CO/478/CIS/02/2003
SECURITIES & EXCHANGE BOARD OF INDIA
DIRECTIONS UNDER SECTION 11B OF THE SEBI ACT 1992 READ WITH REGULATIONS 65 & 73 OF SEBI (COLLECTIVE INVESTMENT SCHEMES) – REGULATIONS, 1999 ISSUED AGAINST
M/S KALPTARU AGRO INDIA LTD., MATHURA
M/s Kalptaru Agro India Ltd. (hereinafter referred to as the company) had filed information / details with SEBI regarding its Collective Investment Schemes (CIS) pursuant to the public notice dated 18.12.97 issued by SEBI.
Subsequent to the notification of SEBI (Collective Investment Schemes) – Regulations, 1999 (hereinafter referred to as the Regulations) on October 15, 1999, the company applied for registration under the provisions of the Regulations. The application and other details available on record were examined by SEBI. Various opportunities of being heard were also granted to the company. In the course of the said hearings, it emerged that the company had continued to mobilize funds in contravention of SEBI directions dated 24.2.98 & the Order of the Hon’ble High Court of Delhi dated 7.10.98 / 13.10.98 passed in the CWP 3352/98. The said action of the company resulted in the violation of Regulation 69 of the Regulations. Hence, the company was advised to immediately repay the amounts of money mobilized in contravention of the above-mentioned directions and Orders. The company filed an estimated repayment schedule spanning seven years till 2008-2009 with SEBI with respect to these funds. The same was not found to be acceptable by SEBI. Further, the company did not fulfil certain requirements of the Regulations for grant of registration. Therefore, its application was rejected by SEBI on 29.6.2002.
While intimating the grounds of rejection of its application, SEBI vide its letter dated 5.7.2002, advised the company that pursuant to the rejection of its application, the company, as an existing Collective Investment Scheme, was required to wind up its existing scheme(s) and make repayment to the investors in terms of Regulation 73 of the Regulations.
Accordingly, the company was required to send an information memorandum to the investors, who had subscribed to its scheme(s), within two months from the date of receipt of the intimation from SEBI. Further, on completion of the winding up and repayment to the investors in terms of Regulation 73, the company was required to file a “Winding Up & Repayment Report” in the format prescribed by SEBI so as to reach SEBI within 3 & ½ months of the date of the information memorandum.
However, the company has failed to comply with the aforesaid requirement. Therefore, it has prima facie violated the provisions of Section 12(1B) of the SEBI Act, 1992 and the provisions of Regulation 73 of the Regulations.
Now, therefore, in exercise of the powers conferred upon me under section 11B of the SEBI Act, 1992, read with Regulation 65 of the Regulations, I hereby direct the company to refund the money collected under the scheme(s) with returns which is due to the investors as per the terms of the offer within a period of one month from the date of this order, failing which the following actions would follow :
1. Initiation of prosecution proceedings under Section 24 of the SEBI Act, 1992 against the company / its promoters / its directors / its managers / persons in charge of the business of its scheme(s).
2. The company / its promoters / its directors / its managers / persons in charge of the business of its scheme(s) would be debarred from operating in the capital market and from accessing the capital market for a period of 5 years.
3. Writing to the state governments / local police to register civil / criminal cases against the company for apparent offences of fraud, cheating, criminal breach of trust and misappropriation of public funds.
4. Writing to the Department of Company Affairs to initiate the process of winding up of the company.
Place : Mumbai G.N. Bajpai
Date : February 10, 2003 Chairman
Securities and Exchange Board of India