Lok Sabha Question No. 960 (UNSTARRED), answered on 2015-12-04
Subject: Ponzi Schemes
Ministry: FINANCE
Asked by: KIRIT SOMAIYA

## 960. DR: KIRIT SOMAIYA:

Will the Minister of FINANCE be pleased t0 state:

(6) whether the SEBI issued prohibitory orders against few ofthe above companies but did not see that the orders are executed;

(a) whether it is true that Madhya Pradesh High Court in 2012-13 had issued guidelines against 13 major Ponzi companies/schemes and asked the regulators including SEBI to initiate action;

- the efforts made by SEBI to see that orders are executed and money is not transferred to other sister companies;
- (d) whether SEBI has received any representations from any quarter in this regard; and
- (e) if so, the details thereof with the action taken by SEBI in the matter? along

## (a): Sir. Yes;

## ANSWER MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI JAYANT SINHA)

Singh and Anr: VS. Union of India and Ors. [Writ petition no 3332 of 201O(PIL)] whereby the Hon'ble High Court of Madhya Pradesh directed that appropriate action in accordance with Law may be taken against 33 companies mentioned in the order by various authorities including Securities and Exchange Board of India (SEBI)

SEBI regulates Collective Investment schemes (CIS) as defined under section HAA of the SEBI 1992 circulation schemes are banned under Prize Chit and Money Circulation Schemes (Banning) Act; 1978 [PCMCSB Act]: per the said State Government is the enforcement agency and SEBI has n0 role in enforcing the PCMCSB Act. Act; Money As Act,

TThe Honble High Court of Madhya Pradesh has observed that these companies had received deposits from public by various types of plans viz. instalment plan and payment plan against the sale of land units, plants and that of livestock The companies entered into contract with the investors and committed offences under Section 3 () 362) cand 3(4) of Madhya Pradesh Nikshepakon Ke Hiton Ka Sanrakshan Adhiniyam 2000, Sections 6 of the Prize Chit and Money circulation Scheme (Banning) Act; 1978 and Section 420 of Indian Penal Code respectively floating lump they have

(b) & (c): SEBI after completion of examination of the activities of these 33 entities mentioned in the order of Hon'ble  High  Court of Madhya   Pradesh, passed ex~parte   interim order  against 11 entities for   carrying out entSti3 were referred to authorities concerned as activities of these entities did not fall under the regulatory purview of SEBI.

For execution of the order passed by SEBI; SEBI has forwarded the copy of the order to the State Governments concerned, RBI and Ministry of Corporate Affairs (MCA) SEBI also issues press releases on a quarterly basis cautioning investors not to invest in the schemes floated by these unregistered CIS entitiesc

(d): Out of the 11 entities against whom SEBI has passed interim order; SEBI has received complaints/ reference against certain entities alleging non-compliance of the direction given in the interim order .

(e): The details of entities against whom SEBI has received complaints alleging non-compliance of interim order is placed at Annexure-A

## GOVERNMENT OF INDIA (MINISTRY OF FINANCE) (DEPARTMENT OF ECONOMIC AFFAIRS)

## LOK SABHA UNSTARRED QUESTION NO. 960 TO BE ANSWERED ON FRIDAY , DECEMBER 4, 2015/AGRAHAYANA 13,1937 (SAKA)

## PONZI SCHEMES

## QUESTION

## ANNEXURE

| SI No.   | Name of the entity                                   | Date of Interim order   | Details of receipt of referencel complaint                                                                                                                                                                                                                                                                                | Action taken by SEBI                                                                                                                                                                                                                                                                                                                                                                                                  |
|----------|------------------------------------------------------|-------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          | Sai Prasad Properties Ltd. and Sai Prasad Foods Ltd. | July 17. 2013           | SEBI received an individual complaint dated December 06. inter-alia alleging that the entity is not complying with the order of SEBL. SEBI received letter dated June 19 2015 from Dr. Kirit Somaiya; Hon'ble Member of Parliament alleging that these companies are illegally transferring money to their sister concern | a Adjudication   proceedings have been initiated against these two companies on 15.09.14 for violation of the directions contained in the SEBT s interim b Prosecution launched for violation of interim order directions on 06.07.15 . C Complaint made to Economic Offences Wing(EOW) on 30.10.15 d. Vide letter dated June 19, 2015, the matter was   referred to the State Government of Maharashtra, MCA and RBI |
|          | Samruddha Jeevan Foods India Limited (SJFIL)         | October 31,2013         | SEBI received a letter from CBL  forwarding a complaint alleging collection of money in spite of SEBI interim order. SEBI received another letter dated June 19 2015 from Dr. Kirit Somaiya; Hon'ble Member of Parliament, alleging that these   companies are illegally transferring money to their sister concern       | a been initiated against SJFIL on 29.04.14 for violation of the directions contained in the SEBI s interim order. b. Prosecution launched for violation of SEBI s interim order directions on 07.07.15 Complaint made to EOW, Pune on 30.10.15 d Vide letter dated June 19, 2015, the matter was referred to the State Government of Maharashtra, MCA and RBI                                                         |