WTM/SR/CIS-WRO/ILO/26/02/2015

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

the

matter

of

Suvidha

Farming

and

Allied

Limited

(CIN:U01400MP2010PLC023082; PAN:AAOCS5986Q) and itsDirectors, viz.,Shri Vinod

Kumar Shankhwar (DIN: 02444432; PAN:ATNPS4287P), Shri RajendraKarnRajpoot
(DIN:02444466;

PAN:AJAPR9252L),

ShriPardeshiRam

(DIN:03118992;

PAN:AVGPS2415J), Shri JagdishBisvas(DIN:03119157) andShri Rajneesh Dutta (DIN:

06736734; PAN:ALEPD7075R)
___________________________________________________________________________
1. Securities and Exchange Board of India (hereinafter referred to as "SEBI") received a
complaint

on October 07, 2013 alleging that Suvidha Farming & Allied Limited has

mobilized Rs.600 crores from public by violating CIS Regulations of SEBI. The complainant
provided certain documents in respect of Suvidha Farming & Allied Limited (hereinafter
referred to as "SFAL") and its group company Suvidha Land Developers India Limited and
requested for investigation by SEBI. The case of Suvidha Land Developers India Limited is
being examined separately by SEBI.
2. SEBI, vide letters dated October 24, 2013,sought the following information / documents
from SFALand its Directors in order to ascertain whether or not SFALis carrying on
'Collective Investment Schemes' in terms of Section 11 AA of the SEBI Act, 1992 (hereinafter
referred to as "SEBI Act") :
a. Memorandum and Articles of Association of the Company as filed with the
concerned Registrar of Companies ("RoC");
b. Details of the past and present directors of the company;
c. Brochures pertaining to SFAL's schemes/ offers which were made available to the
public.

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d. Copies of application forms that are required to be submitted by investors/applicants

to participate in SFAL's schemes.
e. Sample copies of the regulations letter and allotment letter issued to the investors
who subscribed to SFAL's schemes.
f. Sample copies of the agreement letter/ contract required to be entered into by
investor/applicant under SFAL's schemes.
g. Details of the scheme wise amount mobilized by SFAL till date along with the
number of investors under the schemes.
h. Certified copy of audited financial statement for the FY 2009-10, 2010-11 and 201112.
i.

Copy of Income Tax Return filed by SFAL for the last three years.

j.

Details of the regulatory approvals obtained by SFAL, if any, for provision of

accidental death/disability benefits to investor, under SFAL's schemes.

k. Details of any other similar scheme(s), if any, floated by SFAL or its group/associates
company.
3. As the aforesaid letters sent to the registered office, regional office and head office of SFAL
were returned undelivered, a SEBI official visited the registered office address of SFAL on
December 18, 2013when SEBI's letter dated October 24, 2013 was received by SFAL.
During the visit, the following information was gathered:
a. SFAL's office was operational and Shri.R. Sarothia was in-charge.
b.

Shri VinodKumar Shankhwar is the main director.

c. The corporate office of SFAL is at G-13, Sector 6, Noida, Uttar Pradesh-201301,

Tel.No.:0120-4512700 and website is www.suvidhafarming.com. The regional office
of SFAL is at 40-A, Prem Nagar, Lashkar, Gwalior-474001.
d. SFAL is following Joint Venture model for cows/ goats purchased and managed
for their associates.
4. No reply was however received to the SEBI letter dated October 24, 2013 . Copies of the
documents forwarded by the complainant were sent to SFAL and its three Directors, viz.
Shri Vinod Kumar Shankhwar, Shri Rajendra Karn Rajpoot and Shri Pardeshi Ram, vide
letter dated January 23, 2014 seeking their comments. In addition to the information sought
vide SEBI'searlier letter dated October 24, 2013, the following information was also sought:

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a. Name, address of each investor and amount deposited by each of them with plan
details & date of investment (from start of company till date);
b. Details of how many persons have been refunded the amount after expiry of
agreement;
c. In case amount taken from investor, details for amount appropriated by SFAL with
reasons;
d. Amount outstanding to each investor;
e. Address of all branches operating in India;
f. Copies of duly filled in application form, registration certificate, agreement executed
in respect of any two investors of each plan offered by SFAL;
g. Details of all the assets purchased from the funds mobilized from public;
h. List of all the bank accounts of SFAL (including name of branch of bank) from start
till date;
i.

