WTM/PS/129/CIS/ILO-WRO-II/JAN/216 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 HNC Infrastructures & Shares India Limited In respect of: 1. HNC Infrastructures & Shares India Limited [PAN: AABCH9386E], 2. Mr. Santosh Kumar Saket [PAN: BVJPS1765D], 3. Mr. Ramnaresh Saket [PAN: CIMPS822E], 4. Mr. Ramadhar Choudhary [PAN: AMWPC828N] and 5. Mr. Satish Kumar Arya [PAN: AREPA2954N] Date of Hearing: July 1, 215 Appearances: For Noticees: Mr. Ramadhar Choudhary, Director Mr. Satish Kumar Arya, Director For SEBI: Mr. Piyoosh Gupta, Regional Director, Dr. Deepali Dixit, Assistant General Manager, Mr. T. Vinay Rajneesh, Assistant General Manager, Mr. Piyushkumar Mahajan, Manager. 1. Securities and Exchange Board of India (hereinafter referred to as SEBI ) conducted a preliminary inquiry in the investment scheme of one HNC Infrastructures & Shares India Limited (hereinafter referred to as the Company or HNC ). Pursuant to the inquiry, SEBI vide an ex-parte interim Order dated August 5, 214 (hereinafter referred to as the interim order ), prima facie found that HNC 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) Page 1 of 14
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 HNC and its directors from the funds of the investing public. This Order directed HNC and its Directors, namely, Mr. Santosh Kumar Saket, Mr. Ramnaresh Saket, Mr. Ramadhar Choudhary and Mr. Satish Kumar Arya (hereinafter collectively referred to as noticees ): a. not to collect any fresh money from investors by its existing scheme; b. not to launch any new scheme/plan or float any new companies 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 HNC; e. to immediately submit the full inventory of the assets owned by HNC out of the amounts collected from the customers /investors under its existing schemes; f. to furnish all the information sought by SEBI vide letter dated December 3, 213, including, sample copies of the documents/agreements/contracts executed with the customers /investors for the purpose of the scheme. 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. 2. The interim order was forwarded to the Company and its directors on August 19, 214. The copy of the order forwarded to HNC, Mr. Ramnaresh Saket and Mr. Ramadhar Chaudhary were duly delivered. The copy of order forwarded to Mr. Santosh Kumar Saket and Mr. Satish Kumar Arya were not returned undelivered. The Company vide its letter dated September 4, 214, replied to the interim order and requested for an opportunity of personal hearing. Accordingly, SEBI, vide letter dated March 24, 215, afforded an opportunity of hearing to the noticees on April 3, 215. The Company vide its letter dated April 4, 215, confirmed the presence of the directors of the Company for the personal hearing. However, the personal hearing was rescheduled to May 21, 215, due to certain administrative exigencies. The Company vide its letter dated May 11, 215, requested for rescheduling of the date of personal hearing (fixed for May 21, 215) after June 5, 215, on the ground of marriage in the family of one of the directors. The request of the noticees were considered and the personal hearing was rescheduled to July 1, 215. The same was intimated to the noticees vide letter Page 2 of 14
dated June 4, 215. As confirmation of the noticees were not received for the personal hearing, a public notice was issued in newspaper on June 3, 215, intimating thereby about the personal hearing. On the date fixed, the noticees namely Mr. Ramadhar Choudhary and Mr. Satish Kumar Arya appeared for all the noticees and made oral submissions. Vide email dated July 13, 215, Mr. Ramadhar Choudhary submitted the letter of authority for the noticees namely Mr. Santosh Kumar Saket and Mr. Ramnaresh Saket. 3. The submissions of the noticees in brief are as under: a. The Company is a real estate development company. The Company has land bank and the documents pertaining to such lands are available for inspection to all the prospective buyers. All the sums of money received were utilized for the purpose of development of land. The money received by the Company was purely for the purpose of development of lands. b. The brochures or registration certificate does not specify the land details as the proposal of the Company was to provide land to very poor villagers at affordable rates. As these prospective buyers did not have sufficient money to invest, the Company had offered them to make the payments in easy monthly installments and undertook to allot the land as soon as they pay the minimum allotment money. c. The Company gave an exit option to the buyer of land, to surrender the land in favour of the Company in case he finds it difficult to pay the further sale consideration. The customer application form gives an option either to get the plot allotted in its own name or to get the money back with 12% interest. The interest of 12% was payable only to the prospective buyers who does not wish to get the land allotted and does not wish to continue investing the money till the entire sale consideration is paid to the Company. The rate of interest offered in almost at par with the bank interest rate. d. The allotment of land/ plot is not reflected in the balance sheet as the transfer of ownership happens after receipt of the entire consideration amount and then only the Company will be in a position to recognize the same as revenue. e. The entire business of the Company consist of developing the land for habitation purpose and managing the same. The registration certificate reflects that the prospective buyers only have interest/ right over the piece of land equivalent to money Page 3 of 14
