Page 1 of 15

WTM/PS/87/CIS-NRO/NOV/2015

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: PRASHANT SARAN, WHOLE TIME MEMBER

ORDER

Under Sections 11(1), 11(4) and 11B of the Securities and Exchange Board of India Act, 1992 read with Regulation 65 of the SEBI (Collective Investment Schemes) Regulations, 1999 and Regulation 4(2) (t) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 In the matter of Sunshine Global Agro Limited (earlier known as Sunshine Forestry Private Limited) In respect of:

1. Sunshine Global Agro Limited [PAN: AAJCS2508K], 2. Mr. Lekh Narayan Chand [PAN: AALPH6536K], 3. Mr. Mokarram Mohammad [PAN: AJPPM9356A], 4. Mr. Mohammad Ahteshamul Haq [PAN: ACGPH4147P], 5. Mr. Anand Kumar Jha [PAN: AEKPJ8257J], 6. Mr. Wasim Khan [PAN : CENPK6085G] and 7. Mr. Ashif Khan [PAN: BEMPK1322J]

_____________________________________________________________________

1. Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) had,

conducted a preliminary enquiry in the unit plans of the one Sunshine Global

Agro Limited (hereinafter referred to as ‘the Company’ or ‘Sunshine’) and vide an

interim ex-parte Order dated July 15, 2014 (‘the interim order’), prima facie found that

Sunshine is engaged in fund mobilizing activities from the public, which is in the

nature of a Collective Investment Scheme (hereinafter referred to as 'CIS') as

defined in Section 11AA of the Securities and Exchange Board of India Act, 1992

(hereinafter referred to as ‘the SEBI Act’), without obtaining a certificate of

registration from SEBI as required under Section 12(1B) of the SEBI Act and

Regulation 3 of the SEBI (Collective Investment Schemes) Regulations, 1999

(hereinafter referred to as ‘the CIS Regulations’). The mobilization of funds from

the public, was also prima facie found to be a fraudulent practice in terms of

Regulation 4(2)(t) of the SEBI (Prohibition of Fraudulent and Unfair Trade

Practice Relating to Securities Market) Regulations, 2003 (hereinafter referred to as

‘PFUTP Regulations’). The interim order was issued in order to protect the interest

of investors, safeguard the assets/ property acquired by the Company by using the

funds collected from the investing public and also to prevent the Company from

further carrying on with its existing fund mobilizing activities through the alleged

Page 2 of 15

CISs. This Order directed Sunshine and its directors namely Mr. Lekh Narayan

Chand, Mr. Mokarram Mohammad, Mr. Mohammad Ahteshamul Haq, Mr. Anand

Kumar Jha, Mr. Wasim Khan and Mr. Ashif Khan (hereinafter collectively referred

to as the ‘noticees’):

“● not to collect any fresh money from investors under its existing scheme(s); ● not to launch any new schemes or plans; ● to immediately submit the full inventory of the assets owned by SGAL; ● not to dispose of any of the properties or alienate the assets of the existing scheme(s); ● not to divert any funds raised from public at large, kept in bank account(s) and/or in the custody of the company.”

The aforesaid directions came into force with immediate effect and the noticees

were advised to file their reply within a period of twenty one (21) days from the

date of receipt of the interim order and also to indicate whether they wish to avail

an opportunity of personal hearing in the matter.

2. The Company vide its letter dated August 08, 2014, requested for the copy of the

interim order and requested for a time of three (3) months for complying with the

interim order. The interim order was forwarded to the Company and its directors

vide letters dated August 25, 2014. The letters issued to the noticees namely Mr.

Anand Kumar Jha and Mr. Mohammad Ahteshamul Haq had returned

undelivered. SEBI vide letter dated September 18, 2014, forwarded the copies of

the inteirm order to the Company for onward delivery of these to the noticees

namely Anand Kumar Jha and Mr. Mohammad Ahteshamul Haq. SEBI vide its

letter dated October 08, 2014, issued a reminder to the noticees for replying to the

interim order. As no reply was received, SEBI vide letter datd November 10, 2014,

issued one more reminder to the noticees for replying to the interim order. The

Company vide its letter dated November 24, 2014, replied to the reminder letter

of SEBI and requested for three months’ time for filing the detailed reply. The

submissions of the Company, in brief are as under:

i. The activities of the Company are not in the nature of CIS and the Company is

engaged in operating a nursery and plantation of ‘Jhatropa plant’, a natural

substitute of bio-diesel.

ii. To achieve economic and commercial viability of extraction of bio-diesel requires

huge plantation on mass scale, the Company took huge efforts to popularize the

large scale plantation of Jhatropa plants in various states.

iii. The Company had obtained registration from the Government of Bihar on

December 12, 2004, for putting up nursery for forestry/ trading of plant.

