![Sebi](http://im.rediff.com/money/2011/jan/sebi.jpg)
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 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
"The land is proposed to be sold according to the plans offered under the Ashirbad scheme and not on the basis of pricing of land based on its locations or otherwise," Sebi said.
As such, it appears that land units are fungible and irrespective of location, the price remains the same.
CIS is a scheme in which payments made by investors are pooled and utilised for the purpose of the scheme.
Under the scheme, contributions are made with a view to receive profits, income, produce or property. In CIS, the investors do not have a day-to-day control over the management, operation of the scheme or arrangement.
In Ashirbad scheme, the company first receives earnest money in installments from a purchaser, pools the fund so mobilised and uses it to develop the land labs and thereafter provides return at the option of the investor on the amount invested at the end of the scheme in the form of credit value.
Calling the scheme a CIS, Sebi said, "Investors have an option to receive the credit value after making payment of the entire earnest money instalments. It is observed that investment is made with a view to earn profit."
The company has land banks spread across West Bengal in Rajarhat, Durgapur, Siliguri, and also in Tripura, Madhya Pradesh and Orissa.