hereunder. The terms of booking and allotment shall be governed by the terms of Agreement and General Terms and Conditions printed overleaf.”

e. Another document is the ‘Letter of Allotment of Plot(s)’. I have perused the sample

‘Letter of Allotment of Plot(s)’ 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:

“... Peers 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, Peers Allied Corp. Limited, having its registered office at … which shall be holding the same in trust. 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 during the normal working hours, after sending a formal request in writing 15 days in advance. … A sum of Rs.20000 Twenty Thousand Only Paid by you to PEERS under Cash Down Payment Plan no. SIP – 06 – 05 Has now been appropriated by PEERS towards the condition which are to be met in procuring the said property and conveying it to you, developing the same, planting the required saplings, plants, trees, crops etc. Management fees and other ancillary expenses incidental there to.”

f. I note that on February 10, 2015, during the course of personal hearing, the noticees had

submitted that the Company had executed sale deeds in favour of its customers. In this

regard, the noticees were asked to provide the copies of all the sale deeds executed in

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favour of the customers. In reply, the Company vide its letter dated March 10, 2015,

submitted only two sale deeds executed in favour of its customers. I have considered the

list of plot holders as submitted by the Company (consisting of only two plot holders

namely Mr. Vinod Kumar and Mr. Sachin Kumar Gupta) and the documents attached

with such list i.e. application form, registration letter, letter of allotment, ledger, sale deeds,

etc. of both the customers. The analysis of the same is as under:

i. As per the list of customers, Mr. Vinod Kumar had applied for the plot on September

30, 2008, for an area admeasuring 400 sq.ft. for a consideration of ₹20,000. It is seen

that the plot was allotted to him on November 15, 2010 (i.e. after more than 500

days) and the allotment number was PAN0000174. The plot number allotted to him

was B-3.

In this regard, I have seen the documents of this customer and note the following:

- The registration letter mentions the ‘estimated value to be realised’ as ₹41,000.

- The ‘letter of allotment’ bears no date and mentions the date of application as

November 15, 2010.

- The details of the land as noted from the ‘letter of allotment’ are Khasra No. –

Gata No. 591, Plot No. PAN0000174, Village- Sikandarpur, Tehsil- Koda,

District- Fatehpur, State- Uttar Pradesh.

- It is important to note that the number ‘PAN0000174’ only signifies the allotment

number and not the plot number, as argued by the Company.

- The ‘plot no. B-3’ as noted in the list of the customers was never communicated

to Mr. Vinod Kumar.

- The Company vide its letter dated May 09, 2013 (titled as IOM-05), while referring

to the allotment date i.e. November 15, 2010 had intimated Mr. Vinod Kumar

about the plot being ready for the execution of sale deed. The letter also states that

in case the customer is not willing to execute the sale deed, then at the end of the

term of the agreement the customer will be provided with the ‘estimated value to

be realised’ as mentioned on the ‘registration letter’.

- The sale deed mentions the reason for the sale of plot as requirement of funds.

Further, the sale deed finds mentions of the receipt of ₹40,000 on the date of

execution of sale deed. Whereas the customer had admittedly paid only ₹20,000

on September 30, 2008.

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- The sale deed mentions the area of plot sold to Mr. Vinod Kumar as ‘38 sq. meter’.

The description of the plot as per the sale deed is: East- road; West- 20 ft. wide

road; North- plot of Sachin; South: plot of seller.

These details do not match with the lay-out map provided by the Company for the

land bearing Khasra No. – Gata No. 591, Plot No. PAN0000174, Village-

Sikandarpur, Tehsil- Koda, District- Fatehpur, State- Uttar Pradesh. As per the

lay-out map, the description of plot number B-3 is: East- plot no. 72; West- 20 ft.

road; North- plot no. 4; South: plot no. 2.

- Further, the signature of Mr. Vinod Kumar on the application form, request for

plot registration and the sale deed are apparently different and do not match.

ii. Second customer is Mr. Sachin Kumar Gupta in whose favour the Company had

executed the sale deed. As per the list of customers, Mr. Sachin Kumar Gupta had

made eight applications for land measuring 100 sq.ft. each on March 31, 2008 and

May 31, 2008. The plots were allotted to him on November 15, 2010 (i.e. after more

than 450 days) and the allotment numbers were PAN0000104, PAN0000105,

PAN0000106, PAN0000107, PAN0000108, PAN0000109, PAN0000116 and

PAN0000117. The plot number allotted to him were B-1 and B-2. On examination

of the documents for this customer, the observations are as under:

- The eight registration letters mentions the ‘estimated value to be realised’ as

₹10,000 each.