Page 3 of 15

3. Before proceeding further, SEBI granted an opportunity of personal hearing to the

Company and its directors on April 20, 2015. An intimation regarding the same

was sent to all the noticees vide letter dated March 24, 2015. The hearing notices

sent to the noticees namely Mr. Mokarram Mohammad, Mr. Anand Kumar Jha,

Mr. Wasim Khan and Mr. Ashif Khan had returned undelivered. SEBI vide its

letter dated April 13, 2015, asked the Company to intimate the noticees namely Mr.

Mokarram Mohammad, Mr. Anand Kumar Jha, Mr. Wasim Khan and Mr. Ashif

Khan about the date of hearing. On the date fixed for the personal hearing, none

of the noticees turned up for the personal hearing. In the interest of justice, one

more opportunity of personal hearing was granted to the noticees on May 15, 2015.

An intimation regarding the same was sent to the noticees vide letter dated May

08, 2015. However, none of the noticees turned up for the personal hearing on

such date also.

Considering that reasonable opportunities to the Company and its directors have

already been afforded for making submissions in the matter, I find that the matter

could be proceeded on the basis of the material available on record.

4. I have considered the interim order issued in the matter and the material available

on record. The main allegation as against Sunshine is that the schemes/ plans

operated by it were in the nature of CIS and that Sunshine was offering these

schemes without obtaining registration from SEBI in contravention of the

provisions of Section 12(1B) of the SEBI Act and Regulation 3 of the CIS

Regulations read with Section 11AA of the SEBI Act. The directors of Sunshine

were also alleged to be responsible for the illegal conduct of the business of the

Company. The issue that now arises for my consideration is: Whether Sunshine

was operating a CIS without obtaining registration from SEBI?

5. Whether Sunshine was operating a CIS without obtaining registration from

SEBI?

a. I note that the Company was incorporated on June 01, 2004 as Sunshine Forestry

Private Limited. On May 28, 2008, pursuant to the change of name to Sunshine

Global Agro Pvt. Limited, a new certificate of incorporation was issued to it.

Page 4 of 15

b. As per the details provided by Sunshine vide its letter dated December 31, 2013, it

had two schemes i.e. ‘Sale of Jhatropa Bush group’ and ‘Sale of plant/ trees’. I have

seen the brochure submitted by Sunshine vide letter dated December 31, 2013, the

relevant portions of the same are:

“GREEN REVOLUTION FRUIT FOR NATION … … Since last five years company is running in profit. … valuer … has valued 5 to 7 years old trees Rs.1500/- per tree, for which we are offering for sale @ Rs.1,000/- per Tree. The grown up trees which we are selling require further maintenance for seven years to be marketable at the time of delivery, the value of which is expected to be Rs.3,000/-. These trees are planted & nourished on lease hold land. So, the regular maintenance of the trees purchased by you will be carried out by the company and in return the company will aspecting for assured the 14cft. wood contains. JATROPHA – PLANTATION BIO-DIESEL FOR NATION … … Since last five years company is running in profit. … valuer … has valued 5 to 7 years old trees Rs.1500/- per tree, for which we are offering for sale @ Rs.1,000/- or per J.B.G. The grown up J.B.G (Jatropha Bush Group) which we are selling require further maintenance for five years and six months (66 months) to be heavy fruitry at the time of transfer. The value of which is expected to be Rs.2,000/- to Rs.3,000/- per J.B.G. These Jatropha B.G. are planted & nourished on lease hold land. So, the regular maintenance of the J.B.G. purchased by you will be carried out by the company upto the term … as per mutual memorandum of understanding & agreement. After the completion of terms of maintenance agreement, purchaser is bound to sale such J.B.G. If he wants to hold such J.B.G.; he will be responsible for transfer the lease agreement from the company at his own cost. … If the purchaser is far from project site or he is not interested to hold to such J.B.G. company will purchase his J.B.G. as per existing estimated value including fruit cost of one J.B.G. Rs.200/- and Rs.600/- against each plant as per mutual agreement subject to condition that such agreement must be executed within one year after the terms of M.O.U. expiration including grace period of time. … Terms & Condition of Plant Purchase … 2. After receiving application duly completed along with cost of each plant @Rs.1000/-. The Company will send Plant Title Certificate after sixty days. 3. The saleable Plant will further require maintenance for 7 & more years, hence the purchaser will give ownership right of the plant to the company for its maintenance. 4. The Purchaser will be bound to sale the said plant on completion of 7 years because they are grown on leasehold land & Govt. Land. 5. Under the range of insurance risk coverage, purchasing cost is always safe, except imposition of Govt. enactment, notification, rules & regulation what so ever issued time to time. …

