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TMI Blog2013 (7) TMI 1090X X X X Extracts X X X X X X X X Extracts X X X X ..... completion of tenure for monthly installments, such investor can either avail of the facilities i.e. room accommodation and services or opt for maturity payment i.e. a return on the investment with annualized interest. A brochure, application form containing the terms and conditions of the HMP alongwith a confirmation Certificate evidencing subscription to such HMP, were also annexed with the aforesaid letter. 2. As a matter of preliminary enquiry in or der to ascertain whether or not RVHEL was carrying on activities of a 'collective investment scheme', SEBI vide letter dated March 1, 2013, advised RVHEL to submit the following documents relating to the HMP, by March 15, 2013, viz. - i. Total number of individuals who have subscribed to the plan(s); ii. Details (number of rooms available, etc.) about the accommodation provided/projected to be provided; iii. Total number of individuals who have actually availed the services (accommodation) under the plan(s); iv. Details of assets held by RVHEL; v. Total amount refunded by RVHEL towards principal investment and towards interest. 3. RVHEL vide letter dated March 15, 2013, replied that it was in 'Time Share' business, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business of Rose Valley Hotels and Entertainments Ltd. coming under the purview of SEBI Act in any manner whatsoever. We deny that it is incorrect to say that the scheme of Rose Valley Hotels and Entertainments Ltd. do not come under your purview as alleged. We deny that you have any jurisdiction to enquire into the affairs of the company which as per your admission does not come under your purview. ...". 6. While the preliminary inquiry was in progress, SEBI received an ad interim Order dated June 12, 2013 (hereinafter referred to as "Interim Order"), from the Government of Tripura. Vide the aforesaid Order, which was passed by the Sub-Divisional Magistrate Sadar, West Tripura (hereinafter referred to as "SDM, West Tripura ") in accordance with the provisions of the Tripura Protection of Interests of Depositors (in Financial Establishments) (Amendment) Ac t, 2011 (hereinafter referred to as " Financial Establishments Act "), the following restrictions were imposed with immediate effect against the Agartala Regional Office of RVHEL - "1. The Rose Valley, Agartala, is henceforth restrained from collecting or mobilizing any kind of monetary deposits from the public ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r name called, are pooled and utilized solely for the purposes of the scheme or arrangement; (ii) the contributions or payments are made to such scheme or arrangement by the investors with a view to receive profits, income, produce or property, whether movable or immovable from such scheme or arrangement; (iii) the property, contribution or investment forming part of scheme or arrangement, whether identifiable or not, is managed on behalf of the investors; (iv) the investors do not have day to day control over the management and operation of the scheme or arrangement." 7.3. RVHEL has submitted that it is in 'Time Share' business and therefore will not come under SEBI's purview. On this ground, RV HEL has refused to submit documents in respect of the HMP, to SEBI. On an examination of the material available on record, it is prima facie observed that - i. RVHEL offers different membership plans under the HMP i.e. standard, silver, gold, platinum and diamond, to intended investors. ii. When an investor subscribes to a particular plan offered under the HMP, he is required to make monthly payments on advance or installment basis towards provisional allotment of facilities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the HMP are made by the investors with a view to receive profits or income in the form of returns with annualized interest i.e. maturity payment. iii. The resorts and hotels, which are part of the HMP, are wholly owned and managed by RVHEL Further, the contributions made by investors to the HMP are managed on their behalf, by RVHEL. iv. RVHEL has complete control on the plans offered by it under the HMP. In view of the above, I find that the HMP has all the ingredients of a 'collective investment scheme' as defined in section 11AA of the SEBI Act, as reproduced at para 7.2 supra, for ready reference. 7.5 RVHEL has submitted that SEBI does not have any jurisdiction to enquire into its affairs since SEBI has admitted before the Joint Secretary, Govt. of Jharkhand that 'Time Share' business does not come under its purview. In this regard, I note that vide letter dated March 19, 2013, RVHEL was informed that it was incorrect to state that SEBI had concluded that its scheme did not come under SEBI's purview since the object of the meeting organised on February 11, 2013, was to brief the Joint Secretary, Govt. of Jharkhand, on the Writ Petition pending at Kol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SEBI (Collective Investment Schemes) Regulations, 1999 (hereinafter referred to as "CIS Regulations"), provides that no person other than a Collective Investment Management Company which has obtained a certificate under the CIS Regulations shall carry on or sponsor or launch a 'collective investment scheme'. Therefore, a person can launch or sponsor or cause to sponsor a 'collective investment scheme' only if it is registered with SEBI as a Collective Investment Management Company. In my view, therefore, the launching/floating/sponsoring or causing to sponsor any 'collective investment scheme' by any 'person' without obtaining the certificate of registration in terms of the provisions of the CIS Regulations is in contravention of section 12(1B) of the SEBI Act and regulation 3 of the CIS Regulations. In this regard, I note that RVHEL has not obtained any certificate of registration under the CIS Regulations for its fund mobilizing activity from the public, under the HMP offered by it. 7.8 Upon a consideration of the aforementioned paragraphs, I am of the view that RVHEL is prima facie engaged in fund mobilising activity from the public, by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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