- The ‘letter of allotment’ bears no date.

- The details of the land as noted from the respective ‘letter of allotment’ are Khasra

No. – Gata No. 591, Plot No. PAN0000104, Village- Sikandarpur, Tehsil- Koda,

District- Fatehpur, State- Uttar Pradesh. The other plot numbers are

PAN0000105, PAN0000106, PAN0000107, PAN0000108, PAN0000109,

PAN0000116 and PAN0000117.

- As noted earlier, the number ‘PAN0000104’ only signifies the allotment number

and not the plot number.

- The ‘plot no. B-1 and B-2’ as noted in the list of the customers were never

communicated to Mr. Sachin Kumar Gupta.

- The sale deed mentions the reason for the sale of plot as being more than the

requirement and to fulfil the needs of the Company. It has also been said that the

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buyer i.e. Mr. Sachin Kumar Gupta has offered the best price of the plot. Further,

the sale deed finds mention of the receipt of ₹80,000 in cash on the date of

execution of sale deed. Whereas the customer had admittedly paid only ₹40,000

for eight applications on March 31, 2008.

- The sale deed mentions the area of plot sold to Mr. Sachin Kumar Gupta as ‘75

sq. meter’. The description of the plot as per the sale deed is: East- 20 ft. wide

road; West - farm of Ajay Kumar; North - plot of seller; South: plot of seller.

These details do not match with the lay-out map provided by the Company for the

land bearing Khasra No. – Gata No. 591, Village - Sikandarpur, Tehsil- Koda,

District- Fatehpur, State- Uttar Pradesh. As per the lay-out map, the description

of plot number B-1 and 2 are: East- plot no. 73 and 74; West- 20 ft. road; North -

plot no. 3; South: 20 ft. road.

I note that the Company has executed only two (2) sale deeds for its two customers out

of its total customer base of 9,346. Peers vide letter dated August 11, 2014 had submitted

that it had mobilised ₹14,03,05,709 from 9,346 customers.

g. I have also considered the other sample documents submitted by the Company for its

customers. From the same, it is noted that the customers who had chosen to get the refund

at the end of the term, has received the ‘estimated value’ as mentioned in the ‘registration

letter’. On sample basis, I have seen the document of one Ms. Manju who had paid ₹20,000

on July 31, 2008 to the Company for a plot measuring 400 sq.yds. The ‘letter of allotment’

issued to her indicates the application date as November 15, 2010 and allotment of a plot

measuring 400 sq.ft. The document indicates the plot number as ‘PAN0000127’. Peers in

its letter dated May 09, 2013 (i.e. IOM-05), has referred the said number i.e. PAN0000127

as ‘allotment no.’ and not as plot number. The allotment date has been mentioned as

November 15, 2010 (i.e. after 800 days of making application). Vide the said letter i.e. May

09, 2013, the Company has asked the customer regarding the option to get the plot

registered or get the refund. Ms. Manju vide her undated letter (pre-printed with blanks to

be filled) requested the Company to refund the amount as per the terms of the Company.

It is noted that the Company refunded ₹41,000 (i.e. an amount equivalent to the ‘estimated

value to be realised’ as indicated in the ‘registration letter’) to Ms. Manju.

