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TMI Blog2015 (2) TMI 1287X X X X Extracts X X X X X X X X Extracts X X X X ..... ts illegal manner of fund mobilization from them. Therefore, wherever such deductions were made, HBN shall make full payments to its investors with returns that were assured. The auditor has also observed that HBN did not provide full chain of repayments and also that it has used the stationery of group companies for making payments. These statements therefore create a doubt as to whether the claim of partial repayments made by the Company, is genuine. Noticee were the directors of HBN at the relevant period time and have resigned later-on. In view of the same, these five notices are also liable and responsible along with Mr. Harmender Singh Sran, Mr. Amandeep Singh Sran, Ms. Manjeet Kaur Sran and Ms. Jasbeer Kaur, for the violations committed by HBN in running CISs without obtaining registration from SEBI as required under law, during the period when they were the directors. Company had all the opportunity to sell its properties since July 12, 2013 (except for the period July 30, 2014 to December 09, 2014, when the restraint order of Hon ble Delhi High Court was operative) and make repayments to its investors. Also note that there was no restraint on recalling the loans and advanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the monies to its investors. e. HBN Dairies Allied Limited and its directors namely Mr. Harmender Singh Sran, Mr. Amandeep Singh Sran, Ms. Manjeet Kaur Sran and Ms. Jasbeer Kaur shall not alienate or dispose off or sell any of the assets of HBN Dairies Allied Limited except for the purpose of making refunds to its investors as directed above. f. HBN Dairies Allied Limited and its directors/ former directors namely Mr. Harmender Singh Sran, Mr. Satnam Singh Randhava, Mr. Amandeep Singh Sran, Mr. Gajraj Singh Chauhan, Ms. Manjeet Kaur Sran, Ms. Jasbeer Kaur, Mr. Rakesh Kumar Tomar, Mr. Sukhdev Singh Dhillon and Ms. Sukhjeet Kaur are also 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. g. In the event of failure by HBN Dairies Allied Limited and its directors namely Mr. Harmender Singh Sran, Mr. Amandeep Singh Sran, Ms. Manjeet Kaur Sran and Ms. Jasbeer Kaur to comply with the above directions on or before March 09, 2015, the following actions shall follow: - HBN Dairies Allied Limited and its directors namely Mr. Harmender Singh Sran, Mr. Amand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated July 23, 2010, sought certain documents/ details from HBN, as the information submitted was incomplete. HBN failed to provide such information/ details within the time specified. SEBI vide its letters dated September 22, 2010 and December 02, 2010, also sent reminders to HBN. Later, HBN vide its letter dated December 23, 2010, withdrew its application for registration, while submitting that it does not wish to initiate the activities covered under the CIS. 3. Thereafter, SEBI again vide its letter dated February 01, 2011, advised HBN to submit the information/ documents sought earlier vide letter dated February 09, 2009. SEBI vide its letters dated March 11, 2011, April 20, 2011 and December 07, 2011, issued reminders to HBN for submitting the information/ documents. Meanwhile, SEBI also sought information from the Registrar of Companies (hereinafter referred to as 'RoC'), Delhi vide letter dated December 07, 2011, in order to ascertain whether HBN has filed annual accounts for the financial years 2009-10 and 2010-11. HBN vide its letter dated December 20, 2011, requested for time for furnishing the information/ documents, as asked by SEBI. Vide another letter dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted a common reply, which was taken on record. The submissions made by HBN, in brief are as under: a. The present management of HBN consists of Mr. Harmender Singh Sran, Mr. Amandeep Singh Sran, Ms. Manjeet Kaur Sran and Ms. Jasbeer Kaur. Other noticees i.e. Mr. Satnam Singh Randhawa, Mr. Gajraj Singh Chauhan, Mr. Rakesh Kumar Tomar, Mr. Sukhdev Singh Dhillon and Ms. Sukhjeet Kaur have ceased to be the directors of HBN and their names may be dropped from the present proceedings. b. The schemes/ plans of HBN are not in the nature of CIS. The money is provided by the customers of HBN to facilitate its business. The said amounts are not solely utilized for the purpose of purchase and rearing of cattle and maintenance of dairy farms but a part of this amount is also used for investment in acquisition of fixed assets and investment of properties