WTM/SR /CIS-ILO/WRO/ 89 /11/2014

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA

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 Regulations 65 of the Securities and Exchange Board of India
(Collective Investment Schemes) Regulations, 1999 in the matter of Garima Real
Estate & Allied Limited (PAN-AADCG0853B) and its Directors viz., Mr. Banwari
Lal

Kushwah

(PAN-AAGPF1976L),

Mr.

Balkishan

Kushwah

(PAN-

AVQPK4360A), Mr. Shivram Kushwah (DIN: 02338542), Mr. Banabarilal Lodhi

(DIN: 01759136), Mr. Bijendra Pal Singh (DIN: 01781312) and Mr. Jitendra Kumar
(DIN: 06719377).

1. Securities and Exchange Board of India ("SEBI") received an order dated July 13,
2012, passed by the Honble High Court of Madhya Pradesh (Gwalior bench), in the
matter of Dharmvir Singh and Another Vs. Union of India & Others (Writ Petition No. 3332
of 2010) which was forwarded by the Department of Financial Services, Ministry of
Finance, Govt. of India, vide their letter dated September 21, 2012. The Petitioner
therein viz., Dharmvir Singh had filed a Public Interest Litigation seeking order of
enquiry against various financial companies including Garima Real Estate & Allied
Limited ("Garima"). The petitioner had alleged that thousands of residents of State
of Madhya Pradesh have been cheated by various companies/finance companies
under the garb of various schemes, inducing investors/public to make deposits
promising higher return of interest ranging from 15-20%. The Hon'ble Court
directed that copy of the Order dated July 13, 2012 shall be forwarded to the various
authorities including SEBI to take appropriate action in accordance with law.
2. As a matter of preliminary enquiry into whether or not Garima was carrying on
activities of 'collective investment scheme' in terms of Section 11 AA of the SEBI Act,
1992 ("SEBI Act"), SEBI vide letter dated November 22, 2012, sought the following
information from Garima in relation to its business activity, viz.:

Brought to you by http://StockViz.biz

117

i.

Memorandum and Articles of Association (" MoA" and "AoA") of the company as filed with
the Registrar of Companies,

ii.

Details of the past and present directors of the company. Details should contain name, address,
PAN and contact details (Email/fax/contact no) of the directors,

iii.

Brochures/offer document pertaining to the schemes/arrangements,

iv.

Copies of application forms that are required to be submitted by investors / applicant to participate
in Garima's schemes,

v.

Sample copies of the registration letter/ allotment letter or any other document issued to the investors
who subscribe to Garima's schemes,

vi.

Sample copies of the agreement letter / contract required to be entered into by investor /applicant
under Garima's schemes,

vii.

Details of the scheme wise and year wise amount mobilized by Garima till date along with the
number of investors under the schemes,

viii.

Certified copy of audited financial statement for the last three financial years,

ix.

Copy of Income Tax Return filed by Garima for the last three financial years,

x.

Details of the regulatory approvals obtained by Garima, if any, for provision of accidental death/
disability benefits to investor, under Garima's schemes,

xi.

Details of any other similar scheme(s), if any, floated by group/associates of Garima.

3. The said letter was however returned undelivered with the remarks "left". SEBI issued
another letter dated August 5, 2013 to Garima and its past and present Directors viz.,
Mr. Banabarilal Lodhi, Mr. Bijendra Pal Singh, Mr. Shivram Khuswah, Mr. Balkishan
Kushwah and Mr. Banwari Lal Kushwah. The letters to Garima and two Directors
viz. Mr. Balkishan Kushwah and Mr. Banabarilal Lodhi were acknowledged. In
response, Garima vide letter dated September 18, 2013 (received on September 24,
2013) sought extension of time for additional 15 days. The same was allowed by
SEBI till October 12, 2013. Copy of the said letter was also addressed to Directors of
Garima. It is noted that letters addressed to Garima and one of its Directors viz.,
Mr. Shivram Khuswah were returned undelivered. However, Mr. Bijenderpal
Singh(Director of Garima) acknowledged the letter. No response/ acknowledgment
was received from other Directors. Another reminder vide separate letters dated
November 07, 2013 were sent to Garima and its Directors. The said letters were
returned undelivered except for Mr. Banabarilal Lodhi who acknowledged receipt of
the letter.

