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WTM/PS/131/IMD-CIS/WRO-II/ILO/JAN/2016

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
and regulation 65 of the SEBI (Collective Investment Schemes) Regulations, 1999
In the matter of Suvidha Farming and Allied Limited
In respect of
S. No.
Name
1
Suvidha Farming and
Limited
2
Vinod Kumar Shankhwar
3
Rajendra Karn Rajpoot
4
Pardeshi Ram
5
Jagdish Bisvas
6
Rajneesh Dutta

CIN/DIN
Allied U01400MP2010PLC023082

PAN
AAOCS5986Q

02444432
02444466
03118992
03119157
06736734

ATNPS4287P
AJAPR9252L
AVGPS2415J
AOWPB8544E
ALEPD7075R

Date of hearing: July 10, 2015


Appearance:
For the noticees:
1. Mr. G. Kumar, Chartered Accountant and Mrs. Purnima Gupta, Advocate appeared on behalf of the
Suvidha Farming and Allied Limited, Mr. Vinod Kumar Shankhwar, Mr. Rajendra Karn
Rajpoot and Mr. Pardeshi Ram.
2. Noticee, Mr. Jagdish Biswas appeared in-person.
For SEBI:
1. Mr. Piyoosh Gupta, Regional Director, WRO
2. Dr. Deepali Dixit, Assistant General Manager
3. Mr. T. Vinay Rajneesh, Assistant General Manager
4. Mr. Piyushkumar Mahajan, Manager

1.

Securities and Exchange Board of India (SEBI), vide ex-parte interim Order dated February

12, 2015 (the Order), prima facie observed that the fund mobilization activity of the company,
Suvidha Farming and Allied Limited (the Company or SFAL) is a Collective Investment

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Scheme in terms of section 11AA of the Securities and Exchange Board of India Act, 1992 (the
SEBI Act). It was alleged that the Company did not obtain a certificate of registration as required
under section 12(1B) of the SEBI Act and regulation 3 of the SEBI (Collective Investment Schemes)
Regulations, 1999 (the CIS Regulations) and regulation 4(2)(t) of the SEBI (Prohibition of
Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 ("the PFUTP
Regulations").
2.

In order to protect the interest of investors who had subscribed to such schemes launched

and carried out by the Company and also to prevent the Company and its directors from further
carrying with their fund mobilization activity in the nature of CIS without registration from SEBI, the
following directions were issued vide the Order:
22. In view of the foregoing, I, in exercise of the powers conferred upon me under Sections 11(1), 11B and
11(4) of the SEBI Act, 1992 read with Regulation 65 of CIS Regulations and PFUTP Regulations, hereby
direct SFAL and its Directors viz., Shri Vinod Kumar Shankhwar (DIN: 02444432;
PAN:ATNPS4287P), Shri Rajendra Karn Rajpoot (DIN:02444466; PAN:AJAPR9252L), Shri
Pardeshi Ram (DIN:03118992; AVGPS2415J), Shri Jagdish Bisvas (DIN:03119157) and Shri
Rajneesh Dutta (DIN: 06736734; PAN:ALEPD7075R):

not to collect any fresh money from investors under its existing schemes;

not to launch any new schemes or plans or float any new companies to raise fresh moneys;

not to dispose of or alienate any of the properties/ assets including land/gold acquired directly or
indirectly through the money raised by SFAL;

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

to furnish all the information/details sought by SEBI within 15 days from the date of receipt of this
order.
23.

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

24.
This order is without prejudice to the right of SEBI to take any other action that is deemed fit to be
initiated against SFAL and its Directors in accordance with law.
3.

The Order advised the Company and its directors to file their response and also to indicate

whether they wish to avail personal hearing. For convenience, the Company and its directors Mr.
Vinod Kumar Shankhwar, Mr. Rajendra Karn Rajpoot, Mr. Pardeshi Ram, Mr. Jagdish Bisvas and Mr.
Rajneesh Dutta, are collectively referred as noticees.

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4.

The Company, vide an undated letter (received in SEBI on March 03, 2015) made the

following submissions:
(a) The Company had stopped collection of money under its schemes since January 31, 2014.
(b) The Company has given effect to all the restrictions and directions issued under the Order.
The Company is not selling its assets but giving the maturity amount out of the money
generated from trading of goats as well as from cash in hand.
(c) The Company has no malafide intention to cheat or defraud the money of investors. The
Company did take advance from customers and invested their money in land for goat farms,
investments in liquid money like FDRs with Bank and in Gold so that in case of maturities,
the Company has sufficient amount of fund in hand to clear the same in time.
(d) Major part of collection was from the high time period plan as the business of the company
had a long gestation period and accordingly the profit or earning would start after 3-5 years
from inception and by the time maturity period comes, the Company would be in a healthy
situation to refund the money of customers without any failure.
(e) The amount taken by the Company has not been diverted in any malafide manner. The money
so collected was spent by the Company for administrative expenses for running the Company
and the rest in land, offices, FDRs with Banks and in establishing projects.
(f) The directors of the Company were not aware about the rules as applicable on such kind of
activities as prescribed by SEBI or any other authority. The Companys motto was to carry
out business of goat farming which would serve the best interest of the customers as the
Company has gain a good platform to gainfully deploy the savings of investors in an
investment which will give good returns.

