The order further directed the Mumbai-based firm to desist from diverting funds raised from the public.
After taking a note of the schemes run by RTSCL, Sebi started its investigation in June 2012, and after establishing that the company and its directors were running a CIS without having the regulatory approval to do so, the regulator passed an order on Monday. The order noted that the company had collected an aggregate of Rs 668 crore from a total of 3.68 lakh investors.
Running a time-share scheme — ‘Comfort Holiday Plan (CHP)’, the company offered an accommodation scheme along with providing an option to the subscribers to rent out or sell their holiday points earned in the scheme. The subscribers were also offered assured returns at the end of the scheme where through four different options it was offering a compounded annual return ranging between 11 and 13 per cent for an investment period of 4,5,6.5 and 9 years.
Sebi further established that the scheme was meant to generate profits for investors and the money was pooled for the purpose of providing holiday facility or compensation and, therefore, it fulfilled all the criteria of a collective investment scheme. The directors of the firm, against whom the order has been served are — Omprakash Basantlal Goenka, Prakash Ganpat Utekar, Venkatraman Natrajan and Narayan Shivram Kotnis.
“The mobilisation of funds by RTSCL under its various plans including the CHP, with a promise of assured returns, when considered in light of the other features of the CHP as well as other holidays plans offered by RTSCL ... prima facie falls within the ambit of ‘collective investment scheme’ as defined under Section 11AA of the SEBI Act,” said the order passed by S Raman, whole-time member at Sebi.