WTM/SR/ CIS/WRO-ILO/127/06/2015 BEFORE THE SECURITIES … · 2018-08-16 · Page 3 of 16 h) Copy of...

of 16

WTM/SR/ CIS/WRO-ILO/127/06/2015

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA, MUMBAI

CORAM: S. RAMAN, 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 respect of

M/s IPN Developers & Allied Limited (PAN:AADCI0486L) and its Directors/Promoters viz.

Mr. Nageshwar Panchal (PAN:ALTPP5193K), Mr. Dilip Devda (PAN:BIGPD0520B), Mr.

Shankar Lal Yadav (PAN:AGOPY4099F), Mr. Hari Singh (PAN:DQZPS1931J), Mr. Rajesh

Panchal (PAN:BRDPP6591G) and Mr. Dashrath Singh Panwar (PAN:ASHPP0730D)

____________________________________________________________________________

1. Securities and Exchange Board of India (hereinafter referred to as "SEBI") received a letter dated

April 01, 2014, alleging illegal mobilization of funds by M/s IPN Developers & Allied Limited

(hereinafter referred to as “IPN Developers"/the company). The complainant also forwarded

copies of documents viz.,

Copy of a "certificate" issued by IPN Developers,

Copy of "brochure" containing various payment plans in respect of the scheme offered by the

company.

2. As a matter of preliminary inquiry into the alleged mobilization of funds by IPN Developers, SEBI,

vide letter dated May 05, 2014, inter alia sought the following information in relation to its business

activities, viz.-

a) Copies of Memorandum and Articles of Association of IPN Developers,

b) Details of past and present directors of the company including name, addresses, PAN and

contact details (email/fax/contact no.) of the Directors.

c) Brochures pertaining to scheme/plan made available to the public.

d) Copies of application forms that are required to be submitted by investors to participate

in the scheme.

e) Sample copies of the agreement letter/contract required to be entered into by

investor/applicant under the scheme.

of 16

f) Details of the scheme wise amount mobilized by IPN Developers till date along with the

number of investors under the scheme,

g) Names and addresses of all investors in the scheme,

h) List of all branches along with addresses,

i) Certified copy of audited financial statements for the FY 2012-13, detailed trial balance

for FY 2013-14,

j) Copy of income tax return filed by the company for FY 2012-13,

k) Details of any other similar scheme(s), if any, floated by IPN Developers or

group/associate company or other companies in which Directors of IPN Developers are

also Directors,

2.1 The documents forwarded by the complainant, viz. copies of certificate and brochure alleged to

have been issued by IPN Developers, were also enclosed along with the aforesaid letter dated

May 05, 2014.

2.2 IPN Developers vide letter dated June 28, 2014 submitted:

".. IDAL [IPN Developers] accepted amounts against booking from interested buyers ,

Plot of land shall be registered in the name of buyer on receiving full consideration.......

2.2.1 Vide the aforesaid letter the company also furnished the following documents:

a) Copies of Memorandum and Articles of Association (MoA and AoA) of IPN Developers

as filed with the Registrar of Companies,

b) Details of past and present directors of the company,

c) A document containing a payment plan offered by IPN Developers viz. "IPN Project A

Plan R/I 5 years" ,

d) Sample copy of “Application form for provisional Allotment of a plot”,

e) Sample copy of “Allotment Letter”,

f) Sample copy “Agreement to Sell” ,

g) Details of amount mobilized by IPN Developers for the "scheme -1 Project "A" from 30

investors ,

of 16

h) Copy of the list containing the details of the said 30 investors,

i) Details of their branch office with address,

j) Certified copy of audited financial statements for FY 2012-13 and 2013-14,

k) Copy of Income Tax return for FY 2012-13.