through its subsidiary/ associate companies. The properties so purchased commands a good market value and also enhances the security cover of the customers, in case of exigency. c. The agreement entered into with the customer is not with the intention of sharing profits or income of the Company. There exists no share in produce or propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013 (hereinafter referred to as 'interim order') was issued with the following directions: "a. HBN and its directors Mr. Harmender Singh Sran, Mr. Satnam Singh Randhawa, Mr. Amandeep Singh Sran, Mr. Gajraj Singh Chauhan, Ms. Manjeet Kaur Sran, Ms. Jasbeer Kaur, Mr. Rakesh Kumar Tomar, Mr. Sukhdev Singh Dhillon and Ms. Sukhjeet Kaur, shall not solicit or collect any further money/ investments from investors/ customers into its schemes or launch or carry out any money collection schemes. b. HBN and its aforesaid directors shall submit to SEBI, a reasonable proposal including firm time lines with regard to the manner in which it proposes to wind up its schemes and make payments along with the returns which are due to its investors. This proposal shall be submitted within a period of 30 days from the date of this Order. c. HBN and its aforesaid directors shall not dispose of any of the properties including the properties mentioned ..., except for the purpose of winding up of its schemes and repaying the money to its investors/ customers with returns that have been promised to them, ... ...." It was also said that the order is without prejudice to any action t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi. The request was acceded to and the matter was rescheduled to January 16, 2015. On the date fixed, Ms. Anju Jain, Advocate; Mr. Hitesh Sachar, Advocate; Mr. Punkaj Jain, FCA and Mr. Sunil Arora, FCA appeared for the noticees namely HBN, Mr. Harmender Singh Sran, Mr. Amandeep Singh Sran, Ms. Manjeet Kaur Sran and Ms. Jasbeer Kaur and made oral submissions that it has repaid about ₹242 crore to its investors. The representatives also relied upon the written submissions filed on January 15, 2015. During the course of personal hearing, the Company and its directors were asked to explain as to why SEBI should not consider that the Company has failed to fulfill the SEBI order dated July 12, 2013, as it has failed to repay the investors as per the proposal? The Company was also asked to submit the bank account statements from where the about ₹242 crore were disbursed. For replying to the question and submission of documents, fifteen days time was granted to HBN. On persistent requests of the representatives appearing for the noticees, another opportunity of personal hearing was fixed for February 03, 2015. 12. I note that as the hearing notices issued to the noticees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gularly reporting to SEBI about the development vis-a-vis the repayment to the investors and has been adhering to each and every communication/ direction received from SEBI. e. HBN has sold various assets and have also liquidated the investments of the group companies to repay to its investors. It is still in search of prospective buyers for its various properties. However due to the depressed market conditions/ liquidity crunch HBN is facing lack of interest from the buyers towards various properties held by it. The same was also brought to the notice of SEBI on various occasions. SEBI vide its letter dated July 10, 2014, had directed HBN to look into the possibilities of selling its properties through auction or tender process. For the said purpose, HBN had also approached UTI, however, it did not get any positive response in this regard. Further, to repay the investors, HBN also thought it wise to avail loan and for the same it sought clarification from SEBI. f. Due to the stress to repay the investors, HBN is faced with compelling circumstances to sell the properties hurriedly giving rise to a situation to sell the properties at a price much below the expected market price. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 passed an ex parte directions to HBN whereby the Company was restrained from selling, alienating, transferring or parting with the possession and creating any third party rights in the immovable assets of the Company and its subsidiaries. The alleged claim has been settled on September 6, 2014 and HBN has moved an application seeking recalling of the directions of Hon'ble High Court. As per the order dated December 09, 2014, Hon'ble Court has directed HBN that in case of any further assets of HBN are sought to be sold, intimation with regard to the book value of the assets and proposed sale consideration along with the details of recorded owner of the asset shall be furnished to the Hon'ble Court, prior to the transaction being completed. k. HBN has also said that its intentions are good and it would like to pay all its investors. It is financially sound to repay its liabilities. However, it has not been able to adhere to the time lines given by SEBI to repay the investors. HBN has proposed to make repayments as under: TABLE A Financial Year ₹ (in Crore) January 10, 2015 35 2015-16 300 2016-17 300 2017-18 259 HBN also proposed to reserve ₹3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, besides also carrying out the same activities on or behalf of individual or organization on a contractual / joint venture basis." A reading of the objects as stated in the Memorandum of Association shows that the Company is also in the business of breeding and development of livestock and dairy products. b. I have perused the copy of 'rule book' and 'certificate' as submitted by HBN. HBN while applying for registration as CIS had provided a copy of the 'rule book'. - The salient features/ clauses of 'rule book' are being discussed below: "1. Introduction ... ... The demand of quality milk & its allied products has always remained higher than supply. Therefore, the company decided to develop and manage scientific and Modern Dairy Farms with mass participation of public by way of joint-ventures. The joint-venturer shall enter into an agreement with the company on a non-judicial stamp paper after 12 month of receipt of application under category-I plans and after 3 years in case of category-II plans. ... ... ... ... 2. Objectives: 1) ... ... ... ... 5) To further the dairy activity purchase, sale-resale, livestock, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000 50,000 "If the Joint Venturer want to purchase the cattle from the first party's (company) dairy farm and up bringing the cattle into the same dairy farm that can be done as under i. The cost of the cattle includes maintenance expenses which will be paid by the joint venturer to the first party (company) at the time of agreement. ii. The Agreement will be for a fixed period of 6, 6 years and 8 months, 9 year in Category - I. iii. The Agreement cannot be cancelled upto 3 years. After 3 year if the joint venture wants to cancel the agreement, then the first party will charge 25% of the cost of cattle agreed at the time of agreement from the joint venture." - The illustration of plans under Category II is as under: TABLE E Plan No. 'D' for 66 months (5 & 1/2 years) N.O.C. Consideration cost of Cattle/ Ghee Installments * Expected Cost of Developed Cattle/ Ghee Accidental Death Compensation (₹) I.P.M Q. HLY YLY Rs. Rs. Rs. Rs. 1 6,600 100 295 580 1,150 8,550 9,000 2 13,200 200 590 1,160 2,300 17,100 18,000 3 19,800 300 885 1,740 3,450 25,650 27,000 4 26,400 400 1,180 2,320 4,600 34,200 36,000 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny application for joint venture without assigning any reason thereof. .........." The application form finds mention of the Category Plan no., Term of plan, Consideration, Date of commencement, Expiry date of joint venture, Mode of Payment, etc. The application form also contains the details such as the name of applicant, correspondence address, nominee name, etc. It is noted from the 'application form' that the same does not speak anything about the cattle. The salient features as discussed above categorically states that the Joint Venturer shall be repaid only after expiry of the term. d. Joint Venture Agreement: The 'Joint Venture agreement' reads as under: "... ... 4. ... The cost of the cattle includes maintenance expenses, which will be paid by the joint venturer, i.e. second part to the 1st party at the time of agreement. ... That the agreement cannot be cancelled upto 3 years, in case second party cancels the agreement before 3 years, his investment will be refunded after the end of the scheme. However, after 3 years, if the second party wants to cancel the agreement, then the 1st party will charge 25% of the C.O.C. agreed at the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt: Certificate also contains the 'first installment receipt-cum-acceptance letter' which reads as under: "RECEVIED with thanks from the person mentioned as Joint Venturer in the schedule below. The amount of first instalment of subscription alongwith admission fee of ₹ 5/- in pursuance of application made by the said person