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(g) In the last four years, the Company never failed in paying its maturities to its customers. Even
a single complaint is not registered with any authority. The customers of the Company have
full access to the project progress reports, balance sheets, MoA, AoA during business hours.
(h) The Company also stated that it is not mobilizing fresh funds through existing schemes or
launching any news schemes/plans to raise funds.
(i) The Company undertook that it would not divert funds or dispose off property which belongs
to the Company and/or is in the custody of the Company.
5.

The noticees were afforded an opportunity of personal hearing on July 10, 2015. The schedule

of personal hearing was communicated to all the noticees through letters and e-mails dated May 29,
2015. A public notice was published on June 30, 2015 in various newspapers in the areas of
residence/work as available in the records. In the personal hearing held on July 10, 2015, the
Company and its directors, Mr. Vinod Kumar Shankhwar, Mr. Rajendra Karn Rajpoot and Mr.
Pardeshi Ram were represented by Mr. G. Kumar, Chartered Accountant and Mrs. Purnima Gupta,
Advocate, who made oral submissions. As requested by the representatives, liberty was granted to
file written submissions within a period of 10 days. Noticee, Mr. Jagdish Biswas appeared in person
and made oral submissions. He too was granted liberty to file written submissions along with
documents, as per his request. Despite service of the Order and the hearing notice through postal
service and publication of public notice in newspaper, noticee, Mr. Rajneesh Dutta did not appear
in the personal hearing.
6.

Thereafter, vide email dated July 20, 2015, noticee Mr. Jagdish Biswas made the following

submissions:
1.
I am no more associated with SFAL (Suvidha farming and Allied Limited) nor am I
holding any shares of the company.
2.
I was working in SFAL (Suvidha farming and Allied Limited) as a salaried director, and
have resigned from the position on 24/06/2011 which is accepted by RoC.

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3.
My tenure at SFAL as a silent director was for 11 months only i.e from 16/7/2010 till
24/6/2011.
4. Even during that tenure I was working with Sony India Pvt Ltd. Wherein I have worked
from 21-09-2009 to 05-04-2011.
5.
Hence my presence in SFAL as a director was for 2 months only ie from 06-04-2011 to
24/6/2011.
6.
This is to confirm, as even after joining SFAL I was working with Sony India Pvt Ltd. I
had no involvement or any clue of day to day working of the SFAL, nor was I involved in any
kind of financial transaction done by SFAL, by any other directors or by anyone else on the
behalf of SFAL.
7.

I had no involvement in any financial transactions/decisions done by the company SFAL.

8.
I never had any company financials like bank account or check book or any pay-outs
linked to my signatures or on my name.
9. I was never involved as a signing authority under any monetary transactions done by the
company SFAL.
10. During my tenure in the company, my visits were only to take motivational speeches and
personality development sessions for people on behalf of SFAL for which I was paid per visit.
11. My joining SFAL was a sudden influenced decision. I used to take motivational classes
for students, once the current director Mr Rajput approached me saying why dont you join
the company SFAL as a director as they dont have any educated person in the position whom
they can project as knowledgeable person. Hence due to friendship and faith I joined their
company SFAL as a salaried silent director but with condition that:
a.
I will not be involved in any day to day matters of company SFAL.
b. I will not leave current company I was associated with during those days (Sony India Pvt
Ltd).
c.
I will not be involved in any financial transaction done by the company
d.
Nor will I be involved in any working of the company SFAL.
12. I was totally unaware of the operating plans and structure of SFAL during those days as I
was nowhere involved in it. I was kept in dark and was told a very different story about working
of the company SFAL by other directors. Further I was told to create other business lines like
tea and spices business. The day I realised that I am being cheated and the working going in

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the company is not as per what I was told by directors of the company, I immediately resigned
from the position of Director which is accepted by ROC on 26-04-2012.
13. I had sent legal notice to SFAL dated 29-03-2012 to remove my name from any and every
place where SFAL is operating.
14. Further I have also given public notice in newspaper dated 25-04-2012. I am not involved
in any financial transactions done by SFAL and will not be responsible for any losses incurred
by the company.
15. Also attached is the legal agreement done between board of directors of SFAL and me
statinga.
That Jagdish Biswas has not been involved in any financial transactions done by SFAL.
b.
That Jagdish Biswas bears no responsibilities against any pre and post business done by
SFAL.
c.
That under any circumstances Jagdish Biswas will not be liable for any losses/legal
prosecutions done against the company SFAL
Its a sincere request that please understand my state and request you to please exempt me
from this issue. I am currently working in a private company and earning livelihood as an only
earning member in family. I have no involvement with SFAL and their any operations. Request
you to please guide me if any further documents are required from my end to prove my part.
I will be really grateful to you if you can exempt me from the case of SFAL.
7.

