Saradha Realty India and its Managing Director Sudipta Sen have been directed to wind up the company’s collective investment scheme (CIS).
SEBI also instructed the company to pay back investors according to the offer terms within three months.
The regulator cautioned that failure to do so would result in prosecution proceedings for fraud, cheating, criminal breach of trust and misappropriation of public funds.
The company and its Managing Director have been barred from accessing the capital market.
SEBI said Saradha’s scheme satisfied all the conditions of a CIS.
Saradha received advance money from Rs 10,000 to Rs 1 lakh for allotting a piece of land or flat allotted under its schemes.
The scheme tenor varied between 15 and 120 months. Investors could also opt for refund of cash with average returns between 12 and 24 per cent.
SEBI said the land/flat allotted was not pre-determined or identified and investors received them only at the time of final allotment.
In addition, investors did not have day-to-day control over the scheme as their contribution was being managed by Saradha.
Saradha was given multiple opportunities of personal hearing but did not furnish any details.
Denies charges
The company denied all the charges and allegations in the SEBI show-cause notice that were primarily related to CIS.
The company also sent voluminous data and documents in over 200 boxes to SEBI’s Kolkata office, which the regulator found to be irrelevant and extraneous.
When asked to send an authorised representative to explain the information submitted, it sent two data entry operators who were not aware of the case.
Further, Saradha also contended that it was unable to locate its investors and identify the money due to them because of unscrupulous staff and brokers.
The company also said its data was stored in servers at Boston and under the control of the staff and brokers.
SEBI said it was passing the order as no cogent evidence came in support of Saradha’s claims and no representative turned up on the appointed date, April 2 .