given by them and shall not have any control over the Company and other properties of the Company. 4. I have considered the interim order, the reply received along with the documents submitted and the material available on record. The interim order has alleged that the 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 the Company have 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. a. It is noted that the Company had a rule book which was in the nature of promotional material providing the details of the various schemes/ plans offered by HNC to the prospective customers and was used for soliciting/ inviting investments. The schemes as seen from the rule book were mainly categorised as installment scheme and lumpsum payment scheme. A sample of such schemes as mentioned in the interim order is being reproduced below for reference: (Month for 6 months) S. No. Area of land booked TABLE A RIP/A (Installment Scheme) Installments Monthly Quarterly Half- yearly Yearly Amount deposited for land (period - for 5 years) Value of land with profits Compensa tion on accident 1 24 2 585 1,175 2,37 12, 16,2 18, 2 36 3 88 1,775 3,55 18, 24,3 27, 3 6 5 1,475 2,95 5,925 3, 4,5 45, 4 96 7 2,15 4,1 8,2 42, 56,7 63, 5 1,2 1, 2,95 5,9 11,9 6, 81, 9, TABLE B SIP/E (Lump Sum Plan) Years Area of land booked in sq. ft. 1 2 3 4 5 6 7 8 9 1, Lump Sum payment 5, 1, 15, 2, 25, 3, 35, 4, 45, 5, Advance refund 1 5,6 11,2 16,8 22,4 28, 33,6 39,2 44,8 5,4 56, No 2 6,27 12,54 18,81 25,8 31,35 37,62 43,89 5,16 56,43 62,7 No Page 4 of 14
3 7,2 14,4 21,6 28,8 35,1 42,12 49,14 56,16 63,18 7,2 No 4 7,86 15,72 23,58 31,44 39,3 47,16 55,2 62,88 7,74 78,6 Yes 5 8,85 17,61 26,415 35,22 44,25 52,83 61,635 7,44 79,245 88,5,, 6 9,66 19,72 29,58 39,44 49,3 59,16 69,2 78,88 88,74 98,6,, 7 11,45 22,9 33,135 44,18 55,225 66,27 77,315 88,36 99,45 1,1,45,, 8 12,37 2474 37,11 49,48 61,85 74,22 86,59 98,96 1,11,33 1,23,7,, 9 13,855 27,71 41,565 55,42 69,275 83,13 96,985 1,1,84 1,24,695 1,38,55,, 1 15,515 31,3 46,545 62,6 77,575 93,9 1,8,65 1,24,12 1,39,653 1,55,15,, Under one of the lumpsum payment plan i.e. SIP/ E, the Company has promised 12% as yearly profit to its prospective investors. The rule book also finds mention of the emergency loans and compensation for accident/ death to its prospective investors. b. For subscribing to the schemes of the Company, the investors had to execute a customer application form. The salient features of the said customer application form are as under: 2. The allotment of plot/land by the company to customer/investor after completion of the three years as per the actual values of their vested amount for plot which is clearly shown on plan table. I. The allotment of plot /land for amount ranging from Rs.5/- to 2,/- allotted will be 2 to 3 kilometres from the city. II. The advance money deposited for the plot allotment nearby city for amount ranging from Rs.2, to 5,. IV. If any customer is not interested to take plot/land after completion of his/her bounded time period, he will take actual money as per plan table at the time after the plot/land sale to company. 4. Company prescribed one instalment of minimum Rs.5= and maximum Rs.5= for booking plot or by product in single installment. If the plot or product having cost of more than 5=, customer can pay the amount within the proof of income. 5. Company booked difference size of plot or product in the name of customer after advance payment in the multiple of Rs.5= per sqr ft. Due to rate in cases in future will be applicable in agreement terms and Conditions. 6. Customer can register the same plot any time which was booked in his name by company after completed the three years. 7. I. After 3 years if customer wants allotment of plot /land booked by the company, he has to submit written application in this regard in the office. II. Within one month from the date of receiving the application from the customer, location of plot/land will be fixed and allotment will be done by the company. 8. For allotment of plot/ land it is necessary that the customer must have deposited installment at least 3 years on regular basis with the company. Page 5 of 14