2.3 Subsequently, SEBI vide letters dated July 22, 2014 and July 31, 2014, required the company to

furnish following additional documents/information and clarifications in respect of the aforesaid

documents/ information already submitted by IPN Developers, vide their letter dated June 28,

2014:

Copy of the original "Brochure" pertaining to the scheme as the document forwarded by IPN

Developers did not contain all the payment plans,

To offer their comments on the documents (certificate and brochure) forwarded by the

complainant, which contains the payment plans in respect of the scheme offered by the

company, viz. 1 year CP plan A, 2 year CP plan B, 3 year CP plan C, 4 year CP Plan D, 5 year

CP plan E, 12 year CP plan F, 5 year RI plan 1, 5 year 6 month RI Plan2, 6year RI plan 3, 6

year 3 month RI Plan 4, 7 year 6 month Plan 5, 10 year RI-6, One time plans 5 year 5 month

LP 1, 8 year 5 months LP 2, 11 year LP plan 3, 16 years 6 months LP 4, 21 years 6 months

LP 5.,

Copies of certified true copies of application forms, allotment letters and agreements

executed between the company and the investors of the scheme,

To offer its comments as the details of the complainant (who had invested in plan monthly

R1) along with the certificate No. 001R10006135 dated November 16, 2013 (alleged to have

been issued by the company) which has been duly forwarded to the company along with

SEBI letter dated May 05, 2014, was not appearing in the data containing the list of investors

forwarded by the company. IPN Developers is called upon to provide complete list of

investors of various plans of the scheme,

Complete information of all the branches and Customer Service Centres of IPN Developers

across India,

To provide the names and addresses of all the agents and also the details of commission paid

to them during 2012-13 and 2013-14, including the commission structure for the agents,

Copy of detailed trail balance from April 2014 till date,

of 16

The company in its letter dated June 28, 2013 stated IDAL bought tracts of land initially and

continues to acquire and create a huge land bank.......then develop it and sell it in small chunks to buyers.

Further, with regard to the details of scheme wise amount mobilized by the company till date

(sought by SEBI letter dated May 05, 2014), the company replied that till date they have

mobilized an amount of ` 3,61,700/- from 30 customers for "Scheme-I, Project A" located at

Barkhedakalan.

In this regard, IPN Developers was required to provide the following

documents/information:

i. Title deeds of the property stated to have owned by the company,

ii. Whether IPN Developers is registered with local state government of Madhya Pradesh,

as builder/real estate developer, for developing the aforesaid property located at

Barkhedakalan, If yes, provide the copy of same,

iii. The details of development activities carried out by the company from date of

purchase till date.

2.4 In response to this, IPN Developers, vide letter dated July 30, 2014 sought 30 days time to

provide documents/information sought by SEBI. SEBI, vide letter dated August 01, 2014,

advised the company to provide the requisite data by August 07, 2014. Copies of the said letter

were also marked to all the directors of the company. However, till date the company and the

directors have not furnished the required data/documents sought by SEBI.

3. I have carefully perused the documents and materials available on record such as, correspondence

exchanged between SEBI and IPN Developers along with the documents contained therein; the

submissions made by IPN Developers, etc. The issue for determination in the instant matter is

whether the mobilization of funds by IPN Developers is a „collective investment scheme‟ in accordance

with Section 11AA of the SEBI Act, 1992 (hereinafter referred to as "SEBI Act").

3.1 On an examination of the material available on record, it is prima facie observed that:

i. IPN Developers & Allied Limited (CIN U70101MP2012PLC029241) was incorporated on

September 18, 2012 and the registered office of the company is situated at: 1st floor, Reliable

trade Centre, T.I.T, 80-Station Road, Ratlam (MP) - 457 001.

of 16

ii. The present directors of the company are Mr. Nageshwar Panchal, Mr. Dilip Devda, Mr.