Page 5 of 15

7. Delivery of plants (14 cft. wood) of such time will be made on project site after 7 years from the date of sale. … Insurance Schedule The Company provides one time accidental Insurance Policy an additional facilities to those purchasers who will be purchasing plant at a time under Trading of Plant as following schedule with- No. of Units Insurance Value 10 25,000/- 25 50,000/- 50 75,000/- 100 1,00,000/- 200 1 Lacs onwards Terms & Condition of Jatropha B.G. Purchase … 2. After receiving application duly completed along with cost of J.B.G. @ Rs.1000/-. The Company will send J.B.G. Certificate after sixty days. 3. The saleable J.B.G. will further require maintenance for 66 months for developing the fruit full such & risk from life existing from nature. A Bush Group having Number of 3 (three) Plant aged about one year of existing Plant hence the purchaser will give M.O.U. of the plant to the company for its maintenance. 4. The Purchaser will be bound to sale the said J.B.G. on completion of 66 months because they are grown on leasehold land & Govt. Land. If purchaser hold the J.B.G. after the terms of M.O.U. the company transfer lease agreement by names of purchaser. He will be responsible for lease rent and other liabilities. Company will not be liable for any maintenance to this J.B.G. after completion of terms. 5. Under the range of insurance risk coverage, purchasing cost is always safe, except imposition of Govt. enactment, notification, rules & regulation what so ever issued time to time. … Insurance Schedule The Company provides one time accidental Insurance Policy an additional facilities to those purchasers who will be purchasing J.B.G. at a time under Trading of Plant as following schedule with- No. of Units Insurance Value 25 50,000/- 50 75,000/- 100 1,00,000/- 200 1 Lacs onwards

…”

c. I have seen the sample ‘application form’ for the schemes/ plans provided by the

Company. These are pre-printed documents asking for the details of the applicant,

address details, contact number, details of payment, nominee details etc. From the

sample application forms as submitted by the Company it is noted that the location

of the plant/ tree was not mentioned.

Page 6 of 15

d. I have perused the sample ‘Memorandum of Agreement & Understanding’ for

plan/ scheme of the Company. The relevant clauses thereof are as under:

“The first part approached and gave free consent to the company, second part to lookafter

the day to day maintenance of the purchased … No. … of site….

The following terms & condition were mutually agreed amongst both party & for better

future relations these are enumerated below:

…

2. Since purchaser living far from the project site, it is felt by him/ her difficult to look

after day to day growth, maintenance to the said … & therefore agreed to authorize the

second part to supervise, lookafter the plant for better growth …

3. That the total period of such supervision maintenance, taking care for the growth of

the … is for at least … years.

[4. That the first part agreed to take 14 cft of wood benefit of each grown up plant, rest

of wood benefit will be retained by the second part.]*

5. To cover any kind of adversities the second part draw proper insurance of the … at

their cost for the … years.

6. That there is no liability/ responsibilities of the second part except the above

mentioned clauses.” * The clause in is the ‘Memorandum of Agreement & Understanding’ for ‘Plant/ Tree Sale’

e. Another document is ‘certificate’, for the schemes/ plans namely ‘Plant’ and

‘J.B.G.’ provided by the Company. It is noted that the same is a pre-printed

document with blanks for the name and address of the investor. The same reads

as under and contains the date of delivery of wood/ plant/ J.B.G. and promising

plant content/ J.B.G. Content/ Fruit:

“It is hereby certified that the person/ persons named herein this certificate has purchased …. Grown up Plant paying total cost of Rs. … on dated ….. the said plant is/ are bearing distinctive no. …. Nature of plant … which are situated at ….. The certificate for ownership of Plant is subject to rules & regulations over leaf”

The following clauses of the terms and conditions are relevant to be noted:

