Plantation co flouts SEBI rules,fined

A plantation firm and its three directors have been slapped with a fine of Rs two00000 by a Delhi court for raising huge amounts from the public after promising them high returns without prior approval from market watchdog Securities and Exchange Board of India (SEBI). Additional Sessions Judge (ASJ) Pawan Kumar Jain fined YSVK Agro Green Fields and Estate Limited a firm among hundreds of collective investment companies (CIS),on a complaint by SEBI,seeking prosecution of the plantation company for not getting prior certificate from it as prescribed by the SEBI Act. SEBI had alleged that “the company had floated the CIS and mobilised00000 of rupees from general public,in violation of the provisions of the SEBI Act.” “In spite of public notice dated December 18,1997 and then again in 1999 by the SEBI,the company and its three directors failed to get the scheme registered with SEBI or to wind up the said scheme or repay the amount collected from the investors,” it said. During the trial,the plantation company and its directors had admitted that they had not applied for registration in terms of the regulation and sought a mild punishment. ASJ Jain imposed the fine of Rs 50,000 each after convicting the firm and three of directors – S K Khosla,his brother V K Khosla and son Vikas Khosla. “Ends of justice will be met if convicts are burdened with substantial fine. Accordingly,I impose a fine of Rs 50,000 each on the company and its three directors in default of which they will be liable for three months simple imprisonment for the offence punishable under the SEBI Act,” the ASJ said. SEBI Act,amended in January 1995,stipulates that any venture capital funds or collective investment schemes have to obtain a prior registration certificate from SEBI. Hundreds of companies,however,continue their operations without getting the registration certificate,prompting SEBI to launch criminal proceedings against them. These companies offer schemes under which investment from general public is mobilised and utilised with the purported aim to generate high returns. The money thus collected is managed by the plantation company on behalf of the investors who do not have day-to-day control over the management and operation of such schemes.