Detailed trial balance for 2013-14 till date;

j.

Clarification of amounts in each plan;

k. Provide list of all group companies/companies under same management and inform
about the activities performed by them with their addresses;
5. SFAL, vide fax letter dated February 04, 2014 sought additional time till February 18, 2014to
submit the information/documents. Subsequently, vide letters dated February 17, 2014,
March 24, 2014 and March 31,2014,SFALinter alia provided copies of Memorandum and
Articles of Association, listof past and present Directors, addresses of branches operating in
India, copiesof application forms and certificates issued to Joint Venturers, list of bank
accounts, details of scheme-wise amount mobilized by the company, details of refund after
expiry of agreement, brief note on utilisation of amount received from the investors, details
of investments, copies of audited financial statement for the financial years 2009-10, 2010-11,
2011-12, 2012-13, copies of income tax return for financial year 2010-11, 2011-12, brief note
on accidental help provided to investors, list of group companies, and some data
oninvestors.
6. On perusal of the documents submitted by SFAL, SEBI, vide letter dated July 08, 2014,
sought clarifications /documents from SFAL with regard to the following observations :
a. The names of investors indicated in the copies of application forms and certificates
were not reflected in the data on investors.

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b. The details of year-wise amount mobilizeddid not tally with the total amount paid
by investors as per the data on investors.SFAL later advised that the difference is on
account of some deposits repaid on maturity.
c. The Customer Service Centre (CSC) address indicated in certificates issued to two
investors were not reflected in the list of nine branches submitted by SFAL.
d. SFAL had submitted details of repayments made to investors on maturity. SFAL
was advised to provide a certificate from the management as well as auditor
certifying the repaymentsto investors as per the list provided to SEBI. This has not
been done till now.
e. As per the audited financial statements as on March 31, 2013 submitted by SFAL,
an amount of `3,53,04,947/-was indicated as expenses towards "ORC Commission".
SFAL was advised to provide the list of all its agents (with their designation &
address) alongwithyear-wise commission paid from start till date.
f. SFAL was also advised to provide copy of documents evidencing their submission
of investments (in land, gold and FDRs) made from funds mobilized from public.
7. In response, SFAL vide letter dated July 16, 2014 enclosed one CD containing scanned copy
of their reply, copies of few registries towards land purchase and sought a week's time to
provide comprehensive details with respect to agents and commission paid. In addition,
SFAL also made the following submissions:
"
a) The figures reported to you vide our letter dated March 24,2014 were the actual amounts collected.
b) As regards the discrepancies pointed out by you we would like to present to you that they were the result
of honest omissions and commissions which occurred because of the fact that the information presented was
culled out of a very large database within a very short span of time resulting in the inaccuracies pointed
out by you. ........... We are in the process to settle all maturity month wise after taking mandate from our
client individually...
c) As regards the certificates issued by us to......... the address which is printed on the certificates, is an old
branch address of the company which was shifted in June 2013 to the current address ...."
SFAL vide emails dated July 19, 2014 also provided copy of documents to show that they
have 4 properties in Dehradun, Uttrakhand.

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8. I have carefully considered the material available on record, correspondence exchanged

between SEBI and SFAL, along with the documents contained thereinand information
furnished by the complainant, submissions made by SFAL, etc. In this context, the issue for
determinationis whether the mobilization of funds bySFAL under its schemesfalls under the
ambit ofcollective investment scheme in accordance with Section 11AA of the SEBI Act, 1992
(hereinafter referred to as "SEBI Act").
9. On an examination of the material available on record , it is prima facie observed that:
a) SFAL (CIN: U01400MP2010PLC023082) was incorporated on February 16, 2010as
a private limited company and became a public limited company on July 28, 2010.
Its registered office at House No. 176, Near Habibganj, Behind Railway Track,
Narayan Nagar, Hushangabad Road, Bhopal, Madhya Pradesh-462026.
b) Thepresent Directors of SFAL are Shri Vinod Kumar Shankhwar (DIN:02444432;
PAN:ATNPS4287P);

Shri

02444466;PAN:AJAPR9252L)
PAN:ALEPD7075R).