- For purchase of Grown-up Tree Plants and their Further Maintenance

“1. The Company will do maintenance of grown-up Plants purchased by you for further 7 years as agreed by you. 2. Purchaser will be bound to delivering the said Plants after completion of 7 years. 3. Purchaser will be free from maintenance of Tree Plant or estimated future cost of Rs.2,500/-. Company may consider to 14 cft. wood on each unit against Tree Plant. 4. As the plants laying on mostly lease hold land. Plants purchaser must take delivery of plants at project site. 5. The purchaser must submit their Plant title certificate on completion of due date with the option to sale to his plants himself or by the Company. …”

Page 7 of 15

- For purchase of Grown-up Jatropha Bust Group (J.B.G.) and their

Further Maintenance

“1. The Company will do maintenance of grown-up J.B.G. purchased by you for further 51/2 years as agreed by you. 2. Purchaser will be bound to sell or lease transfer the said J.B.G. after completion of term (51/2 years). 3. Purchaser will be free from maintenance of such J.B.G. up to the maintenance period (51/2 years). 4. As J.B.G. are laying on mostly lease hold land. Purchaser must take delivery of fruits with his bush group as per M.O.U. at project site. 5. The purchaser must submit their J.B.G. title certificate on completion of due date with the option to sale to the company. 6. If the purchaser not hold J.B.G. on self the company will purchase his J.B.G. as per existing estimated value including full term fruit cost of one J.B.G. Rs.200/- and Rs.600/- against each standing plant as per mutual agreement subject to condition that such agreement must be executed within one year after the terms of M.O.U. 7. If the purchase don’t want to sale their J.B.G. (Jatropha Bush Group) after term, then lease agreement will be transfer to purchaser minimum period up to 25 years only. After transfer he will bear lease rent with maintenance cost on self. …”

f. From the discussion above, it is observed that Sunshine was inviting applications

from the customers/ investors for sale of plants and J.B.G. I also note the

following:

i. The plant/ tree are said to be allotted by the Company after 60 days of receiving

the application and the ownership rights of plant/ tree are retained by the

Company.

ii. Sunshine guarantees assured returns as more specifically mentioned in the

brochure as ‘expected value’. The application form for the scheme namely ‘sale

of Plant/ Tree’ assured the benefit of 14 cft. of wood for each grown up plant

and the rest of the wood benefit is retained by the Company.

iii. Till the issuance of ‘certificate’, the Company did not provide the details of the

location of the plants.

iv. The possession of the plants rests in the hands of the Company for the purpose

of maintenance. The Company takes consent of the customer/ investor to

lookafter the day to day maintenance of the plant purchased.

v. The Company has proposed to purchase/ buyback the plant/ trees after

completion of the term. The plan/ scheme of the Company are in the nature

that at the end of the term, the customer/ investor has no option but to sell the

plants as it may not be practical for him/ her to look after the plants from their

residence and to bear the cost of continuing lease.

Page 8 of 15

vi. The customer/ investor is compulsorily required to submit the J.B.G. title

certificate/ plant title certificate on completion of due date with the option to

sale to the Company.

vii. The Company provides the accidental insurance cover to its customers/

investors.

From the observations as noted above, it can be inferred that the transactions of

the Company were not mere sale of plants/ trees rather these can be said to be an

investment scheme.

g. Having considered the above, now I proceed to deal with the charges levelled

against Sunshine. According to the definition, CIS means any scheme or

arrangement which satisfies the conditions specified in Section 11 AA of the SEBI

Act, which provides as under:

"(1) Any scheme or arrangement which satisfies the conditions referred to in subsection (2) or sub-

section (2A) shall be a collective investment scheme:

Provided that any pooling of funds under any scheme or arrangement, which is not registered with the

Board or is not covered under sub-section (3), involving a corpus amount of one hundred crore rupees

or more shall be deemed to be a collective investment scheme.

(2) Any scheme or arrangement made or offered by any person under which,

(i) the contributions, or payments made by the investors, by whatever name called, are pooled and

utilized solely for the purposes of the scheme or arrangement;

(ii) the contributions or payments are made to such scheme or arrangement by the investors with a

view to receive profits, income, produce or property, whether movable or immovable from such scheme

or arrangement;

(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 ii. under which deposits are accepted by non-banking financial companies iii. being a contract of insurance iv. providing for any scheme, Pension Scheme or the Insurance Scheme framed under the Employees Provident Fund v. under which deposits are accepted under section 58A of the Companies Act, 1956 vi. under which deposits are accepted by a company declared as a Nidhi or a mutual benefit society 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;

Page 9 of 15

ix. such other scheme or arrangement which the Central Government may, in consultation with the Board, notify, shall not be a collective investment scheme."

