The Calcutta High Court today dismissed a petition by Rose Valley Real Estate and Construction Ltd seeking declaration of a section of SEBI Act on collective investment schemes as ultra vires and directed it to pay Rs 10 lakh as cost. Justice Dipankar Dutta dismissed the writ petition of Rose Valley, observing that Section 11 AA of SEBI Act was legal and that provisions provided in it were valid.
Justice Dutta directed Rose Valley to pay Rs 10 lakh as cost, of which Rs five lakh would go to State Legal Aid Society and the rest to the Calcutta High Court Legal Aid.
Market regulator SEBI had in 1999 framed Section 11 AA of SEBI Act, providing guidelines and provisions under which the collective investment scheme was defined.
Section 12 of the Act provides that any such scheme satisfying the conditions provided in Section 11 AA would have to be compulsorily registered with SEBI.
In January 2011, SEBI had asked Rose Valley Real Estate and Construction not to take deposits from the public for its various schemes for not having registered with it. Rose Valley had challenged Section 11 AA before the High Court claiming that it was ultra vires.
SEBI has recently barred Rose Valley Hotels and Entertainment from collecting money from investors.
In response to the Court decisions, Rose Valley said it would appeal to the Division Bench of Kolkata High Court within next few days against today's judgement.
" Rose Valley Real Estate & Constructions will appeal to the Division Bench of Kolkata High Court within next few days against today's judgement. Rose Valley Real Estate & Constructions limited had challenged the SEBI's order under section 11AA on CIS scheme at the Kolkata High Court in 2010. Rose Valley Real Estate had stopped all sorts of operations and activities since 2010," said Gautam Kundu, Chairman, Rose Valley Group in a statement today.