Brought to you by http://StockViz.biz

217

4. Subsequently, on November 28, 2013, a complainant visited SEBI's Indore Local

Office and informed about fund raising activity of Garima in their area by assuring
high returns through investment in land. The Complainant provided Garimas
Career & Rule Book for agents, which contained various schemes offered by Garima
and commission structure to agents for funds mobilized and a copy of registration
certificate issued by Garima to an investor. The complainant has also alleged about
the fund mobilization activities carried out by the group companies of Garima.
5.

In response to SEBI's letter dated August 05, 2013, Garima vide letter dated
December 05, 2013 inter alia, furnished the following documents:a)

MoA and AoA of the company as filed with the Registrar of Companies,

b) Details of the past and present directors of the company.

c)

Brochures/offer document pertaining to the schemes/arrangements,

d) Copies of application forms

e)

Sample copies of allotment letter issued to the investors who subscribe to the schemes

f)

Sample copies of the agreement letter / contract required to be entered into by investor /applicant
under the schemes

g)

Details of the scheme wise amount mobilized by Garima 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, 2011-12 and 201213, copies of IncomeT ax Returns filed by Garima for the last three financial years.

6. I have carefully considered the material available on record such as correspondence

exchanged between SEBI and Garima along with the documents contained therein,
submissions made by Garima and information and documents furnished by the
Complainant, etc. In this context, the issue for determination is whether the
mobilization of funds by Garima under its schemes fall under the ambit of "Collective
Investment Scheme" provided in Section 11AA of the SEBI Act.
7. On an examination of the material available on record, it is prima facie observed:
(a) Garima (CIN: U70100MP2007PLC019955) was incorporated on October 29, 2007
having its registered office at 403-Souraw Plaza, Gole Ka Mandir, Gwalior 474001. Its present Directors are Mr. Banabarilal Lodhi, Mr. Shivram Kushwah
and Mr. Jitendra Kumar. As per the details furnished by Garima two of its earlier
Directors viz., Mr. Banwari Lal Kushwah and Mr. Balkrishan Kushwah resigned
Brought to you by http://StockViz.biz

317

from the directorship with effect from July 20, 2010 and April 15, 2013
respectively.
(b) As per the brochures containing the schemes, the plans offered by Garima were
Plan B1 (for 5 years), Plan B2 (for 5 years & 6 months), Plan B3 (for 8 years and 4
months), Plan C1 (for 6 years), Plan C2 (for 8 years & 11 months) and Plan C3 (for
10 years and 6 months). Each plan offered investment in plot of land of size from
800 sq. ft. onwards. Garima offers an exit option to the applicants after the expiry
of terms of the respective plans with a refund of estimated realizable value as per
the opted plans. If the applicant opts to continue with the plan at the end of 15
years(term) investor needs to make payment of specified amount for effecting
registration of plot. For instance, the details provided in respect of plan B1 is as
under:Plot size

No of Instalments

Exit option 5

At the end of 15 yr. Payment due

for registration of plot

in sq. ft. Monthly Quarterly

Half-yearly

Yearly

years Estimated

60

10

Realizable Value

20

in `

800

110

325

640

1265

9400

993400 + Registration
charges

1200

220

650

1280

2530

18800

1486800 + Registration
charges

1600

330

975

1920

3795

28200

1980200 + Registration
charges

2000

440

1300

2560

5060

37600

2473600 + Registration
charges

2400

550

1625

3200

6325

47000

2967000 + Registration
charges

(c) It is noted from the above table that Garima is collecting funds from the public
under its various Lumpsum Payment Plans and Instalment Payment Plans. The
'applicant'/investors who are interested in the aforesaid schemes are required to
execute an 'Application form along with an Agreement' with Garima. Upon execution of
the same, Garima issues a 'Registration Letter'.