The term ‘securities’ in section 2(h) of the Securities Contracts (Regulation) Act, 1956

was amended vide the Securities Laws (Amendment) Act, 1999, w.e.f. February 22,

2000, to include units or any other instrument issued by any collective investment

scheme to the investors in such schemes.

h. Let me now, proceed to test the characteristics of the impugned schemes/ plans

floated and carried on by the Company against the four conditions under Section

11AA(2) of the SEBI Act.

i. The first condition is that the contributions, or payments made by the investors, by whatever

name called, are pooled and utilized for the purposes of the scheme or arrangement. The

Company had invited its customers to subscribe to one of the plans offered by it

for the purchase of J.B.G./ plants/ trees. Sunshine had taken the contribution/

investments of the investors/ customers in accordance with its plans/ schemes

as detailed above. As per the discussion above, the J.B.G./ plants/ trees always

remained in the possession of the Company and as per the maintenance clause,

the J.B.G./ plants/ trees are maintained from the funds received from the

customers, under the contract agreement. It is also important to note that even

on payment of full amount for J.B.G./ plants/ trees the customer/ investor had

to wait for 60 days for mere allocation of the plants (the quality/ age of the plant

is never disclosed). From the above observations, it can be said that the payments

made by the investors were pooled and utilized by the Company for the purposes

of its schemes. Thus, satisfying the first condition as stipulated in Section

11AA(2)(i) of the SEBI Act.

ii. The second condition 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. As discussed above, the investors

had made payments towards the plans/ schemes promoted by Sunshine. In the

brochure, Sunshine had stated that the grown up trees offered for sale, require

further maintenance for 7 years to be marketable at the time of delivery, and the

value of which is expected to be ₹3000. It was also said that the regular

Page 10 of 15

maintenance of the trees will be carried out by the Company and in return the

Company had assured 14 cft wood benefit.

Likewise, in J.B.G. plan, the Company had stated that if the customer/ investor

is not interested to hold to J.B.G., the Company will purchase it as per existing

estimated value including fruit cost of one J.B.G at ₹200 to ₹600 against each

plant.

In view of the above, it can be concluded that the brochure itself assured the

customers/ investors of expected value which meant nothing but profits. Further,

the Company also provides one time accidental insurance as an additional facility

to its customers/ investors. The same makes it clear that the investors made

contribution/ payment with a view to receive the profits/ income/ property/

return on their investments that may accrue to them as applicable, thus attracting

the second condition as stipulated in Section 11AA(2)(ii) of the SEBI Act.

iii. The third condition is that the property, contribution or investment forming part of scheme

or arrangement, whether identifiable or not, is managed on behalf of the investors. The fourth

condition is that the investors do not have day to day control over the management and

operation of the scheme or arrangement. In this regard, I note that the Company takes

the consent of the customer/ investor to look after the day to day maintenance

of the plants/ trees. Further, as per the ‘terms and conditions’ on the reverse side

of the ‘certificate’, the purchaser will be free from maintenance of J.B.G./plants/

trees. I also note that Sunshine on completion of the term, asks for submission

of the ‘certificate’ with the option for sale to the Company. From the same, it can

be said that the customer/ investor does not manage his investments in the

scheme rather his investments are managed and utilized by the Company as per

its own discretion and the investor does not have day to day control over the plot

of land/ property as the same remained with Sunshine.

Further, the statement that the J.B.G./ plant are mostly lying on the lease hold

land and in case the customer/ investor do not want to sell the J.B.G./ plants

after the lease agreement, then the lease agreement will be transferred to the

customer/ investor, shows that the plan/ scheme always remains in the control

of the Company. Further, the provision regarding non transferability of the

certificate indicates the total authority of the Company over the subject

Page 11 of 15

J.B.G./plant. The above discussion makes it clear that the contribution,

investment and property, if any, pertaining to the schemes/ plans were managed

by the Company. In view of the same, the investor does not have any day to day

control over the management and operation on the land. Such day to day control

over management and operations of such schemes were also looked after by the

Company and its directors.

i. From the above, it is noted that all the four conditions specified under Section