Thereafter, vide letters dated October 13, 2015 and November 30, 2015, the Company

requested permission to dispose its lands/assets so that money obtained would be utilized for
repayment of the remaining investors and attached a list of properties/projects. The Company also
submitted that after repayments, it would make a detailed submission to SEBI.
8.

I have considered the Order, the submissions made by the noticees and other material available

on record. The Company or the other noticees have not disputed the findings or observations made
in the Order. Accordingly, I refer to such observations on the scheme related documents for making
my observations:
(a) Brochure:
A Brochure of the Company inter alia provided details of various plans (called as "Joint
Venture Plans") for purchase of cattle/ goat (of quantity 1 to 10), expected sum payable

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on expiry of term and Accidental Help (A/H) provided by SFAL to investor's nominee.
The Company has solicited investments through its two plans, namely i.

Installment Payment Plan (monthly, quarterly, half-yearly & yearly): The various plans
in this category are S-1 for 12 months, S-2 for 24 months, S-3 for 36 months, S4 for
48 months, S-5 for 60 months, S-6 for 75 months, S-7 for 84 months, S-8 for 96
months, S-9 for 120 months, S-10 for 84 months, Plan SFM2 for 180 months having
return value after 3 years, 6 years, 9 years, 12 years.
As an illustration, the following table gives the details regarding the payments and
returns of one instalment plan:
Installment Payment Plan No. S-4 for 4 Years or 48 Months:

No. of
Cattle /
Goat
2
4
6
8
10
12
14
16
18
20

ii.

Cost of
Cattle/
Goat
4800
9600
14400
19200
24000
28800
33600
38400
43200
48000

MLY
48
100
200
300
400
500
600
700
800
900
1000

Installment No.
QLY
HLY
16
8
295
580
590
1160
885
1740
1180
2320
1475
2900
1770
3480
2065
4060
2360
4640
2655
5220
2950
5800

YLY
4
1150
2300
3450
4600
5750
6900
8050
9200
10350
11500

Expected Sum
payable on expiry
of term cattle
7250
14500
21750
29000
36250
43500
50750
58000
65250
72500

A/H
(Accidental
Help)
4800
9600
14400
19200
24000
28800
33600
38400
43200
48000

Lump sum Payment Plan: The various plans in this category are S-F1 for 3 years,
S-F2 for 6 years, S-F3 for 6 years, S-F4 for 8 years, S-F5 for 10 1/2 years, SFM-1 MIS
for 6 years, SF-6 for 6 years, SF-7 for 8 years, SFM3 MIS for 6 years. The details of
one Lump sum Payment plan is provided in the table below:

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Lump sum Payment Plan No. S-F 3 for 6 years


No.
of
Cattle/
Cow
1
2
3
4
5
6
7
8
9
10

(b) The

Cost of Cattle/ Cow

Expected Sum payable on expiry of


term Cattle 6 year

6000
12000
18000
24000
30000
36000
42000
48000
54000
60000

12300
24600
36900
49200
61500
73800
86100
98400
110700
123000

Brochure

(which

was

in

Hindi

language)

inter

alia

A/H
(Accidental
Help)
6000
12000
18000
24000
30000
36000
42000
48000
54000
60000

made

the

following

representations/promises:
i.

SFAL purchases agricultural / barren lands and makes it fit for agriculture
usage and develops farms wherein cows, goats and sheep are reared and
taken care of.

ii.

SFAL has various plans for Joint Ventures in Lump Sum Payment and
Installment Payment Plans and as per these plans, the investor chooses the
cattle. After completion of all formalities, the Company issues the
allotment letter for cattle to the investor (investor termed as 'Joint
Venturer'). After completion of the stipulated time frame, the investor can
either opt to get the cattle in his name or the specified money as per the
plan opted. As per these plans, the rearing of cattle takes place in the
Companys farm houses.

iii.

The investor also has the option of emergency loan service after 12 months
on 60% of amount paid.

iv.

The Company also provided Accidental Help (A/H) upto ` 150000/- to


the nominees of the Joint Venturer.

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(c) The Company also has a structured commission pay-out scheme for its agents. As per the
brochure pertaining to the same, the Company had agents at various levels. These agents are
paid "ORC Commission" for business brought in by them. Further, they are also given
Accidental Help (A/H) by SFAL. Another document called the Rule Book for F.A. & Joint
Venture provides details of various plans and other information for the agents and investors.
(d) The following are noted from the Companys letter dated February 17, 2014 to SEBI:
i.

As per the copies of filled in application forms and registration certificate issued for
each of the Plans, it is observed that the Company mobilized the contributions from
investors as per the Plan opted.

ii.

The terms and conditions of the application form inter alia stated:
"Joint Venture must be an Indian National.......
The company shall issue Certificate on the basis of Application Form.....
Joint Venture shall be repaid on Maturity of Term only.....
Minors can apply through their parents/guardian. Application in the name of minor must be
signed by his/her/their natural parent(s)...."

iii.