Shankar Lal Yadav and Mr. Harish Singh. Past directors of the company are Mr. Rajesh Panchal

and Mr. Dashrath Singh Panwar

iii. As per the MoA, the main objects of IPN Developers include "to act as builders, promoters and

developers of land, building, building sites, townships and other building complexes and to undertake and execute

building complexes........"

iv. IPN Developers collects funds towards "advances towards booking of land units/plots", which the

company proposes to develop from the public through various payment plans,. As per the copy

of the brochure forwarded by the complainant, the payments plans are as under:

Single Installment Plans (One Time Plan-5 Year 5 Month LP-1, 8 Year 5 Month LP-2, 11 Year

LP -3, 16 Year 6 month LP-4, 21 Year 6 Month LP-5)

Instalment Plans (1 yr CP Plan-A, 2 yr CP Plan-B, 3 Year CP Plan-C, 4 yr CP Plan-D, 5 yr

CP Plan-E and 6 yr CP plan-F, 5 yr RI Plan-1, 5.6 yrs RI Plan-2 and 6 yr RI Plan-3.)

One of the plans (as furnished by the company) is reproduced below:

IPN Project "A" RI1 5 years

S.No Size of Plot (sq.ft)

Plot Rate Sq.ft (Rs)

Cost of Plot

Installment (Rs) Appreciated Value (Rs)

MLY QLY HLY YLY

1 100 350 35000 100 295 580 1150 8600

2 100 350 35000 200 590 1170 2300 17200

3 100 350 35000 300 885 1760 3450 25800

4 100 350 35000 400 1180 2350 4600 34400

5 100 350 35000 500 1475 2940 5750 43000

6 200 350 70000 600 1770 3530 6900 51600

7 200 350 70000 700 2065 4120 8050 60200

8 200 350 70000 800 2360 4710 9200 68800

9 200 350 70000 900 2655 5300 10350 77400

10 200 350 70000 1100 2950 5890 11500 86000

11 300 350 105000 1200 3245 6480 12650 94600

12 300 350 105000 1300 3540 7070 13800 103200

13 300 350 105000 1400 3835 7660 14950 111800

14 300 350 105000 1500 4130 8250 16100 120400

15 300 350 105000 1600 4425 8840 17250 129000

16 600 350 210000 1700 4720 9430 18400 137600

17 600 350 210000 1800 5015 10020 19550 146200

18 600 350 210000 1900 5310 10610 20700 154800

19 600 350 210000 2000 5605 11200 21850 163400

20 600 350 210000 5900 11790 23000 172000

of 16

v. The investors who are interested in the said scheme offered by IPN Developers are made to enter

into an "Agreement" with it after filing an "Application Form for Provisional Allotment of Plot".

Following clauses are noted from the "Application Form for Provisional Allotment of Plot" available on

record -

"I, the undersigned hereby request that a plot of land may be allotted in your project at ............... as per the

company's terms and conditions which I have read, understood and agreed to abide by, as stipulated by your

company.

I have signed the terms and condition attached to this application form and further agree to sign

and execute the necessary agreements as and when required by the company.

I hereby remit a sum of Rs._______________ vide bank draft ____________ drawn on

__________ in favor M/s.IPN Developers and Allied Limited payable at......................, which may

please be treated as advance towards sale consideration. "

Details of plot to be purchased

Plot No................................ Type of Plot............................ Block......................

Area................ Sq.ft.......................... sq.mtr............................ Basic price Rs................... per

sq.ft./Rs.................................... per sq.ft.............. Approx............... PLC Rs................ others (if any)

Rs....................... Booking: Director through dealer/Agent...........................

Terms and Conditions

"The company shall allot the land to the Applicant/Allottee/Buyer at the time of booking.

In case, the payments of installments for the plot are delayed, the Applicant/Allottee/Buyer(s) shall

pay interest on delayed payments @ 12% per annum...., without prejudice to teh company's right to

cancel the allotment.

Registered sale deed will be executed only after receiving full consideration of plot along with the late

payment (if any).

Possession of the land will be on the same day as of the registration of sale deed.

The applicant shall have no right to nominate or assign his right under the provisional allotment to

any person....without prior approval of the company, who may, in its sole discretion, permit the same

on such terms and conditions as it may deem fit "

Payment Plan

Installment will be as per the installment payment plan, Plan No.......

of 16

Please note-

Prices are subject to revision any time at the discretion of the company. Price ruling on the date of

booking and acceptance by the company shall be applicable"

vi. After filing of application form and making payment, as per the payment plan opted by the

investor, the company issues "Allotment Letter' to the investors, allotting, provisionally, the plot

described in the said letter to the investors. The sample "Allotment Letter" forwarded by the

company contains the following information,

Plot No,

Plot Size ,

Plot Type,

Khasra No., Village ,

District ,

State.

Following are the clauses noted from the "Allotment Letter",

"IPN Developers and Allied Limited hereby provisionally allots you, the following plot of land :

Please note that the company shall execute the Sale Deed in respect of this allotment only after receipt of full

consideration as per the plan agreed upon."

Terms and Conditions

The company shall allot the land to the Applicant at the time of booking,

Registered sale deed will be executed only after receiving full consideration of plot along with the late payment (if

any),

The applicant/allottee/buyer shall have no right to nominate or assign his right under the provisional allotment to

any person....without prior approval of the company, who may, in its sole discretion, permit the same on such terms

and conditions as it may deem fit "

vii. It is observed that the sample copy of the 'Agreement to Sell' furnished by IPN Developers appears

to be private agreement with the purchaser and has not been registered. It is noted that company

has not provided the copies of 'Agreement"/contract executed with its "purchasers"/ investors for

investing in the scheme offered by the company.

of 16

viii. On perusal of the contents of certificate furnished by the complainant, who is a

purchaser/investor in the schemes of IPN Developers, the following details are noted:

Certificate Date of commencement

Plan No./ Term

Mode of payment

Consideration amount

Installment of subscription payment

Subs. due date

Expected sum payable on expiry of term

Dt of last pmt

Expiry date

No. of units

16/11/13 R1 MLY 30000 500 16/12/13 43,000 16/10/18 16/11/18

5

* 10% bonus will be paid on consideration amount of regular instalment is not lapsed.

ix. It is relevant to note that the copy of the "brochure" furnished by the complainant containing the

details of various plans (Single and Installment plans) offered by the company, contains the copy

of "Certificate of Incorporation" of the IPN Developers issued by RoC, M.P. and also copy of the

PAN Card of IPN Developers.

x. IPN Developers, vide their letter dated June 28, 2014 submitted that it had collected money

(amount of Rs. 3,61,700/) from 30 investors. On verification, we find that the name of the

complainant is not included in the list furnished by the company, casting doubt on the credibility

of the list of investors furnished by the company. This is further strengthened by the fact that the

company failed to give clarification on the same, despite being required to do so.

xi. On analyzing the information furnished by IPN Developers vis a' vis the material available on

record furnished by the complainant, it is observed as under:

The brochure furnished by the complainant contains details of about 12 "Installment

Payment Plans" and 5 "Single Installment Plans" (as observed in Paragraph No. 3.1 (iv)

above). However, the copy of brochure furnished by the company mentions only One

plan, viz. "Pan RI- 5 Years",

The name of the complainant is not included in the list of investors furnished by the

company.

The company failed to provide clarification on the aforesaid two issues, despite being

asked to do so.

of 16

xii. In the facts and circumstances as mentioned above coupled with the failure on the part of the

company to furnish the complete information/documents and clarifications sought by SEBI

indicate that the company is concealing the material facts pertaining to the true nature and

structure of various schemes/plans, tenure of plans, scale of operations of the company, total

number of investors, total amount collected etc.

xiii. On perusal of the Balance Sheets pertaining to FY 2011-12, 2012-13 ad 2013-14, the

following is noted -

Liabilities 31.03.12 (Amount Rs.)