Brought to you by http://StockViz.biz

417

(d) As per the details submitted by Garima vide letter dated December 05, 2013,
Garima stated that an amount of `55,22,35,396/- was collected under its Plans B1,
B2, B3, C1, C2 and C3 from 1,08,791 investors and repaid an amount of
`45,87,20,787/-. Further, an amount of `9,35,14,609/- is stated to be the payment
outstanding towards 15,683 investors. There was no proof of repayment attached
in this regard.
(e) Garima stated that no regulatory approvals were taken for accidental
death/disability benefits to investors. It also informed that no other scheme was
floated by the company.
8. On an examination of the documents provided by the complainant the following are
noted :a) Nature of activity- Garima is stated to be engaged in buying and selling of land. It
is contended that company develops the land and shares the profit with its
customers/investors. In case all the formalities are completed, the land is later
transferred to the customer. In case the customer does not want the land, money
will be returned as per rules/plans.
b) Branches: The head office of Garima is at 'Garima', Shri Kalyan Tower, Opp.
Basant Talkies, Thatipur, Gwalior (M.P.). It has various branches at
Gwalior(M.P.), Dholpur (Rajasthan), Jaura (M.P.), Champa (Chhatisgarh),
Rajgarh (M.P.), Korba (Chhatisgarh), Raipur(Chhatisgarh), Shivpuri (M.P.),
Bharatpur (Rajasthan), Shahdol (M.P.), and Agra (U.P.).
c)

Plans offered:- Garima is offering Plan B1 (for 5 years), Plan B2 (for 5 years and
6 months), Plan B3 (8 years and 4 months), plan B4 ( 3 years and 6 months), Plan
B5 (for 6 years). The details of Plan B1 (for 5 years) is as under:-

Land

Amount Monthly Quarterly

in `

size

60

20

Yearly

Expected cost

A/R

yearly

of land

Benefit*

10

(sq. ft.)
132

6600

110

325

640

1265

9400

9900

264

13200

220

650

1280

2530

18800

19800

396

19800

330

975

1920

3795

28200

29700

528

26400

440

1300

2560

5060

37600

39600

660

33000

550

1625

3200

6325

47000

49500

Brought to you by http://StockViz.biz

Half-

517

d) It is noted that there were various plans launched by Garima such as plan D1(5
years), Plan D2(6 years), Plan D3( 7 years), Plan D4(8 years), Plan E1(6 years),
Plan E2( 7 years), Plan E3(8 years), Plan E4 (9 years). For example, the details of
plan D1 and E1 are given below:Plan D1
Land size Amount Monthly Quarterly Half-yrly Yearly

Expected cost

A/R

(sq. ft.)

in `

60

20

10

of land

Benefit*

240

11500

200

590

1160

2300

17100

18000

480

23000

400

1180

2320

4600

34200

36000

720

34500

600

1770

3480

6900

51300

54000

960

46000

800

2360

4640

9200

68400

72000

1200

57500

1000

2950

5800

11500

85500

90000

Expected cost

A/R

of land

Benefit*

Plan E1
Land size Amount Monthly Quarterly Half-yrly Yearly
(sq. ft.)

in `

72

24

12

200

10000

147

433

853

1667

15500

18000

400

20000

294

866

1706

3334

31000

36000

600

30000

441

1299

2559

5001

46500

54000

800

40000

588

1732

3412

6668

62000

72000

1000

50000

735

2165

4265

8335

77500

90000

e) Apart from the above stated instalment payment plans, there were other lumpsum payment plans such as Plan C1 (6 years), Plan C2 ( 8 years & 11 months),
Plan C3 (10 years & 6 months), Plan C4 ( 1 year) & Plan C5 special (6 years). For
example, the details of plan C3 are as under:Plan C3
Land size

Amount

Expected cost of land

A/R
Benefit*

ft.)