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11. Considering the 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 ‘application

form’ does not give an option to the customer to specify the location/ details of the land

they wish to apply for. The ‘application form’/ ‘registration letter’ does not provide the

location of the land where the plot will be allotted to the customers.

b. The Company allots the land much after the time specified in the application form.

c. The plot of land is not identified in the ‘application form’ and ‘registration certificate’

which are the primary documents. However, the ‘registration certificate’ indicates the

estimated value to be realised.

d. The ‘letter of allotment’ mentions the plot numbers as ‘PAN000…’. However, such plot

numbers do not match with the lay-out plan as submitted by the Company. Therefore, it

can be said that the ‘letter of allotment’ only indicates the location where the plot is allotted

and not the unique/ identifiable plot. The plot description mentioned under the field ‘plot

no.’ is the allotment no. given to the customer. Further, no proper demarcation/ map is

given with the ‘letter of allotment’ in order to identify the plot/ land.

e. The customer does not come to know about the exact plot details till the execution of the

sale deed (only two sale deeds have been executed by the Company out of its total 9,346

customers). The two sale deeds executed by the Company are miniscule, when compared

to the total number of its customers i.e. 9,346 customers.

f. The consideration for the plot in the executed sale deeds (two in numbers) were almost

similar to the ‘estimated value to be realised’ at the end of the term of agreement.

g. The ‘agreement’ and ‘application form’ 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 along with other allotees/

transferees in a particular piece of land.

h. From the details of the plans operated by Peers, 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 according

to location, however, the schemes operated by Peers suggests that the land was being sold

as a homogeneous commodity at a fixed price.

i. Further, the cost of the plot had included the cost of land, development charges, other

inputs, saplings, plants, trees, etc. However, the executed sale deeds (where the sale deed

has been executed) does not provide details of any development/ landscaping/

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maintenance and the same only speaks of payment of consideration on the date of

execution of sale deed.

j. From the letters issued by the Company (i.e. IOM-05) asking its customers to indicate

whether the customer would want to register the land in his name indicates only the area

of the plot and the allotment number. The same does not specify the plot number allotted

to the customer. The said letter of the Company also states that in case the customer is

not willing to execute the sale deed, then at the end of the term of the agreement the

customer will be provided with the ‘estimated value to be realised’ as mentioned on the

‘registration letter’.

k. Peers has extended the facility of 'opting out' only to the customers who had made the

investment under the 'single installment plan'.

l. The customer though stated to be an absolute owner of the land and in exclusive

possession of the land sold to him, he is not entitled to carry out any activity on the land

allotted to him, as the right of development and maintenance is exclusively retained by the

Company.

m. The Company has submitted the details of its total land bank as 6,67,000 sq.ft. Considering

the total of customers i.e. 9,346, each customer is eligible for only 71.26 sq.ft. (i.e.

6,67,000/ 9,346) of land.

n. The Company has not submitted the complete set of documents as the copy of the

agreement has not been placed on record.

12. 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:

- Admittedly the Company accepts the money from the investors/ customers for

subscribing to one of its plans offered for the purchase of plot. The customers by way

of an application apply for the purchase of land. The Company takes the contribution/

investments of the customers in accordance with its plans/ schemes for the purchase

of plot.

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- At the stage of ‘application form’ and ‘agreement’, 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 ‘single installment plan’ within a reasonable

period generally not exceeding 270 days. As regards, the ‘installment based plan’, the

plot had to be allotted within reasonable period generally not exceeding 90 days after

the receipt of 50% of the total amount.

- Further, the 'agreement' states that the Company is in process of ‘making

arrangements/ had made arrangements for purchasing/ procuring the land', the same

suggests that the Company till the date of agreement only makes arrangements for

purchasing/ procuring the land.

- The ‘registration letter’ issued by the Company also does not identify the plot and the

same only provides for the size of the plot and the ‘estimated value to be realised’ of

the plot which is yet to be allotted.

The Company in its replies has argued that the contributions/ payments made by the

customer were mostly accepted after identifying the plot/ land. This argument is contrary

to the clauses of the agreement wherein it has been said that ‘Whereas PEERS ALLIED

CORP. LTD. is in the process of making arrangements/ has made arrangements for purchasing/

producing the land…’. The same suggests that till the stage of accepting application and

execution of agreement the Company had only made arrangements for purchasing the

land. The same is also confirmed from the finding that the Company has a total land bank

of only 6,67,000 sq.ft. for its admitted customer base of 9,346 customer. A simple

calculation shows that the Company has only 71.26 sq.ft. land for its existing customers

whereas the minimum offered area of land as per the plans is 100 sq.ft.

These facts show that the Company pools the investment made by the customers, with an

aim/ object of carrying out the overall plan/ scheme. 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

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from such scheme or arrangement. The brochure of the Company provides for the ‘estimate

value’ at the end of the term and the ‘accidental risk coverage’ on the investment made.

