Yatra Art Fund vs. SEBI – Collective Investment Scheme Violation Case

The case of Yatra Art Fund vs. SEBI involves a dispute over alleged violations of regulations related to Collective Investment Schemes. The Securities Appellate Tribunal recently issued important directives in this ongoing legal battle. Stay updated on the latest developments between the parties involved, Yatra Art Fund and SEBI.


  • SEBI issued a show cause notice to the trustees of two Trust Funds regarding violation of regulations.
  • Appellants argued that they were not registered as a company and therefore the regulations did not apply to them.
  • Investors were made aware of the risks involved in investing in the Trust Funds.
  • SEBI requested the Yatra Art Fund to register in the prescribed corporate form.
  • Trust Funds were to be registered as Collective Investment Schemes.
  • Both Trust Funds had an initial period of 4-4½ years.
  • The Securities Appellate Tribunal disposed of the appeal on 21.08.2017.
  • The appeal stemmed from the judgment dated 13.10.2015 in Osian’s – Connoisseurs of Art Private Limited v. Securities and Exchange Board of India & Anr.
  • It is essential to review the specific part (RLC) of the judgment to understand the details of the disposal.

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  • The Appellate Tribunal set aside paragraphs of SEBI’s order related to requiring the State Government to make a reference for registering civil/criminal cases against the Fund
  • The Appellate Tribunal also rejected the arguments of Shri Vishwanathan, a learned senior counsel, regarding Section 11AA of the SEBI Act
  • Paragraph 29(b) of SEBI’s order was remanded back to SEBI by the Appellate Tribunal following the reasoning of an earlier Tribunal judgment from 13.10.2015
  • Shri K.V. Vishwanathan, learned senior counsel appeared for the appellants
  • Shri C. U. Singh, learned senior counsel appeared for the respondent-SEBI
  • The Schemes in the case are determined to be Collective Investment Schemes

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  • SEBI issued directions to Yatra Art Fund to abstain from collecting money from investors or launching any Collective Investment Schemes identified in the order.
  • Yatra Art Fund was directed to refund all collected monies to investors with a 10% annual return within three months.
  • The fund was restrained from accessing the securities market and dealing in securities for four years.
  • Yatra Art Fund was required to submit a detailed inventory of its assets.
  • Failure to comply would result in further market restrictions, criminal cases, and attachment of assets by SEBI.
  • Section 11(2)(c) of the SEBI Act provides for registering and regulating venture capital funds and collective investment schemes, including mutual funds.
  • Section 12(1B) states that no person can sponsor or carry on any collective investment scheme without obtaining a certificate of registration from the Board.
  • Section 11AA introduced the concept of a collective investment scheme.
  • Regulation 2(h) of the CIS Regulations defines a “Collective Investment Management Company.”
  • Conditions for a scheme to be considered a collective investment scheme are outlined in sub-sections (2) and (2A) of the Act.
  • Regulation 3 of the CIS Regulations specifies that only a Collective Investment Management Company can carry on or sponsor a collective investment scheme.
  • Pooling of funds over one hundred crore rupees in an unregistered scheme is deemed to be a collective investment scheme.
  • Litigation has been ongoing for an extremely long period of time.
  • Instead of remanding the matter to SEBI to decide the refund issue afresh, a specific order is given.

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  • Balance owing to 50 investors of Fund No 1 and 132 investors of Fund No 2 to be repaid within six months from the date of this judgment.
  • Interest at the rate of 10% to be paid on the principal outstanding amount from the due date to each member until the end of each Fund (15.09.2011 for Fund No 1 and 31.01.2012 for Fund No 2).
  • Interest amount to be paid within nine months from the date of this judgment.
  • Principal amount repayable to each investor of both Schemes to be paid back within six months in specified manner.
  • 81.32% of the total principal sum of Rs.10.95 crores of Fund No 1 and 50% of the principal amount of Rs.21.92 crores of Fund No 2 has been repaid.
  • Compliance report to be filed with SEBI once amounts are actually paid within specified time period.
  • Interest shall be as specified in the judgment.


Case Number: C.A. No.-000054-000054 / 2016

Click here to read/download original judgement

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