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TMI Blog2014 (7) TMI 1246X X X X Extracts X X X X X X X X Extracts X X X X ..... e fund mobilizing activity of PCL. From the material available on record, it is observed that Mr. Sudhir Shankar Moravekar (PANAADPM2933M), Mrs. Shobha Ratnakar Barde (PAN-ASLPB1204C), Mrs. Usha Arun Tari (PAN-ABYPT8841M), Shri. Manish Kalidas Gandhi (PAN-AITPG8933H), Shri. Chandrasen Ganpatrao Bhise (PAN-AADPB6103E) and Shri Ramachandran Ramakrishnan (PAN-AAIPR9196G) are the Promoters/Directors/persons in charge of the business of PCL. Further, in order to safeguard the assets/property acquired by PCL and its promoters/directors using the funds collected from the investing public until full facts and materials are brought and final decision is taken in the matter, it is incumbent on SEBI to take preventive action by way of an immediate measure. In the light of the above, I find no other alternative but to take recourse to an interim order against PCL and its Directors for preventing them from further carrying on with its existing fund mobilizing activity by launching 'collective investment scheme', without obtaining registration from SEBI in accordance with law. We in exercise of the powers conferred upon me under sections 11(1), 11B and 11(4) of the SEBI Act read with Regul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils (Email/fax/contact no) of the directors, iv. Brochures/offer document pertaining to PCL's schemes/arrangements, v. Copies of application forms that are required to be submitted by investors/applicant to participate in PCL's schemes, vi. Sample copies of the registration letter/allotment letter or any other document issued to the investors who subscribe to PCL's schemes, vii. Sample copies of the agreement letter/contract required to be entered into by investor/applicant under PCL's schemes. viii. Details of the scheme wise and year wise amount mobilized by PCL till date along with the number of investors under the schemes, ix. Details of the scheme wise and year wise amount paid/redeemed by PCL till date along with the number of investors under the schemes, x. Details of scheme wise timeshare availed by the investors/applicants. In case the investors/applicants opted for surrender value instead of timeshare, to provide the details of surrender value redeemed, xi. Certified copy of audited financial statement for the last three financial years, xii. Copy of Income Tax Return filed by PCL for the last ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation is whether the mobilization of funds by PCL under its schemes fall under the ambit collective investment scheme provided in Section 11AA of the SEBI Act, 1992 (hereinafter referred to as SEBI Act ). 6. On an examination of the material available on record, it is prima facie observed that: a) PCL (CINU91900MH1997PLC105363) was incorporated on January 24, 1997. It has its registered office at 111-113, Kallandas Udyog Bhavan, near Century Bazar, Prabhadevi, Mumbai- 400 025. Its directors are Mr. Sudhir Shankar Moravekar, Mrs. Shobha Ratnakar Barde, Mrs. Usha Arun Tari, Mr. Manish Kalidas Gandhi, Mr. Chandrasen Ganpatrao Bhise and Mr. Ramachandran Ramakrishnan. b) The main object of PCL as per the MoA, is to carry on business as proprietors of all types of clubs, gaming rooms, card rooms and billiard rooms, golf club and creating recreation and club facilities and generally as amusement caterers and organisers, promoters, providers and managers of all kinds of entertainments . c) As per the brochure furnished by PCL, vide letter dated October 03, 2013 it is noted that PCL is offering, inter alia, following schemes to general public: 1. Pancard Clubs- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar Holidays for 10 years: ( w.e.f. April 01, 2004 ): Current Average Tariff Actual price for two Hundred Forty Room Nights Package Offer Price of the package at discount Total entitlement room nights Total entitlement Room Nights per month Current surrender Value as on Today ₹ 2,40,000/- (1,000*240) ₹ 1,02,000/- (425*240) 240 2 ₹ 850 (per room night v. Pancard Clubs New Premium Holiday for 10 years ( w.e.f. May 22, 2007 ): Current Average Tariff for Eighty room Nights Offer Price of Eighty room Nights Total entitlement room nights Total entitlement Room Nights per quarter Current estimated surrender Value per unutilized room nights ₹ 80,000/- (1,000*80) ₹ 34,000/- (425*80) 80 2 ₹ 850 vi. Sunrise Holiday for 5 years ( w.e.f. February 05, 2009 ): ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 27 payments for the committed number of room nights shall be considered as a valid applicant and shall be formalised for and eligible for the benefits of the scheme. In the event of non-payment of instalment consistently, the applicant shall be levied a late fee of Rs. 25 per month for monthly option and Rs. . 75/-per quarter for quarterly option for each such delayed payment. The applicant can commence utilising his room night entitlements 60 days after completion of all the 27 payments towards committed room nights. viii. Divine Holiday for 66 months ( w.e.f. May 01, 2009) : Current Average Tariff for four room nights Offer Price of four room nights Minimum room nights to be acquired Minimum amount to be paid Current Estimated surrender value @Rs.1200/- per room nights ₹ 8,000/- (2,000*4) ₹ 3,600/- (900*4) 4 ₹ 3,600/- ₹ 4,800/- The tenure of Pancard Clubs-Divine Holiday scheme is 66 months. The offer price for one room nights is Rs. 900. The applicant has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 7 8 9 Sl. No. Financial Year Income from membership and annual subscription fee Provision for surrender value payable Advance against sale of room nights Other heads under long term current liabilities * Long term current liability Holiday members surrender value Marketing expenses 1 2009-10 0.31 688.75 2087.68 132.06 2908.49 297.19 194.07 2 2010-11 0.46 953.93 2778.76 150.07 3882.76 368.54 145.98 3 2011-12 0.67 1376.14 3607.13 116.54 5099.81 587.71 292.52 4 2012-13 0.85 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 90880 116 0.13 5 New Regular holiday 24.17 1449 568720 630 0.11 6 New Royal Holiday 85.61 112494 951243 5708 0.60 7 Relax Holiday 577.93 302727 6421506 30545 0.48 8 Sunrise Holidays .73 48 8160 18 0.22 Total 1190.86 1220813 13580229 45910 0.34 Financial year 2011-12 (Rs. in Crores) Sl. No Scheme Amount mobilized Total no of applicants room nights sold Room nights utilized % of room nights actually utilised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 New Regular holiday 25.26 1577 594353 - 0.00 6 New Royal Holiday 84.24 122308 936000 50 0.01 7 Relax Holiday 412.42 227639 4582444 121 0.00 8 Sunrise Holidays 8.15 455 90556 - 0.00 Total 853.35 590022 9846765 256 0.03 13. It is noted from the above analysis that only 0.34% of the investors/customers utilised the purchased room nights. From the details provided by PCL, it is observed that PCL has a total of 1420 rooms (723 domestic and 697 foreign) of its own. As per the scheme details provided by PCL vide letter dated April 11, 2014, it is noted that the available room night for a year owned by PCL is only 5,18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14, it is noted that during the financial years 2010-11 (Rs. 853.35crores), 2011-12 (Rs. 1052.10crores)and 2012-13 (Rs. 1190.86crores) it raised a sum of ₹ 3096.31 Crores from a total number of 24,86,650 investors under its abovementioned eight Holiday Plans . From the details for the financial year 2012-13, I note that PCL has long term current liability of ₹ 6263.93 Crores. It is noted from PCL's letter dated April 11, 2014 that apart from the above mentioned schemes, there are several other schemes being operated by PCL. Under the various Holiday Plans , room nights are awarded by PCL to investors who purchase the Holiday Plans and the room nights can be rented out or surrendered to PCL and in lieu of the same the investors receive an assured amount from each of the surrendered room night. Thus, apparently the contribution made by investors in response to the Holiday Plans offered by PCL are pooled and utilized for providing various holiday facilities and in case said facilities are not availed, then the same can be surrendered. In view of the said facts, Holiday Plans offered by PCL satisfies the first condition stipulated in section 11AA(2) (i) of the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arious accommodation and other holiday facilities at different locations. Hence, it is seen that the Holidays Plans offered by PCL satisfies third and fourth conditions stipulated in Section 11AA (2) of the SEBI Act. 17. I note that although PCL has submitted that it is in the 'Time Share' business and therefore falls outside the purview of SEBI the main characteristics of a 'collective investment scheme' are clearly present in the aforementioned Holidays Plans offered by it. At this stage, it is relevant to refer to the observations of the Hon'ble Supreme Court of India in the matter of P.G.F Limited Ors. vs. UOI Anr. (MANU/SC/0247/2013), wherein the Hon'ble Court has observed : ...sub-section (2) of Section 11 AA, which defines a collective investment scheme disclose that it is not restricted to any particular commercial activity such as in a shop or any other commercial establishment or even agricultural operation or transportation or shipping or entertainment industry etc. The definition only seeks to ascertain and identify any scheme or arrangement, irrespective of the nature of business, which attracts investors to invest their funds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le conclusion is that non-submission of the information especially scheme wise list of investors and their contact numbers and addresses to SEBI is nothing but an attempt to conceal the true nature and operation of the fund mobilizing activity of PCL. 21. Protecting the interests of investors is the first and foremost mandate for SEBI and therefore, steps have to be taken in the instant matter to ensure that only legitimate investment activities are carried on by PCL and no investors are defrauded. From the material available on record, it is observed that Mr. Sudhir Shankar Moravekar (PANAADPM2933M), Mrs. Shobha Ratnakar Barde (PAN-ASLPB1204C), Mrs. Usha Arun Tari (PAN-ABYPT8841M), Shri. Manish Kalidas Gandhi (PAN-AITPG8933H), Shri. Chandrasen Ganpatrao Bhise (PAN-AADPB6103E) and Shri Ramachandran Ramakrishnan (PAN-AAIPR9196G) are the Promoters/Directors/persons in charge of the business of PCL. Further, in order to safeguard the assets/property acquired by PCL and its promoters/directors using the funds collected from the investing public until full facts and materials are brought and final decision is taken in the matter, it is incumbent on SEBI to take preventive action by w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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