The same shows that the investment/ contributions were made by the customers/

investors with a view to earn profits. The ‘registration letter’ issued by the Company also

mentions the ‘estimated value to be realised’ on the investment made.

The Company has argued that the ‘estimated value to be realised’ acts as a ‘safety net’ in

order to protect the capital investment of the customers. This argument of the Company

is also without merits as the ‘estimated value to be realised’ has been provided in the

‘registration letter’ i.e. before the issuance of allotment letter/ identifying the plot/ land.

From the above, it is clear that the customers/ investors had made the contribution/

payment to the Company with a view of earning 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 customer investing with the Company is mandatorily required to give authority

for the development and maintenance of the plot in favour of Peers, as development

is an integral part of the plan of the Company.

- As per the terms and conditions in the ‘application form’, after allotment of land, Peers

shall have the right to enter into the property allotted to the customer.

- The clauses in the ‘agreement’ states that the Company shall carryout the preliminary

work on behalf of the customer hints that the plot/ land was not managed by the

customers, at any stage of the scheme.

- The Company obtains the unconditional authority from its customers for developing

and maintaining the plot intended to be purchased by the customers. In view of the

same, it can be said that the customer does not manage his investments in the scheme

rather his investments are managed and utilized by Peers at its discretion.

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- As the contribution/ investment and the plot are managed by Peers 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.

- Further, the joint possession of the plot of land also makes it clear 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 Peers.

The Company has argued that the business of the Company is conducted as a ‘joint

venture’ whereby all the customers regularly participate in various activities and the

schemes. I note that the argument of the Company is not supported by any document to

show the schemes/ plans of the Company were in the nature of joint venture. Further, no

document has been placed on record to show that all the activities were being done by the

customers.

In this regard, I place reliance on the observations of the Hon’ble Supreme Court of India

in New Horizons Ltd. Vs Union of India [1995(1) SSC 478] regarding the nature of a joint

venture i.e. ‘The expression ‘joint venture’… connotes a legal entity in the nature of a partnership engaged

in the joint undertaking of a particular transaction for mutual profit or an association of persons or

companies jointly undertaking some commercial enterprise wherein all contribute assets and share risks. It

requires a community of interest in the performance of the subject matter, a right to direct and govern the

policy in connections therewith, and duty, which may be altered by agreement, to share both in profit and

losses.’

In the instant matter, though the Company has argued that the business is conducted as a

‘joint venture’, I find that there are no clauses providing for profit sharing or participation

in losses on the basis of ‘community of interest’ as observed by Hon’ble Supreme Court.

Further, there is no mention of any percentage of profits to those ‘joint venturers’. The

brochure only provides for the ‘estimate value’ at the end of the term and the same do not

refer to any shared control. Having considered the above, I find no merit in the argument

of the Company.

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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.

13. From the arrangement which the Company has with its customers, it is evident that the

Company solicits investments from its customers in its scheme 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.”

The scheme of the Company in taking monies from the investors and promising ‘estimated

value to be realised’ at the end of the contract would definitely fall within the ambit of

Section 11AA of the SEBI Act as held by the Hon’ble Supreme Court. It is also to be

noted that Section 11AA mentions the activities that are exempted from its operation. In

this regard, the following observations of the Hon’ble Supreme Court in of PGF Limited

& Ors. Vs. Union of India & Anrs. (supra) is relevant to be noted:

“A reading of sub-Section (3) of Section 11AA also throws some light on this aspect, wherein it is provided that those institutions and schemes governed by sub-clause (i) to (viii) of sub-Section (3) of Section 11AA will not fall under the definition of collective investment scheme. ........... Therefore, by specifically stipulating the various ingredients for bringing any scheme or arrangement under the definition of collective investment scheme as stipulated under sub- Section (2) of Section 11AA, when the Parliament specifically carved out such of those schemes or arrangements governed by other statutes to be excluded from the operation of Section 11AA, one can easily visualize that the purport of the enactment was to ensure that no one who seeks to collect and deal with the monies of any other individual under the guise of providing a fantastic return or profit or any other benefit does not indulge in such transactions with any ulterior motive of defrauding such innocent investors and that having regard to the mode and manner of operation of such business activities announced, those who seek to promote such schemes are brought within the control of an effective State machinery in order to ensure proper working of such schemes.”

