K. Sreedhar Rao, J.

1. The petitioner is a company registered under the Companies Act, 1956 with the head office in Kolkata and the regional office at Guwahati and branch offices in various parts of the state of Assam. The company which owns several hotels all over the country floated a scheme Holiday Membership Plan (HMP) calling for monthly investments up to 3 to 5 years under different categories styled as standard, silver, gold, platinum and diamond from different categories of persons - middle to aristo - and on completion of the subscription for the period of contract offered the facility of free stay in its hotels for a period between 3 and 4 days with extra payment for food and other entertainments. The terms of the scheme also declare that after completion of the subscribed period if for any reason the subscriber is unable to avail the benefit of stay in hotels the amounts subscribed would be refunded with an agreed rate of interest as per the agreement. In the writ petition the total number of subscription to the scheme is not stated. However, it is stated that about 2,50,000 persons in the state of Assam have subscribed to the HMP scheme. One of the subscribers lodged a complaint against the petitioner company alleging fraud. The Bureau of Investigation (Economic Offences) of the state of Assam took up investigation, conducted raids and searches and in course of the investigation has found the petitioner company collected about Rs. 1006.70 crore till February, 2012 from various subscribers. The documents seized in the search proceedings were sent to the Security Exchange Board of India (SEBI) and on the basis of which the SEBI passed the impugned order which is as follows.

"WTM/SR/ERO-CIS/11.07.2013

Before the Securities and Exchange Board of India, Mumbai

Coram: S. Raman, Whole Time Member

Order

Under sections 11(1), 11B and 11(4) of the Securities and Exchange Board of India Act, 1992 read with Regulation 65 of the SEBI (Collective Investment Schemes) Regulations, 1999 in the matter of Rose Valley Hotels and Entertainments Limited.

1. The Securities and Exchange Board of India (hereinafter referred to as "SEBI") had received a letter dated June 20, 2012, from the Additional Director General of Police, Office of the Director, Bureau of Investigation (E.O.), Assam, Guwahati (hereinafter referred to as "ADGP, Assam Police"), regarding the raising of funds by M/s. Rose Valley Hotels and Entertainments Limited (hereinafter referred to as "RVHEL") and M/s. Rose Valley Real Estates Constructions Limited (hereinafter referred to as "RVRECL"). As per the aforesaid letter, RVHEL and RVRECL were stated to have collectively raised Rs. 1006.70 Crores from the public till February 2012, Further, RVHEL was stated to have launched a scheme titled Rose Valley Holiday Membership Plan (hereinafter referred to as "HMP') in the year 2010. Under the HMP, an investor can book a holiday package through payment of monthly installments and upon maturity or completion of tenure for monthly installments, such investor can either avail of the facilities i.e. room accommodation and services or opt for maturity payment i.e. a return on the investment with annualized interest. A brochure, application form containing the terms and conditions of the HMP alongwith a confirmation Certificate evidencing subscription to such HMP, were also annexed with the aforesaid letter.

2. As a matter of preliminary enquiry in order to ascertain whether or not RVHEL was carrying on activities of a 'collective investment scheme', SEBI vide letter dated March 1, 2013, advised RVHEL to submit the following documents relating to the HMP, by March 15, 2013, viz.-

i. Total number of individuals who have subscribed to the plan(s);

ii. Details (number of rooms available, etc.) about the accommodation provided/projected to be provided;

iii. Total number of individuals