9. Customer can sell booked plot/land to company and time after completing three years and receive advance amount along with the 12% annual profit and company terminates agreement at the same time. 1. Customer can book company product or plot on the payment basis of monthly, quarterly, half yearly or yearly installment for the prescribed period of 5,7,9 and 12 years. 13. The company regulates and introduces new payment as specified in rule book (time to time) by rules and regulations and new payment plan is changed at any time without any notice. 14. The changed terms and conditions of company will be applied on the agreement enforced after the change. 17. The customer will not file any suit or any type of interference in distributed plot or purchased product. 18. The customer will not interfere in any work of company he/she is only the part of scheme. 19. The customer will not interfere in the advertisement, development, project related work of the company. 2. All the charges all included for the development in product/ plot of company. c. Another document is a Registration Certificate issued by the Company to its investors against the investments made. The said certificate inter alia contains the details of the plan opted, term of the scheme, date of commitment, date of expiry, land value with profit, expiry value payable to customer or his nominee or his blood relative, etc. The registration certificate is more in the nature of an investment advice. 5. Having gone through the documents of the Company, I note the following: a. By accepting the application form, the Company only books the plot/ land. The Company promises to allot plot/ land to its customers on specific request in this regard after three years. b. The registration certificate issued by the Company to its customers does not provide the location of the plot/ land. However, the same indicates the expiry value payable to the customer. c. From the details of the schemes operated by HNC, it is seen that the costs of all the plots offered by the Company are same. d. The customer/ investor is not entitled to interfere in any work of the Company. e. The customers were provided with the option of selling the booked plot/ land to the Company after completing three years from the date of the application. For the same, the customers were promised to receive the advance amount along with the 12% annual profit. Page 6 of 14
f. The Company has submitted certain sale deed and partnership letters which are in favour of the Company. No sale deeds have been submitted by the Company to show that the plot/ land was sold to the customers/ investors. g. I also note from the interim order/ documents available on record that the Company had offered huge commissions to its agents for promoting its schemes/ plans. 6. 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. The provisions of Section 11AA(1) and (2) are mentioned below: 11AA. (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 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 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; (iv) the investors do not have day-to-day control over the management and operation of the scheme or arrangement. i. The first condition is that the contributions, or payments made by the investors, by whatever name called, are pooled and utilized for the purposes of the scheme or arrangement. In this regard, I note that the Company has admitted that accepted money from the investors/ customers for subscribing to one of its plans offered for the purchase of plot. The investors/ customers by way of an application applies for the purchase of the land. The Company do not identify the land to be sold to such investor/ customer either in the application form or in the registration certificate. As per the terms and conditions stated in the application form, the investor/ customer can book the plot/ land on payment of installment and such plot/ land will be allotted after completion of the three years. Page 7 of 14
As per the clause 7 of the terms and conditions as stated on the reverse of the application form, after completion of the three years of the scheme, if the customer wants allotment of plot/ land, he has to submit a written application in this regard to the Company. Thereafter, within a period of one month the location of the plot/ land is said to be fixed. These facts show that the Company pools the investment made by the customers and as per the application form only after three years of making application allots the land that also after making a specific request. The same is sufficient to find that the 'contributions, or payments made by the investors, are pooled and utilised by the Company for the purposes of the scheme or arrangement'. Thus, satisfying the first condition as stipulated in Section 11AA(2)(i) of the SEBI Act. ii. The second condition is that the contributions or payments are made to such scheme or arrangement by the investors with a view to receive profits, income, produce or property, whether movable or immovable from such scheme or arrangement. As perused from the rule book of the Company, all the schemes of the Company provides for the value of land with profit after the period of the schemes and the compensation on accident. The same shows that the investment/ contributions were made by the investors/ customers with a view to earn profits. The registration certificate issued by the Company also mentions the expiry value payable to customer at the end of the term of the scheme. The relevant clauses of the terms and conditions stated on the reverse of the application form are also relevant to be noted in this regard: 2. IV. If the any customer is not interested to take plot/land after completion of his/her bounded time period, he will take actual money as per plan table at the time after the plot/land sale to company. 