for Joint Venture with HBN Dairies & Allied Ltd. The said application is hereby accepted by the company subject to Rule Book as amended from time to time." The same also gives the expiry date of the plan. g. From the discussion above, it is observed that HBN was inviting applications from the customers/ investors for the purchase and upbringing of the cattle under its various plans broadly categorised as lump sum and installment. I also note the following: i. For applying the customer/ investor necessarily have to execute a 'Joint Venture agreement' with the Company, in which only the rights of the Company and the returns are mentioned. ii. It is not clear whether on completion of the joint venture, the joint venturer/ investor will get the cattle or ghee. iii. HBN guarantees assured returns on completion of the term a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further stated that instruments such as agro bonds, plantation bonds should be treated as CIS coming under the SEBI Act. All the companies having such activities were required to file information with SEBI. Moreover, general public was also informed that no person can sponsor or cause to be sponsored any new CIS and thereafter raise further funds. Meanwhile, a committee was formed to examine and finalize the draft regulations for CIS to structure a comprehensive regulatory framework. Subsequently, the notification of CIS Regulations was issued on October 15, 1999. As per the CIS Regulations, any person who has been operating a CIS at the time of commencement of the CIS Regulations was required to make an application to SEBI for the grant of registration under the provisions of the regulation, within a period of two months from the date of the notification. No entity was allowed to run a CIS scheme without obtaining the Certificate of Registration from SEBI. i. The definition for 'collective investment scheme' was inserted in the SEBI Act, 1992, vide the Securities Laws (Amendment) Act, 1999 w.e.f. February 22, 2000. According to the definition, CIS means any scheme or arrangemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of subscription to a mutual fund; [ix. such other scheme or arrangement which the Central Government may, in consultation with the Board, notify,] shall not be a collective investment scheme." The term 'securities' in section 2(h) of the Securities Contracts (Regulation) Act, 1956 was amended vide the Securities Laws (Amendment) Act, 1999, w.e.f. February 22, 2000, to include units or any other instrument issued by any collective investment scheme to the investors in such schemes. j. Let me now, proceed to test the characteristics of the impugned schemes/ plans floated and carried on by the Company against the four conditions under Section 11AA(2) of the SEBI Act. 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 its 'rule book', the Company has stated "...The demand of quality milk & its allied products has always remained higher than supply. Therefore the company decided to develop and manage scientific and Modern Dairy Farms with mass participation of public by way of joint-ventures. The joint-venture shall enter into an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BN also finds mention about the profits/ income. Also the admission of HBN in its reply dated July 08, 2013 i.e. the customer who enters into an agreement with the company is entitled to assured returns on the payments so made as per the plans. Further, HBN has also stated the customer is under no obligation to purchase the cattle from the Company and it is optional to buy live stock from it. This makes it clear that the joint venturer/ investor makes contribution/ payment with a view to receive the profits/ income/ property/ return on their 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 condition is that the property, contribution or investment forming part of scheme or arrangement, whether identifiable or not, is managed on behalf of the investors. The fourth condition is that the investors do not have day to day control over the management and operation of the scheme or arrangement. In this regard, I note the relevant clauses from the 'rule book', i.e. Joint Venturers will be repaid on expiry of Term, The cost of the cattle includes maintenance expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d earned retirement benefits or savings in such schemes with a view to earn some sustained benefits or with the fond hope that such investment will get appreciated in course of time. Certain other Section of the people who are worstly affected are those who belong to the middle income group who again make such investments in order to earn some extra financial benefits and thereby improve their standard of living and on very many occasions to cater to the need of the educational career of their children. 