REAL ESTATE COMPANIES ON ASSURED RETURN BASIS IS AGAINST SEBI & RBI ACTS AS PER COURT ORDER DATED 29.08.2012
Division Bench, consisting of the Hon'ble Acting Chief Justice and Hon'ble Mr. Justice Rajiv Sahai Endlaw of the High Court of Delhi, on a public interest litigation WP(C) 5324/2012 filed by an investor, have issued directions to the Reserve Bank of India and Securities & Exchange Board of India to investigate against real estate companies who are inviting booking of property from the public with assured returns. The Hon'ble High has also further issued directions to take further remedial steps not only in restraining inviting booking on assured returns but also to take other action as permissible under law as well.
ORDER / 29.08.2012
1. This petition is filed in public interest. The petitioner has brought to the notice of this court that respondents no. 7 to 10, real estate development companies are inviting deposits from public with assured returns with buy back options. The submission is that the same amounts to banking activity within the meaning of Section 45-IA of the Reserve Bank of India Act, 1934 as applicable to non-banking financial corporations and is without the permission of the Reserve Bank of India as well as SEBI and cannot be undertaken by respondents no.7 to 10. It is further pleaded that not only are the said activity illegal but it is possible that small time investors having limited funds would be duped by such companies.
2. We find that the petitioner had sent a representation to the Reserve Bank of India and SEBI only on 10.7.2012. Learned counsel for SEBI has appeared on advance notice and has submitted that on the representation of the petitioner, action has been initiated and the matter is under investigation. He has produced copies of letter dated 06.08.2012 addressed to respondents no.7 to 10 asking them to submit required documents to take further action.
3. Since the matter is already under examination by the concerned authorities, it is not necessary to entertain this stage except for directing the RBI and SEBI to conduct and conclude the probe at the earliest and if it is found that respondent no.7 to 10 are not eligible to undertake such activities, take further remedial steps not only in restraining these respondents but also to take other actions as permissible under law as well. Petitioner shall be intimated about the outcome of the proceedings of the SEBI. In case the petitioner remains aggrieved by the action taken by the concerned authorities, he would be at liberty to approach the Court.
With the aforesaid directions, the petition stands disposed of.