Order in The Matter of Asurre Agrowtech Limited

WTM/PS/25/IMD-CIS/SRO/MAY/2016
BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA

CORAM: PRASHANT SARAN, WHOLE TIME MEMBER
ORDER
Under sections 11(1), 11(4), 11B and 11D of the Securities and Exchange Board of India Act,
1992
In respect of
1. Asurre Agrowtech Limited (CIN: U51213TN2007PLC064744) and its Directors
2. Mr. Sengan Thangappalam (PAN: AFUPT3687B/ DIN: 01709534),
3. Mr. Shanmugam Rajendran (PAN: ALAPR1414Q/ DIN: 01656296),
4. Mr. P. Saravanan (DIN: 06467396),
5. Mr. R. Devadoss (PAN: AUCPD0859J/ DIN: 07097648) and
6. Dr. V. Venkataramanujam (PAN: AABPV3976F/ DIN: 07097641).
Date of personal hearing: January 13, 2016

Appearance1. Company was represented by Mr. P. Subba Reddy, Advocate
2. Mr. Sengan Thangappalam appeared in-person.
3. Dr. V. Venkataramanujam appeared in-person.
For SEBI: Mr. G. Ramar, General Manager, Mr. E. Balasubramanian, Assistant General Manager,
Mr. R.Anand, Assistant General Manager and Mr. T. Vinay Rajneesh, Assistant General Manager
Date of personal hearing: March 03, 2016
AppearanceMs. K. Aparna Devi, Advocate represented the Company
For SEBI: Dr. Anitha Anoop, General Manager, Mr. E. Balasubramanian, Assistant General
Manager and Mr. T. Vinay Rajneesh, Assistant General Manager.
1.
Securities and Exchange Board of India (SEBI), vide ex-parte interim Order dated July 03,
2015 (the interim order), prima facie observed that the fund mobilization activity of the company,
Asurre Agrowtech Limited (the Company or AAL) is a Collective Investment Scheme in terms
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of section 11AA of the Securities and Exchange Board of India Act, 1992 (the SEBI Act). It was
alleged that the Company did not obtain a certificate of registration as required under section 12(1B)
of the SEBI Act and regulation 3 of the SEBI (Collective Investment Schemes) Regulations, 1999
(the CIS Regulations) prior to the launch and operation of such schemes. The Company was also
alleged to have contravened regulation 4(2)(t) of the SEBI (Prohibition of Fraudulent and Unfair
Trade Practices Relating to Securities Market) Regulations, 2003 ("the PFUTP Regulations").
2.
In order to protect the interest of investors who had subscribed to such schemes launched
and carried out by the Company and also to prevent the Company and its directors from further
carrying with their fund mobilization activity in the nature of CIS without registration from SEBI, the
Company and its past and present directors were directed as follows:
In view of the foregoing, I, in exercise of the powers conferred upon me under Sections 11(1), 11(4)(b), 11B and
11D of the SEBI Act read with CIS Regulations and PFUTP Regulations, hereby direct Assure Agrowtech
Limited (CIN: U51213TN2007PLC064744) and its Directors viz., Mr. Sengan Thangappalam (DIN:
01709534), Mr. Shanmugam Rajendran (DIN: 01656296), Mr. P. Saravanan (DIN: 06467396), Mr. R.
Devadoss (DIN: 07097648) and Dr. V. Venkataramanujam (DIN: 07097641):
a. to cease and desist and not to solicit or undertake such activity or any other activities in the securities
market, directly or indirectly, in any matter whatsoever till the time the proceedings in respect of
AAL is disposed of;
b. not to divert any funds raised from the investors.
c. not to collect any fresh money from investors under its existing schemes;
d. not to launch any new schemes or plans or float any new companies to raise fresh moneys;
e. to immediately submit the full inventory of the assets acquired through money raised by AAL;
f. not to dispose of or alienate any of the properties/assets obtained directly or indirectly through
money raised by AAL;
g. not to divert any funds raised from public at large which are kept in bank account(s) and/or in
the custody of AAL;
h. to furnish the following information:
Details of amount mobilized till date,
Scheme wise list of investors and their contact numbers and addresses,
Details of investors repaid if any, with full addresses and telephone numbers etc.,
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Details of charges created on its assets by the company,
Details of commission paid on amounts mobilized above,
Details of agents along with their addresses, etc.,
Audited Accounts for FY 2014-15.
full details of project development expenses of Rs.19.90 crores mentioned in the financial
statements of AAL for FY 2013-14, alongwith the position for FY 2014-2015.
3.
PAN of abovementioned Directors.
The interim order advised the Company and its directors mentioned above (collectively
referred to as noticees) to treat the interim order as a show cause notice and advised them to show
cause why directions under the SEBI Act and the CIS Regulations should not be issued against them.
The interim order advised the noticees to file their replies and also indicate whether they desire to
avail an opportunity of personal hearing in the matter.
4.
The interim order was delivered on the Company and its directors. The Company and its
Directors have made their submissions to the interim order, vide their letter dated July 22, 2015.
Without providing the information sought in the interim order, they had inter alia mentioned as
follows:
(a)
The collection of money under the schemes by Company had been stopped
completely since six months.
(b)
The Company has no malafide intention to cheat or defraud the money of investors.
(c)
The Company did take advance from customers and invested their money in acquiring
land for farm and capital expenditure on Goat Farming.
(d)
In the last 8 years, the Company never failed in paying maturity amounts to its
customers. The customers have full access to project progress reports of the
Companys various projects, Balance Sheets and other documents of the company.
(e)
Further, the Company is not currently mobilising any fresh funds from investors,
through existing schemes or launching any new schemes/plans to fresh funds.
(f)
The Company assured that it would not dispose off /alienate the any property/assets
belonging to it and would also not divert any funds raised from public.
(g)
The Company also requested for an opportunity of personal hearing in the matter.
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5.
Mr. Venkataramanujam V., vide letter dated July 28, 2015, stated that he holds a doctorate in
veterinary sciences and retired as a Professor and Head of Dept, of Madras Veterinary College. As he
possessed domain knowledge, he had consented to act as the director of the Company on February
14, 2015. He has no knowledge of the proceedings initiated by SEBI prior to the date of his joining
the board. He neither was aware nor part of any decision taken by the Company to raise funds as the
fund raising activities was prior to his joining as a director of the Company. He submitted that he did
not attend any board meeting so far. The noticee stated that he had since resigned. A copy of his
resignation letter dated July 21, 2015 was enclosed. The noticee requested full discharge in relation to
any proceedings in the future.
6.
The noticees were afforded an opportunity of personal hearing on September 24, 2015 and
were informed of the same vide SEBI letter dated August 21, 2015. However, this hearing was
adjourned in view of administrative exigency and fixed on December 10, 2015.
7.
Further, the Company, vide letters dated August 27, 2015, September 05, 2015 and October
13, 2015, requesting SEBI to expedite in disposing off its application seeking registration as Collective
Investment Management Company. The Company submitted that it does not have any intention of
defrauding its customers and that it had repaid Rs.6.11 crore pertaining to 6050 customers. The
Company provided details of properties and requested SEBI to permit them to disburse one property
so that money may be utilized in repayments to investors. They have also stated that they are willing
to abide by any Guidelines issued by SEBI in this regard. A writ petition was also filed by the Managing
Director of the company, Mr. Sengan Thangapalam, before Honble High Court of Madras in W.P.
no. 39046 of 2015 on November 30, 2015. In the writ petition, it was inter alia prayed that the Honble
Court may issue a writ of mandamus directing SEBI to register the company as Collective Investment
Management Company and pass such order as it deems fit.
8.
Thereafter, vide letter dated November 27, 2015, Asurre Farmers Welfare Society (Farmers
society) filed an application stating that the society consists of members of farmers and subscribers
to the various schemes of the Company and requested SEBI to implead it as a party to the proceedings.
On a consideration of the same, the Farmers Society was allowed to participate in the proceedings.
Thereafter, on December 07, 2015, the Company requested SEBI to adjourn the personal hearing
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fixed on December 10, 2015 on the ground of heavy rains and floods in the city of Chennai.
Considering the request, the personal hearing was re-scheduled to January 13, 2016. All the noticees
were informed accordingly.
9.
Subsequently, the counsel for the Farmers Society stated that the society was registered as
Salem Farmers Welfare Society and requested SEBI to take the same on record.
10.
SEBI had on January 11, 2016, sent a letter to the Company with respect to its repeated
request including the letter dated January 07, 2016 for consideration of its application seeking
registration as a Collective Investment Management Company. In the letter, it was reiterated that SEBI
has passed the interim order against the Company and its directors and that in Para 17 of the said
Order, the fact that they have applied for registration as Collective Investment Management Company
has been recorded and the Order inter-alia noted that registration with SEBI is a pre-condition for
launching any collective Investment Scheme and collecting money from the public. It was also stated
that the interim order had inter alia directed the Company and directors to cease and desist and not to
solicit or undertake such activity or any other activities in the securities market, directly or indirectly,
in any matter whatsoever till the time the proceedings in respect of the Company was disposed of.
11.
In the personal hearing held on January 13, 2016, Company was represented by Mr. P. Subba
Reddy, Advocate, Mr. Sengan Thangappalam and Dr. V. Venkataramanujam appeared in-person. The
following is brief record of the proceedings of the said hearing:
1. The Company was represented by its Advocate, who requested for deferring the personal
hearing on the ground that the Company had filed a Writ Petition in the Honble High Court
at Madras seeking a writ of mandamus directing SEBI to dispose off its application seeking
registration for launching CIS. As there was no stay of the present proceedings pursuant to
the interim order dated 03.07.2015, as stated by the Advocate himself, the Advocate was
advised to make submissions in the matter. The Advocate then requested that the personal
hearing may be held after the application is decided by SEBI. The Advocate was not keen on
making submissions and persistently requested for another date. In view of the same, another
opportunity of personal hearing was afforded to the Company for making submissions.
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2. The Company was also directed to submit the list of investors with complete details (name of
investor, full address, contact numbers, amount mobilized from them along with scheme, date
when such amounts were collected) by January 14, 2016.
3. Salem Farmers Welfare Society, which was allowed to participate in the proceedings,
appeared through its representatives. The representatives submitted that the Society has
around 1500 members who are the customers/investors in the Company and that such
members wish to continue with the Schemes at their own risk. The representatives also stated
that there are around 1 lakh customers/investors who have subscribed to the Schemes offered
by the Company. The representatives submitted that the Society would submit the consent
form from all investors stating that they wish to continue with the Schemes of the Company
at their own cost and risk. Liberty was granted to file such consent forms within a period of
45 days. They were directed that such list/forms should contain full details of the investors
(name, full address, amounts paid to the Company etc) along with proof of identity (Govt.
issued identity cards/documents). As further requested, the Society was granted liberty to file
its written submissions within a period of 10 days.
4. Noticee, Mr. Venkataramanujam appeared in-person. He filed his submissions dated July
28, 2015 along with copies of resignation letter dated July 21, 2015 and the Companys letter
dated August 31, 2015 acknowledging the resignation letter.
12.
Thereafter, the Company on January 13, 2016 filed the following information:
a. Details of amount collected till June 30, 2015 in CD including Name of investor,
address, scheme in which investments are made and amount invested;
b. Details of commission paid on amount mobilised;
c. Details of agents along with addresses;
d. Audited Accounts for 2014-15;
e. Details for Project Development Expenses for FY 2013-14 and 2014-15;
f. PAN numbers of Directors
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From the details provided by the company, it is observed that the total amount collected by
the Company was ` 69.30 Crores and the amount refunded till December 31, 2015 is `11.74
Crores and the balance payable is `57.55 Crores.
As per the last Audited Balance Sheet dated March 31, 2015, the Share Capital of the Company
as on March 31, 2015 is `2.29 Crores and Other Long Term Liabilities obtained by the
company in the form of advance for purchase of live-stock is `58.40 Crores. The Company
has given Land Purchase Advances to the tune of `7.68 Crores and the company has Land
equivalent to `18.57 Crores in their Balance Sheet for Period Ending March 31, 2015 and
Inventories of Livestock around `3.29 Crores.
13.
Salem Farmers Welfare Society did not provide any consent forms from the investors. It had
forwarded its written submissions on January 21, 2016, wherein the following submissions were inter
alia made:
a. Salem Farmers Welfare Society (formerly called as Asurre Farmers Welfare Society), is
a registered Society. The society consists of members of farmers who have subscribed
to the various schemes of the AAL and they are aggrieved with the interim order of
SEBI against AAL.
b. The society was formed with the objective to solve common problems, grievances,
and misunderstandings of all members including safeguarding the legitimate interests
of the farmers and subscribers to the various schemes framed by the company.
c. SEBI order dated July 03, 2015 has definite civil consequences also on the farmers,
who have contributed their hard earned money and life savings for implementation of
the project, which is under progress.
d. The society, being the representatives of farmers and their combined resources, has
deployed resources in Animal Husbandry project under a common platform by
incorporating the respondent company, therefore the society should have been
allowed to intervene and to take part in the proceedings initiated by SEBI and they
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should be allowed to make their submissions in the personal hearing and to make
written submissions.
e. The society has given its detailed opinion about the difficulties faced by farmers and
challenges in carrying on animal husbandry businesses and stated that the problem
associated with the farmers /producers could be eradicated through common platform
and collective strength. Since the Farmers/ producers have limited capacity to engage
trained and experienced persons of relevant experience to manage their business,
which is admittedly beyond their reach and means and hence associated voluntarily
under a common platform through the promoters, in line with Section 581B of the
Companies Act, 1956 (Producer Company), with the co-operative principles of selfhelp through mutual help.
f. The society understood that the Company has been carrying on the business in
compliance with applicable rules and regulations. The farmers have invested their hard
earned money in the company and the company believes that the activities of the
company are in line with the idea of producer company and does not fall within the
ambit of CIS as defined under Section 11AA (1) and (2) of SEBI Act read with
Regulation 65 of SEBI (Collective Investment Schemes) Regulations, 1999. Therefore,
the farmers have not obtained the registration from SEBI.
g. SEBI initiated the action based on a complaint dated September 01, 2014, which was
received from a person, who has nothing to do with the affairs of the company and
subsequently, the complainant has withdrawn his complaint. Immediately, after receipt
of a letter from SEBI, the Company held several meetings with the farmers, and after
taking into their suggestion, the Company has initiated steps to register the company
as CIS and accordingly amended their main object of Memorandum of Association.
h. The society stated that if the activities of the company are in the nature of CIS, the
same is not prohibited and not unconstitutional and only a reasonable restriction was
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placed in Regulation 3 of SEBI (CIS) Regulations, 1999 and non-compliances of the

