Markets regulator Sebi today ordered Utkarsha Plotters & Multi Agro Solutions and its directors to refund in three months the money collected from investors through unauthorised schemes.
The company and its directors have also been barred from the capital market for four years.
The Securities and Exchange Board of India (Sebi) found that Utkarsha was engaged in fund-mobilising activities from the public by sponsoring or launching a collective investment scheme (CIS) without obtaining regulatory approvals.
It was collecting money from the public to buy undeveloped plots and then convert those into non-agricultural developed plots with road, electricity, water and other infrastructure amenities.
In an order passed today, Sebi asked the company and its directors -- Dipali Mitharam Gurav, Mitharam Chhagan Gurav and Pravin Chhagan Gurav -- to "wind up the existing CIS and refund the money collected by the said company under the schemes with returns which are due to its investors... Within a period of three months".
Thereafter, the firm has to submit a winding up and repayment report within 15 days, including the trail of funds claimed to be refunded and bank account statements indicating repayment to investors, among others.
In addition, they have been barred from selling any assets of the company, except for the purpose of making refunds to its investors.
In case they fail to comply with the order, Sebi said the firm and its directors will continue to be barred from the securities market, even after the completion of four years of restrictions imposed on them "till all the CIS of Utkarsha are wound up and all the money mobilised through such schemes are refunded to its investors with returns which are due to them".
Besides, it will make a reference to the state government/ local police and register a civil/criminal case against Utkarsha and will make a reference to the Ministry of Corporate Affairs to initiate the process of winding up of the firm.
In January last year, Sebi, through an interim order, had put several restrictions on the company. It had observed that the "CIS activities were carried out by the company in the garb of purchase/sale/development of plot(s) of land".
"A thorough review of the exercise is going on but it will
take us a few months to bring it to the same level as securities market," the Sebi chief said.
On providing settlement guarantee fund (SGF) for the commodity exchanges, Sinha said, "before introducing core SGF through our SECC regulations we provided for this money to be set aside."
"The problem is that the commodity exchanges do not have the clearing corporations and by law, three years time is being given to them to set up such facilities. We are engaging them and preparing them on how this can be done at the earliest," he said.
"Commodities market has huge potential of growth but we have to approach it in a cautious manner," he noted.
Bourses are required to maintain SGF as a cushion for any residual risk, and it works like a self-insurance mechanism in the event of a trading member defaulting on settlement obligations.
Following the NSEL scam in August 2013, Commodities Market Regulator FMC was merged with Sebi in September 2015.
