Cracking down on a fraudulent collective investment scheme being run as an agriculture land business, market regulator SEBI has barred Ken Infratech and its promoters from raising money from the public.

In an interim order, the Securities and Exchange Board of India (SEBI) also barred the Delhi-based company and its promoters from any diversion of funds or sale of any assets and properties till the time its investigation continues.

The SEBI began probe into the matter following complaints in 2011, accusing the company of soliciting funds from public through various schemes for purchase, transfer and development of plots.

As per SEBI, the company had raised Rs 7.50 crore from the alleged collective investment scheme (CIS).

In its order dated June 18, the SEBI has directed Ken Infratech, its promoters and directors — Sukhwinder Singh, Gurwinder Singh, Sukhchain Singh and Kuldeep Singh — not to collect any money from investors or to launch any scheme.

Besides, the market regulator has ordered the company not to dispose of any properties/assets “which have been owned or acquired in respect of or in pursuance of the plans/schemes or earmarked/allotted to the investors under the plans/schemes”.

Further, the entities have been directed to not to divert any of the funds raised and kept in bank account or in the custody of Ken Infratech.

Passing the order, the regulator said the action has been taken to ensure that the company does not collect further funds and safeguard investor interests.

Meanwhile, the SEBI has asked the company and its directors to file reply within 15 days as to why the schemes operated by them should not be termed as “collective investment schemes”.

After receiving the complaints, the SEBI had sought certain details from Ken Infratech regarding its fund raising through — “cash down payment plan” and an “instalment payment plan”.

The company in a letter dated September 2011, informed the regulator that it had mobilised about Rs 4.5 crore in cash down payment and about Rs 3 crore in instalment payment plan.

It said it had not purchased any land with the money but planned on acquiring land soon.

However, as the firm failed to provide further details to SEBI, the regulator decided “to act swiftly and proceed ex-parte on the basis of material available on record”.

The SEBI has noted that as per the agreement between Ken Infratech and the investors, the company invited funds for purchasing and developing land for agriculture purposes.

The firm also undertook to arrange for the sale of the agricultural produce from such land on behalf of the customer and decided the price of the output.

As per the deal, the SEBI said, customers had no role to play and had to merely accept whatever proceeds given to them.

Meanwhile, the regulator has also prima facie found that Ken Infratech had floated the collective investment scheme without obtaining the necessary regulatory approval.

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