9. Customer can sell booked plot/land to company and time after completing three years and receive advance amount along with the 12% annual profit and company terminates agreement at the same time. The Company in its reply to the interim order has submitted that it gives an exit option to the investors/ customers by surrendering the land in favour of the Company, in case he/ she finds difficulty in paying the further sale consideration. It has also been said that the interest was payable only to the prospective buyers who did not wish to get the land allotted and also does not wish to continue investing the money to the Company. These submissions of the Company hints that the schemes of the Company Page 8 of 14
are not mere sale, purchase and development of land and the same are more in the nature of earning profits. 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 can be 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 this regard, the following clauses from the terms and conditions stated in the application form are referred: 5. Company booked difference size of plot or product in the name of customer after advance payment in the multiple of Rs.5= per sqr ft. Due to rate in cases in future will be applicable in agreement terms and Conditions. 17. The customer will not file any suit or any type of interference in distributed plot or purchased product. 18. The customer will not interfere in any work of company he/she is only the part of scheme. 19. The customer will not interfere in the advertisement, development, project related work of the company. The above clauses indicate that the investor/ customer does not manage his/ her investments in the scheme rather the investments were managed by the Company on behalf of its investors. As the contribution/ investment and the plot are managed by HNC on behalf of its customers, they do not have any role in their management. In view of the discussion above, it can be concluded that the schemes of the Company satisfies the third and fourth conditions under Section 11AA (2) of the SEBI Act also. 7. As all the four conditions specified under Section 11AA(2) of the SEBI Act are satisfied in this case, the schemes promoted, launched, carried on and operated by the Company are in the nature of CIS, in terms of Section 11AA of the SEBI Act. Page 9 of 14
8. 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. 9. The activities of the Company are not exempt under the clauses under Section 11AA(3) of the SEBI Act. 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, it becomes necessary to issue suitable directions in the interest of investors and the securities market. 1. Further, in terms of Regulation 4(2)(t) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 23, 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 CIS by any person. This provision in the above Regulations has been brought into effect from September 6, 213. 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 and liable for action. 11. The interim order with regard to the financial statements of the Company had observed as under: From the audited financial statements of the company for the FY 29 1, 21 11 and 211 12, it is observed that the amounts mobilized from customers, cost of land Page 1 of 14
purchased, development expenses etc. incurred by HNC, as stated in the relevant Balance Sheet are as under: (Amount in ) As on As on As on As on March 31, 21 March 31, 211 March 31, 212 March 31, 213 Advances from customers 7,67,8 1,71,17,614 2,9,68,98.5 4,11,52,879.25 Opening Stock (inventory) Land at cost Add: Land development expenses Add: Stationery Closing Stock (inventory) Land at cost Add: Land development expenses Add: Stationery 5161141. 728732.95 35674. 12477547.95 5161141. 728732.95 35674. 12477547.95 5161141. 15224543.29 2385684.29 5161141. 15224543.29 2385684.29 5161141. 24954868.84 31169.84 *It is noted that in financial statements of 21-11, the opening and closing stock are not separately reflected in Schedules. However, profit & loss account shows change in stock includes (a) Land purchase for Rs. 5161141/- and (b) Land development expenses for 728733.75/-. The corresponding figure in profit & loss account for 29-1, is nil. From the above table (stock position), it is observed that the land purchased in 21-11 is continued to be reflected in financial statement as on March 31, 213. This implies that company has not allotted any land to its customers /investors from whom funds were raised. HNC in its reply dated September 4, 214, has submitted that the allotment of land/ plot is not reflected in the balance sheet as the transfer of ownership happens after receipt of the entire consideration amount and then only the Company will be in a position to recognize the same as revenue. I note from the interim order that the Company had 1,528 investors in its various plans/ schemes offered by HNC and the total advance taken from the customers/ investors against land as on January 22, 214, was 4,75,2,825. 