The Bombay High Court has imposed a cost of Rs 25,000 on the petitioner and dismissed a Public Interest Litigation (PIL) seeking direction to the Respondents to regulate the Time Share Companies as Collective Investment Scheme (CIS) under Securities & Exchange Board of India Act, 1992 (as amended in 2014) and the Collective Investment Schemes Regulations, 1999 (CIS Regulations).
The PIL filed by a Society in the alternative, has prayed that the Respondents be directed to formulate suitable legislation to regulate Time share companies.
The basis on which the petition has been instituted is that the rights of several million residents of India are adversely affected due to malfunctioning, fraud, misrepresentation and other wrongful and/or illegal activities of various Time Share Companies.
“….for SEBI to govern a particular activity or an entity, such activity has to be in relation to a security; SEBI is a regulator as mentioned in the preamble to the SEBI Act to protect the interests of the investors in securities and for the regulation of the securities/capital market; any scheme or arrangement under the sun not involving a security would not be the concern of the SEBI”, the Division Bench of Chief Justice Dipankar Datta and Abhay Ahuja observed.
The Court however clarified that it has not in any way held that all Timeshare companies are Collective Investment Schemes as that is for the SEBI to consider on the facts of each case.
True that the innocent and gullible investors need to be protected against the abuse in the name of Time shares. SEBI – the Regulator being fully empowered to do so, it would therefore not be necessary for us to give any such directions to the Regulator , the Court held.
The Court is of the considered view, that PIL cannot be styled or filed as a Public Interest Litigation as it is neither for enforcement of fundamental rights of marginalized and deprived sections of the society nor for preservation of ecology and environment nor for purity in public administration and probity in governance but seeking directions to the Respondents to either enforce the provisions pertaining to CIS Regulations against Timeshare companies, which the Court have found to be without any merit or in the alternate, issue directions to formulate legislation/ guidelines/regulations, which we have already held to be de hors the scope of its constitutional mandate under Article 226.
“In view of the above discussion, the Petition deserves to be dismissed and is hereby dismissed with costs of Rs. 25,000/- to be paid by the Petitioner to the SEBI, within a period of two weeks,” the Court ordered.