Your World of Legal Intelligence
 India | 1-800-335-6202

WTM/SR/IMD/CIS/107/06/2015. Case: In Re: Citrus Check Inns Limited and Ors. Vs. Securities and Exchange Board of India

Judgment Cited in Precedent Map Related
Vincent
Case NumberWTM/SR/IMD/CIS/107/06/2015
JudgesS. Raman, Member
IssueSecurities And Exchange Board of India Act, 1992 - Sections 11(1), 11(4), 11AA, 11AA(2), 11AA(2)(i), 11AA(2)(ii), 11B, 12(1B)
Judgement DateJune 03, 2015
CourtSecurities and Exchange Board of India

Order:

S. Raman, Member

  1. Securities and Exchange Board of India (hereinafter referred to as "SEBI") received a complaint dated January 17, 2014 alleging that "Citrus Check Inns Limited" (hereinafter referred to as "Citrus"/"the company") was running a "Ponzi Scheme" and "mis-selling" its schemes to the public. It was also alleged that the company refused to refund the money invested by the complainant in June 2012, when the complainant approached the company for refund of the money as she wanted to discontinue with the plan. The complainant also mentioned that the company stated in reply "you would get the refund only after 4 to 5 years without interest".

  2. SEBI, vide Order dated March 07, 2014 had directed Royal Twinkle Star Club Private Limited (Royal Twinkle) and its Directors "not to collect any more money from investors including under the existing schemes; not to launch any new schemes; not to dispose of any of the properties or alienate any of the assets of the schemes; not to divert any funds raised from public at large which are kept in bank account(s) and/or in the custody of the company ".

    SEBI also received complaints alleging that subsequent to the issuance of the SEBI Order, the Directors of Royal Twinkle are running Collective Investment Scheme through Citrus.

  3. As a matter of preliminary inquiry into whether or not Citrus is carrying on activities of 'collective investment scheme' in terms of Section 11AA of the SEBI Act, 1992 (hereinafter referred to as "SEBI Act"), SEBI vide letter dated February 18, 2014 sought the following information from Citrus viz.-

    a. Memorandum and Articles of Association of Citrus as filed with the Registrar of Companies,

    b. Details of the past and present directors of Citrus,

    c. Brochures/offer documents pertaining to Citrus's schemes,

    d. Application forms that are required to be submitted by investors to participate in the schemes of Citrus.

    e. Sample copies of the registration letter and allotment letter issued to the investors who subscribed to the schemes of Citrus.

    f. Sample copies of the agreement letter/contract required to be entered into by investor/applicant under the schemes of Citrus.

    g. Details of the scheme wise amount mobilized along with the number of investors under the schemes of Citrus.

    h. Details of the scheme wise amount repaid/redeemed, along with the number of investors under the schemes of Citrus.

    i. List of all investors under their different schemes.

    j. Details of the regulatory approvals obtained, if any, provision of accidental death/disability benefits to investor, under the schemes of Citrus.

    k. Certified copies of audited financial statements of Citrus for the last three financial years.

    l. Copy of Income Tax Returns filed by Citrus for the last three financial years.

  4. In response thereto, Citrus vide letters dated March 03, 2014 March 20, 2014, April 21, 2014 and May 21, 2014 sought extension of time for the submission of required information and the same was granted by SEBI vide letters dated March 06, 2014 April 09, 2014, May 02, 2014 and May 28, 2014 respectively.

  5. Thereafter, vide reply dated June 19, 2014, Citrus inter alia, furnished the following documents:

    "i. Memorandum and Articles of Association of the company.

    ii. Details of the past and present directors of the company.

    iii. Copies of brochures/application forms of a few holiday plans of Citrus.

    iv. Certified copies of audited financial statements for the F.Y. 2011-12 and 2012-13.

    1. Copy of Income Tax Returns filed by the Citrus F.Y. 2011-12 and 2012-2013."

  6. Citrus also made the following submissions in the aforesaid letter about their activities:

    1. "Citrus is engaged in selling holiday plans/packages and time share holidays and does not mobilize or pool funds from the general public.