same is compoundable under Section 24 and 24A of SEBI Act.
i.
The society further submitted that when the company is satisfying the criteria of
provisional registration, as stipulated under Chapter IX and XIA of SEBI (CIS)
Regulations, SEBI should have considered the application of CIS Company, which is
in the best interests of the company and farmers and all other stakeholders.
j.
Society submitted that when the application for grant of registration is pending, there
is no necessity and urgency for SEBI to issue impugned order and the said order is
arbitrary, irrational and impractical. As it was issued, without being heard or offered
an opportunity to farmers to explain, it is denial of doctrine of justice and opportunity
to the farmers.
k. The society has mentioned that SEBI has not taken into account the socio-economic
value of the project and its resultant benefit to the society, more particularly, to
farmers. It is also requested that holistic view need to be taken by SEBI after taking
into account the investment deployed so far, dedication of the promoters to revive
and rehabilitate the status of farmers and producers.
l.
SEBI failed to ascertain that the farmers are having immense trust and faith on the
company and the complainant is not a representative of rest of the farmers and may
have made the complaint with malafide intention.
m. The society submit that if according to SEBI, the company has committed the
contravention, SEBI should have directed the company to register itself as Collective
Investment Management Company, without affecting the business operation of the
company. The entire project of Techno Based Animal Husbandry was conceived by
the Promoters, based on estimation and same was originally placed to be funded out
of farmers contribution. The project is in advanced stage of completion and will be
ready for commercialization in next 12 months. By the interim order, SEBI has
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restrained the company and its promoters from collecting fresh money. Under such
circumstances, the company will be confronted by severe financial crisis and will not
be able to implement/complete the projects in time and if the situation continues for
long time, the entire assets and infrastructure will deteriorate and perish, due to upkeep
and maintenance and ultimately, the company will not be able to discharge the funds
to the farmers. By this act, the entire project will became paralyzed and will be put into
great jeopardy, without resultant benefit to farmers, whose hard earned money was
being deployed in the project.
n. The impugned order is violation of Article 19(1)(g) of Constitution of India and it
fails to take into account, the nature of business, place and time where it is intended
to be carried on, effect on others, stage of development and many other factors that
might change within the passage of time and development of society.
o. The Society further submit that as per the scheme, a farm admeasuring 258.50 Acres
situated at Thuraiyur Village, Trichy Dt., have been developed as Integrated Intensive
Meat Goat farm with required infrastructures. Under the scheme, the company is at
the completion of the project and require to allot and transfer land with readily builtup shed along with Meat Goat Kids of the age of 45 days in the ratio of 250 Meat
Goat Kids per acre of farm land at marginal cost. Now, as per the scheme, the
company has to transfer and handover the farmers land in their land, however the
SEBI vide its interim order restrained the company not to dispose of properties
obtained through money raised by the company. As a result the company will not able
to transfer the farmers share of land, unless the restriction of SEBI is lifted and
consequently farmers will be put to great loss and the fundamental rights to carry on
the business under the Article 300A is infringed.
p. The directions issued by SEBI are arbitrary and without evaluating consequential
damage/ loss of the investment of the farmers. SEBI failed to understand the impact
of the order on existing business and future prospect and the business of the company
became stand still, thus prejudicially affecting the interest of farmers.
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q. When the company is in compliance with provisions of SEBI (CIS) regulation as it