I note that the activities of the Company are not exempted under the clauses under Section

11AA(3) of the SEBI Act. Further, as all the four conditions specified under Section

11AA(2) of the SEBI Act are satisfied in the present facts of the case, the schemes/ plans

promoted, launched, carried on and operated by the Company are in the nature of CIS in

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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.

14. 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.

15. Further, in terms of Regulation 4(2)(t) of the SEBI (Prohibition of Fraudulent and Unfair

Trade Practices Relating to Securities Market) Regulations, 2003, dealing in securities shall

be deemed to be a fraudulent or an unfair trade practice if it involves fraud and includes

illegal mobilization of funds by sponsoring or causing to be sponsored or carrying on or

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causing to be carried on any CIS by any person. This provision in the above 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, the Company has contravened the above said provision.

16. Liability of the Directors: I note that the interim order was issued against the Company

and its directors namely Mr. Durga Prasad Dubey, Mr. Anup Aggarwal, Mr. Ashish Kumar

Tripathi, Ms. Indu Dubey, Ms. Manju Upadhyay, Mr. Alok Tripathi, Mr. Sadhu Sharan,

Mr. Sandeep Kumar Mishra and Mr. Ajay Kumar Pandey. The details of the appointment

and resignations of the directors of the Company are as under:

Name Date of Appointment Date of Cessation

Mr. Durga Prasad Dubey 28/01/2008 13/05/2013

Mr. Anup Aggarwal 01/02/2008 18/08/2008

Mr. Ashish Kumar Tripathi 08/08/2008 04/10/2010

Ms. Indu Dubey 08/08/2008 04/02/2013

Ms. Manju Upadhyay 08/08/2008 04/02/2013

Mr. Alok Tripathi 28/01/2008 -

Mr. Sadhu Sharan 08/08/2008 04/02/2013

Mr. Sandeep Kumar Mishra 25/08/2008 -

Mr. Ajay Kumar Pandey 25/08/2008 13/05/2013

Mr. Shailesh Kumar Upadhyay 04/02/2013 -

Mr. Vishwambher Nath Dubey 04/02/2013 -

It is noted that Mr. Alok Tripathi, Mr. Sandeep Kumar Mishra Mr. Shailesh Kumar

Upadhyay and Mr. Vishwambher Nath Dubey are the present director of the Company.

Both Mr. Shailesh Kumar Upadhyay and Mr. Vishwambher Nath Dubey have been

appointed as director of the Company on February 04, 2013. Though they are not covered

vide the interim order, they would be in the capacity as present directors are under liability

to wind up the unregistered CIS activity of the Company and make refunds to the investors

and also for other remedial and preventive directions.

It is noted that the noticees namely Mr. Durga Prasad Dubey, Mr. Anup Aggarwal, Mr.

Ashish Kumar Tripathi, Ms. Indu Dubey, Ms. Manju Upadhyay, Mr. Sadhu Sharan and

Mr. Ajay Kumar Pandey had resigned from the Company on the dates as mentioned in

the table above. I note that such resignations does not absolve these from the charges

levelled in the interim order, in the light of the incorporation of the Company on January

09, 2008 and commencement of the schemes in the period during which they were the

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directors of the Company. Therefore, I have no hesitation in holding that the Company

and its directors namely Mr. Durga Prasad Dubey, Mr. Anup Aggarwal, Mr. Ashish Kumar

Tripathi, Ms. Indu Dubey, Ms. Manju Upadhyay, Mr. Sadhu Sharan and Mr. Ajay Kumar

Pandey 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.

17. 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. Peers Allied Corporation Limited [PAN: AAECP5032C] and its directors (past and

present), namley Mr. Durga Prasad Dubey [PAN: AIYPD6009L], Mr. Anup

Aggarwal [PAN: AFVPA8971N], Mr. Ashish Kumar Tripathi [PAN:

AGEPT4844K], Ms. Indu Dubey [PAN: AKYDP8151B], Ms. Manju Upadhyay

[PAN: AAZPU1224F], Mr. Alok Tripathi [PAN: AEUPT1819A], Mr. Sadhu Sharan

[PAN: AAZPU1225E], Mr. Sandeep Kumar Mishra [PAN: AXHPM2750M], Mr.

