What may restrictions and prohibitions SEBI, RBI or the government impose to tackle collective investment schemes or Ponzi investment companies.Financial scams and scandal rock the country on regular basis, promising quick money to gullible small investors. They find loopholes in laws and regulations, play different tricks, play with the words, give deceptive promises and so on. It is not the case that government official don’t understand or don’t know such cases but they hand in glove with promoters of such schemes and land mafias turn their eyes away from it.
Recently CBI registered a case of criminal conspiracy and cheating under Sections 120B and 420 of IPC against Nirmal Singh Bhangoo, his two companies Pearls Agrotech Corporation Limited (PACL) and Pearls Golden Forest Limited (PGFL) and their director Sukhdev Singh. "Investigations have revealed that Bhangoo's companies raised investments from over 5 crore gullible investors through
collective investment scheme under the garb of sale and development of agricultural land,
As well Mumbai
city economic offences wing (EOW) is probing a case involving PACL (formerly Pearls Agrotech Corporation) for allegedly duping investors by promising land. There are over 5 lakh investors in the state who invested money to get a plot or double their money in five years. Recently, the Securities and Exchange Board of India (Sebi) asked PACL to refund Rs 49,100 crore to the investors within three months. Sebi has also ordered the immediate closure of unauthorized collective investment schemes (CIS) run by the company.
In Pune and around also several such schemes are being run. Few days back my friend and
real estate blogger Ravi Karandeekar forwarded me email sent to him by Landson realties requesting him to remove the YouTube Video of company’s Suhas Phadnis and team. I appreciate that ravi didn’t do so. Now question is why company was insisting on him to remove the video. Before drawing any conclusion lets have a look on the email, it says
As we have sold out our Layout of Teak county totally, please Remove the
YouTube video uploaded by you of Suhas Phadnis & Team. Secondly our Project name was changed from Teak County to Wood County so it is not legal to keep old video with that name. We request you to remove the video at earliest.”
Now first of all if they have sold the entire layout then they should be proud of it, they can easily and with pride tell customers that our project was so successful that all plots are sold. However there is no harm in keeping video on YouTube.
Secondly if the name of the project has been legitimately changed from Teak County to Wood County, it makes no difference, it is perfectly legal. However before changing name project has to be registered with some authority, There is nothing such thing mentioned in videos or company website about where the project has been registered.
Landson claims that it has 104 acre land in its possession however IGR record shows hardly around 20 acre land in its partner’s name. They should come clean on this issue before claiming sell of all the 104 acres.
So what could be the reason behind insisting for removing the said video? , After going through that video, Teak County, Wood County websites and other related videos, it becomes crystal clear that the many statements made by team suhas Phadnis and his company are daisy and deceptive.
Now if you look at the project highlights of the
“wood county” it clearly says that
“We are selling you an agriculture land with professional legal process. Teak Plantation is a feature where your planted trees will be registered with the Government. Plus, we will be maintaining Teak plant for you.” But can any one purchase only land here? The answer is “no”. One has to go for plantation scheme. If he/she wants to purchase only land here, there is no other option.
In its FAQ section in an answer to question ‘CAN WE HONOUR CLIENT’S DEMAND FOR LAND ONLY?” Company categorically says
“The project offers land with teak plantation as a package. It’s a two generation project and you can keep the land for your next generation by selling off the teak trees.” ( see FAQ no 30 ). In other terms whatever purchaser is paying under this scheme is the contribution or payment made to such scheme or arrangement by the investors with a view to receive profits, income, produce or property, whether movable or immovable from this scheme or Arrangement is a “Collective investment scheme” and is contrary to Sebi regulations.