31.03.13 (Amount Rs.)

31.03.14 (Amount Rs.)

Advance for booking of plots

Nil

Nil

3,23,400

Total Nil Nil 3,23,400

4. The aforementioned features of the so-called "Purchase/sale and development of land” by IPN Developers

appear to be a "scheme". In view of this, the aforementioned details of the scheme offered by IPN

Developers, have to be considered in light of Section 11AA of the SEBI Act. The aforesaid Section

11AA, which provides for the conditions to determine whether a scheme or arrangement is a „collective

investment scheme‟, reads as follows:

“(1) Any scheme or arrangement which satisfies the conditions referred to in subsection (2) or [sub-section (2A)]

shall be a collective investment scheme.

Provided that any pooling of funds under any scheme or arrangement, which is not registered with the Board or is

not covered under the exemptions from CIS sub-section (3), involving a corpus amount of one hundred Crore

rupees or more shall be deemed to be a collective investment scheme.

(2) Any scheme or arrangement made or offered by any person under which,

(i) the contributions, or payments made by the investors, by whatever name called, are pooled and utilized solely

for the purposes of the scheme or arrangement;

(ii) the contributions or payments are made to such scheme or arrangement by the investors with a view to receive

profits, income, produce or property, whether movable or immovable from such scheme or arrangement;

(iii) the property, contribution or investment forming part of scheme or arrangement, whether identifiable or not, is

managed on behalf of the investors;

of 16

(iv) the investors do not have day to day control over the management and operation of the scheme or

arrangement.”

4.1 In the context of the abovementioned Section 11AA of the SEBI Act, the schemes/plans offered by

IPN Developers, is examined as under:

i. The contributions, or payments made by the investors, by whatever name called, are

pooled and utilized solely for the purposes of the scheme or arrangement.

IPN Developers collects funds from the public towards its scheme for the "Purchase/Sale and

development of land" through various plans as detailed in the Paragraph No. 3.1 (iv). The financial

statements furnished by the company also indicates that the funds received from investors are

pooled together under the head “Advance for booking of plots”. From the balance sheet for the year

2013-2014, it can be seen that the company has collected a sum of `3,23,400/- as advances for

booking of plots. The balance sheet also states that the company had acquired land worth

`3,14,500/-. However, IPN Developers have not submitted any land documents proving

ownership of land acquired, despite being given many opportunities to do so. It is observed that

the land is allotted by way an "Allotment Letter" after the receipt of initial payment/instalment as

per the plan opted by the "purchaser"/investor. As per the terms and conditions of the allotment

letter the registered sale deed will be executed only after receiving full consideration. It is also

noted from the terms and conditions mentioned in the sample copy of "Application Form for

Provisional Allotment of a Plot" (furnished by the company) that the prices are subject to revision

any time at the discretion of the company. It is further noted from the "Certificate" issued by the

company (provided by the complainant) does not contain any details of the location of the plot.

It is, therefore not clear, as to when the plot/land would be transferred to the

"Purchaser"/investor (by way of a sale deed) and also at what price the plot would be sold to the

investors. It is also noted that till date the company has not furnished the registration documents

in respect of land/property located at Barkhedakalan, which was stated to have been allotted to

30 investors by the company (as per the List of "Purchasers"/investors furnished by the company

to SEBI), despite being asked to do so. This indicates that the so-called "allotment of land" is a

mere ruse created to show that the company is doing land transactions. The funds are collected

from the general public and are pooled for the purpose of the scheme offered by the company,

which offers an "expected sum payable"/return at the end of the term. It is, therefore observed that

of 16

IPN Developers was pooling money, from general public, solely for the purpose of the

schemes/plans. Hence, the instant "scheme"/plan satisfies the first condition stipulated in Section

11AA(2)(i) of the SEBI Act.

ii. The contributions or payments are made to such scheme or arrangement by the

investors with a view to receive profits, income, produce or property, whether movable

or immovable from such scheme or arrangement.