The General Terms and Conditions in the Certificate issued by the Company inter alia
statesd
"Special Provisions for refund in case of natural Death: In case of natural death of a Joint
Venture or the Nominee of legal Representative /Successor may have the refund as specified in
Rule Book, as amended from time to time.
Accidental Death Compensation: The Joint Venture (s) shall be eligible for compensation in the
event of accidental death as per Rule Book, as amended from time to time."

iv.

The Company has branches in 9 locations and had 21 bank accounts with HDFC
Bank, Axis Bank, ICICI Bank, Yes Bank, Bank of India and Vijaya Bank.

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(e) The following were noted from the documents /information submitted by the Company vide
its letter dated March 24, 2014 to SEBI:
i.

In a brief note attached on Accidental Help (A/H), the Company has represented
as follows:
"Accidental Help (hereinafter refer as A/H) belongs to Accidental Health Help which the Co.
is providing to its customer's nominee after death of the customer, on certain terms & conditions.
The Accidental Help is the financial assistance to the family/dependant of the customer of the
Co who have applied in any of the scheme of the Co. and being provided only on the death, on
certain terms & conditions and on complete discretion of the Board and any other prescribed
authority of the Co. The said financial assistance is in nature of help and Co. is not charging
any extra/additional money for this, from its customer.

ii.

In a brief note attached on "Appropriation of amount received from the Investors"


the Company had stated:
"The Company M/s Suvidha Farming & Allied Limited was incorporated in the year 2010
with an object of cattle farming, animal husbandry, farming business and has been raising the
fund from its customer on the basis of the cattle farming. The Company accept the advance from
customer against the product i.e. cattle and assured them certain returns.
After getting advance from the customer, the Company purchases cattle, takes care of them and
whatever the benefits accrue out of the cattle farming, it will be shared to the customers.
For the above, the Company gets the application signed from customers with their personal details,
and issues the Bond/certificate which also includes the terms and conditions of the cattle and
advances given by the customers.
Till the time the company returns the money to the customer, it treats the advances received from
customers under the head of Liabilities........"

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(f) The Order has mentioned that the Company had mobilized an amount of approximately
`28.22 crores from 2,69,905 investors during the financial years 2010-11 to 2013-14. The
break-up of such mobilization financial year-wise and plan-wise is as below:
2010-11
Plan Code
S1
S10
S2
S3
S4
S5
S6
S7
S8
S9
SF1
SF2
SF3
SF4
SF5
SF6
SF7
SFM2
SFM3
Grand Total

Total amount mobilized (`)


2970
44552
1682
44856
34195
3483177
484852
40271
63490
16597
65679
145577
575395
943680
543605
1128210
1318415
19989
1889505
10846697

No. of investor
10
63
10
151
111
6646
672
34
72
40
3
13
23
36
19
42
58
10
21
8034

2011-12
Plan Code
S1
S10
S2
S3
S4
S5
S6
S7
S8
S9
SF1
SF2
SF3
SF4
SF5
SF6
SF7
SF8
SFM1

Total Amount Mobilized (`)


9523
132164
52631
713101
308470
12019671
4551888
269006
160781
115121
553105
789002
2002745
1621100
5128620
8442490
6194365
1432170
112810

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No. of investors
33
192
57
1314
625
33230
5219
259
452
134
29
106
109
100
192
258
298
39
2

SFM2
SFM3
Grand Total

330162
8479275
53418200

100
95
42843

2012-13
Plan Code
S1
S10
S2
S3
S4
S5
S6
S7
S8
S9
SF1
SF2
SF3
SF4
SF5
SF6
SF7
SF8
SFM2
SFM3
Grand Total

Total Amount Mobilized (`)


140548
235160
168443
1971105
595020
35856561
11124827
655172
242898
311552
1237965
1219065
1999335
3788315
4968600
15091495
19849415
6065725
567739
10843560
116932500

No. of Investors
220
317
275
3885
962
57665
15296
550
416
310
57
165
123
223
216
519
733
260
232
132
82556

2013-14 (upto January 31, 2014)


Plan Code
S1
S10
S2
S3
S4
S5
S6
S7
S8
S9
SF1
SF2
SF3
SF4
SF5
SF6
SF7
SF8

Total Amount Mobilized (`)


969213
522140
255788
2970417
597788
51654215
14699508
998060
234144
314494
530338
137439
212745
2077895
775945
5315130
9409815
1892560

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No. of Investors
1094
586
415
5603
1120
102300
22212
924
419
343
26
27
21
79
41
226
613
107

SFM2
SFM3
Grand Total

578726
6896240
101042600

228
88
136472

(g) The Order also noted and observed the following:


iv.

As per the audited financial statement as on March 31, 2010, March 31, 2011, March 31, 2012
and March 31, 2013 submitted, it is observed as follows:

The details of fund mobilization and their utilization (as apparent from the audited financial
statements) are as under:
As on March 31, 2011
(`)

Major Liabilities
Advance received from customers
Major Assets
Tangible Assets
Bank balance
Cash in hand
Investments
Other current assets (mainly loan
& advances w.r.t. business)

As on March 31,
2012
(`)

As on March 31,
2013
(`)

1,08,46,697.00

6,41,06,191.00

17,77,21,932.00

13,77,496.00
51,13,327.32
5,63,047.00
5,21,200.00*

2,00,83,102.00
2,02,04,395.13
11,21,508.00
23,47,115.00

2,91,09,536.00
2,45,95,387.53
12,03,513.00
4,23,86,546.31
76,24,711.92

* As per note 7 to the Financial Statement as on March 31, 2012, this figure is
Rs.4,21,200/- with respect to loans and advances business.

During these years, the commission paid/ payable to agents involved in mobilization of funds
from customers is given below:-

ORC Commission paid


Commission payable
Total Commission

2010-11 (`)
14,64,637.00
14,64,637.00

2011-12 (`)
2,04,94,871.00
41,63,249.00
2,46,58,120.00

2012-13 (`)
3,53,04,947.00
4,59,992.00
3,57,64,939.00

The total commission paid/payable to agents viz., `6,18,87,696/-, for the three years
considered is approximately 35% of the amount indicated as "Advance received from customers"
as on March 31,2013.

The income generated by SFAL from operations is as below:2011-12 (`)


Animal husbandry consultancy fees

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22,01,500.00

2012-13 (`)
23,56,200.00

Trading in Goatry

21,20,050.00

20,51,850.00

Total Revenue from Operations

43,21,550.00

44,08,050.00

v.

The details of investments as provided by SFAL is as under:

Investment in land Total paid amount is `6,61,78,233/- (outstanding amount is

`5,06,06,292/-).

Investment in gold- 356.50 gms. (`10,05,646/-)

Investment in FDRs- `2,11,75,462/-.

vi.

SFAL has also provided a list of its group companies comprising eleven entities and M/s
Suvidha Land Developers India Limited is one of the group entities. It is noted that the
Shri Vinod Kumar Shankhwar and Shri Rajendra Karn Rajpoot are the Directors in ten
of these entities.

g)

It is pertinent to mention here that the group entity of SFAL, viz. M/s Suvidha Land
Developers India Limited, against which a complaint has been received, have vide their letter
dated March 21, 2014, inter alia submitted: "M/s Suvidha Farming & Allied Limited
is one of the group company, which is raising funds from the Public....".

9.

In the light of the features of the schemes/plans including the features mentioned above, it

needs to be determined whether the schemes are CISs as alleged in the Order. The Company, in its
submissions, has not disputed the findings/allegations in the Order. Rather, in its submissions, the
Company accepted that it took advance from customers and invest their money in goat farming, land,
administrative expenses, establishing of projects etc. To conclude whether a scheme is a CIS or not,
all the four conditions under section 11AA(2) of the SEBI Act should be satisfied.
(a) The first condition under the said section is that 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.
From the above scheme related and submissions of the Company, it is very clear that the
Company receives payments from customers under the head Advances and assured them

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returns. The following submission from the Company is the testimony to the fact that monies
were pooled and utilized for its scheme related business:
The Company M/s Suvidha Farming & Allied Limited was incorporated in the year 2010
with an object of cattle farming, animal husbandry, farming business and has been raising the
fund from its customer on the basis of the cattle farming. The Company accept the advance from
customer against the product i.e. cattle and assured them certain returns.
After getting advance from the customer, the Company purchases cattle, takes care of them and
whatever the benefits accrue out of the cattle farming, it will be shared to the customers.
For the above, the Company gets the application signed from customers with their personal details,
and issues the Bond/certificate which also includes the terms and conditions of the cattle and
advances given by the customers.
Till the time the company returns the money to the customer, it treats the advances received from
customers under the head of Liabilities........"
The Company accepts monies from customers under its schemes and uses it for the purposes
of the purported schemes i.e. purchases cattle and offers benefits to the customers under the
schemes. In view of the same, it is proved that the Company pools and utilizes the monies
towards the scheme/arrangement. Accordingly, I find that the first condition is satisfied.
(b) The second condition is that the contributions or payments are made to such scheme
or arrangement by the investors with a view to receive profits, income, produce or
property, whether movable or immovable from such scheme or arrangement.
On perusal of the various schemes/plans and the submissions of the Company, the Company
solicits investments from customers to carry out its scheme objectives and promises returns
to the customers as per plans opted by them. It is noted that the Certificate issued by SFAL
indicates the Plan opted by the investor in the application form. Further, the brochure issued
by SFAL provides details of the various Plans, viz. number, cost of cattle/cow, expected sum

Page 15 of 24

payable on expiry of term and also Accidental Help (A/H). As per sample plan table for
Installment Payment Plan No.S-4 for 4 years, which is detailed in paragraph 8 of this order,
it is observed that for an investor paying an amount of Rs.100/- per month for 48 months
for cattle/goat costing Rs.4,800/-, the expected sum payable on expiry of term is Rs.7,250/.
The investor can either opt to get the cattle or is assured of receiving a specified amount at
the expiry of term. The Company also provides financial assistance (accident help) to its
customers and also provides emergency loan services after 12 months on 60% of the amount
paid.
As the scheme envisages payment of money/cattle in return of the investment by the
customer, the second condition is also satisfied.
(c) The third and fourth conditions under section 11AA(2) of the SEBI Act can be discussed
together. These 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.
As per the scheme related documents, the rearing of cattle takes place in the Companys farm
houses and at the end of term of the Plan, the investor can either opt for the cattle or the
money assured.