Ajay Kumar Pandey [PAN: AXLPP7767R], Mr. Shailesh Kumar Upadhyay [PAN:

ABDPU8384M] and Mr. Vishwambher Nath Dubey [PAN: AZRPD9701B] 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. Peers Allied Corporation Limited and its directors, namley Mr. Alok Tripathi, Mr.

Sandeep Kumar Mishra, Mr. Shailesh Kumar Upadhyay and Mr. Vishwambher

Nath Dubey 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

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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. Peers Allied Corporation Limited and its directors, namley Mr. Alok Tripathi, Mr.

Sandeep Kumar Mishra, Mr. Shailesh Kumar Upadhyay and Mr. Vishwambher Nath

Dubey shall not alienate or dispose off or sell any of the assets of Peers Allied Corporation

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. Peers Allied Corporation Limited and its directors (past and present), namley Mr.

Durga Prasad Dubey, Mr. Anup Aggarwal, Mr. Ashish Kumar Tripathi, Ms. Indu

Dubey, Ms. Manju Upadhyay, Mr. Alok Tripathi, Mr. Sadhu Sharan, Mr. Sandeep

Kumar Mishra, Mr. Ajay Kumar Pandey, Mr. Shailesh Kumar Upadhyay and Mr.

Vishwambher Nath Dubey 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. Peers Allied Corporation Limited and its directors (past and present), namley Mr.

Durga Prasad Dubey, Mr. Anup Aggarwal, Mr. Ashish Kumar Tripathi, Ms. Indu

Dubey, Ms. Manju Upadhyay, Mr. Alok Tripathi, Mr. Sadhu Sharan, Mr. Sandeep

Kumar Mishra and Mr. Ajay Kumar Pandey 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 Peers Allied Corporation Limited and its directors (past and

present), namley Mr. Durga Prasad Dubey, Mr. Anup Aggarwal, Mr. Ashish Kumar

Tripathi, Ms. Indu Dubey, Ms. Manju Upadhyay, Mr. Alok Tripathi, Mr. Sadhu

Sharan, Mr. Sandeep Kumar Mishra, Mr. Ajay Kumar Pandey, Mr. Shailesh Kumar

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Upadhyay and Mr. Vishwambher Nath Dubey to comply with the above directions,

the following actions shall follow:

- Peers Allied Corporation Limited and its directors (past and present), namley,

Mr. Durga Prasad Dubey, Mr. Anup Aggarwal, Mr. Ashish Kumar Tripathi, Ms.

Indu Dubey, Ms. Manju Upadhyay, Mr. Alok Tripathi, Mr. Sadhu Sharan, Mr.

Sandeep Kumar Mishra and Mr. Ajay Kumar Pandey 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 17(f) above, till all the Collective Investment Schemes of Peers Allied

Corporation 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 initiate proceedings against Mr. Shailesh Kumar Upadhyay and Mr.

Vishwambher Nath Dubey (who joined the board in the year 2013 and not covered

under the interim order) for appropriate directions including directions restraining him

from accessing the securities market and prohibiting him from buying, selling or

otherwise dealing in securities market for an appropriate period

- SEBI would make a reference to the State Government/ Local Police to register a civil/

criminal case against Peers Allied Corporation 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, Peers Allied Corporation Limited.

- SEBI shall initiate attachment and recovery proceedings under the SEBI Act and rules

and regulations framed thereunder.

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

19. 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 Peers Allied Corporation

Limited and its directors, namley Mr. Durga Prasad Dubey, Mr. Anup Aggarwal,

Mr. Ashish Kumar Tripathi, Ms. Indu Dubey, Ms. Manju Upadhyay, Mr. Alok

Tripathi, Mr. Sadhu Sharan, Mr. Sandeep Kumar Mishra, Mr. Ajay Kumar Pandey,

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Mr. Shailesh Kumar Upadhyay and Mr. Vishwambher Nath Dubey, including other

persons who are in default, for the violations as found in this Order.

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

necessary action.

DATE : March 14, 2016 PRASHANT SARAN PLACE : Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA

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