It is observed from the clauses/contents in the "Certificate" furnished by the complainant and the

details of a payment plan provided by IPN Developers that the schemes/plans offers assured

return upon maturity of plan. For instance, in case of "IPN Project A Plan R 1- 5 Years", if the

"purchaser"/investor invest in "Monthly Instalment plan", where the "Cost of Plot" is mentioned as

`35000/-the investor has to pay ` 100/- as monthly instalment for a period of 5 years. After the

expiry of the agreed period, he/she would receive an amount of ` 8,600/- as "appreciated value of

plot"/expected sum payable/return over and above the "Cost of plot" which is Rs. 35,000/-, i.e the

investor is entitled for an amount of Rs. 43,600/-. It is also noted from the copy of the brochure

forwarded by the complainant (containing the various payment plans in respect of the scheme

offered by the company) that the payment plans provides for "appreciated value"/profit/return at

the end of the term period, against each payment option. In light of the above, it is prima facie

observed that the investment is made with a view to receive profit/property, whether movable or

immovable, derived out from the scheme or arrangement. Hence, the second condition, which

stipulates that the contributions or payments are made to such scheme or arra

ngement by the investors with a view to receive profits, income, produce or property as

stipulated in Section 11AA (2) (ii) of the SEBI Act is also fulfilled.

iii. The property, contribution or investment forming part of scheme or arrangement,

whether identifiable or not, is managed on behalf of the investors and

iv. The investors do not have day-to-day control over the management and operation of the

scheme or arrangement.

It is apparent from the information available on record that IPN Developers was collecting

money from public at large in the name selling of plots under its scheme. The investments made

by "purchaser"/investor are solely managed by IPN Developers. At the end of the agreement

of 16

period, the "Purchasers"/investors are entitled to get an amount as "expected sum

payable"/return/profit. The terms and conditions (in the "Application Form") further states that

the prices are subject to revision any time at the discretion of the company, which indicates that

the company has the unilateral authority to change the price of the land/plot at any time.

It is therefore, evident that IPN Developers solely manages the investments on

behalf of "purchasers"/investors and the investors do not have day-to-day control over the

management and operation of the 'Scheme'. It is therefore, clear that the instant schemes/plans

satisfy the conditions stipulated in Section 11AA(2)(iii) & (iv)of the SEBI Act.

5. From the above analysis, it is thus apparent that the "scheme"/plan offered by IPN Developers with a

resultant promise of returns when considered in light of peculiar characteristics and features of such

scheme, as discussed in the preceding paragraphs, prima facie satisfies all four conditions specified in

Section 11AA (2) of the SEBI Act. Thus, it can be concluded that IPN Developers is engaged in the

fund mobilizing activity from public, which is in the nature of a „collective investment scheme‟ as defined in

Section 11AA of the SEBI Act.

6. In this context, it is relevant to refer to the observations of the Hon'ble Supreme Court of India in

the matter of P.G.F Limited & Ors. vs. UOI & Anr. (MANU/SC/0247/2013), wherein the

Hon’ble Court had occasion to adjudge on a scheme having features similar to the instant Scheme

towards " Purchase/sale and development of land”, as a 'collective investment scheme' under Section 11AA of the

SEBI Act. The Hon'ble Supreme Court of India had observed that:

“A conspectus consideration of the scheme of development of the land purchased by the customers at the instance of the

PGF Limited and the promised development under the agreement disclose that there was wholesale uncertainty in the

transactions to the disadvantage of the investor concerned. ……..PGFL under the guise of sale and development of

agricultural land in units ....offered to develop the land by planting plant, trees etc. and thereby the customers were

assured of a high amount of appreciation in the value of the land after its development and attracted by such

anticipated appreciation in land value, which is nothing but a return to be acquired by the customers after making the

purchase of the land based on the development assured by the PGF Limited, part with their monies in the fond hope

that such a promise would be fulfilled after successful development of the bits of land purchased by them.

