Sebi bans Rose Valley from raising cash
- Arvind Kejriwal hits back at Jung on cancelling secy appointments
- US releases documents recovered in raid that killed Osama bin Laden
- Al Qaeda describes 26/11 Mumbai attack as 'heroic Fidai', 'blessed' operation
- Key member of Modi's poll campaign team likely to work for Nitish Kumar
- Food inspectors order recall of Maggi noodles, say it contains excess lead
Market regulator Sebi has barred West Bengal-based Rose Valley Real Estates & Construction from raising money from the public on the charge that it did not seek the watchdog's permission for running a scheme.
While Rose Valley claimed that it was mobilising funds for real estate business, Sebi came to the conclusion that the company was in fact running a Collective Investment Scheme (CIS) and did not seek market regulator's permission, mandatory for these products.
As such, Sebi directed Rose Valley, "not to collect any money from investors or to launch any scheme, not to dispose of any of the properties or delineate assets of the schemes and not to divert any fund raised from public at largest kept in bank account and or at the custody of the company."
The company has been raising funds from the public in certain areas of West Bengal in the name of sale of plots of land under its Ashirbad scheme.
However, all investors in the scheme get a piece of land at a fixed price.
It is this feature of the scheme, on the basis of which Sebi said the product cannot be called a real estate business. A typical real estate business would price its land banks, depending on location, terrain, current and future potential of use of the land, Sebi said.
"It is a prevalent and innate feature of real estate that even within the same location, there may be differential pricing taking into account the floor rise etc. However, the schemes of the company claim to be a pure real estate developer on the premise that all investors in this scheme get a piece of land at a fixed price," the watchdog said.
Pointing out that land or land banks at different places would be valued differently in real estate business, Sebi said however, in the current case no demarcation was made in terms of pricing of land.