submitted an application for registration which is pending SEBI would have to restrain
itself from passing the exparte order. This tantamounts to gross violation of regulation
7 of SEBI (CIS) regulations which requires SEBI to give an opportunity to the
applicant to remove any objection within one month before rejecting any application.
r. If according to SEBI, the company committed the contravention of SEBI (CIS)
regulations, then based on companys application, SEBI would have granted the
provisional registration under regulation 71 of chapter IX read with regulation 74A of
chapter IXA of SEBI (CIS) regulations by stipulating the conditions prescribed under
regulation 71 of SEBI (CIS) regulations without affecting the business operations of
the company.
s. As per regulation 68 of SEBI (CIS) Regulations, SEBI should have dealt with the
application in the following manner- 1 . Grant of provisional registration. 2. by grant
of certificate of registration and 3. rejection of application for registration.
t. The company in compliance with Regulation 69 and awaiting for Certificate of
registration, has stopped raising money from investors under the existing scheme and
also not launched any new scheme thereafter. Further the company as per regulation
70 satisfies all the four requirements for grant of registration and hence SEBI cannot
reject the application, except in case where requirements in regulation 70(1) are not
fulfilled by the company.
u. Any precipitative action taken by SEBI in its interim order would tantamount to
violation of Article 14 of constitution, in light of the Order passed by SAT in the
matter of Highland Holiday Homes P Ltd. Vs SEBI wherein it was held as under
It is to be noted that the CIS Regulations are meant to protect the interests of the participants in the
collective investment schemes floated by various entities. While applying the said Regulations, the object
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of the regulations should not be pushed aside giving way to mere technicalities. Any measure in the
interest of the farmers which would pass the legal test provided in the Regulation should be welcome
v. The company is engaged in the business of Intensive Breeding and Meat Goat Farm
and substantial capital has been deployed in the form of land and infrastructure. The
entire business from inception to commercialization will take minimum five to six
years time and premature selling of farm land and infrastructure will not fetch
adequate returns. The farms lands and infrastructure therein are a composite asset and
finding a suitable buyer in short term is impossible . Therefore, SEBI order is violative
of Article 4 of the Constitution.
w. The company is in the middle of implementation of the project which need further
and continuous flow of contribution of farmers under the existing schemes as per
original estimation to successfully complete the project. Failing which, the project will
close even before commencement of commercialization operation and farmers will
sustain huge loss.
x. The society submitted that impugned order should not been passed as the company is
co-operating with SEBI and the impugned order fails to set out any reason for urgency
and is in breach of natural justice. Further, as the allegation is only floating collective
investment scheme without obtaining registration, the same is punishable with fine
and the same can be compounded.
y. The order does not point towards any kind of injustice, damage, fraud caused to any
of the farmers. There is no complaint regarding default in repayment. Hence SEBI
cannot claim any justifiable reason to pass an exparte order. No grievances of the
farmers has come to light which warrant passing of impugned order. SEBI cannot be
allowed to harass the farmers purely to satisfy the whims and fancies of the
complainant, who has nothing to do with the affairs of the company. The discretion
conferred by sections 11(1), 11(4)(b), 11(b), and 11(4) of the SEBI Act ought to be
exercised in the appropriate cases. In the instant case, SEBI has arbitrarily passed the
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order without following the prescribed procedure contemplated under regulation 59

of SEBI collective investment Regulations 1999.
z. As per regulation 73 of SEBI CIS regulations, the farmers of the requisite majority
have given the positive consent and/ or desires of continuing with the scheme at their
own risk and responsibility. Even after SEBIs proceedings, the companys activities
have not undergone any change and the company continues to carry on its activity,
with full knowledge and involvements of farmers and the company is continuously
bringing to the knowledge of farmers, all development that is happening between
SEBI and company.
aa. The farmers are aggrieved with the interim order of SEBI under following grounds:
i.
SEBI totally ignored the interest of farmers whose resources and efforts
having deployed in the business and also ignored the result and damage, loss
and consequences due to impact of SEBIs order which will ultimately be
burdening the farmers.
ii. The company is in the implementation of the project which was originally
planned to be funded out of the contribution from the farmers. Due to the
restraint order, the company is unable to collect further subscription under the
existing scheme from the farmers and is confronted with severe financial crisis
and the project became standstill, resulting in continuous deterioration of
companys assets. The company is unable to undertake commercialisation and
generate income as per original estimation, in which case, the company will fail
to repay the investments which will prejudice the farmers. Till now the
company and the promoters have not defaulted in discharging the duties and
responsibilities. SEBI should have appreciated bonafide efforts of the
company and would have accorded the registration in accordance with the
regulations.
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iii. SEBI in the pretext of farmers protection has unreasonably encroached into
the personal rights of the farmers. When the farmers themselves voluntarily
associated with the company and consented to deploy for development of the
project, there is no necessity for SEBI to step into the shoes of the farmers. A
reasonable opportunity should have been given to the farmers by directing the
company to call a meeting of the farmers. SEBI proceeded to issue the order
based on unknown complainant without assessing the consequent effect of the
order. Later on, the complainant has withdrawn the complaint.
The
imposition of fines and penalties is not acceptable, as these would be paid out
of farmers funds. SEBI cannot enrich itself out of penalties/fines out of
investors money. When the company is not in default and no farmer has
complained against the company, SEBIs arbitrary actions, without consent of
the farmers, is not justifiable and is not warranted.
iv. SEBI vide its order restrained the company to not to dispose of its
assets/properties and not to collect fresh money from the farmers under
existing scheme. In such case, how would the company develop the project
with necessary infrastructure and allot the farm land, develop and supply the
goats to farmers on continuous basis. If SEBI does not allow them to transfer
the farm land with necessary infrastructure to farmers, then how would the
farmers carry on the business of meat goat rearing. SEBI order will force the
company to resort to distress and premature sale of assets and it will not able
to realise the real value of assets and ultimately farmers have to sacrifice the
hard earned money. Even though substantial parts of the assets comprises of
farmland, it still cannot be sold as empty land, as other infrastructures already
created over the land and it cannot be sold in piece and part.
v. The interim order of SEBI will create rumours in the market about the
company and will create a panicky situation and uncertainty among the farmers
on apprehension of losing their money and would force them to take drastic
steps, without understanding the consequences.
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vi. In this manner, SEBI cannot protect the interest of the farmers. SEBIs action
will ultimately result in farmers suffering huge losses. Even assuming the
company is in contravention of section 11AA of SEBI Act, SEBI should have
restrained itself from passing the severe order, where alternative remedies are
available like grant of provisional registration, getting consent of the farmers
to continue with the scheme at their own risk and responsibility and giving
direction to the company to dispose of the others and distribute the sale
proceeds among the farmers.
vii. Statutory authority like SEBI is bound to exercise their discretion, in every case
and they cannot automatically refuse all CIS applications but hear and
determine the case on merits.
viii. In case of CIS schemes, SEBI should have extended the similar benefit as in
the case of compounding applications, in the case of listed companies and
should not show step-motherly attitude. In CIS schemes also, SEBI should
have initiated effective steps to regularize non-compliances of companies, by
imposing penalties and fines. By this process, large number of CIS companies
having sound business, are forcibly closed down by SEBI where there are
alternative remedies available.
bb. Stating the above, the society has made following prayers:
a)
To set aside interim order of SEBI and other proceedings.
b)
Direction to issue provisional registration under regulation 71 of SEBI

(CIS) Regulations.
c)
Direction to SEBI to consider CIS applications and issue registration

certificate.
d)
The farmers who subscribed to the Collective Investment Schemes have

given their positive consent and are desirous of continuing with the scheme
with their risks and responsibility. The farmers having high confidence and
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trust on promoters and hence, the promoters shall be allowed to complete

the project as per original schedule in accordance with Regulation 3 of SEBI
(CIS) Regulations.
e)
Direction to the promoters to furnish an undertaking not to divert funds