Rajendra
and

Shri

Further,

PAN:AVGPS2415J) was director

Shri

Karn
Rajneesh

Rajpoot
Dutta

PardeshiRam

(DIN:

(DIN:06736734;
(DIN:03118992;

from 16/7/2010 till 01/12/2013 and

ShriJagdishBisvas (DIN:03119157) was director from 16/7/2010 till 24/6/2011).

c) As per the MoA of SFAL, its mainobject is"to carry on in India or else where the business to
own, lease, manage, run, establish and develop dairy and dairy farms and for this purpose to buy,
sell, trade breed, provide financial assistance, import, export, grow, produce, keep and deal in all
types of cattle including cows, buffaloes, she goats, sheep and to nourish, cherish and nurse them to
extract milk and also to act as dairyman, gardener, breeder, milk collector, milk vendor and use the
milk for manufacturing various dairy products. "
d) A perusal of thevarious brochures submitted by the complainantprovides the
following details:
One brochure,inter alia, provides details of various "Joint Venture Plans" for purchase
of cattle/ goat (of quantity 1 to 10), expected sum payable on expiry of term and

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Accidental Help (A/H) provided by SFAL to investor's nominee. The plans indicated
are :
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.

ii.

Lumpsum 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 sample plan table for one Installment Payment Plan and Lumpsum Payment
Plan is given below:Installment Payment Plan No. S-4 for 4 Years or 48 Months:

No. of

Cost of

Installment No.

Cattle

Cattle/ MLY

QLY

/ Goat

Goat

48

16

HLY
8

Expected Sum

A/H

YLY

payable on

(Accidental

expiry of term

Help)

cattle
2

4800

100

295

580

1150

7250

4800

9600

200

590

1160

2300

14500

9600

14400

300

885

1740

3450

21750

14400

19200

400

1180

2320

4600

29000

19200

10

24000

500

1475

2900

5750

36250

24000

12

28800

600

1770

3480

6900

43500

28800

14

33600

700

2065

4060

8050

50750

33600

16

38400

800

2360

4640

9200

58000

38400

18

43200

900

2655

5220

10350

65250

43200

20

48000

1000

2950

5800

11500

72500

48000

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Lumpsum Payment Plan No. S-F 3 for 6 years

No.

of Cost of Cattle/ Expected

Cattle/

Cow

Sum

payable on expiry of

Cow

term Cattle 6 year

A/H
(Accidental
Help)

6000

12300

6000

12000

24600

12000

18000

36900

18000

24000

49200

24000

30000

61500

30000

36000

73800

36000

42000

86100

42000

48000

98400

48000

54000

110700

54000

10

60000

123000

60000

The brochure (translated version)inter aliaprovides as follows:

i.

SFAL purchases agricultural / barren lands and makesit 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 LumpSum Payment and
Installment Payment Plans and as per these plans, the investor
chooses the cattle and after all formalities are completed, SFAL 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 theseplans, the rearing of cattle takes place
in SFAL's farm houses.

iii.

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

iv.

SFAL also provides Accidental Help (A/H) upto`150000/- to the

nominees of the Joint Venturer.

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A second brochure indicates the commission structure offered by SFAL to 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.
A third brochure Rule Book for F.A. & Joint Venture provides details of various
plans and other information for the agents and investors.
e) SFAL's letter dated February 17, 2014 to SEBI inter alia provides the following
details:

As per the copies of filled in application forms and registration certificate

issued for each of the Plans, it is observed that SFAL collects the
contributions from investors as per the Plan opted.

The terms and conditions of the application form inter aliastates:

"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)...."

The General Terms and Conditions in the Certificate issued by SFAL inter
alia states:
"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."

SFAL has branches in 9 locations and 21 bank accountswith HDFC Bank,

Axis Bank, ICICI Bank, Yes Bank, Bank of India and Vijaya Bank.

