SEBI orders wind-up of Growpital scheme, bars Rituraj Sharma and others for 5 years

Fresh updates from the financial markets indicate that Market regulator Securities and Exchange Board of India (SEBI) has ordered the winding-up of the Growpital farmland investment scheme, holding that the platform operated an unauthorised collective investment scheme (CIS) and collected Rs 192.88 crore from market participants by promising assured, tax-free returns from agricultural operations.

In its final order passed today, SEBI Whole Time Member Kamlesh Chandra Varshney held all 28 noticees guilty of violations of the SEBI Act and regulations. The eight main noticees Rituraj Sharma, Krishnna Joshi, Gayatri Rinwa, Yotta Agro Ventures Pvt Ltd, Farm Silo Tech LLP and ZF Project 1, 2 and 3 LLPs were held directly responsible for the unauthorised CIS and jointly and severally liable to refund investor money with 12 percent interest.

The remaining noticees were held guilty of aiding and abetting the scheme.

The regulator has barred the eight main noticees from the securities market for five years or until completion of refunds, whichever is later. Twenty other entities and individuals have been barred for three years.

Rs 192.88 crore boosted from 5,208 market participants

The case relates to the Growpital platform, which offered market participants opportunities to invest in agricultural projects through LLP structures and promised assured, tax-free returns.

According to SEBI's findings, Farm Silo Tech LLP, which operated Growpital, and ZF Project 1, 2 and 3 LLPs boosted Rs 192.88 crore from 5,208 unique market participants.

Market participants were enrolled as LLP partners, but the underlying land agreements were in the name of Yotta Agro Ventures Pvt Ltd or its subsidiary. SEBI found that market participants as a result did not have ownership or control over the land.

Rituraj Sharma was a director of Yotta and designated partner of Farm Silo Tech, while Krishnna Joshi was a director of Yotta. Gayatri Rinwa, was a designated partner of Farm Silo Tech.

SEBI additionally found that around Rs 95.60 crore was transferred from Farm Silo Tech to Yotta without any underlying business, while another Rs 8.53 crore was used to acquire Grobanana in Yotta's name.

Rs 50 crore escrow to be refunded first

SEBI has directed the appointment of a nodal officer to oversee the refund process.

As the first step, around Rs 50 crore already lying in escrow and attached pursuant to the interim order will be distributed among market participants in proportion to their outstanding amounts.

The order lays down a process to identify market participants and determine the amount outstanding to each investor.

After exhausting the escrow amount, the regulator has directed recovery from trade and other receivables as well as assets owned by the entities. Amounts recovered will similarly be distributed among market participants in proportion to their outstanding dues.

If market participants are still not fully refunded, the balance will be recovered from the personal assets and accounts of Rituraj Sharma, Krishnna Joshi, Gayatri Rinwa, Yotta Agro Ventures, Farm Silo Tech and ZF Project 1, 2 and 3 LLPs, who have been made jointly and severally liable.

Explaining the rationale, Varshney wrote in his order:

"The money collected from market participants has not remained with Supplier and Topline Entities and the money has only been transferred through them. It is important to fasten joint and several liability on Noticee Nos. 1 to 8 since they acted as masterminds of the unregistered CIS. Thus, they shall be personally liable for any shortfall in refunding the amount to market participants".

The refund is to include 12 percent annual interest, calculated from January 29, 2024, the date of SEBI's interim order.

Rs 2 crore penalty on each main noticee

SEBI has imposed a Rs 2 crore penalty each on Rituraj Sharma, Krishnna Joshi, Gayatri Rinwa, Yotta Agro Ventures, Farm Silo Tech and ZF Project 1, 2 and 3 LLPs.

Other noticees have been fined Rs 50 lakh each, except noticees 17, 18 and 19, who have been fined Rs 20 lakh each.

The order follows an interim order issued on January 29, 2024, directing the noticees to desist from floating or operating any CIS. A confirmatory order was subsequently passed on April 26, 2024.

SEBI thereafter completed its investigation and issued show-cause notices to the parties.