There is no clause in the terms and condition of the application form/

registration certificate to show that the investor has any say in the management of these Plans
or towards purchase of land/cattle and rearing of cattle. In these facts and circumstances, it
is clear that the schemes are managed by the Company on behalf of the investors. The
Company has also not disputed the observations made in the Order in this regard.
Accordingly, I find that the third and fourth conditions under section 11AA(2) are satisfied.
As all the 4 conditions under section 11AA(2) of the SEBI Act are satisfied, the scheme of the
Company qualifies as a collective investment scheme.
10.

The Company, through its schemes, had mobilized Rs.28.22 crore from 2,69,905 investors

from FY 2010 to 2014. In Order, in paragraph 16, has observed It is also disconcerting that the total

Page 16 of 24

"Commission paid/payable to agents" viz.,`6.19 Crores is approximately 35% of the amount of `.17.77 Crores
collected in three years indicated as "Advance received from customers" as on March 31,2013 (details in page 14 above
of this order). Prima facie, it appears that a significant portion of the moneys collected as "Advance received from
customers" is utilized for payment of Commission to agents for their role in attracting investors to invest in the various
Schemes/ Plans offered by SFAL. It is noticed that the Company has paid huge amounts (from the
money mobilized from customers) as commission to its agents. Further, the usage of joint venture
in the brochure has already been observed to be a camouflage for the Companys mobilization activity
to mislead and solicit investments from public.
11.

In view of the above discussion, the Scheme of the Company i.e. purchase of land and cattle

and rearing of goats/buffaloes, satisfies all the four conditions under section 11AA(2) of the SEBI
Act. Accordingly, it is concluded that the purchase and rearing (of goats/buffaloes) arrangements of
the Company with its customers fall within the ambit of the definition of Collective Investment
Scheme under section 11AA of the SEBI Act. The Honble Supreme Court in the matter of PGF
Limited vs. UoI and another (ref. MANU/SC/0247/2013, has observed "..the Parliament thought it
fit to introduce Section 11AA in the Act in order to ensure that any such scheme put to public notice is not intended to
defraud such gullible investors and also to monitor the operation of such schemes and arrangements based on the
regulations framed under Section 11AA of the Act." The Hon'ble Supreme Court further observed "Inasmuch
as the said Section 11AA seeks to cover, in general, any scheme or arrangement providing for certain consequences
specified therein vis-a-vis the investors and the promoters..
12.

To carry out the activity of CIS and mobilize public funds from such schemes, it is mandatory

under law to obtain a certificate of registration from SEBI. 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.
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 'collective investment scheme'. A person can launch or sponsor or cause to
sponsor a collective investment scheme only if it is registered with SEBI as a Collective Investment
Management Company. Therefore, the launching/ floating/ sponsoring/ causing to sponsor any

Page 17 of 24

'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. The Company does not have a certificate of registration as
mandated under law and has launched CIS without obtaining certificate of registration from SEBI,
thereby contravening the provisions of section 12(1B) of the SEBI Act and regulation 3 of the CIS
Regulations. The activities of the Company are not exempt under the clauses under section 11AA(3)
of the SEBI Act.
13.

I also note that 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 causing to be carried
on any collective investment scheme by any person. This provision in the above Regulations has been
brought into effect from September 06, 2013. The Company has stated that it stopped mobilization
from January 31, 2014. Accordingly, it could be held that by mobilizing public funds through CIS
without obtaining registration from SEBI as required under section 12(1B) of the SEBI Act read with
regulation 3 of the CIS Regulations, after the provision coming into force, the Company has
contravened the above provision.
14.

Therefore, having concluded that the activities of the Company are CIS in terms of section

11AA of the SEBI Act and that the same were carried out without obtaining registration from SEBI,
suitable enforcement action should necessarily follow in the interest of investors. In view of such
unregistered CIS activities carried on by the Company, it becomes necessary to issue suitable directions
in the interest of investors and the securities market. In this regard, regulation 65 provides for various
directions by SEBI. The said provision is reproduced below for reference:
65. The Board may, in the interests of the securities market and the investors and without prejudice to its right to
initiate action under this Chapter, including initiation of criminal prosecution under section 24 of the Act, give such
directions as it deems fit in order to ensure effective observance of these regulations, including directions:
(a) requiring the person concerned not to collect any money from investors or to launch any [collective investment scheme];

Page 18 of 24

(b) prohibiting the person concerned from disposing of any of the properties of the [collective investment scheme] acquired
in violation of these regulations;
(c) requiring the person concerned to dispose of the assets of the [collective investment scheme] in a manner as may be
specified in the directions;
(d) requiring the person concerned to refund any money or the assets to the concerned investors along with the requisite
interest or otherwise, collected under the [collective investment scheme];
(e) prohibiting the person concerned from operating in the capital market or from accessing the capital market for a
specified period.
As the Company is carrying out unregistered CIS activities, it becomes necessary to direct the
Company to wind up the CIS and refund its investors money or assets along with requisite interest
along with other necessary directions.
15.