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f) A perusal of the documents /information submitted by SFAL vide letter dated

March 24,2014 to SEBI provides following details:
i.

In a brief note attached on Accidental Help (A/H), SFAL has submitted 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" SFAL has submitted as follows:
"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........"

iii.

As per the plan-wise amount mobilized by SFAL, detailed below, SFAL has
mobilized an amount of approximately `28.22 crores from 2,69,905 investors
during the financial years 2010-11 to 2013-14 :

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2010-11
Plan Code

Total amount mobilized(`)

No. of investor

S1

2970

10

S10

44552

63

S2

1682

10

S3

44856

151

S4

34195

111

S5

3483177

6646

S6

484852

672

S7

40271

34

S8

63490

72

S9

16597

40

SF1

65679

SF2

145577

13

SF3

575395

23

SF4

943680

36

SF5

543605

19

SF6

1128210

42

SF7

1318415

58

SFM2

19989

10

SFM3

1889505

21

10846697

8034

Grand Total

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2011-12
Plan Code

Total Amount Mobilized (`)

S1

No. of investors

9523

33

S10

132164

192

S2

52631

57

S3

713101

1314

S4

308470

625

S5

12019671

33230

S6

4551888

5219

S7

269006

259

S8

160781

452

S9

115121

134

SF1

553105

29

SF2

789002

106

SF3

2002745

109

SF4

1621100

100

SF5

5128620

192

SF6

8442490

258

SF7

6194365

298

SF8

1432170

39

SFM1

112810

SFM2

330162

100

SFM3

8479275

95

53418200

42843

Grand Total

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2012-13
Plan Code

Total Amount Mobilized(`)

No. of Investors

S1

140548

220

S10

235160

317

S2

168443

275

S3

1971105

3885

S4

595020

962

S5

35856561

57665

S6

11124827

15296

S7

655172

550

S8

242898

416

S9

311552

310

SF1

1237965

57

SF2

1219065

165

SF3

1999335

123

SF4

3788315

223

SF5

4968600

216

SF6

15091495

519

SF7

19849415

733

SF8

6065725

260

SFM2

567739

232

SFM3

10843560

132

116932500

82556

Grand Total

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2013-14 (upto January 31, 2014)

Plan Code

Total Amount Mobilized (`)

No. of Investors

S1

969213

1094

S10

522140

586

S2

255788

415

S3

2970417

5603

S4

597788

1120

S5

51654215

102300

S6

14699508

22212

S7

998060

924

S8

234144

419

S9

314494

343

SF1

530338

26

SF2

137439

27

SF3

212745

21

SF4

2077895

79

SF5

775945

41

SF6

5315130

226

SF7

9409815

613

SF8

1892560

107

SFM2

578726

228

SFM3

6896240

88

101042600

136472

Grand Total
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:

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As on March 31,
2011
(`)

As on March 31, As on March 31,

2012
2013
(`)
(`)

Major Liabilities
Advance received from
customers
Major Assets

1,08,46,697.00

6,41,06,191.00

17,77,21,932.00

Tangible Assets

13,77,496.00

2,00,83,102.00

2,91,09,536.00

Bank balance

51,13,327.32

2,02,04,395.13

2,45,95,387.53

Cash in hand

5,63,047.00

11,21,508.00

12,03,513.00

4,23,86,546.31

5,21,200.00

23,47,115.00

76,24,711.92

Investments
Other current assets (mainly
loan & advances)

During these years, the commission paid/ payable to agents involved in

mobilization of funds from customers is given below:2010-11 (`)

ORC Commission paid

2011-12 (`)

14,64,637.00

Commission payable

Total Commission

14,64,637.00

2012-13(`)

2,04,94,871.00

3,53,04,947.00

41,63,249.00

4,59,992.00

2,46,58,120.00

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 (`)

2012-13 (`)

Animal husbandry consultancy fees

22,01,500.00

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/-.

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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...."
10. The aforementioned details of the Plans towards purchase

of

agricultural, barren

lands,cows, goats and sheep and of developing farms wherein the cows, goats and sheep are
reared and taken care ("Schemes")offered by SFAL to investors (termed as 'Joint Venturer')
have to be considered in light of the provisions 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 under :
"(1) Any scheme or arrangement which satisfies the conditions referred to in sub-section (2) 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 personunder 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;

(iv)

the investors do not have day to day control over the management and operation of the scheme or
arrangement.

