Supreme Court attaches all properties of RTSCL, CCIL- two ponzi schemes with 18 lakh investors

A Bench of Justices Rohinton Nariman and Abhay Sapre of the Supreme Court has passed an order attaching the properties of two companies, operating collective investment schemes (CIS), and their sister concerns..The case pertains to CIS of the two companies, Royal Twinkle Star Club Limited (RTSCL) and Citrus Check In Limited (CCIL). The modus operandi of these companies was similar, collect monies from investors and divert it to several sister concerns, which in this case are 88 so far..Even before these companies were put under insolvency process, the Supreme Court had ordered SEBI to expedite the investigation process for these two companies after appeals had been filed by the promoters. While SEBI investigations were underway, insolvency was triggered by a set of investors and an order of admission was passed in May 2017..However, there were several hurdles during the insolvency resolution process. After the Resolution Professional, Devendra Jain, applied for liquidation, an order of injunction was passed by the NCLT prohibiting the directors of RTSCL and CCIL from alienating their properties or fleeing the country..At the same time, a certain set of investors who suspected collusion between the triggering investors and promoters of these companies moved an intervening application at the NCLT, which was turned down. The same was turned down by the NCLAT as well and is now pending with the Supreme Court..This suspicion of collusion stems from the fact that no opposition was made by the companies themselves despite there being a precedent in this regard – Pancard Clubs. This was a similar case where the NCLT refused to interfere with a CIS case in view of ongoing SEBI investigations..During the previous hearing, the bench had passed an order asking the Resolution Professional, a representative of the petitioners and SEBI to sit together to arrive at an amicable solution..The Supreme Court has now ordered the setting up of a Sale-Cum-Monitoring Committee which will appoint Registered Valuers to value the properties that have been unearthed during the insolvency process, which will include assets of their associates/sister concerns. The sale proceedings will take place under the aegis of the NCLT, said the bench..This Committee will consist of lawyers representing the representing the petitioners and the Resolution Professional, the Resolution Professional, two members from the petitioners’ group, and two members from SEBI..This Committee has been directed to submit its report within a period of four months..In the given circumstances, also noting that the NCLT had only passed an injunction, the Supreme Court has now ordered attachment of the properties RTSCL and CCIL and all the sister concerns to which funds were diverted from RTSCL and CCIL. The Bench has further directed all promoters and directors of CCIL and RTSCL to disclose all their assets worldwide..Senior Counsel Shyam Divan along with advocates Kapil Joshi, Rahul Gaikwad, Vinayak Bhandari, Faizi Saif, Kriti Malik, Ajay Kumar and Manju Jaitley appeared for the investors before the Supreme Court whereas ASG Tushar Mehta appeared for SEBI. Senior Counsel KV Viswanathan along with advocates Mahesh Agarwal, Rishi Agrawala, Vivek Jain, Rishabh Parikh, Nipun Singhvi and Vikrant Pachnanda appeared for the RP..Read the order below.