Assured Returns in Real Estate Under Scanner

Real Estate Development Companies have been inviting deposit from Public with assured returns with buy back offers.

Through a Public Interest Litigation filed in Hon'ble Delhi High Court, such schemes have been alleged to be in violation of RBI and SEBI Acts. Real Estate Developers like Cosmic Infrastructures Ltd, Earth Infrastructures Ltd, Assotech Realty Pvt Ltd and Wave Group were made a party in this Petition as respondents No. 7-10. The matter is still under investigation by RBI and SEBI.

Hon'ble Delhi High Court has directed RBI and SEBI to conduct and conclude the probe at the earliest and based on probe take further remedial steps not only in restraining but also to take other actions as permissible under law.

The copy of the order has been reproduced below for reference and proper interpretation. IN THE HIGH COURT OF DELHI AT NEW DELHI W.P. (C) 5324/2012 MANISH JAIN Vs RESERVE BANK OF INDIA AND ORS. CORAM :  HON'BLE THE ACTING CHIEF JUSTICE HON'BLE MR. CHIEF JUSTICE RAJIV SAHAI ENDLAW 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 10.07.2012. 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.

Supreme Court Presidential Reference 2012

27 Sep 2012, New Delhi - Recent Supreme Court Opinion on Presidential Reference, sought by Hon'ble President of India, has given enough ammunition to all sides of Political Spectrum and each one is interpreting it conveniently. 

In exercise of powers conferred upon her by clause (1) of Article 143 of the Constitution of India, former President of India, HE Prathibha Patil, had sought opinion on several specific questions including : "Whether the only permissible method for disposal of all natural resources across all sectors and in all circumstances is by the conduct of auctions?"

Hon'ble Supreme Court of India, has now made it clear, "Auctions not the only permissible method for disposal of natural resources across all sectors and in all circumstances"

For Full text of Judgement :

http://supremecourtofindia.nic.in/outtoday/op27092012.pdf