(Rs.)

20

1000

4000

1500

100

5000

20000

7500

200

10000

40000

15000

400

20000

80000

30000

1000

50000

200000

75000

2000

100000

400000

120000

Brought to you by http://StockViz.biz

(sq.

617

f) Commission offered by Garima is tabulated as under:

Plan B1, B2, B3, B5, D all, E all
Rank

A/R

Year
I

II

III

IV

V+

Benefit*

Agent

22

10.5

7.27

5.25

5.25

21000

Field Officer

0.5

0.5

0.5

0.5

21000

Development Officer

0.5

0.5

0.25

0.25

21000

Organizer

0.5

0.5

0.25

0.25

30000

Zonal Officer

0.5

0.5

0.25

0.25

30000

Sr. Zo. Officer

0.5

0.5

0.25

0.25

30000

Development Advisor

0.5

0.5

0.25

0.25

35000

Inspector

0.5

0.5

0.25

0.25

40000

Regional Manager

0.25

0.25

0.25

0.25

50000

Zonal Manager

0.25

0.25

0.25

0.25

80000

Executive Manager

0.25

0.25

0.25

0.25

100000

Total commission

48

14.75

11.52

*the details and nature of A/R benefits are not provided by Garima till date.
g) It is noted from the 'Rule book for agents' that Garima is offering very high
commission which is as much as 48% in the first year to its agents and other
officials for mobilisation from public opting for instalment Plans. This amount
reduces to 14.75% in 2nd year, 11.52% in 3rd year and 8% from 4th year
onwards. In respect of investors opting for lump sum payment and also for
instalment plan of 3 years 6 months, the commission structure is as under:Other Plans
Rank

CI

C2

C3

C4

C5

B4

Agent

11

Filed Officer

0.1

2.5

Development Officer

0.1

Organizer

0.1

1.5

Zonal Officer

0.5

0.5

0.5

0.1

0.5

Sr. Zo. Officer

0.5

0.5

0.5

0.1

0.5

Development Advisor

0.5

0.5

0.5

0.1

0.5

Inspector

0.5

0.5

0.5

0.1

0.5

Regional Manager

0.5

0.5

0.5

0.1

0.5

Zonal Manager

0.5

0.5

0.5

0.1

0.5

Executive Manager

0.5

0.5

0.5

0.1

0.5

Total

12.5

13.5

15.5

12.5

24

Brought to you by http://StockViz.biz

717

h) Accidental benefit :- Garima has created a joint venture social welfare fund,
whose contribution is given by the company only. In case the joint-venturer dies
due to accident, compensation is offered out of said fund. This will be applicable
after 6 months from start of scheme. Further, maximum compensation shall not
be more than `1,20,000/-.
9. On comparison of documents provided by Garima and those provided by

complainant the following differences were observed.

