Sebi slaps Rs 50 lakh fines on Citrus Check, directors

Markets regulator Sebi Friday imposed a penalty of Rs 50 lakh on Citrus Check Inns and its directors for non-compliance of its order, wherein it had barred them from raising funds from the public.

The regulator, through its orders passed in June and August 2015, had directed the firm as well as its directors -- Omprakash Basantlal Goenka, Prakash Ganpat Untekar, Venkatraman Natarajan and Narayan Shivram Kotnis -- not to collect any more money from investors through the existing or new schemes.

Citrus collected Rs 770 crore from about 4.5 lakh members in March 2013 through its various 'holiday plans' which later went up to Rs 1,600 crore in 2015, the orders had noted.

The direction came after the Securities and Exchange Board of India (Sebi) found that the company was raising money from investors through collective investment scheme (CIS) without obtaining requisite approval from it.

In a fresh order passed on Friday, Sebi said the company continued to collect money from the existing investors through periodic instalments.

"It is established that noticees collected/raised money from the investors even after Sebi prohibited them from doing so vide orders dated June 3, 2015 and August 24, 2015 ....and thereby noticees failed to comply with the directions contained therein," the regulator noted.

Accordingly, the regulator has slapped a penalty of Rs 50 lakh on Citrus and its directors. The fine is to be paid 'jointly and severally' by them.

The regulator had began the probe after receiving a complaint alleging that Citrus was running a 'Ponzi Scheme' and 'mis-selling' its schemes to the public.

It was also alleged that Citrus refused to refund the capital invested by the complainant in June 2012, when she approached the company for refund of the money. The company replied that she would "get the refund only after 4 to 5 years without interest".

Sebi had received several investors' complaints against Citrus alleging that directors of Royal Twinkle Star Club are now running their CIS through Citrus.

The regulator had already passed an order against Royal Twinkle and its directors, restraining them from collecting fresh money from investors through existing or new schemes.