raised from the farmers and undertaking not to divert any funds raised for
public, which are kept in the bank account and in the custody of the
company.
f)
14.
Such other orders which is beneficial to the interest of the farmers.
The Company was afforded another personal hearing on March 03, 2016, when Ms. K. Aparna
Devi, Advocate appeared on behalf of the company and filed written submissions dated February 29,
2016 and reiterated the relief made in such submissions. As per the written submissions, the Company
had requested SEBI for the following relief:
(a) To set-aside the interim order, more particularly the restraint imposed in alienating or transfer
of properties/assets obtained directly or indirectly through money raised by the Company; and
(b) To repay and wind-up the scheme in accordance with the CIS Regulations.
I also note that in the above said written submissions, the Company has mostly reiterated the
submissions made by the Salem Farmers Welfare Society and inter alia submitted as follows:
a) The written submissions is in on behalf of AAL and on behalf of Mr.Sengan
Thangapalam and Mr.Shanmugam Rajendran.
b) They have stated that the SEBIs interim order have definite civil consequences not
only on the business of the company but farmers, its existing customers, its employees
and several intermediaries and investors at large.
c) SEBIs Interim order was passed ex-parte and without giving opportunity of being
heard to the company and as a result the entire project came to a standstill and
paralyzed.
d) The company had submitted an interim reply dated December 20, 2014 to SEBI
illustrating the background on how their project is conceived and came into existence.
SEBI has failed to take note of the noble objects of the promoters and moral, social
and economic value of their projects and its resultant benefits to farmers.
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e) The farmers, with the sole objective to revive and rehabilitate the farmers,
incorporated AAL, with the objective of co-operative principle of self-help. The
resources pooled from the investors are deployed in the business. The actual
commercial production was expected to commence by end of December, 2015.
f) The activities of CIS as such is not prohibited and is not unconstitutional and only
reasonable restrictions has been imposed by way of Regulations 3 of SEBI (CIS)
Regulations, 1999. Non-compliance of the same is only a contravention and can be
compoundable under Section 24 is and 24A of SEBI Act, 1992.
g) SEBI has based on a complaint sought information from the company. The company
has provided the information sought by SEBI vide their letter dated December 20,
2014.
h) After receipt of SEBIs letter and after considering the suggestions of the farmers, the
company has initiated effective steps to register the company as a Collective
Investment Management Company. The company has passed a resolution in an EGM
to amend their Memorandum of Association and has inducted two more independent
directors and increased their net worth to 3 Crores. The company has then submitted
their application for registration in Form A to SEBI.
i) The Company had mentioned that SEBI has inserted Chapter IXA and Regulation
74A in SEBI (CIS) Regulations, 1999 vide SEBI (CIS) (Amendment) Regulations,
2014. AAL has quoted the provisions of Regulations 68, 69, 70, 71 and 78A of SEBI
(CIS) Regulations, 1999 and stated that when the company is satisfying the criteria of
provisional registration stipulated under Chapter IX and IXA of SEBI (CIS)
Regulations, 1999, SEBI should have considered their application and issued
provisional registration, in the interest of the farmers and other stakeholders.
j) If according to SEBI, the company has committed the contravention, SEBI would
have directed the company to register itself as Collective Investment Management
Company, without affecting the operations of the company. As a result of SEBIs
interim order, the entire project became stand still and the company will not go for
commercialisation, as per original schedule. If the situation will continue for a long
time, the entire infrastructures and assets will deteriorate and the entire project will
Page 17 of 44
become paralysed. The impugned order of SEBI is in violation of Article 19 (1) (g) of
the Constitution.
k) SEBIs order is in violation of Regulation 7 of SEBI (CIS) Regulations, 1999.
l) The application for registration should have been dealt as in Regulation 68 of SEBI
(CIS) Regulations, 1999, i.e. either provisional registration should have been granted,
or certificate of registration be issued or the application form should be rejected.
Further, the company satisfies the criteria mentioned in Regulation 70 of SEBI (CIS)
Regulations, 1999 and is in compliance with Regulation 69. Hence, SEBI should have
granted provisional registration.
m) When the application for grant of CIS registration is pending, there is no urgency on
the part of SEBI to issue ex-parte order, which is arbitrary and without giving
opportunity of being heard, which will affect the interest of investors. There are no
investor grievances. The complainant based on whose complaint SEBI has initiated
inquiry has also withdrawn her complaint subsequently.
n) If a Collective Investment Management Company contravenes any provisions, it has
to be dealt under Regulation 59 of SEBI (CIS) Regulations, 1999 read with Regulation
25 of SEBI (Intermediaries) Regulations, 2008.
o) Mr. R. Devadoss and Mr. Venkataramnujam were inducted as Independent Directors
to satisfy eligibility criteria for CIS application and are not directly associated with the
persons having control over the affairs of the company. The independent Directors
are not holding any shares in the company and they are not responsible for the acts
and omissions of the company. AAL has also attached the copy of submissions of
Mr.R. Devadoss. Further, AAL has also forwarded a copy of the Form DIR-12, filed
by AAL with MCA regarding resignation of Mr.P.Saravanan from the directorship of
the company on February 26, 2015.
p) The company has mentioned that they have filed a Writ Petition, which is pending
before Honble High Court of Madras and requested SEBI to not pass any orders, till
the Writ Petition is disposed. However, SEBI did not accede to their request.
q) SEBI has intentionally with a pre-determined intention delayed disposal of their CIS
application through practice of deliberate inaction and inordinate delay. Hence, the
Page 18 of 44
company has submitted an application dated February 24, 2016 to Honble Prime
Minister of India and Ministry of Agriculture and Farmers Welfare regarding the same.
r) As already irreparable damage caused to the company, by inordinate delay in granting
provisional registration to the company and subsequent damages by issuance of
SEBIs interim order dated July 03, 2015, it will not be possible for the company to
restore the Animal Husbandry Project, without incurring additional expenditure.
Therefore, even the grant of provisional registration will not be of us or benefit to the
company or farmers. Also due to closure of the project to comply with SEBIs order,
all the sources of the earnings to the company are stopped and the project was
abandoned without even going for commercialization. If the situation continues for
some time, the company may have to face severe financial crisis to even discharge the
liabilities of the farmers as well as investment deployed in Animal Husbandry projects.
s) By SEBIs interim order, the projected cost was increased substantially and it requires
further resources to fund the project escalation costs, for which the farmers will not
agree. Thus, now even after grant of CIS registration, the same cannot be avoided and
doing business with escalated cost will not be profitable for the company.
t)
Any further delay in granting permission to the company to dispose of the assets and
discharge the liabilities will give origin to unnecessary litigations. Before the farmers
could resort of take law in hands, out of frustration and apprehension of losing the
investment, the interim order should be lifted, so that the company could discharge
the liabilities to the farmers amicably and in friendly manner..
15.
In the submission of Mr. R. Devadoss, which was attached by the company along with their
written submissions, it is has stated that he was appointed as Independent Director on February 26,
2015, in compliance with Regulation 70 of SEBI (CIS) Regulations. 1999. He has mentioned that he
is not directly associated with the persons having control over the affairs of the company, is not
holding any shares in the company and he is not responsible for the acts and omissions of the
company. Stating the above, he has prayed that he be discharged from all the proceedings, penalties
and prosecutions in respect of all the acts and actions of the company, prior to his appointment and
those that subsists as on the date.
Page 19 of 44
16.
Subsequently, the Company vide its letter dated March 08, 2016, while referring to the Order
dated February 03, 2016 passed by the Honble Securities Appellate Tribunal in Citrus Check Inn vs.
SEBI requested SEBI to grant provisional certificate of registration to the Company so that the
Company could operate schemes under the regulation of SEBI and that depending on the final order
to be passed, SEBI may consider grant of final registration. The Company also requested SEBI to
allow the Company to receive subscription amount from investors till the time provisional registration
is granted. The Company also mentioned that due to the restraints imposed against it vide the interim
order, cash inflows had stopped which had resulted in its business being hampered.
17.
I have considered the interim order, the submissions made by the concerned noticees and the
material submitted by them and other material available on record. The interim order has alleged that
the Company had launched and operated CIS without obtaining registration from SEBI in violation
of section 12(1B) of the SEBI Act and regulation 3 of the CIS Regulations. The mobilization was also
alleged to be in violation of regulation 4(2)(t) of the PFUTP Regulations. From the submissions made
by the Company, it is noted that it has not disputed the allegations and has requested SEBI to consider
its application for registration as a Collective Investment Management Company.
18.
The following observations/facts from the interim order are noted:

(a) As per the Rule Book of the Company, the Company engages in developing techno based,
Agro industries on behalf of the venturer for which the venturer shall enter into an agreement
with the Company. Advisors are associated for booking orders for such activity.
(b) The Company may buy back the stock if the venturer opts for an Estimated Realizable
Value(ERV).
(c) The Company had been offering and operating the following schemes admittedly based on
livestock and poultry:
I (A) Down Payment Scheme (DPS)
Scheme DPS 1 for 75 Months (6.3 Yrs)
Sl. No.
1
2
3
Consideration Cost
2500
5000
10000
Expected Realisable
Value
5000
10000
20000
Page 20 of 44
Accidental Death
Compensation
NA
5000
10000
4
5
Sl. No.
1
2
3
4
5
Sl. No.
1.
2
3.
4.
5.
Sl. No.
1.
2
3.
4.
5.
Sl. No.
1.
2
3.
4.
5.
15000
50000
30000
100000
I (B) Down Payment Scheme (DPS)

Consideration Cost
Expected Realisable
Value
2500
6325
5000
12650
10000
25300
15000
37950
50000
126500
15000
50000
Accidental Death
Compensation
NA
5000
10000
15000
50000
II(A) SYSTEMATIC PAYMENT SCHEME (SPS)

Scheme SPS 1 for 66 months ( 5.6 Yrs)
Consideration INSTALMENTS
ERV
ADC
Cost
Mly
Qly
Hly
Yly
6600
100
295
580
1150
8750
9000
13200
200
590
1160
2300
17500
18000
19800
300
885
1740
3450
26250
27000
26400
400
1180
2320
4600
35000
36000
66000
1000
2950
5800
11500
87500
90000
II(B) SYSTEMATIC PAYMENT SCHEME (SPS)
Scheme SPS 2 for 78 months (6.6 Yrs)
ERV
ADC
Cost
Mly
Qly
Hly
Yly
7800
100
295
580
1150
10925
9000
15600
200
590
1160
2300
21850
18000
23400
300
885
1740
3450
32775
27000
31200
400
1180
2320
4600
43700
36000
78000
1000
2950
5800
11500 109250
90000
II(C) SYSTEMATIC PAYMENT SCHEME (SPS)
Scheme SPS 3 for 60 months (5 Yrs)
ERV
ADC
Cost
Mly
Qly
Hly
Yly
7500
125
370
730
1450
9700
9000
15000
250
740
1460
2900
19400
18000
22500
375
1110
2190
4350
29100
27000
30000
500
1480
2920
5800
38800
36000
75000
1250
3700
7300
14500
97000
90000
Page 21 of 44
Sl. No.
1.
2
3.
4.
5.
Sl. No.
1.
2
3.
4.
5.
Sl. No.
1.
2
3.
4.
5.
Sl. No.
1.
2
3.
4.
5.
II(D) SYSTEMATIC PAYMENT SCHEME (SPS)

ERV
ADC
Cost
Mly
Qly
Hly
Yly
6000
80
235
480
950
9550
9000
12000
160
470
960
1900
19100
18000
18000
240
705
1440
2850
28650
27000
24000
320
940
1920
3800
38200
36000
60000
800
2350
4800
9500
95500
90000
II(E) SYSTEMATIC PAYMENT SCHEME (SPS)

ERV
Cost
Mly
Qly
Hly
Yly
6000
100
295
580
1150
8500
12000
200
590
1160
2300
17000
18000
300
885
1740
3450
25500
24000
400
1180
2320
4600
34000
30000
500
1475
2900
5750
42500
II(F) SYSTEMATIC PAYMENT SCHEME (SPS)

ERV
Cost
Mly
Qly
Hly
Yly
3600
100
295
580
1150
4250
7200
200
590
1160
2300
8500
10800
300
885
1740
3450
12750
14400
400
1180
2320
4600
17000
18000
500
1475
2900
5750
21250
II(G) SYSTEMATIC PAYMENT SCHEME (SPS)
ERV
Cost
Mly
Qly
Hly
Yly
4800
100
295
580
1150
4250
9600
200
590
1160
2300
8500
14400
300
885
1740
3450
12750
19200
400
1180
2320
4600
17000
24000
500
1475
2900
5750
21250
Page 22 of 44
Sl. No.
1.
2
3.
4.
5.
Sl. No.
1.
2
3.
4.
5.
Sl. No.
1.
2
3.
4.
5.
Sl. No.
1.
2
3.
4.
5.
II(H) SYSTEMATIC PAYMENT SCHEME (SPS)

ERV
Cost
Mly
Qly
Hly
Yly
6000
100
300
590
1175
7925
12000
200
600
1180
2350
15850
18000
300
900
1770
3525
23775
24000
400
1200
2360
4700
31700
30000
500
1500
2950
5875
39625
II(I) SYSTEMATIC PAYMENT SCHEME (SPS)
ERV
Cost
Mly
Qly
Hly
Yly
8400
100
295
580
1245
12970
16800
200
590
1160
2490
25940
25200
300
885
1740
3735
38910
33600
400
1180
2320
4980
51880
42000
500
1475
2900
6225
64850
II(J) SYSTEMATIC PAYMENT SCHEME (SPS)

ERV
Cost
Mly
Qly
Hly
Yly
12000
125
370
730
1450
19780
24000
250
740
1460
2900
39560
36000
375
1110
2190
4350
59340
48000
500
1480
2920
5800
79120
60000
625
1850
3650
7250
98900
II(K) SYSTEMATIC PAYMENT SCHEME (SPS)
ERV
Cost
Mly
Qly
Hly
Yly
6000
100
295
580
1140
7800
12000
200
590
1160
2280
15600
18000
300
885
1740
3420
22800
24000
400
1180
2320
4560
31200
30000
500
1475
2900
5700
39000
II(L) SYSTEMATIC PAYMENT SCHEME (SPS)
Page 23 of 44
Sl. No.
1.
2
3.
4.
5.