38. Since it was noticed in the early 90s that there was mushroom growth of attractive schemes or arrangements, which persuaded the above vulnerable group getting attracted towards such schemes and arrangements, which weakness was encashed by the promoters of such schemes and arrangements who lure them to part with their savings by falling as a prey to the sweet coated words of such frauds, 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 11A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivities of sale of agricultural land and its development. ... ... It is needless to state that as per the agreement between the customer and the PGF Limited, it is the responsibility of the PGF Limited to carry out the developmental activity in the land and thereby the PGF Limited undertook to manage the scheme/arrangement on behalf of the customers. Having regard to the location of the lands sold in units to the customers, which are located in different states while the customers are stated to be from different parts of the country it is well-neigh possible for the customers to have day to day control over the management and operation of the scheme/arrangement. In these circumstances, the conclusion of the Division Bench in holding that the nature of activity of the PGF Limited under the guise of sale and development of agricultural land did fall under the definition of collective investment scheme under Section 2(ba) read along with Section 11AA of the SEBI Act was perfectly justified and hence, we do not find any flaw in the said conclusion. ... .... 53. We, therefore, hold that Section 11AA of the SEBI Act is constitutionally valid. We also hold that the activity of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ote that HBN, vide letter its dated August 08, 2013, had forwarded a repayment proposal/ schedule and a list of its properties. The said proposal/ schedule was examined by SEBI and a detailed procedure for making repayments was forwarded to HBN, vide letter dated January 06, 2014, for necessary compliance. The procedure inter alia required as under: - HBN to provide the details about its investors/ customers to SEBI. - HBN to appoint a SEBI registered Registrar and Share Transfer Agent (hereinafter referred to as 'RTA') after obtaining approval of SEBI within one month for managing the escrow account and handling the entire repayment process. For the said purpose, it had to propose the name of three RTAs to SEBI. On consideration, SEBI to provide no objection to one of the three RTAs proposed by HBN. HBN, its directors, its group companies and their directors should not have any conflict of interest with such RTA. - RTA has to inform the investors about the initiation of the repayment process by way of registered post within 15 days of its appointment, for handling the repayment process. - HBN to open an escrow account with any of the public sector scheduled bank, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s given on March 28, 2014. Later as M/s. Garg Mendiratta and Associates resigned as auditor, HBN appointed a new auditor namely M/s. R Shandilya & Associates. Approval for appointment of M/s. R Shandilya & Associates as auditor and M/s. Garg & Associates as the 'Government approved valuer' was given vide letter dated July 09, 2014. Approval for appointment of S.C. Vohra as the 'Government approved valuer' was given vide letter dated August 21, 2014. Since, SEBI was not receiving any details of the investors and the monthly report on asset realization from HBN. SEBI vide letters dated April 01, 2014, April 21, 2014 and April 25, 2014, had sought said details from HBN. c. HBN vide its letter dated May 06, 2014, informed SEBI that it has opened an escrow account with Bank of Baroda, Parliament Street, New Delhi. Vide this letter, HBN also submitted the list to whom repayment has been made. With regard to the asset realization, HBN informed that as on April 2014, HBN has been able to realize assets worth ₹24,89,09,767. HBN vide its letter dated April 17, 2014, submitted details of its bank accounts as on November 30, 2012. Vide another letter dated April 29, 2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s letter dated May 15, 2014, submitted a representation with regard to the repayment to the investors, while stating as