12. Liability of the Directors: I note that the interim order was issued against the Company and its directors namely Mr. Santosh Kumar Saket, Mr. Ramnaresh Saket, Mr. Ramadhar Choudhary and Mr. Satish Kumar Arya The details of the appointment and resignations of the directors of the Company are as under: Name Date of Appointment Date of Cession Mr. Santosh Kumar Saket 4/7/28 23/12/213 Page 11 of 14
Mr. Ramnaresh Saket 5/11/29 - Mr. Ramadhar Choudhary 29/1/29 - Mr. Satish Kumar Arya 8/3/21 - From the available records, it is seen that the noticee namely Mr. Ramnaresh Saket, Mr. Ramadhar Choudhary and Mr. Satish Kumar Arya are continuing as directors of the Company. It is noted that the Mr. Santosh Kumar Saket had resigned from the post held in the Company on December 23, 213. I note that the resignation of Mr. Santosh Kumar Saket does not absolve him from the charges levelled in the interim order, in the light of the incorporation of the Company on November 23, 26 and the period during which he was the director of the Company moneys were collected. Therefore, I have no hesitation in holding that the Company and its directors namely Mr. Santosh Kumar Saket, Mr. Ramnaresh Saket, Mr. Ramadhar Choudhary and Mr. Satish Kumar Arya 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. 13. 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. HNC Infrastructures & Shares India Limited [PAN: AABCH9386E], Mr. Santosh Kumar Saket [PAN: BVJPS1765D], Mr. Ramnaresh Saket [PAN: CIMPS822E], Mr. Ramadhar Choudhary [PAN: AMWPC828N] and Mr. Satish Kumar Arya [PAN: AREPA2954N] 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. HNC Infrastructures & Shares India Limited, Mr. Ramnaresh Saket, Mr. Ramadhar Choudhary and Mr. Satish Kumar Arya shall wind up the existing Page 12 of 14
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. c. HNC Infrastructures & Shares India Limited, Mr. Ramnaresh Saket, Mr. Ramadhar Choudhary and Mr. Satish Kumar Arya shall not alienate or dispose off or sell any of the assets of HNC Infrastructures & Shares India Limited except for the purpose of making refunds to its investors as directed above. d. HNC Infrastructures & Shares India Limited, Mr. Santosh Kumar Saket, Mr. Ramnaresh Saket, Mr. Ramadhar Choudhary and Mr. Satish Kumar Arya are directed to provide a full 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. e. HNC Infrastructures & Shares India Limited, Mr. Santosh Kumar Saket, Mr. Ramnaresh Saket, Mr. Ramadhar Choudhary and Mr. Satish Kumar Arya are restrained from accessing the securities market and are prohibited from buying, selling or otherwise dealing in securities market for a period of four years. f. In the event of failure by HNC Infrastructures & Shares India Limited, Mr. Santosh Kumar Saket, Mr. Ramnaresh Saket, Mr. Ramadhar Choudhary and Mr. Satish Kumar Arya, to comply with the above directions, the following actions shall follow: - HNC Infrastructures & Shares India Limited, Mr. Santosh Kumar Saket, Mr. Ramnaresh Saket, Mr. Ramadhar Choudhary and Mr. Satish Kumar Arya 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 years of restraint imposed in paragraph 13(e) above, till all the Collective Investment Schemes of HNC Infrastructures & Shares India Limited Page 13 of 14
are wound up and all the monies mobilized through such schemes are refunded to its investors with returns which are due to them. - SEBI would make a reference to the State Government/ Local Police to register a civil/ criminal case against HNC Infrastructures & Shares India Limited, its promoters, directors and its managers/ persons in-charge of the business and its schemes, for offences of fraud, cheating, criminal breach of trust and misappropriation of public funds; and - SEBI would make a reference to the Ministry of Corporate Affairs, to initiate the process of winding up of the company, HNC Infrastructures & Shares India Limited. - SEBI shall initiate attachment and recovery proceedings under the SEBI Act and rules and regulations framed thereunder. 14. This order shall come into force with immediate effect. 15. This Order shall be without prejudice to thpe 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 HNC Infrastructures & Shares India Limited, Mr. Santosh Kumar Saket, Mr. Ramnaresh Saket, Mr. Ramadhar Choudhary and Mr. Satish Kumar Arya, including other persons who are in default, for the violations as found in this Order. 16. Copy of this Order shall be forwarded to the stock exchanges and depositories for necessary action. Date: January 8, 216 Place: Mumbai PRASHANT SARAN WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA Page 14 of 14