In a major clamp down, Sebi today imposed a four-year ban on Royal Twinkle Star Club and its four directors for illegally raising over Rs 2,656 crore in the garb of sham 'time share' holiday plans.
The capital market regulator, which has been keeping a close watch on illicit money-pooling schemes, has also directed the company and its officials to refund the money along with promised returns to the investors in three months.
Besides Royal Twinkle Star Club, the four-year ban would be applicable on the company's four directors -- Omprakash Basantlal Goenka, Prakash Ganpat Utekar, Venkatraman Natrajan and Narayan Shivram Kotnis.
All of them have been restrained from accessing the securities market for four years.
"... It is seen that the total net worth of the group companies of Royal is Rs 181,39,53,959, which is very less compared to the admitted total amount i.E. Rs 2656,01,17,417 collected by Royal from its customers through its nine plans," Sebi Whole Time Member Prashant Saran said in the order.
"This clearly indicates that the so-called 'time share' plan is just a sham and the real purpose of the company is to mobilise the money from the unsuspecting investors," he said.
Sebi has directed the entities to wind up the existing collective investment schemes and refund the money with returns, which are due to its investors, as per the terms of offer within a three-month period from today.
Thereafter within 15 days, the company should submit a winding up and repayment report to Sebi, including details about the "trail of funds claimed to be refunded, bank account statements indicating refund to the investors and receipt from the investors acknowledging such refunds".
Royal Twinkle Star and the directors have been barred from selling off any assets of the company except for the purpose of making refunds to its investors.
According to Sebi, the packages were offered at deep discounted price owing to the fact that the purchaser was making down payment for the full terms of the holiday plan period while usage was spread over the full term of the holiday plan.
"The company mainly operated three 'time share schemes' for its clients, i.E. Economic Holiday Plan, Comfort Holiday Plan and Luxury Holiday Plan, wherein, the client paid money to avail of the planning of his holidays, hotel accommodation, sightseeing, travel guide, ticketing, food coupon, gift shopping and organising the same with several hotels/ resorts etc across India," it added.