under: - HBN has about 21 lakh investors out of which around 15 lakh investors are holding small sum of investments in the range of ₹100 - ₹5,000 amounting to about ₹200 crore as under: TABLE G S.No. Amount due No. of investors Amount due (in lakh) 1 Upto ₹1,000 9,06,093 ₹3,505 2 ₹1,001 - ₹2,000 2,50,352 ₹3,711 3 ₹2,001 - ₹3,000 1,63,557 ₹4,115 4 ₹3,001 - ₹4,000 1,20,890 ₹4,242 5 ₹4,001 - ₹5,000 98,100 ₹4,450 Total 15,38,992 ₹20,023 HBN has said that most of such investors are located in far flung villages/ rural/ semi urban areas and are mostly illiterate. Therefore, intimating these through the publication of advertisement/ registered post would not serve the purpose and the same will create an unnecessary burden on the Company. It was also said that the investors without understanding the intent of such intimation would make a run on the branch offices/ field staff and create a situation of panic. HBN requested SEBI to dispen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omments. seema f. In line with the discussion on May 15, 2014, HBN vide its letter dated May 19, 2014, forwarded a copy of the newspaper advertisement in relation to the sale of properties. Along with this letter, HBN also submitted copies of the bank statements evidencing the transfer of funds from its several accounts to the escrow account maintained with the Bank of Baroda. Thereafter, a meeting was held between SEBI, HBN and the RTA on June 03, 2014, wherein HBN was suggested to issue an advertisement with regard to the repayment and also to look into the possibility of selling its properties through auction/ tender process. It was also informed by HBN that the escrow account has a balance of ₹31 lakh and that by June 12, 2014, they are expecting a credit of about ₹40 crore. Upon consideration, the request of HBN of making repayments through its branch offices and agents, under the supervision of RTA was accepted and it was said that all the payment must be through the banking channel. g. HBN then issued a public notice in June 2014, in local newspapers of Raipur, wherein, inter-alia it was stated that HBN will repay matured amount through SEBI registered RTA and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payments made by HBN were not through the escrow account. SEBI vide its letter dated October 28, 2014, sought the status of the repayment including compliance of SEBI's earlier letters dated January 06, 2014 and July 10, 2014, from HBN. The details of the amounts credited by HBN in the escrow account was also sought. However, SEBI did not receive any reply to this letter from HBN. Later, vide another letter dated December 18, 2014, HBN informed SEBI that it has repaid ₹242.17 crores to 2,36,307 investors. Thereafter, before the date of personal hearing on January 16, 2014, HBN submitted written submissions, copies of various letters and the orders of Hon'ble High Court of Delhi. Vide another letter dated February 02, 2015, HBN again submitted written submissions. On the date of hearing i.e. February 03, 2015, HBN submitted copies of the bank statements as asked during the course of personal hearing dated January 16, 2014. j. I note that in the recent past SEBI has received more than 1,200 complaints. These complaints inter alia alleged as under: - HBN is not paying the matured amount. In certain cases, HBN has not repaid even after 18-24 months of the maturity date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... four volumes of paper book containing the various bank statements. I note that the bank account statements so submitted by HBN are not in sequence (either bank wise or area wise). However, an attempt was made to cross verify the claim of repayment by HBN and investor complaint on sample basis. For the same, two samples were selected i.e. Mr. Virendra Kumar Loniya and Mr. Ram Dayal Loniya, according to the Company their details are as under: TABLE I S. No. Name of investor Date of investment Amount of investment Maturity date Promised return on maturity Date of repayment Proportionate promised return Mode of payment 1. Virendra Kumar Loniya 29/01/2007 ₹11,040 29/04/2013 ₹18,000 24/01/2014 14,126 Cheque/ DD 2. Ram Dayal Loniya 16/03/2007 ₹9,400 16/06/2013 ₹18,000 24/01/2014 11,522 Cheque/ DD I note that these investors while complaining to SEBI vide their letters dated October 31, 2014 have submitted that the cheque bearing number '561' issued to Mr. Virendra Kumar Loniya dated March 19, 2014, was returned with the remark 'insufficient funds' on June 07, 2014. As regards, the cheque issued to Mr. Ram Dayal