ERV
Cost
Mly
Qly
Hly
Yly
6600
100
295
580
1245
8950
13200
200
590
1160
2490
17900
19800
300
885
1740
3735
26850
26400
400
1180
2320
4980
35800
33000
500
1475
2900
6225
44750
III (A) HYBRID PAYMENT SCHEME (HPS) Scheme HPS 1 payment 40 months
(3.4) ERV 60 months ( 5 Yrs)
Sl. No.
1.
2
3.
4.
5.
ERV
ADC
Cost
Mly
Qly
Hly
Yly
10000
250
760
1645
3275
14500
7500
20000
500
1520
3290
6550
29000
15000
30000
750
2280
4935
9825
43500
22500
40000
1000
3040
6580
13100
58000
30000
100000
2500
7600
16450
32750 145000
75000
III (B) HYBRID PAYMENT SCHEME (HPS)

Scheme HPS 2 payment 60 months (5 Yrs) ERV 120 months (10 Yrs)
Sl.
ERV
Special
ADC
No.
Cost
Incentive
Mly
Qly
Hly
Yly
1.
15000
250
740
1475
2925 21500
1500
7500
2
30000
500 1480
2950
5850 43000
3000 15000
3.
45000
750 2220
4425
8775 64500
4500 22500
4.
60000 10000 2960
5900 11700 86000
6000 30000
5.
150000
2500 7400 14750 29250 215000
15000 75000
(d) Further, as per the Rule Book, every unit of `5,000/-, represents specified number of
livestock/poultry, as mentioned below:
No. of Units*
I
I
I
Unit Cost of Livestock and Poultry

Particulars
Allotments
Dairy
1 Calf
Goat
2 Goats
Poultry
30 Birds
Page 24 of 44
(e) The Company had been mobilizing funds under its schemes under three payment schemes
Down Payment Schemes, Systematic Payment Schemes and Hybrid payment Schemes. The
features of these Schemes are as follows:
Down Payment Schemes:
i. These are the fixed investment plans, in which the venturer/investor books
livestock/poultry on day one and develops it for the minimum maturity period of 6.3
years with an option to renew the agreement upto 8.4 years based on the discretion
of the venturer.
ii. The venturers/investors who are interested in the schemes offered by AAL, are made
to enter into an "Agreement" for developing livestock with AAL. The terms of
agreement are as under:
1. "The cost of livestock/Poultry includes maintenance and administrative expenses which
will be paid by the venturer to the company at the time of agreement.
2. The agreement will be fixed for a period of 75 and 100 months.
3. The agreement could not be cancelled upto 3 years. After 3years, if venture wishes to cancel
the agreement then the company will charge 30% of the Booking price of livestock / Poultry
agreed at the time of agreement by the venture."
Systematic Payment Schemes (SPS):

i.
"Livestock/poultry can be booked in 60-78 easy systematic payments.
ii.
Livestock / Poultry will be allotted to the venturer/investor after receiving first 36 instalments
and will be developed in next 30 months in Scheme-1, 42 months in Scheme -2, 24 months in
Scheme-3.
iii.
The cost of livestock/Poultry includes maintenance and administrative expenses which has to be
paid by the venturer to AAL in 60-78 monthly payments.
iv.
Agreements will be fixed for 60, 66, 75 and 78 months and SPS cannot be cancelled in between
the term.
Page 25 of 44
v.
In case if the venture failed to comply with the agreement there is no lapsation and rule no. (IV)
of the Rule book applies."
Hybrid Payment Scheme:

HPS-1 is a short term scheme in which the venturer pays cost of consideration for 40 months
and develops the cattle/Poultry for a period of 60 months, HPS-2 is a long term scheme in
which venturer pays instalments for a period of 5 years and develop the livestock/poultry till
10th year for which a special incentive is paid as return apart from the final ERV amount.
i.
"Under the scheme the venturer can book the livestock in 40-60 payment.
ii.
The total terms of the HPS 1 is 6 yrs and HPS 2 is 10 yrs however the venturer will have to pay
instalments for livestock / Poultry only for 40 month and 60 month respectively.
iii.
The agreement will be fixed for 60 month and 120 month and cannot be cancelled in between the
term.
iv.
The cost of livestock / Poultry includes the maintenance and administrative expenses which will
be paid by the venture to the company in 40 to 60 monthly instalments
v.
Livestock / Poultry will be allotted to the venture after receiving first 36 instalments and will be
developed in the next 2 years in HPS 1 and 7 years in HPS 2."
(f) The interim order had also observed the following:

a) As per the application form, the customer applies for schemes which are based on units of
Livestock Poultry. i. The application form also contains various fields including Scheme
Category, Consideration amount, date of commencement/expiry date of Joint venture, Introducers
code, Advisors code, etc. The following clauses are noted from the application form:
1)
An applicant should be an Indian. At least one instalment amount along with an admission
fee of Rs.5/-, to the customer support centre (CSC) of the company together with application
form duly filled in and signed by the applicant/parent or guardian of minor.
2)
The company has full authority to reject any application without giving any reasons.
3)
Joint venturer must make all remittances to the concerned CSC of the company directly.
Page 26 of 44
4)
The company shall issue a Certificate form. The certificate issued by the company shall
bear the seal/stamp of the company and shall be signed by the chairman or any other
authorised officer of the company.
5)
The joint venture certificate issued by the company should not be pledged or mortgaged or
otherwise used as a security to raise loan through any bank, organization or individuals.
b) AAL issues a "Certificate" after enrolling a Customer, which contains details regarding
Registration number of the Customer, Scheme number, Consideration, Cost of livestock/poultry,
Instalments payable, date of expiry of term, distributers code, Expected Sum Payable on Expiry
of Term CC/PC. The following general terms and conditions" are noted from a 'Certificate"
issued to an investor:
1) Payment of subscription: Subscriptions are payable annually in advance but the same
may be paid in half yearly, quarterly or on monthly basis without any extra charges.
2) Thirty days grace period are allowed for payment of annual, half yearly and quarterly
subscriptions and fifteen days for monthly subscription.
3) When the instalment is not paid within the grace period the registration letter stands
discontinued but may be revived at any time within 12 months on payment of all dues
together with penalty there on @ 15% per annum and appropriate late fees for delayed
payments;
4) Special Revival Scheme: A discontinued joint venturer may be revived any time before
expiry of the term from the date of discontinuation on an application with a nominal
alteration fee of Rs. 50/- along with one instalment of subscription.
5) The details of different penalty rates of interest to different levels of discontinued period
as stated in the Rule Book is as under:
Serial No.
1
2
3
4
5
6
Discontinued
Period
1-12months
13-24 months
25-36 months
37-46months
47-60months
61-72 months
Page 27 of 44
Amount payable after completion

of Venture Period
Only the paid booking price
Booking price received + 10%
6) Amount received against discontinued Joint Venturer shall be repaid by the company
as per Rule Book as amended from time to time and is applicable for scheme of five years
and above only.
7) The company also states that All charges related to the agreement would be borne by
the venture. No duplicate agreement will be issued under any circumstances.
8) In case of natural death of a Joint Venturer, the Nominee/legal
Representative/Successor may have the refund as specified in Rule Book, as amended
from time to time.
The details of refund stated in the Rule book is as under :Serial No.
1
2
3
4
5
6
Term Period for

the claim in case of
Natural Death
1-12months
13-24 months
25-36 months
37-46months
47-60months
61-72 months
Amount payable as claim in the

event of Natural Death during the
venturer Period
Only the paid booking price
9) 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.
10) The joint venture arrangement cannot be transferred/assigned/alienated in any manner
whatsoever to anyone except in the circumstances and in the manner as specified in Rule
book as amended from time to time.
11) The company reserves the right to discontinue/change/amend/modify or alters any of
the Rules and regulations and Plans mentioned in the Rule Book(as amended from time
to time) at any time at its sole discretion with or without any notice.
12) In case of dispute, the decision of Chairman of Company or any other person(s)
nominated by him, shall be final and shall be legally binding on Joint Venturer, who
shall have no objection to the appointment of any officer(s) of Company as the sole
arbitrator / arbitrators.
19.
The Company had, vide letter dated December 20, 2014, submitted its scheme-wise
contribution received from investors:
Page 28 of 44
Sl.
No.
1
Plan
Venturers
Amount in Rs.
Grand Total
75
4,37,190
HPP1
2
HPP2
13,880
SPS1
77032
26,64,52,990
SPS2
27968
15,13,83,541
SPS3
8450
3,33,82,405
SPS4
11481
8,64,51,860
SPS5
976
59,21,560
SPS6
255
2,82,510
SPS7
423
4,08,860
10
SPS8
902
7,80,855
13
DPS1
1360
2,30,70,000
14
DPS2
87
20,95,000
16
DPS4
19
18,80,000
17
DPS5
823
2,33,17,500
129855
59,58,78,151
TOTAL
The Company, in its submissions dated January 13, 2016 has informed that it had collected a
total of ` 69.30 crore under its schemes and has refunded `11.74 crore as on December 31,
2015. According to the Company, it has to refund `57.55 Crores. However, it has not
provided any verifiable proof regarding such claims.
20.
In the light of the above facts and submissions, it is to be decided whether the scheme/activity
of the Company is in the nature of CIS in terms of section 11AA of the SEBI Act. The provisions of
section 11AA are referred and reproduced herein below:
Collective investment scheme.
11AA. (1) Any scheme or arrangement which satisfies the conditions referred to in sub-section (2) or subsection (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 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,
Page 29 of 44
(i) the contributions, or payments made by the investors, by whatever name called, are pooled and utilized 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
(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 (2 of 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 45I of the Reserve Bank of India Act, 1934 (2 of 1934);
(iii) being a contract of insurance to which the Insurance Act, 1938 (4 of 1938), applies;
(iv) providing for any Scheme, Pension Scheme or the Insurance Scheme framed under the Employees Provident
Fund and Miscellaneous Provisions Act, 1952 (19 of 1952);
(v) under which deposits are accepted under section 58A of the Companies Act, 1956 (1 of 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 (1 of 1956);
(vii) falling within the meaning of Chit business as defined in clause (d) of section 2 of the Chit Fund Act,
1982 (40 of 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.
Page 30 of 44
21.
The first condition, under section 11AA(2) of the SEBI Act, 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. Undisputedly, the Company mobilizes funds from the investor for the
purported purchase of livestock/poultry and undertakes to develop them as per the plans offered by
it. The details of the plans have already been mentioned above. The investors are required to make
payment in respect of the schemes offered by the Company as per the payment options they choose.
The investors are made to execute an application form and thereafter the Company issues a certificate
endorsing the payment received, plan opted, etc. The certificate does not contain any specific details
regarding the poultry or livestock. The certificate mentions the name of plan, maturity date and the
expected sum payable on completion of term of the scheme. The important point to be noted is that
the certificate mentions only the scheme opted, maturity date and amount he would receive on
completion of the plan.
Further, the Company has not proved that it has the requisite number of livestock/poultry to satisfy
the investor and therefore it becomes clear that the Company pools monies from the investors for the
purposes of the scheme or arrangement. In view of the above, it is clear 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 thereby satisfying the aforesaid first condition under section 11AA(2)(i)
of the SEBI Act.
22.
The second condition under section 11AA(2) of the SEBI Act is 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, whether movable or immovable from such scheme or arrangement.
One plan from each of the payment modes available to the investor under the scheme of the Company
is mentioned below for reference.
I (A) Down Payment Scheme (DPS)
Sl. No.
1
2
Consideration Cost
2500
5000
Expected Realisable
Value
5000
10000
Page 31 of 44
Accidental Death
Compensation
NA
5000
3
4
5
Sl. No.
1.
2
3.
4.
5.
10000
15000
50000
20000
30000
100000
10000
15000
50000
II(A) SYSTEMATIC PAYMENT SCHEME (SPS)