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11. In the context of the abovementioned Section 11AA of the SEBI Act, the 'Schemes' offered
by SFAL 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;
It is noted from the various plans offered in the brochures, the application forms
andregistration certificatesthat SFAL invites funds from public through its various
Plans for purchase of agricultural, barren lands, cows, goats and sheep and for
developing farms wherein the cows, goats and sheep are reared and taken care of. At
the end of term of the Plan, the investor (termed as 'Joint Venturer')has the option to
either opt to get the cattle in his name or the specified money as per the Plan opted.
SFAL has in their submissions stated that ".......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. SFAL's Balance Sheet as on March 31, 2013
states that an amount of `17,77,21,932/- has been received as "Advance from the
Customers". From a reading of SFAL's submissions, it is apparent that these "Advances
from the Customers" are later pooled and utilized for purchasing and rearing cattle. As
the contributions received from the investors under SFAL's various Plans are pooled
for the purpose of the 'Schemes',prima facieit is clear that the instant 'Schemes' satisfies the
first condition stipulated in Section 11AA(2) 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 noted that theCertificate 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 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 Point 9 on page6 of this order, prima faciefor
an investor paying an amount of Rs.100/- per month for 48 months for cattle/goat

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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 amountat
the expiry of term.
As stated in the brochure, SFAL provides Accidental Help (A/H) upto Rs.1,50,000/to the nominees and the investor also has the option of emergency loan service after 12
months on 60% of amount paid. Further, as per SFAL's submissions, ".....The A/H is
the financial assistance to the family/dependant... The said financial assistance is in nature of help and
Co. is not charging any extra / additional money for this..... ".
SFAL has also in their submissions stated that ".......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.
In light of the aforesaid,prima facie the nature of benefits receivable by the investor at the
expiry of term indicates an element of return for which money has been provided by the
investorsto SFAL. Hence, the second condition, which stipulates 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, in Section 11AA (2) 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;

(iv) The investors do not have day to day control over the management and

operation of the scheme or arrangement.

It is noted from the brochures, application forms and registration certificates that
SFAL collects the contributions from investors as per the Plan opted and
contributions received are utilized for purchase of land/cattle and rearing of cattle.
SFAL manages these Plans on behalf of investors during the agreed term of Plan. At
the end of term of the Plan, the investor has the option to either opt to get the cattle
in his name or the specified money as per the Plan opted. Prima facie, it appears that the

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investor has no say in the purchase of land/cattle and SFAL collects the amount as per
the Plan opted by the investor in the application form.
Further, as stated in the brochure, the rearing of cattletakes place in SFAL's 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 SFAL on behalf of the
investors.
In view of above, it is clear that the investors do not have day to day control over the
management and operation of the 'Schemes.' I, therefore, find that the instant 'Schemes'
satisfies the third and fourth condition stipulated in Section 11AA(2) of the SEBI Act.
12. In the context of the 'Schemes' being in the nature of a ''Joint Venture', it may be relevant to
refer to the observations of the Honble Supreme Court of India in New Horizons Ltd. vs.

Union of India [1995(1) SCC 478] regarding the nature of a joint venture that:The expression joint venture. connotes a legal entity in the nature of a partnership engaged in the
joint undertaking of a particular transaction for mutual profit or an association of persons or
companies jointly undertaking some commercial enterprise wherein all contribute assets and share risks.
It requires a community of interest in the performance of subject matter, a right to direct and govern the
policy in connection therewith, and duty, which may be altered by agreement, to share both in profit and
losses. (Blacks law dictionary, sixth edition, p. 839).
13. It has further been illustrated by Honble Supreme Court in Faqir Chand Gulati vs. Uppal

Agencies Pvt. Ltd. {(2008)10SCC345} that An illustration of joint venture may be of some
assistance. An agreement between the owner of a land and a builder, for construction of apartments and sale
of those of apartments so as to share the profits in a particular ratio may be a joint venture, if the agreement
discloses an intent that both parties shall exercise joint control over the construction/ development and be
accountable to each other for their respective acts with reference to the project.