Loniya b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9, 2014. HBN vide its letter dated May 13, 2014, intimated SEBI that ₹193.73 crores have been repaid to 2,00,517 investors. It is clear that such repayment, if done were made not through the escrow account. Further, as on December 18, 2014, HBN has claimed to have repaid ₹242.17 crores to 2,36,307 investors again not from the escrow account. - HBN has failed to intimate SEBI about the petition filed by Pier-one Construction Pvt. Limited before the Hon'ble Delhi High Court and the order of Hon'ble Court dated July 30, 2014 i.e. the direction to HBN to restrain from selling, alienating, transferring or parting with the possession and creating any third party rights in the immovable assets of the Company and its subsidiaries. HBN and its directors vide the said order were also restrained from selling, alienating or transferring any of its stock or investment. I note that such directions had direct bearing on the repayment procedure detailed by SEBI. HBN ought to have intimated of these to SEBI immediately. - Later, HBN settled the dispute with Pier-one Construction Pvt. Limited by paying a sum of ₹2.30 crore. The same clearly shows diversion of funds and no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions dated February 02, 2015, HBN had initiated the process of repayment from August 2013 i.e. after filing of the proposal dated August 08, 2013 to SEBI. As on January 27, 2014, it has brought to the notice of SEBI that pursuant to the submission of proposal, it had already paid about ₹140 crores. From the same, it is interesting to note that HBN had repaid about ₹140 crore within a period of five months (i.e. during August 2013 - January 2014). In the second period of one year (i.e. February 2014 - January 2015), HBN has stated to repay only ₹102 crore (i.e. ₹242 crore - ₹140 crore). During the second period i.e. February 2014 - January 2015, HBN had issued various advertisements and in common parlance it should have returned more money than it paid during August 2013 - January 2014. This raises serious doubt about the claim of HBN and the authenticity of the payments made. Further, when HBN had made the proposal of repayment to SEBI then it was not fair on its part to proceed with the repayments. 18. HBN has argued that due to change in auditor and delay in approval by SEBI, the process of concurrent audit has been delayed. This submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payments and also that it has used the stationery of group companies for making payments. These statements therefore create a doubt as to whether the claim of partial repayments made by the Company, is genuine. 19. Now let me deal with the liability of its directors - both past and present. The SCNs have been issued to Mr. Harmender Singh Sran, Mr. Satnam Singh Randhava, Mr. Amandeep Singh Sran, Mr. Gajraj Singh Chauhan, Ms. Manjeet Kaur Sran, Ms. Jasbeer Kaur, Mr. Rakesh Kumar Tomar, Mr. Sukhdev Singh Dhillon and Ms. Sukhjeet Kaur. HBN in its reply dated July 09, 2013, has submitted that Mr. Satnam Singh Randhava, Mr. Gajraj Singh Chauhan, Mr. Rakesh Kumar Tomar, Mr. Sukhdev Singh Dhillon and Ms. Sukhjeet Kaur have ceased to be the directors of HBN the details of their resignation are as under: Table - J Name Date of ceasing Satnam Singh Randhava 20/03/2003 Gajraj Singh Chauhan 30/06/2006 Rakesh Kumar Tomar 01/11/2000 Sukhdev Singh Dhillon 01/11/2000 Ms. Sukhjeet Kaur 20/03/2003 From the above table, I note that the said noticees were the directors of HBN at the relevant period time and have resigned later-on. In view of the same, these five notices are also liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited and its directors namely Mr. Harmender Singh Sran, Mr. Amandeep Singh Sran, Ms. Manjeet Kaur Sran and Ms. Jasbeer Kaur shall forthwith 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, on or before March 09, 2015 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. d. The Company shall provide proof including trail of funds, bank statements to support its contention that it has refunded the monies to its investors. e. HBN Dairies & Allied Limited and its directors namely Mr. Harmender Singh Sran, Mr. Amandeep Singh Sran, Ms. Manjeet Kaur Sran and Ms. Jasbeer Kaur shall not alienate or dispose off or sell any of the assets of HBN Dairies & Allied Limited except for the purpose of making refunds to its investors as directed above. f. HBN Dair ..... X X X X Extracts X X X X X X X X Extracts X X X X
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