CIS: Sebi slaps Rs 50 lakh fine on Karmbhoomi Real Estate, 5 directors

Markets regulator Sebi has imposed a fine of Rs 50 lakh on Karmbhoomi Real Estate and its five directors for collecting money from investors through illegal collective investment schemes.

The directors are Devendra Pal Singh, Sardar Singh, Nirmal Kumar Singh, Manoj Kumar Sengar and Mahipal Singh.

According to a Sebi order dated September 18, Karmbhoomi had two types of schemes on the basis of payment option available to the investors -- single investment scheme for lump-sum investment and multiple investment scheme for investment in instalments.

Under the two schemes, Karmbhoomi invited investments against the sale of plots of variable sizes. The firm also mentioned the estimated realizable value for the plots under the respective schemes.

On perusal of the balance sheet submitted by the entities, the regulator found that it showed the current liabilities of Rs 16.18 crore under the head 'advance against allotment of plots' for the period ended March 31, 2015.

The schemes of the entities satisfied all four conditions as stipulated under the CIS (Collective Investment Scheme) Regulations, the regulator said.

"... noticees (company and directors) are engaged in the fund mobilising activity from public through investment contracts by floating/ sponsoring/ launching collective investment schemes... without having registration with the Sebi as mandated under... the CIS Regulations for sponsoring/ launching collective investment schemes," it added.

The fresh ruling of the Securities and Exchange Board of India (Sebi) follows an earlier order passed in November 2015 against the noticees whereby the regulator had directed them to abstain from collecting any money from the investors or launch any CIS. They were also asked to wind up the existing schemes and refund the money collected from the investors.

Thereafter, the noticees filed an appeal before the Securities Appellate Tribunal against the November 2015 ruling. The tribunal through its order in November 2017 directed them to make a representation to Sebi setting out in detail the names and the quantum of amount refunded to the investors and the mode and the manner in which the balance amount would be refunded.

It is "difficult" to accept the contention of the noticees that the requisite amount has been refunded to the investors, the regulator said.

Noting that it has already been established that the noticees have mobilised funds from public by launching CISs without having registration with Sebi, the regulator imposed a penalty of Rs 50 lakh on them.