sebi:Order/MN/PS/2026-27/32465-32469

SEBI · SEBI · 2016-02-03 · N. Murugan, Adjudicating Officer

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Facts / Headnote

Violations established against all five Noticees; penalties imposed on Noticees 2-5 under Section 15HA of the SEBI Act

Provisions invoked

• s. 11A
• s. 15
• s. 19
• s. 12
• s. 15H
• s. 15J
• s. 27(1)
• s. 14

Regulations

• Reg. 4
• Reg. 3
• Reg. 10
• Reg. 4(2)
• Reg. 4(2)(t)
• Reg. 87

Parties

• Citrus Check Inns Limited (Noticee No. 1)
• Omprakash Basantlal Goenka (Noticee No. 2)
• Prakash Ganpat Utekar (Noticee No. 3)
• Venkatraman Natarajan (Noticee No. 4)
• Narayan Shivram Kotnis (Noticee No. 5)

Holding

The holiday plans operated by Citrus Check Inns Limited constituted a Collective Investment Scheme under Section 11AA(2) of the SEBI Act, and the company carried on CIS activities without registration in violation of Section 12(1B) read with Regulations 3 and 69 of the CIS Regulations. All five Noticees were held liable for violating Regulation 4(2)(t) of the PFUTP Regulations, with penalties of Rs. 35 lakhs on Noticee No. 2 and Rs. 25 lakhs each on Noticees Nos. 3, 4, and 5 under Section 15HA.

Full text

Adjudication order in the matter of Citrus Check Inns Limited 2 of 30 aside the directions contained in the Interim and Confirmatory Orders and directed Citrus to apply for registration with SEBI in respect of refundable schemes covered under the CIS Regulations. 4) SEBI challenged the Hon’ble SAT’s order dated February 03, 2016 before the Hon’ble Supreme Court. By order dated November 09, 2016, the Hon’ble Supreme Court set aside the Hon’ble SAT’s order and directed SEBI to complete the investigation and determine whether Citrus’s business is a CIS or not. 5) Pursuant to the above directions, SEBI completed the investigation into alleged violations of the SEBI Act and the CIS Regulations by Citrus for FYs 2011–12 to 2015–16 (“Investigation Period”). During pendency of SEBI’s investigation, the National Company Law Tribunal (“NCLT”) passed an order dated May 02, 2017 initiating the Corporate Insolvency Resolution Process (“CIRP”) against Citrus and imposed a moratorium under Section 14 of the IBC. SEBI’s investigation was completed on May 04, 2017 whereby 11B and Adjudication proceedings were approved against the Noticees. 6) Thereafter, by order dated January 08, 2018, the Hon’ble Supreme Court stayed the IBC proceedings and directed that SEBI be made a party to the proceedings. SEBI was impleaded on March 23, 2018. Subsequently, by order dated May 10, 2018, the Hon’ble Supreme Court, inter alia, directed constitution of a Sale cum Monitoring Committee (“SMC”), including a S

Adjudication order in the matter of Citrus Check Inns Limited 3 of 30 Jain (“RP”). The SCN was successfully delivered by email to all Noticees and the RP. As for SPAD, the delivery of SCN remained successful on Noticee no.2, 3, 4 and the RP. Delivery by SPAD remained unsuccessful on Noticee no.1 Company and Noticee no.5 Narayan Shivram. Thereafter, delivery of SCN was attempted on Noticee no.5 via hand-delivery which remained successful on May 8, 2026. Noticees were given time of 21 days from the date of receipt of Notice to file reply to the SCN. 10) The essence of the SCN is summarized below : 10.1) Noticee No. 1 Citrus introduced and operated 25 holiday plans, of which 7 plans purportedly provided for payment of amounts exceeding the original investment in instances where the holiday benefits were not utilised by the investors. An amount of approximately ₹2,722 crore was mobilised through the said 7 plans. On the basis of the features of these plans and the manner in which funds were pooled and managed, the aforesaid arrangements fulfilled the ingredients of a Collective Investment Scheme (“CIS”) as contemplated under Section 11AA(2) of the SEBI Act, 1992. 10.2) Citrus carried on the activities of a CIS without obtaining the requisite certificate of registration from SEBI, thereby contravening the provisions of Section 12(1B) of the SEBI Act read with Regulations 3 and 69 of the CIS Regulations. The SCN further alleges that Noticee No. 2, 3, 4 and 5 being its Directors, we

Adjudication order in the matter of Citrus Check Inns Limited 4 of 30 12) No reply to the SCN was received from Noticee No. 1 (the Company) or the Resolution Professional ("RP"). Further, no reply to the SCN was received from Noticee No. 5. An opportunity of personal hearing was granted to the RP and Noticee No. 5 on June 09, 2026. The digitally signed notice of hearing was sent to the RP and Noticee no.5 via email, which did not bounce. Further, notice of hearing was successfully delivered to the RP and Noticee no.5 via SPAD and hand-delivery respectively. However, no communication confirming their participation in the hearing was received from either of them. The RP and Noticee No. 5 did not appear for the hearing. 13) I note that Noticee no. 5 has neither filed any reply to the SCN nor appeared for hearing despite being given sufficient opportunities. I note that principles of natural justice have been complied with, since sufficient opportunities have been provided to the Noticees no. 5 to submit reply and to appear for personal hearing. I am, therefore, of the view that the Noticees no. 5 has nothing to submit in terms of rule 4(7) of the Adjudication Rules. In view of the facts and circumstances of the case, I am compelled to decide this matter ex-parte qua Noticees no. 5 based on the documents/material and information available on record. The Hon’ble Securities Appellate Tribunal (“SAT”) in the matter of Classic Credit Ltd. v. SEBI [2007] 76 SCL 51 (SAT - MUM) inter al

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