They pretend that Wood County is only selling the land, but that is not true going for teak wood plantation is compulsory. They also pretend that they are planting teak free of cost and will maintain it free of cost, but is that a truth ?. In fact, whether purchasers pays lump sum or on installment he has to sign an agreement of ten years for maintenance of the plot and water supply for the trees and has to pay Rs. 2/ sq. ft. for first five years and Rs. 2.5/ sq. for next five years or till the reaping of the trees whatever is later. Purchaser can not terminate this agreement, if he does so, he has to pay double the amount of remaining period towards liquidated damages.
What sort of land dealing is this?. This is nothing but a collective investment scheme (CIS).As per SEBI regulation Any scheme or arrangement made or offered by any company under which the contributions, or payments made by the investors, are pooled and utilized with a view to receive profits, income, produce or property, and is managed on behalf of the investors is a CIS. Investors do not have day to day control over the management and operation of such scheme or arrangement.
And, as per Section 11AA of the SEBI Act, A Collective investment scheme is any scheme or arrangement, which satisfies the following conditions:
(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
(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.
Ladson realty satisfies all above conditions and in FAQ no 18 they also admit that “This indeed is our first Teak project and is just the beginning. We have many more in pipeline”.This is clear confession that landson is attracting investors to invest in teak plantation and not in land.
Landson also claims that they will plant 140 Teak wood ( In FAQs they say 100 Plants, see FAQ 25) saplings free of cost i.e. without any consideration whatsoever being paid by the Purchaser and there is no sale and/or any other like transaction of any nature. But is it really so? , then why they collect annual maintenance charges from purchaser after selling the land and why there is condition of double the maintenance charges if purchaser discontinues with the plantation scheme ?. This is nothing but contributions, or payments made by the investors, by whatever name called, are pooled and utilized solely for the purposes of the scheme or arrangement and illegal as per SEBI regulation
Ladson also claims that they are giving saplings free of cost as companies Corporate Social Responsibility (CSR).When did Landson became a listed company?. If they are a company they have to be registered with SEBI. And as per Companies Act, 2013, any company having a net worth of rupees 500 crore or more or a turnover of rupees 1,000 crore or more or a net profit of rupees 5 crore or more should mandatorily spend 2% of their net profits per fiscal on CSR activities. Landson is not a listed company, it’s a partnership firm, And to deceive investors they are naming only CSR, actually they have nothing to do with CSR, also they are giving nothing free to the investor ( in landson’s language “purchasers”) Now look at the profit range of landson . In April 2014 they purchased 1.93 hector ( Two lakh eight thousand sq. ft. ) land at the cost of 18 lakh i.e. around nine rupees per sq. ft. and immediately started selling it under the name of teakwood plantation at the rate of 100 rupee per sq. ft. 11 times more than purchase price in just few days. plus recurring maintenance charges. Is there any other such lucrative business?
Not only this after so called sale of land, Landson also reserves right of amalgamation of all the plots with itself. There is one condition in an agreement “The purchaser hereby exclusively entitles to the vendor to specifically to do all that is required for amalgamation of entire holding of the vendor. It is further agreed that the purchaser is aware of the fact that the vendor shall amalgamate his entire holding and that the purchaser hereby authorizes to the vendor to do all that is necessary for the same.” How can one keep any rights with himself after selling the property?
Landson also claims 1 cr income after reaping of teak but refuses to give any written commitment, says “As per the guidelines issued by RBI and SEBI, we cannot offer any such written commitments.” (FAQ 39).
The project name initially was Teak County; it was later changed to Wood County. As Teak County they were selling same plot of 10890 sq. ft. with same built-up area
Landson has published video of one Maharashtra Forest official Mr. kashinath Rathod who was praising the project. The search of this name and designation in government website yielded nothing.It will interesting to know which law has permitted this public servant to praise such private collective investment project. What details of the project did he check before doing so?
In the nutshell the investors or purchaser in such projects must take adequate care before investing their hard earned money, there is no point in crying fowl after loss. They should always insist for all the documents from the developers and take guidance from reliable lawyer in such cases. And developers should also come clean before launching any scheme any ambiguity may lead to serious consequences.
