sebi:WTM/AB/EFD-1/DRA-3/22/2019-20

SEBI · SEBI · 2015-12-11 · Ananta Barua, Whole Time Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Directions issued against Noticee Nos. 1 to 5 to abstain from CIS activity, refund money collected by Zeestar Limouzines Limited with returns within three months, and remain restrained from securities market until refunds complete.

Provisions invoked

• s. 11A
• s. 24
• s. 19
• s. 12
• s. 15T

Regulations

• Reg. 65
• Reg. 3
• Reg. 4(2)(t)
• Reg. 65(e)

Parties

• REENA ATAL
• SURENDER KUMAR
• DEEPAK KUMAR GOSWAMI
• MRINAL ATAL
• RAHUL CHAUHAN

Holding

Noticee Nos. 1 to 5, as directors of Zeestar Limouzines Limited during operation of unregistered CIS, are liable jointly and severally with the Company to wind up the schemes and refund money with returns within three months, with attendant restraint and disclosure directions.

Full text

In the matter of Zeestar Limousines Ltd. Page 2 of 11 2. Above proceedings culminated into passing of a final order dated December 11, 2015 against the Company. Regarding scheme/arrangement of the Company, the said order inter alia observed as under:

In the matter of Zeestar Limousines Ltd. Page 3 of 11 for the purchase of the vehicle. The ‘agreement’ also states that in case, the documents submitted by the investors are not sufficient to get assistance from the financial institutions for the balance amount in respect of the purchase of vehicle then the entire amount is utilized by the Company in its finance and investment scheme. From the discussion, it can be concluded that the ‘contributions, or payments made by the investors, are pooled and utilised by Zeestar for the purposes of the scheme or arrangement’. Thus, satisfying the first condition as stipulated in Section 11AA(2)(i) of the SEBI Act.

In the matter of Zeestar Limousines Ltd. Page 4 of 11 With respect to the above said conditions, I note that the investors of the Company were not provided with the vehicle details. The relevant clauses in the ‘agreement’ that the instalment for the entire loan period of vehicle and insurance/ maintenance/ fuel for such vehicle was the responsibility of the Company suggests that the management of the vehicle remains with the Company. The Company under the agreement retains the right to sublease/rent the vehicle to a third party. From the same, it can be concluded that the investors do not have day to day control over the arrangement and operation of the scheme offered by the Company. The investor only decides the scheme and has no role in the acquisition of the vehicle. The investments of the investors were managed and utilized by the Company. As per the scheme, the vehicle remains with the Company and at the end of the term of the scheme the customer only gets the resale amount in addition to the monthly rent/ hire charges as promised. Such day to day control over management and operations of such scheme were also looked and exercised by the Company and its directors. In view of the same, it can be concluded that the property, contribution or investment forming part of scheme or arrangement, whether identifiable or not, is managed on behalf of the investors and the investors do not have day-to-day control over the management and operation of the scheme or arrangement. Thus,

Source: SecMarx — sebi:WTM/AB/EFD-1/DRA-3/22/2019-20. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.