The interim order was issued in respect of Vinod Kumar Shankhwar, Rajendra Karn Rajpoot,

Pardeshi Ram, Jagdish Bisvas and Rajneesh Dutta. Except for Mr. Jagdish Bisvas, the other individuals
have not filed their replies. With respect to their liability, I observe as follows:
(a) As per the details available in the MCA portal, Vinod Kumar Shankhwar, Rajendra Karn
Rajpoot, Pardeshi Ram and Rajneesh Dutta. Details regarding their DIN, address and date of
appointment as directors in the Company is given in the table below:
DIN/DPIN/PAN

Full Name

Present residential address

Designation

Date of Appointment

02444432

VINOD KUMAR
SHANKHWAR

OPP. QR NO. 97, SEVA NAGAR,


LASHKAR, GWALIOR, 474001, Madhya
Pradesh, INDIA

Director

16/02/2010

02444466

RAJENDRA KARN
RAJPOOT

C/O SURENDRA BHONSLE, 4, NORTH


AVENUE , CHAUBEY COLONY, RAIPUR,
492001, Chhattisgarh, INDIA

Director

16/02/2010

03118992

PARDESHI RAM

HNO. 7, NEW MOTI NAGAR, VILL BORIYAKHURD, RAIPUR, 492001,


Chhattisgarh, INDIA

Additional director

01/06/2015

06736734

RAJNEESH DUTTA

4/251 BLOCK NO 4, SUBHASH NAGAR,


HARI NAGAR, NEW DELHI, 110027, Delhi,
INDIA

Additional director

01/12/2013

Page 19 of 24

(b) The Company was incorporated on February 16, 2010. Vinod Kumar Shankhwar and
Rajendra Karn Rajpoot are the directors in the Company from the date of its incorporation.
These directors become responsible for the conduct of the business of the Company and
therefore liable for the contraventions, as found above in this Order, committed by the
Company.
(c) Rajneesh Dutta was appointed as a director on December 01, 2013. Pardeshi Ram was
inducted on June 01, 2015. It appears that they have not taken any action against the
Company/management in running unregistered CIS even after the interim order, which gives
an impression that they have colluded with the Company/management in carrying on with
the unregistered CIS. Further, these directors have also not taken any steps to remedy the
violations. Therefore, these persons also become responsible for the conduct of the business
of the Company from the date of their appointment.
(d) With respect to Jagdish Bisvas, I note that he was admittedly a director in the Company from
July 16, 2010 to June 24, 2011. This noticee had made elaborate submissions stating that he
was not responsible for the violations and that he resigned from the Company on noticing
that the Company was not working as he was told and that his resignation was accepted by
RoC on April 26, 2012. The noticee has also sent a legal notice to the Company demanding
that his name be removed and had also made a newspaper notice stating that he was not
involved in any financial transactions of the Company and therefore not responsible for any
losses incurred by the Company. The noticee has also submitted that during the period of
directorship with the Company he was also employed elsewhere from September 21, 2009 to
April 05, 2011.
I have considered such submissions. In terms of section 291 of the Companies Act, 1956, the
board of directors of a company shall be entitled to exercise all such powers and do all such
acts and things as the company is authorized to exercise and do. Therefore, the board of
directors shall be responsible for the conduct of the business of a company and liable for any
non-compliance of law and such liability shall trickle down to individual directors.

Page 20 of 24

Accordingly, a director who is part of a companys board shall be responsible and liable for all
acts carried out by a company unless exemptions are provided. The noticee, in the present
case, was part of the Companys Board of Directors for the period July 16, 2010 to June 24,
2011. Accordingly, he shall also be responsible and liable along with the others in the Board,
for all the deeds/acts of the Company during the period of his directorship. The noticee, by
merely stating that he was a silent director and not involved in the operations and finances
of the Company cannot wriggle out from his responsibility. The present case involves a
Company that has mobilized public funds from gullible investors through its unregistered
collective investment schemes. In this regard, the following observations made by the Honble
High Court of Madras in Madhavan Nambiar vs Registrar of Companies (2002 108 Comp Cas 1
Mad) are important to note:
13. . A director either full time or part time, either elected or appointed or nominated is
bound to discharge the functions of a director and should have taken all the diligent steps and
taken care in the affairs of the company.
14. In the matter of proceedings for negligence, default, breach of duty, misfeasance or breach
of trust or violation of the statutory provisions of the Act and the rules, there is no difference
or distinction between the whole-time or part time director or nominated or co-opted director
and the liability for such acts or commission or omission is equal. So also the treatment for
such violations as stipulated in the Companies Act, 1956.
I also note that the noticee has made a newspaper notice stating that he was not involved in
the financial transactions done by the Company. The noticee has also referred to an
agreement entered into between the noticee and the Board of Directors of the Company
stating that this noticee was not involved in the transactions and would not be liable for any
losses/legal prosecution done against the Company. However, this agreement would not
abdicate the noticees role as a director in the Company when the Company was mobilizing
money from public under its unregistered CIS. He therefore becomes liable for enforcement
action.
16.