.………Apart from the sale consideration, which is hardly 1/3rd of the amount collected from the customers, the

remaining 2/3rd is pooled by the PGF Limited for the so called development/improvement of the land sold in

multiples of units to different customers. Such pooled funds and the units of lands are part of such

scheme/arrangement under the guise of development of land. It is quite apparent that the customers who were attracted

by such schemes/arrangement invested their monies by way of contribution with the fond hope that the various

of 16

promises of the PGF Limited that the development of the land pooled together would entail high amount of profits in

the sense that the value of developed land would get appreciated to an enormous extent and thereby the customer would

be greatly benefited monetarily at the time of its sale at a later point of time. …... 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.”

7. In terms of Section 12(1B) of the SEBI Act, "no person shall sponsor or cause to be sponsored or cause to be

carried on a 'collective investment scheme' unless he obtains a certificate of registration from the Board in accordance with

the regulations”. Regulation 3 of the SEBI (Collective Investment Schemes) Regulations, 1999

(hereinafter referred to as "CIS Regulations") provides that no person other than a Collective

Investment Management Company which has obtained a certificate under the said regulations shall

carry on or sponsor or launch a 'collective investment scheme'. 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. In the instant case, the

scheme/plan offered by IPN Developers by way of " Purchase/sale and development of land” is nothing

but a smokescreen for its fund mobilizing activity, which squarely falls under the definition of 'collective

investment scheme'. Such fund mobilizing activity by IPN Developers is without obtaining certificate of

registration from SEBI, contravening the provisions of Section 12(1B) of the SEBI Act and

Regulation 3 of the CIS Regulations.

8. It is further noted that Mr. Nageshwar Panchal, Mr. Dilip Devda, Mr. Shankar Lal Yadav and Mr.

Harish Singh are the present directors of the company and Mr. Rajesh Panchal and Mr. Dashrath

Singh Panwar are past directors of the company. The activity of illegal mobilization of funds by

sponsoring or causing to be sponsored or carrying on or causing to carry on any collective investment

scheme by any person amounts to a fraudulent practice in terms of Regulation 4(2)(t) of SEBI

(Prohibition of Fraudulent and Unfair Trade Practices relating to securities Market), 2003.

Considering the fact that no prior registration was obtained by IPN Developers in respect of the

aforesaid activities in the nature of 'collective investment scheme', thus it can be viewed that IPN

Developers and its directors/promoters are illegally mobilizing funds from the public, which prima

of 16

facie amounts to a fraudulent practice in terms of Regulation 4(2) (t) of the SEBI (Prohibition of

Fraudulent and Unfair Trade Practice Relating to Securities Market) Regulations, 2003.

9. SEBI vide letters dated May 05, 2014, July 22, 2014 and reminders, vide letters dated June 19, 2014,

July 31, 2014 etc. advised IPN Developers to respond to the preliminary inquiry conducted by SEBI.

However, on all these occasions, IPN Developers deliberately avoided to furnish the relevant

information/documents such as the original brochure, certified true copies of agreement, allotment

letter and application form and the registration documents in respect of the property stated to have

been allotted to the investors. The company also failed to furnish the entire list of the schemes

offered (as noted in Paragraph No. 3.1 (ix)). As already noted in Paragraph No. 3.1 (x)), IPN

Developers' list did not include the name of the complainant, casting serious doubt on the veracity

and reliability of even the documents furnished by them.

In these circumstances, I am of the view that non-co-operation on the part of IPN

Developers with the preliminary inquiry conducted by SEBI, when considered in the light of the

abovementioned prima facie findings, lead to the inescapable conclusion that such refusal to furnish

the full information sought by SEBI was only to conceal the full details regarding the total number of

investors, total amount mobilized, the true nature and operation of the fund mobilizing activity etc..