(I) As per Garimas reply dated December 05, 2013 there were Plan B1, Plan B2,
Plan B3, Plan C1, Plan C2 and Plan C3 (total 6 plans). However, as per the
booklet titled Career & Rule Book for agent issued by Garima 13 Instalment
Payment Plans were offered. Plan B1 (5 years), B2 (5 years and 6 months), B3
(8 years & 4 months), B4 (3 years & 6 months) & B5 ( 6 years), Plan D1( 5
years), Plan D2 ( 6years), Plan D3 (7 years), Plan D4(8 years), Plan E1(6 years),
Plan E2(7 years), Plan E3(8 years), Plan E4 ( 9 years). All these plans have
monthly, quarterly, half-yearly and yearly options. Further there were 5 lump
sum payment plans viz., Plan C1 (6 years), Plan C2 (8 years 11 months), plan
C3 (10 years 6 months), Plan C4 (1 year) and Plan C5 Special (6 years).
(II) As per the data provided by Garima, in respect of Plan C3 it is indicated that
the plot sizes offered were of 800 sq. ft, 1200 sq. ft. and 1600 sq. ft. However,
as per the registration certificate issued by Garima to one of its investors viz.,
Shri Bhan Vati Maravi (registration no. C30110027205 dated 30-4.2011) the
land size is stated to be 200 sq. ft. Similarly, Plan C3 provided in Career & Rule
Book for agent mentions the land size as 20 sq. ft. There are thus too many
inconsistencies in respect of land area of different schemes as mentioned in
various documents viz., data provided by Garima, registration certificate issued
to an investor, Career and Rule Book for agent etc.
(III) In view of the aforesaid differences, SEBI vide letter dated January 22, 2014,
the following clarifications/information was sought from Garima and its
Directors:-

Brought to you by http://StockViz.biz

817

(a) to provide correct information as regards the plans launched by

Garima.
(b) details and nature of the A/R benefit mentioned in the Plans.
(c) to provide correct details of scheme wise amount mobilized till date
along with the number of investors under the schemes.
(d) to provide copy of duly filed in (a) application form (b) registration
certificate and (c) agreement executed in respect of any 2 investors of
each plan offered by the company.
(IV)In addition to the above, Garima was also advised to provide the following

details to SEBI:a) Address of all its branches operating in India;

b) Name, address of each investor and amount deposited by each of
them with plan details and date of investment:
i.

How many investors were refunded the amount (not

property) after expiry of agreement;

ii.

the utilization of the money collected from the investors;

Amount outstanding to each investor.

c) List of all the properties acquired by Garima from the date of

incorporation to till date.
i.

Properties transferred to the investors and duly registered

with local authority;

ii.

List of properties held by Garima.

d) Reasons for non allotment of balance properties in favour of

investors.
10. The aforesaid letter sent by registered post to Garima & its Directors were returned

undelivered except the letter sent at an alternate address of Garima i.e. 459.
Patpadganj, Industrial Area, Delhi-110092.
11. SEBI noted the contact details of an official of Garima on the envelope containing
Garimas reply dated December 05, 2013. An e-mail was sent to the said official of
Garima enclosing the letter dated January 22, 2014. In response, vide e-mail dated

Brought to you by http://StockViz.biz

917

March 06, 2014 Garima stated that three of its Directors viz., Mr. Shivram Kushwah,
Mr. Balkishan Kushwah and Mr. Banbarilal Lodhi were under judicial custody, hence
Board meeting could not be held to consider the reply to be given for SEBIs letter
dated January 22, 2014. Hence, an additional time of 4-6 weeks were sought to
submit the reply. Since already sufficient time was given, a final opportunity was
given up to March 14, 2014. However, no reply has been received till date.
12. A perusal of the annual reports of Garima for the financial years 2008-09, 2009-10,
2010-11, 2011-12 and 2012-13 shows the following: In `
As per balance

As on March

As on March

As on March

As on March

As on March

sheet

31, 2013

31, 2012

31, 2011

31, 2010

31, 2009

9,64,32,481.25

11,48,79,107.25

17,02,94,129.46

7,20,86,405.46

6,01,54,037.46

7,52,81,506.40

6,79,60,308.40

6,44,53,564.40

5,20,46,282

1,53,17,772

Liabilities includes
Advance for plot
booking
Assets includes
Inventories*

*It is noted that break up of inventory has not been provided in any of the balance sheet of Garima.
13. The details of the 'Scheme' towards the purchase and development of plot/land
offered by Garima have to be considered in light 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 follows:
(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 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 person under 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;
Brought to you by http://StockViz.biz