I also note that the Company has requested SEBI to grant permission to dispose off its

assets/property for the purposes of repaying the investors. Considering that this request is made for

Page 21 of 24

the purposes of making refunds to the investors from whom mobilization was made, I find it
appropriate and in the interest of investors to allow this request.
17.

In view of the foregoing observations and findings, 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),
11(4) and 11B thereof and regulation 65 of the SEBI (Collective Investment Schemes) Regulations,
1999, hereby issue the following directions:
1. Suvidha Farming and Allied Limited, Mr. Vinod Kumar Shankhwar, Mr. Rajendra Karn
Rajpoot, Mr. Pardeshi Ram, Mr. Jagdish Bisvas and Mr. Rajneesh Dutta shall abstain
from collecting any money from the investors or launch or carry out any Collective Investment
Schemes including the schemes which have been identified as a Collective Investment Scheme
in this Order.
2. Suvidha Farming and Allied Limited, Mr. Vinod Kumar Shankhwar, Mr. Rajendra Karn
Rajpoot, Mr. Pardeshi Ram and Mr. Rajneesh Dutta shall wind up the existing Collective
Investment Schemes and refund the money collected by the said company under the schemes
with returns which are due to its investors as per the terms of offer within a period of three
months from the date of this Order and thereafter within a period of fifteen days, submit a
winding up and repayment report to SEBI in accordance with the SEBI (Collective Investment
Schemes) Regulations, 1999, including the trail of funds claimed to be refunded, bank account
statements indicating refund to the investors and receipt from the investors acknowledging
such refunds.
3. Suvidha Farming and Allied Limited, Mr. Vinod Kumar Shankhwar, Mr. Rajendra Karn
Rajpoot, Mr. Pardeshi Ram and Mr. Rajneesh Dutta shall not alienate or dispose off or
sell any of the assets of the aforesaid company except for the purpose of making refunds to its
investors, as directed above.
4. Suvidha Farming and Allied Limited, Mr. Vinod Kumar Shankhwar, Mr. Rajendra Karn
Rajpoot, Mr. Pardeshi Ram, Mr. Jagdish Bisvas and Mr. Rajneesh Dutta are directed to

Page 22 of 24

immediately submit the 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.
5. Suvidha Farming and Allied Limited, Mr. Vinod Kumar Shankhwar, Mr. Rajendra Karn
Rajpoot, Mr. Pardeshi Ram, Mr. Jagdish Bisvas and Mr. Rajneesh Dutta are restrained
from accessing the securities market and are prohibited from buying, selling or otherwise
dealing in securities market for a period of 4 years.
6. In the event of failure by Suvidha Farming and Allied Limited, Mr. Vinod Kumar
Shankhwar, Mr. Rajendra Karn Rajpoot, Mr. Pardeshi Ram and Mr. Rajneesh Dutta,
to comply with the directions in sub-paragraphs 1-4 above, the following action shall follow:
i.

Suvidha Farming and Allied Limited, Mr. Vinod Kumar Shankhwar, Mr.
Rajendra Karn Rajpoot, Mr. Pardeshi Ram, Mr. Jagdish Bisvas and Mr.
Rajneesh Dutta shall remain restrained from accessing the securities market and
prohibited from buying, selling or otherwise dealing in securities market, even after the
completion of period of 4 years of restraint imposed vide sub-paragraph 5 above, till
all the Collective Investment Schemes of the Company are wound up and all the monies
mobilized through such schemes are refunded to its investors with returns which are
due to them.

ii.

SEBI would make a reference to the State Government/ Local Police to register a civil/
criminal case against Suvidha Farming and Allied 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 mis-appropriation of public funds.

iii.

SEBI would make a reference to the Ministry of Corporate Affairs, to initiate the
process of winding up of the company, Suvidha Farming and Allied Limited.

Page 23 of 24

iv.

SEBI shall also 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 Suvidha Farming and Allied Limited, Mr. Vinod Kumar
Shankhwar, Mr. Rajendra Karn Rajpoot, Mr. Pardeshi Ram, Mr. Jagdish Bisvas and Mr.
Rajneesh Dutta, 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.

PRASHANT SARAN
WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA
Date: January 11th, 2016
Place: Mumbai

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