10. Protecting the interests of investors is the first and foremost mandate for SEBI. Under the

circumstances, SEBI has to take immediate steps to prevent activities of companies or entities

defrauding investors and damaging the orderly development of the securities market. In order to

ensure that IPN Developers and its directors/promoters do not collect any further funds under its

schemes and to safeguard the assets/property acquired by IPN Developers and its

promoters/directors from the funds of the investing public until full facts and materials are brought

about and a final decision is taken in the matter, it becomes necessary for SEBI to take urgent

preventive action by way of an interim measure. In the light of the same, I find no other alternative

but to take recourse through an interim measure against IPN Developers and its

promoters/directors.

11. In view of the above, I, in exercise of the powers conferred upon me under Section 11(4) and 11B of

the SEBI Act, 1992 and Regulation 65 of CIS Regulations, hereby direct M/s IPN Developers &

Allied Limited (PAN:AADCI0486L) and its Directors/Promoters viz. Mr. Nageshwar Panchal

of 16

(PAN:ALTPP5193K), Mr. Dilip Devda (PAN:BIGPD0520B), Mr. Shankar Lal Yadav

(PAN:AGOPY4099F), Mr. Hari Singh (PAN:DQZPS1931J), Mr. Rajesh Panchal

(PAN:BRDPP6591G) and Mr. Dashrath Singh Panwar (PAN:ASHPP0730D):

a. not to collect any fresh moneys from investors from its existing scheme;

b. not to launch any new scheme/plan or float any new companies/firm to raise fresh moneys;

c. not to dispose of any of the properties or alienate the assets of the existing scheme;

d. not to divert any funds raised from public at large, kept in bank account(s) and/or in the custody of the

company;

e. to immediately submit the full inventory of the assets owned by IPN Developers out of the amounts collected from

the "purchasers"/investors under its existing schemes;

f. to furnish all the information sought by SEBI, including,

i. Copies of all the documents pertaining to the scheme, issued to the investors including the

document/agreement executed with the investors,

ii. scheme -wise list of investors as on date and their contact numbers and addresses,

iii. the details of amount mobilized till date,

iv. the details of amount refunded till date along with the details of mode of payment, duly certified by a

CA,

v. Copies of the registration documents/sale deed in respect of all the land/properties purchased by IPN

Developers including the one located at Barkhedakalan,

vi. all documents/information and clarifications sought by SEBI, vide letters dated May 05, 2014, and

July 22, 2014 and not yet submitted.

12. The above directions shall take effect immediately and shall be in force until further orders.

13. This Order shall also be treated as a show cause notice. IPN Developers and its abovementioned

Directors may show cause as to why appropriate directions under the SEBI Act and CIS Regulations

including directions, prohibiting them from buying, selling or otherwise dealing in securities market,

either directly or indirectly, in any manner whatsoever, for a particular period and/or for refunding

the investors, any money/assets collected from them under the scheme along with the requisite

interest and for winding up of such plans/schemes in terms of Regulations 65 and 73 of the CIS

Regulations should not be issued against them.

of 16

14. M/s IPN Developers & Allied Limited. and its abovementioned Directors shall, within 21 days from

the date of receipt of this Order, file their reply, if any, to the prima facie observations made herein.

M/s IPN Developers & Allied Ltd. and its Directors may also indicate, in such reply, whether they

wish to avail an opportunity of personal hearing in the matter.

Place: Mumbai S. RAMAN Date: June 22, 2015 WHOLE TIME MEMBER

SECURITIES AND EXCHANGE BOARD OF INDIA

WTM/SR/ CIS/WRO-ILO/127/06/2015 BEFORE THE SECURITIES … · 2018-08-16 · Page 3 of 16 h) Copy of...

Documents

Transcript of WTM/SR/ CIS/WRO-ILO/127/06/2015 BEFORE THE SECURITIES … · 2018-08-16 · Page 3 of 16 h) Copy of...