Scheme SPS 1 for 66 months ( 5.6 Yrs)
ERV
ADC
Cost
Mly
Qly
Hly
Yly
6600
100
295
580
1150
8750
9000
13200
200
590
1160
2300
17500
18000
19800
300
885
1740
3450
26250
27000
26400
400
1180
2320
4600
35000
36000
66000
1000
2950
5800
11500
87500
90000
III (A) HYBRID PAYMENT SCHEME (HPS) Scheme HPS 1 payment 40 months
(3.4) ERV 60 months ( 5 Yrs)
Sl. No.
1.
2
3.
4.
5.
ERV
ADC
Cost
Mly
Qly
Hly
Yly
10000
250
760
1645
3275
14500
7500
20000
500
1520
3290
6550
29000
15000
30000
750
2280
4935
9825
43500
22500
40000
1000
3040
6580
13100
58000
30000
100000
2500
7600
16450
32750 145000
75000
From the above, it can be seen that in each of the plans, the Company has represented that after the
completion of the term, the investor would be entitled for Estimated Realisable Value. Further, such
value is more than the investment amount. It can thus be inferred that the schemes are in the nature
of investment schemes; whereby 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.
I also note the following observations made in the
interim order:
.in respect of the scheme of "SPSA-1 (66 months)", for the "Expected Realizable Value" of Rs 8,750/(which includes administration and maintenance charges), the total amount required to be paid by a client/ venturer is
only Rs.6,600/-(paid as monthly instalment of Rs.100 for 66 months as the investment in the Livestock/Poultry). It
is stated in the Rule Book that the company may also wish to buy back the stock if the venturer opts for, for an
Estimated Realizable Value (ERV). The Certificate, issued by AAL states that The company shall pay in Indian
Page 32 of 44
currency at its Customer Service Centre through corporate office, the amount due under this certification in accordance
with Terms of the said Schedule to the person to whom the same is herein expressed to be payable. The Certificate
issued by AAL mentions the Estimated Sum payable to the Client or Venturer at the end of the term..
I, therefore conclude that the scheme/s floated and operated by the Company satisfies the second
condition under section 11AA(2)(ii) of the SEBI Act.
23.
The third and fourth conditions under section 11AA(2) are that the property, contribution or
investment forming part of scheme or arrangement, whether identifiable or not, is managed on behalf
of the investors, and the investors do not have day-to-day control over the management and operation
of the scheme or arrangement. With respect to this condition, the interim order has alleged the
following:
As has been noted in the preceding paragraphs, AAL agrees to allot the Livestock /Poultry (unidentified)
to the client/ venturer upon execution of the Application Form and after full/part payment of consideration
amount. It is further noted that the issuance of Certificate to client/ venturer is construed as the confirmation
that the client/ venturer registered for the livestock/poultry booked by them. The allotment of such
livestock/poultry to the client/ venture is at AAL's discretion.
AAL reserves the right to discontinue/change/amend/modify or alter any of the rules/regulation and payments
schemes at any time at its sole discretion.. Thus, even after allotment, neither the ownership or nor possession
of the livestock/poultry is transferred by AAL to the client at any point of time. As per the Rule Book, the
company shall have first charge on the said property on account of its unpaid instalments for services/development
charges and for other incidental expenses incurred by the company, as the said property cannot be sold, assigned,
mortgaged, pledged, alienated without obtaining no dues certificate from the company in case of instalment
payment plans.
I have perused such observations. As per the scheme, it is the Company which receives the monies
from the investors. The Company pools such monies for utilization under the purported scheme of
purchase of livestock/poultry. The Company reserves the right to amend the scheme/plans at any
time at its discretion. The investor does not have possession of the livestock even after allotment. The
Company in its submissions has only stated that it is returning the funds of the investors and has not
Page 33 of 44
stated that it has handed over livestock as per the schemes. From the features of the scheme, it can
therefore be noticed that the Company/its management have the sole right to manage the contribution
or property/investment forming part of the scheme and the investors do not have any day-to-day
control over the management and operation of the scheme or arrangement. I accordingly conclude
that the scheme satisfies the third and fourth conditions stipulated in section 11AA(2)of the SEBI
Act.
24.
From the above findings and observations, I conclude that the scheme offered by the
Company with a promise of return satisfies all the four conditions specified in section 11AA (2) of
the SEBI Act and therefore qualify as a Collective Investment Scheme as defined under the said
section read with the CIS Regulations. The Company and the society have submitted that the interim
order of SEBI has prejudiced the interest of farmers who have placed their money with the Company
under the schemes. In this regard, I refer to the following observation of the Honble Supreme Court
in the matter of PGF Limited vs. UoI and another (ref. MANU/SC/0247/2013):
"..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 11AA of the Act."
The requirement of registration and regulation of collective investment schemes as mandated under
section 11(2)(c) and 12 of the SEBI Act therefore assumes much importance. SEBI, being the
regulator for the securities market cannot allow any unregistered scheme/company to solicit public
funds from gullible investors. The regulations have been framed keeping in mind the interest of
investors. Therefore, the submission is misplaced.
The Hon'ble Supreme Court further observed "Inasmuch as the said Section 11AA seeks to cover, in general,
any scheme or arrangement providing for certain consequences specified therein vis-a-vis the investors and the
promoters.,. The Honble Supreme Court further observed "A reading of sub-Section (3) of Section
11AA also throws some light on this aspect, wherein it is provided that those institutions and schemes governed by subclause (i) to (viii) of sub-Section (3) of Section 11AA will not fall under the definition of collective investment scheme.
........... Therefore, by specifically stipulating the various ingredients for bringing any scheme or arrangement under the
definition of collective investment scheme as stipulated under sub- Section (2) of Section 11AA, when the Parliament
Page 34 of 44
specifically carved out such of those schemes or arrangements governed by other statutes to be excluded from the operation
of Section 11AA, one can easily visualize that the purport of the enactment was to ensure that no one who seeks to
collect and deal with the monies of any other individual under the guise of providing a fantastic return or profit or any
other benefit does not indulge in such transactions with any ulterior motive of defrauding such innocent investors and that
having regard to the mode and manner of operation of such business activities announced, those who seek to promote such
schemes are brought within the control of an effective State machinery in order to ensure proper working of such schemes."
25.
To launch or carry on the activity of CIS and mobilize public funds from such schemes, it is
mandatory under law to obtain a certificate of registration from SEBI. Section 12(1B) of the SEBI
Act mandates that no person, shall sponsor or cause to be sponsored or carry on or caused to be
carried on any CIS unless it obtains a certificate of registration from SEBI in accordance with the CIS
Regulations. Regulation 3 of the CIS Regulations provides that no person other than a Collective
Investment Management Company which has obtained a certificate under the said regulations shall
carry on or sponsor or launch a 'collective investment scheme'. A person can launch or sponsor or
cause to sponsor a collective investment scheme only if it is registered with SEBI as a Collective
Investment Management Company. 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. The Company does not have a certificate of
registration as mandated under law and has launched CIS without obtaining certificate of registration
from SEBI, thereby contravening the provisions of section 12(1B) of the SEBI Act and regulation 3
of the CIS Regulations. Therefore, having concluded that the activities of the Company are CIS in
terms of section 11AA of the SEBI Act and that the same were carried out without obtaining
registration from SEBI, suitable enforcement action should necessarily follow in the interest of
investors.
26.
I note that the Company seems to be aggrieved as SEBI has not granted registration to it to
launch and operate CIS. In this regard, it needs to be appreciated that in terms of regulation 68 (under
Chapter IX of the CIS Regulations dealing with Existing Collective Investment Schemes) of the CIS Regulations,
any person who has been operating a collective investment scheme at the time of
commencement of the regulations shall be deemed to be an existing collective investment
Page 35 of 44
scheme and shall also comply with the provisions of this Chapter. Regulation 73(1) prescribes that
an existing collective investment scheme which has failed to make an application for registration to
SEBI or has not been granted provisional registration by SEBI or having obtained provisional
registration fails to comply with the provisions of regulation 71 shall wind up the existing collective
investment scheme. It is an admitted position that the Company was incorporated on September
13, 2007 and commenced its activities thereafter. Therefore, it cannot be said that the schemes of the
Company are existing collective investment schemes in terms of Chapter IX of the CIS Regulations.
Therefore, having launched and operated CIS without obtaining a certificate of registration under
section 12(1B) of the SEBI Act and regulation 3 of the CIS Regulations, the Company has to wind up
its unregistered CIS schemes and repay the investors who had contributed under the schemes. There
is no provision of registering such schemes or validating them after the offence has already been
committed by the Company.
27.
In this regard, I also refer and rely on the following observations made by the Honble
Securities Appellate Tribunal made in Order dated August 12, 2015 in PACL Limited vs. SEBI (Appeal
no. 368/2014):
.a CIS floated after the CIS Regulations came into force without obtaining certificate of registration
from SEBI is liable to be wound up under the regulation 65 read with regulation 73 of the CIS Regulations. Therefore,
the argument that in view of the decision of this Tribunal in case of Alchemist Infra Realty Ltd. (supra) PACL has a
right to seek registration under CIS Regulations cannot be accepted. (Emphasis supplied)
In view of the above reasons, the schemes of the Company having been launched after the CIS
Regulations came into force, would not be eligible for invoking the provisions under Chapter IX of
the CIS Regulations.
28.
The Company has also referred to the Order passed by the Honble SAT in the matter of
Citrus Check Inn and requested SEBI to grant provisional certificate of registration to the Company
so that the Company could operate schemes under the regulation of SEBI. The Company needs to
appreciate that in the matter of Citrus Check Inn, the SEBI Order that was challenged was not a final
order conclusively establishing that the schemes of that entity was an unregistered CIS. However, in
this case, I have already held that the Company has admittedly operated unregistered CIS activities.
Page 36 of 44
Therefore, the case of Citrus Check Inn cited by the Company would not be applicable to the present
matter.
29.
I also note that the Company had filed a writ petition before the Honble High Court at Madras
in W.P. No. 39046/2015 praying for issuance of a Writ of Mandamus, directing SEBI to dispose of
its representation in relation to registration of Company as a collective Investment Management
Company. The Honble High Court, vide Order dated March 28, 2016, had dismissed the petition
while observing the following:
6. From a perusal of the materials available on record, it is seen that already there is an interim order against the
petitioner to desist from collecting money to the tune of Rs.70 crores under various schemes without obtaining registration
from SEBI. The Registration with the SEBI is a pre-condition for collecting money under any scheme. Though interim
order was passed restraining the petitioner from collecting money under any scheme, the same was not complied with by
the petitioner. Only in this situation, the petitioner has come forward with the present writ petition. Considering the
nature of the business activities and conduct of the petitioner. I am of the opinion that it is not a fit case to give direction
to the respondents to consider the representation of the petitioner. It is needless to say that this Court cannot mechanically
give direction to the respondents to consider the representation of the petitioner in all cases. Further more, in the counter
it has been stated that only after disposal of the pending proceedings before that SEBI, the issue of registration of the
petitioner-company could be decided. Therefore, I am of the opinion that there is no need to give any directions sought for
by the petitioner, at this juncture.
Hence, the writ petition is liable to be dismissed and accordingly, the same is dismissed.
30.
I also note that in terms of regulation 4(2)(t) of the SEBI (Prohibition of Fraudulent and
Unfair Trade Practices Relating to Securities Market) Regulations, 2003, dealing in securities shall be
deemed to be a fraudulent or an unfair trade practice if it involves fraud and includes illegal
mobilization of funds by sponsoring or causing to be sponsored or carrying on or causing to be carried
on any collective investment scheme by any person. This provision in the above Regulations has been
brought into effect from September 06, 2013. Accordingly, it could be held that by mobilizing public
funds through CIS without obtaining registration from SEBI as required under section 12(1B) of the
SEBI Act read with regulation 3 of the CIS Regulations, after the provision coming into force, the
Company has contravened the above provision.
.
Page 37 of 44
31.
It has also been submitted that SEBI initiated the action based on a complaint dated
September 01, 2014, which was received from a person, who has nothing to do with the affairs of the
company and subsequently the complaint was withdrawn. In this regard, it needs to be noted that the
said complaint may have been a trigger to examine the business activities of the Company. On
examination by SEBI, the interim order was passed on the basis of material submitted by the
Company. Therefore, the withdrawal of the complaint would not have any impact as far as the present
proceedings are concerned.
It has been argued that the interim order has caused disruption in the business of the Company. I am
of the opinion that it is most important to preserve the assets of the Company in order to pay the
investors. I do not give any credence to the argument.
The Company has also contended that the interim order is in violation of Article 19(1)(g) of the
Constitution of India. Article 19(1)(g) gives the right to a citizen to practise any profession, or to carry on
any occupation, trade or business. However, under Article 19(6), the right under Article 19(1)(g) shall not
affect the existing laws or prevent the State from making law, imposing in the interest of general
public, reasonable restriction on the exercise of this right. Therefore, such right to carry on any
business is not unfettered and should be carried on only in compliance with the relevant laws that
regulate such activity or business. The provisions of sections 11AA and 12(1B) of the SEBI Act read
with the CIS Regulations, including the registration requirement prior to launching a CIS (and
collecting public money under such CIS) mandated therein, has to be complied with by any company
intending to launch and carry on a CIS. Therefore, the above argument of the Company is also
without any merit.
32.
Therefore, having concluded that the activities of the Company are CIS in terms of section
11AA of the SEBI Act and that the same were carried out without obtaining registration from SEBI,
in violation of the SEBI Act and SEBI regulations, suitable enforcement action should necessarily
follow in the interest of investors and orderly development of the securities market. Regulation 65
provides for various directions that could be issued by SEBI. The said provision is reproduced below
for reference:
Page 38 of 44
65. The Board may, in the interests of the securities market and the investors and without prejudice to its right to
initiate action under this Chapter, including initiation of criminal prosecution under section 24 of the Act, give such
directions as it deems fit in order to ensure effective observance of these regulations, including directions:
(a) requiring the person concerned not to collect any money from investors or to launch any [collective investment scheme];
(b) prohibiting the person concerned from disposing of any of the properties of the [collective investment scheme] acquired
in violation of these regulations;
(c) requiring the person concerned to dispose of the assets of the [collective investment scheme] in a manner as may be
specified in the directions;
(d) requiring the person concerned to refund any money or the assets to the concerned investors along with the requisite
interest or otherwise, collected under the [collective investment scheme];
(e) prohibiting the person concerned from operating in the capital market or from accessing the capital market for a
specified period.
33.
As the Company is carrying out unregistered CIS activities, it becomes necessary to direct the
Company to wind up the CIS and refund its investors money or assets along with requisite interest
along with other necessary directions. The Company, in its submissions dated January 13, 2016 has
informed that it had collected a total of ` 69.30 crore under its schemes and has refunded `11.74 crore
as on December 31, 2015. According to the Company, it has to refund the balance of `57.55 crore.
However, the Company has not submitted supporting documents with respect to such claim. In view
of the same, such claim cannot be accepted at this stage.
34.
The interim order has issued directions against the past and present directors namely
Mr. Sengan Thangappalam, Mr. Shanmugam Rajendran, Mr. P. Saravanan, Mr. R. Devadoss and Dr.
V. Venkataramanujam.
The following table provides the details of the tenure of the above said 6 persons in the Company:
Sr.
Name of Director
Appointment Date
Cession Date
Mr. Sengan Thangappalam*
14/09/2007
Continues as director
Mr. Shanmugam Rajendran*
13/09/2007
No.
Page 39 of 44
Mr. P. Saravanan
09/07/2012
26/02/2015
Mr. R. Devadoss#
26/02/2015
Dr. V. Venkataramanujam@
26/02/2015
21/07/2015 (as per the

noticee), though
Company has
acknowledged, the
same not
updated/mentioned in
the MCA portal
* From incorporation of Company.