11AA(2) of the SEBI Act are satisfied in this case, the schemes/ plans promoted,

launched, carried on and operated by the Company are in the nature of CIS in

terms of Section 11AA(1). While proceeding further, I also place my reliance on

the observations of the Hon'ble Supreme Court, made in the matter of PGF Limited

& Ors. Vs. Union of India & Anrs. (Civil Appeal No. 6572 of 2004):

“42. … ... .. as per the agreement between the customer and the PGF Limited, it is the responsibility of the PGF Limited to carry out the developmental activity in the land and thereby the PGF Limited undertook to manage the scheme/arrangement on behalf of the customers. Having regard to the location of the lands sold in units to the customers, which are located in different states while the customers are stated to be from different parts of the country it is well-neigh possible for the customers to have day to day control over the management and operation of the scheme/arrangement. In these circumstances, the conclusion of the Division Bench in holding that the nature of activity of the PGF Limited under the guise of sale and development of agricultural land did fall under the definition of collective investment scheme under Section 2(ba) read along with Section 11AA of the SEBI Act was perfectly justified and hence, we do not find any flaw in the said conclusion. ... .... 53. … therefore, hold that Section 11AA of the SEBI Act is constitutionally valid. We also hold that the activity of … the sale and development of agricultural land squarely falls within the definition of collective investment scheme under Section 2(ba) read along with Section 11AA (ii) of the SEBI Act ...”

6. The Company has clearly failed to comply with the Section 12(1B) of the SEBI Act

which 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

'CIS'. A person can launch or sponsor or cause to sponsor a CIS 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

Page 12 of 15

Act and Regulation 3 of the CIS Regulations. I note that Sunshine launched CIS

without obtaining certificate of registration from SEBI, it contravened the provisions

of Section 12(1B) of the SEBI Act and Regulation 3 of the CIS Regulations.

7. Further, in terms of the Regulation 4(2)(t) of the PFUTP Regulations, 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. 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, the Company has

contravened Regulation 4(2)(t) of the PFUTP Regulations and is liable for action.

8. I note that the interim order was issued against the Company and its directors namely

Mr. Lekh Narayan Chand, Mr. Mokarram Mohammad, Mr. Mohammad Ahteshamul

Haq, Mr. Anand Kumar Jha, Mr. Wasim Khan and Mr. Ashif Khan. As per details

available at 'MCA 21' portal of Ministry of Corporate Affairs (accessed on August 31,

2015), following are the present directors of the Company:

DIN/DPIN Full Name Designation Date of Appointment

00640432 LEKH NARAYAN CHAND Director 01/06/2004

01040835 MOHAMMAD MOKARRAM Director 01/06/2004

03103199 MOHAMMAD AHTESHAMUL HAQ Director 15/07/2011

06995817 MOHAMMAD FAISAL Director 02/12/2014

06995819 BIBEKA NAND MANDAL Director 02/12/2014

From the above, it is noted that Mr. Lekh Narayan Chand and Mr. Mokarram

Mohammad are directors of the Company from June 01, 2004 and Mr. Mohammad

Ahteshamul Haq from July 15, 2011 and they continue to be the directors and are

responsible for carrying on unregistered CIS activities. Further, it is also noted that Mr.

Mohammad Faisal and Mr. Bibeka Nand Mandal have become the director of the

Company on December 02, 2014 (i.e. after the passing of the interim order) and these

persons continue to be the directors of the Company.

The details submitted by the Company vide its December 31, 2013, shows that the

noticee namely Mr. Anand Kumar Jha was appointed as director of the Company on

October 15, 2005 and had resigned on July 16, 2011. Further, the noticees namely Mr.

Wasim Khan and Mr. Ashif Khan had joined the Company on June 22, 2013 and

had resigned on December 02, 2014.

Page 13 of 15

I note that the resignation by Mr. Anand Kumar Jha, Mr. Wasim Khan and Mr. Ashif

Khan do not absolve these from the charges levied in the interim order as the Company

was incorporated on June 01, 2004 and since then it had mobilised funds from the

investors. Therefore, I have no hesitation in holding that Sunshine and its directors

namely Mr. Lekh Narayan Chand, Mr. Mokarram Mohammad, Mr. Mohammad

Ahteshamul Haq, Mr. Anand Kumar Jha, Mr. Wasim Khan and Mr. Ashif Khanwere

engaged in the illegal fund mobilising activity by floating/ sponsoring/ launching,

unregistered/ unauthorised CIS, as defined in the Section 11AA of the SEBI Act.