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14. Thus, it implies that the joint venture arrangement should be a genuine joint undertaking of a
particular transaction with share of both parties in profit and losses arising thereof.
Irrespective of the nomenclature the present 'Schemes', do not fall within the meaning of
Joint Venture since SFAL offers assured returns to investors irrespective of profit and
losses. Also, the element of joint control over the plans/cattle does not exist.
15. In view of the above analysis, it is apparent that the 'Schemes' offered by SFAL having
nomenclature Joint Venture is not a joint venture in accordance with law but rather such
term has been used by SFAL to camouflage its fund mobilizing activity which is in the nature
of a ''CIS' in order to mislead and attract investment from general public.
16. It is also disconcerting that the total "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.
17. In this context, it may be relevant to refer to the observations made by the Honble Supreme
Court of India in P.G.F. Limited & Ors. Vs. UOI & Anr. (MANU/SC.0247/2013),
wherein it was stated: ...sub-section (2) of Section 11AA, which defines a collective investment scheme
disclose that it is not restricted to any particular commercial activity such as in a shop or any other commercial
establishment or even agricultural operation or transportation or shipping or entertainment industry etc. The
definition only seeks to ascertain and identify any scheme or arrangement, irrespective of the nature of business,
which attracts investors to invest their funds at the instance of someone else who comes forward to promote such
scheme or arrangement in any field and such scheme or arrangement provides for the various consequences to
result therefrom.
18. In the light of the above analysis and examination, it is clear that the activity of fund
mobilization by SFAL with a promise of returns prima facie satisfies all four conditions
specified in Section 11AA (2) of the SEBI Act and hence falls within the ambit of 'Collective
Investment Schemes' as defined under Section 11AA of the SEBI Act.

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19. I note that 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") also prohibits
carrying on CIS activities without obtaining registration from SEBI. Therefore, the
launching/ floating/ sponsoring/causing to sponsor any 'collective investmentscheme' by any
'person' without obtaining the certificate of registration in terms of theprovisions of the CIS
Regulations is in contravention of Section 12(1B) of the SEBI Act and Regulation 3 of the
CIS Regulations. In this regard, I note that SFAL has not obtained any certificate of
registration from SEBI under the CIS Regulations for its fund mobilizing activity from the
public, under the instant'Schemes' offered by it.
20. I also find that the fund mobilizing activity of SFALprima facie, amounts to a fraudulent
practice in terms of Regulation 4(2)(t) of the SEBI (Prohibition of Fraudulent and Unfair
Trade Practices Relating to Securities Market) Regulations,2003("PFUTP Regulations").
21. Protecting the interests of investors is the first and foremost mandate for SEBI and
therefore, steps have to be taken to ensure that SFALdoes not collect further fundsunder its
'Schemes'and no investors are defrauded. Further, in order to safeguard the assets/property,
acquired by SFAL and its Directors using the funds collected from the investing public until
full facts and materials are brought on record and a final decision is taken in the matter, it is
incumbent on SEBI to take preventive action by way of an immediate measure. In the light
of the same, I find no other alternative but to take recourse through an interim order against
SFALand its Directors for preventing them from further carrying on with its existing fund
mobilizing activity by launching collective investment scheme without registration from SEBI in
accordance with law.
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 SFALand its Directors viz.,Shri Vinod Kumar Shankhwar
(DIN: 02444432; PAN:ATNPS4287P), Shri Rajendra Karn Rajpoot (DIN:02444466;
PAN:AJAPR9252L), Shri PardeshiRam (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;

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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 inforce 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.
25. The prima facie observations contained in this Order are made on the basis of the material
available on record. In this context, SFAL and its abovementioned Directors may, within 15
days from the date of receipt of this Order, file their reply, if any, to this Order and may also
indicate whether they desire to avail themselves an opportunity of personal hearing on a date
and time to be fixed on a specific request made in that regard.

Place: Mumbai
Date: February 12, 2015

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S. RAMAN
WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA

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