Sebi asks Hyderabad co to repay `30 cr in 3 months

Published on May 02, 2015 02:00:07 AM
The Securities and Exchange Board of India (Sebi) has asked Hyderabad-based Viswas Real Estates and Infrastructures India (VREIL) to refund `30 crore raised from investors within three months. The market regulator barred VREIL from accessing the securities market for a period of four years besides restraining it from raising money from investors through any Collective Investment Schemes (CIS).

The Sebi has received an investor complaint that VREIL having registered office at Bhagyanagar Colony in Hyderabad has collected huge funds from the public. The Sebi in order to examine the activities of VREIL advised to explain the details pertaining to the schemes through a letter in February, 2014. As there was no reply from the company, Sebi proceeded further on the basis of the material available on record and prima facie found that the firm and its directors namely Vaka Saradhi and Eshararao Gundala were engaged in the ‘fund mobilising activity’ from the investors and were promising land as part of the scheme/ arrangement, the regulator said.

According to Sebi, the company had mobilised funds from public by promising them plots of land in its real estate ventures without necessary approvals from Sebi. It was alleged that the firm had collected an amount of `30 crore by deceiving public through its investment schemes. In the order, Sebi directed VREIL and its directors to wind up the existing CIS and refund the money collected under the schemes with returns which are due to its investors within a period of three months from the date of this order.

The company would have to submit a winding up and repayment report to Sebi, within 15 days of completion of the refund to the investors. The company and its directors shall abstain from collecting any money from the investors or launch or carry out any collective investment schemes including the scheme which has been identified as a collective investment scheme in this order, said Prashant Saran, whole time member of Sebi.

In the 14-page order, he said, "The VREIL has various plans/ schemes including 'Viswas Own Your Property Advance Scheme Monthly Plans', 'Lumpsum Property Advance Schemes', 'Silver Plan 3 years', 'Gold Plan 4 years', 'Diamond Plan 7 years', 'LPAS-MIS Platinum', 'Own Your Property Advance Scheme (Daily) and 'Golden Future Plan - I (540 days)' and 'Golden Future Plan - II (1080 days)'. It is seen from the details available that the plans were for different time periods like one year, two years, four years and five years upon a payment of minimum monthly installment in the range of `500 to a maximum amount of `2,000 and provided the compensation value (profits). The firm also offered insurance coverage in conjunction with its schemes.”

Sebi noted that the company executed 'Simple Mortgage Deed', wherein the mortgager is VREIL and the customer is mortgagee. The document only mentioned about the details of the land mortgaged and has no details of the land allotted for sale to the customer. The document also mentioned about the assured return of 12 per cent per annum on the investment amount. From the observations, it can be inferred that the transactions of the company were not in the nature of real estate transactions rather it can be said to be an investment scheme.

The VREIL and its directors 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. In case of failure, Sebi would make a reference to the State government/ Local Police to register a civil/criminal case against VREIL, its promoters, directors and its managers/ persons in-charge of the business and its schemes, for offences of fraud, cheating, criminal breach of trust and misappropriation of public funds.

Besides, Sebi would also make a reference to the Ministry of Corporate Affairs, to initiate the process of winding up of VREIL and would begin attachment and recovery proceedings against the company, in case of failure to comply with orders. These directions would come into force with immediate effect.