9. In view of the observations made in this Order, 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. Sunshine Global Agro Limited [PAN: AAJCS2508K] and its directors, namley

Mr. Lekh Narayan Chand [PAN: AALPH6536K], Mr. Mokarram Mohammad

[PAN: AJPPM9356A], Mr. Mohammad Ahteshamul Haq [PAN:

ACGPH4147P], Mr. Anand Kumar Jha [PAN: AEKPJ8257J], Mr. Wasim Khan

[PAN: CENPK6085G], Mr. Ashif Khan [PAN: BEMPK1322J], Mr. Mohammad

Faisal [PAN: AAWPF1464H] and Mr. Bibeka Nand Mandal [PAN:

CNVPM6593E] 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. Sunshine Global Agro Limited and its directors, namley Mr. Lekh Narayan

Chand, Mr. Mokarram Mohammad, Mr. Mohammad Ahteshamul Haq, Mr.

Mohammad Faisal and Mr. Bibeka Nand Mandal shall wind up the existing

Collective Investment Schemes and refund the money collected by the said company

under the schemes with returns which are due to its investors as per the terms of

offer 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.

Page 14 of 15

c. Sunshine Global Agro Limited and its directors, namley Mr. Lekh Narayan

Chand, Mr. Mokarram Mohammad, Mr. Mohammad Ahteshamul Haq, Mr.

Mohammad Faisal and Mr. Bibeka Nand Mandal shall not alienate or dispose

off or sell any of the assets of Sunshine Global Agro Limited except for the

purpose of making refunds to its investors as directed above.

d. Sunshine Global Agro Limited and its directors, namley Mr. Lekh Narayan

Chand, Mr. Mokarram Mohammad, Mr. Mohammad Ahteshamul Haq, Mr.

Mohammad Faisal and Mr. Bibeka Nand Mandal and past directors, Anand

Kumar Jha, Mr. Wasim Khan and Mr. Ashif Khan and 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.

e. Sunshine Global Agro Limited and its directors, namley Mr. Lekh Narayan

Chand, Mr. Mokarram Mohammad, Mr. Mohammad Ahteshamul Haq, Mr.

Anand Kumar Jha, Mr. Wasim Khan and Mr. Ashif Khan 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.

f. In the event of failure by Sunshine Global Agro Limited and its directors,

namley Mr. Lekh Narayan Chand, Mr. Mokarram Mohammad, Mr.

Mohammad Ahteshamul Haq, Mr. Anand Kumar Jha, Mr. Wasim Khan, Mr.

Ashif Khan, Mr. Mohammad Faisal and Mr. Bibeka Nand Mandal to comply

with the above directions, the following actions shall follow:

- Sunshine Global Agro Limited and its directors, namley Mr. Lekh Narayan

Chand, Mr. Mokarram Mohammad, Mr. Mohammad Ahteshamul Haq,

Mr. Anand Kumar Jha, Mr. Wasim Khan and Mr. Ashif Khan 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 paragraph 9(e) above, till all the Collective

Investment Schemes of Sunshine Global Agro Limited 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 initiate appropriate proceedings as against Mr. Mohammad Faisal

and Mr. Bibeka Nand Mandal for appropriate directions including directions

Page 15 of 15

restraining them from accessing the securities market and prohibiting them from

dealing in securities.

- SEBI would make a reference to the State Government/ Local Police to register

a civil/ criminal case against Sunshine Global Agro Limited, 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; and

- SEBI would make a reference to the Ministry of Corporate Affairs, to initiate the

process of winding up of the company, Sunshine Global Agro Limited.

- SEBI shall initiate attachment and recovery proceedings under the SEBI Act and

rules and regulations framed thereunder.

10. 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 Sunshine Global

Agro Limited and its directors, namley Mr. Lekh Narayan Chand, Mr.

Mokarram Mohammad, Mr. Mohammad Ahteshamul Haq, Mr. Anand

Kumar Jha, Mr. Wasim Khan, Mr. Ashif Khan, Mr. Mohammad Faisal and

Mr. Bibeka Nand Mandal, including other persons who are in default, for the

violations as found in this Order.

11. This order shall come into force with immediate effect.

12. Copy of this Order shall be forwarded to the stock exchanges and depositories for

necessary action.

Date: November 09, 2015 PRASHANT SARAN Place: Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA