The fine has been imposed on Orient Resorts (India) Pvt Ltd (ORIPL), Dilpesh V Shah and Darshanbhai Arvindbhai Shah (noticees).
In November 2013, Sebi had passed an order directing Orient Resorts to wind up its operations and refund the money of the investors which it had collected through its illegal collective investment scheme.
According to the order, Orient Resorts had launched ‘Vanashree Teak Bumper Profits Scheme’ in 1993. It called for an investment of Rs 910 per unit for a period of 18 years from the investors and claimed that the investors would receive Rs 91,000 for every Rs 910 invested for one unit.
The money collected was pooled towards setting up a teak plantation.
However, the regulator observed that the 18-year period stipulated in the scheme has expired and ORIPL has not yet made repayment of profit, income to investors as promised by it.
Also, there is no documentary proof on record to substantiate the claim of the noticees for having repaid the income or returns to the investors, the watchdog said.
Besides, ORIPL and Dilpesh V Shah failed to submit any report to Sebi about compliance with the directions issued by Sebi earlier, it added.
“I find that ORIPL has illegally continued the scheme in contravention of the…..provisions of…Collective Investment Schemes (CIS) Regulations,” Sebi’s Adjudicating Officer Prasanta Mahapatra said in its order passed on Monday.
While imposing penalties the watchdog said, the hard earned money of the investors cannot be allowed to be duped by the illegal activities of the company.
Further it said, the activities of unauthorized pooling of funds from the investors by the company are illegal because it has launched CIS without obtaining registration from Sebi.
For the violations, Sebi levied Rs 35 lakh fine on Orient Resorts (India) Pvt Ltd.
Besides, a fine of Rs 35 lakh and Rs 15 lakh has been imposed on Dilpesh V Shah and Darshanbhai Arvindbhai Shah, respectively.