1017

(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.
(2A) Any scheme or arrangement made or offered by any person satisfying the conditions as
may be specified in accordance with the regulations made under this Act.
(3) Notwithstanding anything contained in sub-section (2) or sub-section (2A)], any scheme or
arrangement
(i) made or offered by a co-operative society registered under the Co-operative Societies Act,
1912 or a society being a society registered or deemed to be registered under any law relating to
co-operative societies for the time being in force in any State;
(ii) under which deposits are accepted by non-banking financial companies as defined in clause
(f) of section 45-I of the Reserve Bank of India Act, 1934;
(iii) being a contract of insurance to which the Insurance Act, 1938 applies;
(iv) providing for any Scheme, Pension Scheme or the Insurance Scheme framed under the
Employees Provident Fund and Miscellaneous Provisions Act, 1952;
(v) under which deposits are accepted under section 58A of the Companies Act, 1956;
(vi) under which deposits are accepted by a company declared as a Nidhi or a mutual benefit
society under section 620A of the Companies Act, 1956;
(vii) falling within the meaning of Chit business as defined in clause (d) of section 2 of the Chit
Fund Act, 1982;
(viii) under which contributions made are in the nature 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."
14. In the context of the abovementioned Section 11AA of the SEBI Act, the Scheme
offered by Garima 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.
As per the schemes offered in the brochure, sample application form, sample registration
letter provided by Garima and the Complainant, it is noted that Garima is collecting
Brought to you by http://StockViz.biz

1117

money from the general public under its schemes of development and maintenance
of the land. It is noted from the copy of registration certificate issued to one of the
investors that there is no identified and demarcated plot/land. The location of the
plot is also not mentioned. The 'Registration Certificate' issued to the applicant/
investor and the 'General Terms and Conditions' forming part of the said certificate does
not indicate the ownership aspect of the plot/land under the schemes offered by
Garima. Point 11 of the Rules & Regulations of the sample registration letter
provided by Garima states that these plots which are developed by the company in various
parts of the country and will be of similar sizes (i.e. 800 sq. ft. & 1200 sq. ft. respectively). The
plots would be numbered and identified by the company and thereafter be allotted to the applicants,
the said plot may be allotted to the applicants anywhere and in any location, at the discretion of the
management. It is noted from the financial statements of Garima that funds received
from the applicants/investors are pooled together as Advance for Plot booking.
As on March 31, 2013, Garima has collected `9,64,32,481.25 towards advance for
plot booking. As per the details of mobilization furnished vide its reply dated
December 05, 2013 mentioned at para 7 (c) above, Garima collected an amount of
`55,22,35,396/- under its Plans B1, B2, B3, C1, C2 and C3 from 1,08,791 investors
and repaid an amount of `45,87,20,787/-. Further, an amount of `9,35,14,609/- is
claimed to be the payment outstanding towards 15,683 investors. In view of the
aforesaid it is evident that Garima is collecting funds from the applicants/ investors
under its various schemes/Plans and the contributions/funds so collected are pooled
and utilized for the purpose of the 'Scheme/Plan' offered by Garima. Hence, it is clear
that the instant scheme/Plans of Garima 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 from the Schemes/Plans offered by Garima that an investor who opts for
Lump-sum Payment Plan or Instalment Payment Plan to purchase land, an amount is indicated

as 'estimated realizable value' if exit option is exercised by an investor as per the said
plan. Similarly, it is noted from the booklet of Garima titled Career & Rule Book for
agents (At page 18 para 5) that in lieu of the money deposited by the investors,

