SEBI bars Growpital's agri-investment scheme, applying the four-point test for what counts as a CIS

The Securities and Exchange Board of India issued a final order against 30 people and entities behind Growpital, an online platform (Farm Silo Tech LLP, Yotta Agro Venture and related LLPs) that promised assured, tax-free returns from agricultural investments between 2020 and 2024. SEBI held that the scheme was a Collective Investment Scheme (CIS) under Section 11AA of the SEBI Act, applying the four conditions the Act lays down: pooling of investors' funds, contributions made in expectation of profit, funds managed on the investors' behalf, and no day-to-day control by investors over the scheme.

The order rejected the argument that operating through LLPs, which are separately regulated under the LLP Act, took the scheme outside SEBI's reach, relying on the Supreme Court's ruling in Osians Connoisseurs of Art v. SEBI that a CIS remains illegal regardless of the legal form it is run through. SEBI restrained the promoters from accessing the securities market for five years, ordered the scheme wound up, directed refunds to investors with 12% annual interest, and imposed monetary penalties on 30 entities, including intermediaries who allegedly routed funds through sham transactions with no underlying business.