# On September 30, 2015, he was re-designated as Independent Directors vide a form filed with MCA.
@ On September 30, 2015, he was re-designated as Independent Directors vide a form filed with MCA. No forms
were filed by the Company with MCA regarding resignation of the director. However, Company has acknowledged the
receipt of resignation letter in their reply. As per MCA, he still continues as a director.
Regarding the liability of the above persons, I note that
(a) In terms of section 291 of the Companies Act, 1956, the board of directors of a company shall
be entitled to exercise all such powers and do all such acts and things as the company is
authorized to exercise and do. Therefore, the board of directors being responsible for the
conduct of the business of a company shall be liable for any non-compliance of law and such
liability shall devolve on individual directors also. Accordingly, a director who is part of a
companys board shall be responsible and liable for all acts carried out by a company unless
exemptions are provided. The present case involves a Company that has mobilized public
funds from gullible investors through its unregistered collective investment schemes. In this
regard, the following observations made by the Honble High Court of Madras in Madhavan
Nambiar vs Registrar of Companies (2002 108 Comp Cas 1 Mad) are important to note:
13. . A director either full time or part time, either elected or appointed or nominated is
bound to discharge the functions of a director and should have taken all the diligent steps and
taken care in the affairs of the company.
Page 40 of 44
14. In the matter of proceedings for negligence, default, breach of duty, misfeasance or breach of trust
or violation of the statutory provisions of the Act and the rules, there is no difference or distinction
between the whole-time or part time director or nominated or co-opted director and the liability for
such acts or commission or omission is equal. So also the treatment for such violations as stipulated
in the Companies Act, 1956.
(b) The Company had submitted that Mr. R. Devadoss and Mr. Venkataramanujam were inducted
as Independent Directors to satisfy eligibility criteria for CIS application and are not directly
associated with the persons having control over the affairs of the company. According to
them, these persons do not hold any shares in the company and are not responsible for the
acts and omissions of the company. The above persons have made similar submissions.
I note that as per the Companys submissions dated December 20, 2014, the Company had
mobilized Rs.59.58 crore. Thereafter, vide letter dated January 13, 2016, the Company has
stated that it has collected a total of Rs.69.30 crore. It can therefore be inferred that Rs.10
crore (more than what was collected as per letter dated December 20, 2014) has been
mobilized during December 2014 and January 2016. Therefore, the Companys submission
that it has stopped mobilization since 6 months made vide its letter dated July 22, 2015 is
incorrect. It can also be inferred that the mobilization had continued when Mr. V.
Venkataramanujam and Mr. R. Devadoss were inducted into the board of directors of the
Company. Accordingly, the submissions made by the said persons cannot be accepted. They
shall also be liable.
(c) The Company was incorporated on September 13, 2007 and commenced launching and
operating the impugned schemes thereafter. Therefore, the persons who were the directors
from such date would be liable for the contravention as found against the Company.
Therefore, I find Mr. Sengan Thangappalam, Mr. Shanmugam Rajendran and Mr. P Saravanan
liable for the contravention of law as found against the Company in launching and operating
CIS without registration from SEBI.
(d) In view of the above observations, I therefore, find Mr. Sengan Thangappalam, Mr.
Shanmugam Rajendran and Mr. P Saravanan along with Mr. V. Venkataramanujam and Mr.
R. Devadoss liable for the contraventions committed by the Company in launching and
Page 41 of 44
operating unregistered CIS, in violation of section 12(1B) of the SEBI Act and regulation 3 of
the CIS Regulations and contravening regulation 4(2)(t) of the PFUTP Regulations.
35.
In view of the foregoing, in the interest of investors and the securities market, I, in exercise of
the powers conferred upon me under Section 19 of the Securities and Exchange Board of India Act,
1992 and Sections 11(1), 11B and 11(4) thereof and regulation 65 of the SEBI (Collective Investment
Schemes) Regulations, 1999, hereby issue the following directions:
(a) Asurre Agrowtech Limited, Mr. Sengan Thangappalam, Mr. Shanmugam Rajendran, Mr. P
Saravanan, Mr. V. Venkataramanujam and Mr. R. Devadoss shall abstain from collecting any
money from the investors or launch or carry out any Collective Investment Schemes including
the scheme which have been identified as a Collective Investment Scheme in this Order.
(b) Asurre Agrowtech Limited, Mr. Sengan Thangappalam, Mr. Shanmugam Rajendran, Mr. V.
Venkataramanujam and Mr. R. Devadoss shall wind up the existing Collective Investment
Schemes and refund through Bank Demand Draft or Pay Order, the money collected by the
said company under the schemes with returns which are due to its investors as per the terms
of offer within a period of three months from the date of this Order 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.
In case the Company has made refunds as claimed in its submission, it shall produce the proof
for such repayment as directed above and also submit a certificate from Chartered Accountant
as directed in sub-paragraph (d) below.
(c) Asurre Agrowtech Limited/its present management is permitted to sell the assets of the
Company only for the sole purpose of making the refunds as directed above and deposit the
proceeds in an Escrow Account opened with a nationalised Bank.
Page 42 of 44
(d) After completing the aforesaid repayments in terms of sub-paragraph (b) above, the Company
shall file a certificate of such completion with SEBI, within a period of 15 days, from two
independent peer reviewed Chartered Accountants who are in the panel of any public
authority or public institution. For the purpose of this Order, a peer reviewed Chartered
Accountant shall mean a Chartered Accountant, who has been categorized so by the Institute
of Chartered Accountants of India (ICAI).
(e) Asurre Agrowtech Limited, Mr. Sengan Thangappalam, Mr. Shanmugam Rajendran, Mr. P
Saravanan, Mr. V. Venkataramanujam and Mr. R. Devadoss 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.
(f) Asurre Agrowtech Limited, Mr. Sengan Thangappalam, Mr. Shanmugam Rajendran, Mr. P
Saravanan, Mr. V. Venkataramanujam and Mr. R. Devadoss are restrained from accessing the
securities market and are prohibited from buying, selling or otherwise dealing in securities
market for a period of 4 years.
(g) In the event of failure by Asurre Agrowtech Limited, Mr. Sengan Thangappalam, Mr.
Shanmugam Rajendran, Mr. P. Saravanan, Mr. V. Venkataramanujam and Mr. R. Devadoss to
comply with the above directions, the following actions shall follow:
- Asurre Agrowtech Limited, Mr. Sengan Thangappalam, Mr. Shanmugam Rajendran, Mr. P
Saravanan, Mr. V. Venkataramanujam and Mr. R. Devadoss shall remain restrained from
accessing the securities market and would further be prohibited from buying, selling or
otherwise dealing in securities, even after the period of 4 years of restraint imposed in subparagraph (f) above, till all the Collective Investment Schemes of the Company are wound
up and all the monies mobilized through such schemes are refunded to its investors with
returns which are due to them.
- SEBI would make a reference to the State Government/ Local Police to register a civil/
criminal case against the Company, its promoters, directors and its managers/ persons in-
Page 43 of 44
charge of the business and its schemes, for offences of fraud, cheating, criminal breach of
trust and misappropriation of public funds;
- SEBI would also make a reference to the Ministry of Corporate Affairs to initiate appropriate
action as deemed fit.
- SEBI would make a reference to the Ministry of Corporate Affairs to restrain abovementioned noticee directors from being directors in other companies.
- SEBI shall initiate attachment and recovery proceedings under the SEBI Act and rules and
regulations framed thereunder against the Company and others responsible.
36.
This order shall come into force with immediate effect.
37.
This Order shall be without prejudice to the right of SEBI to initiate prosecution proceedings
under Section 24 and adjudication proceedings under Chapter VIA of the Securities and Exchange
Board of India Act, 1992 against Asurre Agrowtech Limited, Mr. Sengan Thangappalam, Mr.
Shanmugam Rajendran, Mr. P Saravanan, Mr. V. Venkataramanujam and Mr. R. Devadoss including
other persons who are in default, for the violations as found in this Order.
38.
Copy of this Order shall be forwarded to the stock exchanges and depositories for necessary
action.
PRASHANT SARAN
WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA
Date: May 09, 2016
Place: Mumbai
Page 44 of 44

Order in The Matter of Asurre Agrowtech Limited

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Order in The Matter of Asurre Agrowtech Limited

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WTM/PS/25/IMD-CIS/SRO/MAY/2016

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA

Date of personal hearing: January 13, 2016

Details of amount mobilized till date,

Details of charges created on its assets by the company,

Details of commission paid on amounts mobilized above,

Details of agents along with their addresses, etc.,

Audited Accounts for FY 2014-15.

PAN of abovementioned Directors.

placed in Regulation 3 of SEBI (CIS) Regulations, 1999 and non-compliances of the

q. When the company is in compliance with provisions of SEBI (CIS) regulation as it

order without following the prescribed procedure contemplated under regulation 59

To set aside interim order of SEBI and other proceedings.

Direction to issue provisional registration under regulation 71 of SEBI

Direction to SEBI to consider CIS applications and issue registration

The farmers who subscribed to the Collective Investment Schemes have

trust on promoters and hence, the promoters shall be allowed to complete

Direction to the promoters to furnish an undertaking not to divert funds

Such other orders which is beneficial to the interest of the farmers.

The following observations/facts from the interim order are noted:

I (B) Down Payment Scheme (DPS)

II(A) SYSTEMATIC PAYMENT SCHEME (SPS)

II(D) SYSTEMATIC PAYMENT SCHEME (SPS)

II(E) SYSTEMATIC PAYMENT SCHEME (SPS)

II(F) SYSTEMATIC PAYMENT SCHEME (SPS)

II(H) SYSTEMATIC PAYMENT SCHEME (SPS)

II(J) SYSTEMATIC PAYMENT SCHEME (SPS)

Scheme SPS 12 for 60 months (5.6 Yrs)

III (B) HYBRID PAYMENT SCHEME (HPS)

Unit Cost of Livestock and Poultry

Systematic Payment Schemes (SPS):

"Livestock/poultry can be booked in 60-78 easy systematic payments.

Hybrid Payment Scheme:

(f) The interim order had also observed the following:

Amount payable after completion

Term Period for

Amount payable as claim in the

contribution received from investors:

II(A) SYSTEMATIC PAYMENT SCHEME (SPS)

I also note the following observations made in the

Mr. Sengan Thangappalam*

Mr. Shanmugam Rajendran*

21/07/2015 (as per the

* From incorporation of Company.

This order shall come into force with immediate effect.

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