Brought to you by http://StockViz.biz

1217

Garima assures to give duly registered land. In case the investor is not interested in
the land, Garima guarantees the payment of money as per the plan. Apart from the
same Garima also offers Accidental benefit as compensation to investors. For
instance, if an applicant/investor opts for Plan B1 (mentioned at para 7(b)
above)and invested ` 1265 per year for 800 sq. ft plot for 5 years, at the end of 5
years the investor is offered an exit option at `9400. This implies `3075 (`9400`6325) is the profit. Similarly, it is noted from booklet of Garima titled Career &
Rule Book for agents, wherein the expected cost of land after certain period is
tabulated. For example, in Plan B1, a plot of area 132 square feet worth `6600 shall
have expected cost of land increased to `9400 after 5 years. The difference is the
expected profit for the investor. Similarly, different returns have been offered in
different plans launched by Garima. Hence, it is apparent that contributions by
applicants/investors (either by instalments or lump sum payment) are made to such
scheme or arrangement with a view to receive expected sum payable in form of
cash/ or land and also accidental benefit in time of need from such scheme or
arrangement. Therefore, the instant scheme/Plan of Garima satisfies second
condition stipulated in Section 11AA (2) of the SEBI Act.
(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 apparent from brochure, application form and registration certificate that
contributions made by the applicant/investors in either instalment or lump sum
payment plans are collected by Garima who in turn manage these funds on behalf of
investors during agreed term of Plan. It is noted from Clause 2(a) of the Proforma of
Agreement that Garima shall carry out necessary works by conducting the survey, demarcation,
clearing and related jobs/ works on behalf of the customer. Further, it shall procure and install bore
wells, open bells and other water points and install motors, pump sets and other facilities main
pipelines, electrical installations and temporary sheds/ structures required for the development of
property. Garima shall keep accounts with reference to the income and expenditure incurred /to be
incurred, pertaining to the development and maintenance of the entire project site, which includes the
Brought to you by http://StockViz.biz

1317

said property. As per clause 3 of proforma of agreement Garima shall have the rights to
develop and maintain the said property in consultation with Engineers/ experts, customer shall not
ordinarily interfere with the method and mode of development and maintenance of the said
property.As per clause 14 of general terms & condition of registration letter, Garima
shall have first charge on said property on account of the unpaid instalments for services /
development / maintenance charges and for other incidental expenses incurred by Garima. The said
property cannot, in any other manner be sold, assigned, mortgaged, pledged or alienated without
obtaining No dues certificate from the Garima by the applicant. Point 11 of the Rules &
Regulations of the sample registration letter provided by Garima states that these plots
which are developed by the company in various parts of the country and will be of similar sizes (i.e.
800 sq. ft. & 1200 sq. ft. respectively). The plots would be numbered and identified by the
company and thereafter be allotted to the applicants, the said plot may be allotted to the applicants
anywhere and in any location, at the discretion of the management. It is not clear whether
applicants/investors even know which part of the country would they be allotted
plots in case they opt for allotment of plots.
In light of these facts and circumstances, it is clear that the property, contribution or
investment forming part of the scheme/Plans are managed by Garima on behalf of
applicants/investors and they do not have any day-to-day control over the
management of the schemes/Plans. In view of above, I find that the instant
scheme/Plans satisfies third and forth conditions stipulated in Section 11AA (2) of
the SEBI Act.
15. The activity of fund mobilization by Garima under the scheme/Plans for allotment,
development and maintenance and subsequent transfer of land, with a resultant
promise of return/"estimated realizable value at the end of the term', when considered in
light of peculiar characteristics and features of such schemes/Plans, as discussed in the
preceding paragraphs, prima facie satisfies all four conditions specified in Section
11AA (2) of the SEBI Act.
16. In this context, it is relevant to refer to the observations of the Hon'ble Supreme
Court of India in the matter of P.G.F Limited & Ors. vs. UOI & Anr.
(MANU/SC/0247/2013)"..sub-section (2) of Section 11 AA, 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
Brought to you by http://StockViz.biz

1417

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 there from."
17. In view of the abovementioned analysis and examination, I, find that Garima is
engaged in fund mobilizing activity from public which clearly falls within the ambit
of 'collective investment schemes' as defined in Section 11AA of the SEBI Act.