    2. The important characteristics/features of the holiday plans/packages and time share holidays sold by Citrus are as under:

    3. The amount received from the customer is a ' Sales Consideration' for the products/services bought by the customers and are shown in the books of accounts of Citrus. Hence, it cannot be termed as amount pooled by the company.

      ii. The main object of the customer for purchasing the Citrus 's products/services is to avail the holiday and other facilities.

      iii. The amount received from the customers is not managed for and on behalf of the customers by the company.

      iv. The customers have absolute control/discretion as regards the manner in which the customers wish to avail their holiday facilities.

    4. Citrus sought more time to submit the remaining information."

  7. As no further information was received from Citrus, SEBI issued reminders vide its letters dated July 23, 2014 and August 05, 2014. Subsequently, Citrus vide its letter dated August 07, 2014 furnished the following documents:

    1. "Copies of additional brochures/application forms of the remaining holiday plans;

    2. Copies of application forms that are required to be submitted by the customers while purchasing Citrus's holiday plans;

    3. Copies of Holiday Entitlement Certificates which Citrus issues to a customer on purchase of holiday plans;

    4. Total amount of plan - wise sale achieved by Citrus as on 31.03.13."

  8. Vide the aforesaid letter, Citrus also submitted as under:

    "i. It is not engaged in the activities of mobilizing funds from the general public but it is engaged in selling holiday plans/time share holidays to its customers and

    ii. Citrus do not issue any registration letter and allotment letter/agreement letter/contract to its customers.

    iii. On purchase of holiday plans by the customers, Citrus issues a "Holiday Entitlement Certificate" to a customer

    iv. The terms and conditions of availing holiday plans are enumerated/listed on the reverse of an application form.

    1. As regards the amount paid by the investors and the repayments to customers, Citrus stated that validity period of all the holiday plans sold by Citrus is still in force and information pertaining to the amount paid/redeemed by Citrus to the customers is under compilation.

    vi. Further, Citrus/group/associates have not floated any other similar holiday plans."

  9. Subsequently, SEBI vide its letter dated August 14, 2014 advised Citrus to furnish the remaining information sought by SEBI vide letter dated February 18, 2014 and also the following additional information:--

    1. "Details (numbers of rooms available, etc.) about the accommodation provided/projected to be provided.

    2. Total number of individuals/customers who have actually availed the services (accommodation) under the plan(s) subscribed to the plan(s).

    3. Details of assets held by Citrus."

  10. Citrus vide its letter dated August 22, 2014 sought extension of time to submit the remaining information sought by SEBI vide its letters dated February 18, 2014 and August 14, 2014. Citrus vide its letter dated September 25, 2014 submitted the following:

    1. "The annual room inventory (owned by the group companies) at 11 locations are 233965. Apart from this, company has tie ups with its business associates for providing hotel rooms/accommodation.

    2. Demand of the customers for availment of holiday facilities cannot be predicted with reasonable amount of certainty as the same depends on numerous variable factors.

    3. Majority of the holiday plans were marketed by the company in the year 2012 and their validity period varied from 4 to 15 years.

    4. Apart from this, Citrus has sought further time to submit the remaining information."

  11. Thereafter, SEBI issued reminders dated September 29, 2014 and October 01, 2014 to Citrus. In response, Citrus vide its letter dated October 13, 2014 has referred to its earlier letter dated September 25, 2014 and did not submit any further information.

  12. SEBI received a complaint dated September 19, 2014 followed by a reminder dated October 22, 2014 alleging "Citrus is trying to commit fraud by collecting investments from innocent public without legal authority or sanctity". The complainant also alleged "business group of Mr. Omprakash Goenka and others have been committing fraud, initially under the name of Royal Twinkle and thereafter in the name of Citrus Check- Inns". The complainant also stated "... I was contacted by certain agents working for "Citrus Check-Inns Limited" in or about July 2014 regarding investment plan and the new scheme launched by them. Upon several discussions they convinced me that after investing in their scheme named "SAPH-JUMBO-M-N" (Sapphire), I would be guaranteed an additional sum after 3 years...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT