Capital markets regulator Sebi today ordered Zeestar Multi Club & Tours and its directors to refund investors' money which it collected illegally through collective investment scheme (CIS).
The company and its directors -- Mrinal Atal, Surendra Kumar and Shailendra Prasad Badoni -- have also been barred from the capital market for four years.
According to the Securities and Exchange Board of India (Sebi), the firm and its three directors were allegedly running CIS in the name of "membership club for tour travel".
Sebi said the CIS was being run without obtaining its approval.
The company had offered monthly returns to investors for a period of 12, 18, 45 and 48 months, as per the regulator.
"Section 12(1B) of the Sebi Act mandates that no person shall sponsor or cause to be sponsored or carry on or caused to be carried on any CIS unless it obtains a certificate of registration from Sebi in accordance with the CIS Regulations. The company has clearly failed to do so," Sebi said in its order.
In view of the violation committed by the directors and the company, Sebi said that they are liable to wind up the scheme and repay the amount collected as per terms of the offer.
Sebi directed the entities to refund the money within 3 months of the order and then submit a winding up and repayment report to the regulator within 15 days.
In addition, they have been barred from selling any assets of the company except for the purpose of making refunds to its investors.
In case they fail to comply with the order, Sebi said Zeestar Multi Club and its directors will continue to be barred from securities market, even after the completion of four years of restrictions imposed on them "till all the Collective Investment Schemes are wound up and all the money mobilised through such schemes are refunded to its investors with returns which are due to them".
Further, it would make a reference to state government/ local police and register a civil/criminal case against Zeestar Multi Club and would make a reference to the Ministry of Corporate Affairs to initiate the process of winding up of the firm.