18. 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 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.
19. Taking into consideration of the above and the fact that Garima has failed to furnish
the details of land allotted/transferred in the name of investors, it appears that the
instant scheme/Plan offered by Garima is nothing but a smokescreen for its fund
mobilizing activity under a "collective investment scheme' without obtaining a certificate
of registration from SEBI as required under Section 12(1B) of the SEBI Act read
with Regulation 3 of the CIS Regulations. From the materials available on record, it
is noted that Mr. Banabarilal Lodhi, Mr. Shivram Kushwah and Mr. Jitendra Kumar
are the present Directors and the persons in charge of and responsible for the day to
day affairs of Garima. Further, it is also noted that Mr. Banwari Lal Kushwah and
Mr. Balkrishan Kushwah and Mr. Bijendra Pal Singh were the former Directors of
Garima.
20. I also find that the activity of illegal mobilization of funds by Garima through its
schemes, prima facie, amounts to a fraudulent practice in terms of Regulation 4(2)(t) of

Brought to you by http://StockViz.biz

1517

SEBI( Prohibition of Fraudulent and Unfair Trade Practices relating to Securities

Market), 2003 ("PFUTP Regulations").
21. Protecting the interests of the investors is the first and foremost mandate of SEBI
and therefore, SEBI has to take immediate steps to prevent activities if companies or
persons defrauding the investors and damaging the orderly development of the
securities market. In order to ensure that Garima and its Directors (past and present)
do not collect further funds under its scheme/Plans and to safeguard the
assets/property acquired by Garima and its Directors from the funds of the investing
public until full facts and materials are brought and final decision is taken in the
matter, it becomes necessary for SEBI to take urgent preventive action by way of this
interim measure. In the light of the above, I find no other alternative but to take
recourse to an interim order against Garima and its past and present Directors for
preventing them from further carrying on with the fund mobilizing activity by
launching 'collective investment scheme', without obtaining registration from SEBI in
accordance with law.
22. In view of the above, I, in exercise of the powers conferred upon me under Sections
11(1), 11B and 11(4) of the SEBI Act read with Regulation 65 of CIS Regulations,
hereby direct Garima Real Estate & Allied Limited and its past and present Directors
viz., Mr. Banwari Lal Kushwah (PAN-AAGPF1976L), Mr. Balkishan Kushwah
(PAN-AVQPK4360A), Mr. Shivram Kushwah (DIN: 02338542), Mr. Banabarilal
Lodhi (DIN: 01759136), Mr. Bijendra Pal Singh (DIN: 01781312) and Mr. Jitendra
Kumar (DIN: 06719377):(i) not to collect any fresh money from investors under its existing schemes;
(ii) not to launch any new schemes or plans or float any new companies to raise fresh moneys;
(iii) to immediately submit the full inventory of the assets including land obtained through money
raised by Garima;
(iv) not to dispose of or alienate any of the properties/assets obtained directly or indirectly through
money raised by Garima;
(v) not to divert any fund raised from public at large which are kept in bank account(s) and/or in the
custody of Garima.

Brought to you by http://StockViz.biz

1617

(vi) to furnish all the information/documents sought by SEBI vide letter dated January 22, 2014,

within 15 days from the date of receipt of this order, including:

i.

Scheme wise list of investors and their contact numbers and addresses;

ii.

PAN of the aforementioned Directors and

iii.

Details of agents along with address, money mobilized and commission paid

23. The above directions shall take effect immediately and shall be in force until further
orders in this regard.
24. This Order is without prejudice to the right of SEBI to take any other action that

may be initiated against Garima Real Estate & Allied Limited and its Directors (past
& present) 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, Garima Real Estate & Allied Limited
and its abovementioned Directors may, within 21 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

S. RAMAN

Date: November 24, 2014

WHOLE TIME MEMBER

SECURITIES AND EXCHANGE BOARD OF INDIA

Brought to you by http://StockViz.biz

1717