One of my clients recently had a case which I am explaining below and if you are stuck in such similar situation, here is what to do.
Note: Due to attorney-client privilege, I cannot disclose complete case details or identify the actual parties involved. However, I am sharing the essential facts and legal approach so that if you find yourself in a similar situation, you can understand the available solutions and legal remedies.
TL;DR: When SEBI bans an investment scheme but the company is not listed on the SCORES portal, you can recover money by filing a physical claim with SEBI's regional office and simultaneously approaching the civil court for recovery. Keep original certificates and receipts safe — they are your primary evidence. A lawyer experienced in securities law can guide you through the maze of regulatory and civil remedies.
You invested hard-earned money. Then SEBI acted. Good news — but the company isn't on their portal. What now? That's the exact situation one of my clients faced. Mr. Sharma and his wife invested ₹12 lakhs in 2013 with Deccan Capital Markets Ltd. (name changed), a company promising monthly returns through redeemable preference shares. They received regular payments for two years. Then the trouble started. In 2016, their investment was rolled over into shares of Narmada Ventures Pvt. Ltd. through Deccan Broking Services Pvt. Ltd. SEBI passed a Final Order against Deccan Capital Markets Ltd. on 12 January 2024. But here's the kicker — neither Deccan Capital Markets Ltd. nor Deccan Broking Services Pvt. Ltd. appeared on the SCORES portal. The client emailed SEBI twice. Crickets. Frustrated and worried, they approached the Chamber of Advocate Sudhir Rao. Earlier attempts with a local lawyer hadn't moved the needle. The general practitioner didn't understand the interplay between SEBI regulations and civil recovery proceedings. Advocate Sudhir Rao and his office examined the payment records, the conversion documents, and the SEBI Final Order. They argued that the SCORES portal not listing the company did not extinguish the investor's right to claim — it merely meant the claim had to be filed physically. The office filed a physical claim with SEBI's Mumbai Head Office and simultaneously initiated civil recovery proceedings against both companies. The strategic two-track approach worked. Within six months, the client received a substantial settlement.Key Facts of the Case
- Investment of ₹12 lakhs made in 2013 under a Redeemable Preference Share/Monthly Income Scheme of Deccan Capital Markets Ltd.
- Investment was converted into Narmada Ventures Pvt. Ltd. shares in 2016 through Deccan Broking Services Pvt. Ltd.
- SEBI passed a Final Order against Deccan Capital Markets Ltd. on 12 January 2024, banning the scheme.
- Neither Deccan Capital Markets Ltd. nor Deccan Broking Services Pvt. Ltd. were listed on the SCORES portal.
- Emails to SEBI's AskSEBI facility went unanswered.
- Physical claim was filed with SEBI's Mumbai Head Office via Speed Post.
- Civil recovery suit was filed simultaneously in the civil court having jurisdiction.
- The client recovered a substantial portion of the principal amount through settlement.
The Direct Legal Answer
What if the company is not on the SCORES portal?
Don't panic. The SCORES portal is SEBI's online platform for investor complaints, but it's not the only route. When a company is not listed, you file a physical claim directly with SEBI. Write a detailed letter, attach all original documents, and send it via Speed Post to SEBI's Head Office in Mumbai or the concerned Regional Office. Keep copies and the postal receipt — that's proof you approached them.
What is the official SEBI process for filing a claim?
Step one: gather every document you have — certificates, receipts, correspondence, bank statements showing payments. Step two: write a clear representation letter addressed to the SEBI Committee for Investor Protection and Education Fund. Step three: send it physically with all enclosures. Step four: follow up after 30 days if no response. Many investors get stuck because they only try the online route. Physical filing works when the portal fails.
Can I recover money through civil court instead of waiting for SEBI?
Yes, absolutely. SEBI's action confirms the scheme was illegal — that's a big plus for you. You can file a civil suit for recovery of money against the company, its directors, and the brokerage that converted your investment. The SEBI Final Order becomes strong evidence in your favour. Many investors recover faster through civil proceedings than by waiting for the SEBI recovery process.
Advice in Such Cases
Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation to come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.
Second, act fast. Delay can hurt you — assets get dissipated, directors disappear, limitation periods run out. Don't wait months for SEBI to respond before exploring other options.
Third, keep a detailed timeline. Note every payment you made, every communication with the company, every return you received. This timeline becomes your case narrative and helps the advocate build a clean recovery strategy.
This type of matter — recovering money from regulated but failed investment schemes — requires an advocate who regularly handles both securities law and civil recovery. The procedural nuances of approaching SEBI while preserving limitation for civil remedies are often missed by general practitioners. An advocate with domain-specific experience can save you months of wasted effort.
Applicable Sections of Law
- Section 12 of the SEBI Act, 1992 — Registration requirement for intermediaries; schemes that violate this are illegal.
- Sections 11 and 11B of the SEBI Act, 1992 — SEBI's power to pass orders against fraudulent schemes and direct disgorgement of money.
- Section 73 of the Indian Contract Act, 1872 — Recovery of losses arising from breach of contract, applicable to investment agreements.
- Order 7 Rule 1 of the Code of Civil Procedure, 1908 — Requirements for filing a civil suit for recovery of money.
Limitation Period
Under the Limitation Act, 1963, a suit for recovery of money must be filed within three years from the date the cause of action arises. For investment schemes, the clock usually starts when the company defaults on payment or the scheme is found to be fraudulent — often the date of the SEBI order or the last payment received. Missing this deadline can be fatal. A court may condone delay if you show sufficient cause, but it's risky. File early.
Interim Reliefs Available
In civil recovery suits, you can ask the court for interim reliefs to protect your interest. Under Order 39 Rule 1 and 2 of the CPC, the court can grant a temporary injunction restraining the company from transferring or disposing of its assets. Under Order 38 Rule 5, you can seek attachment of property before judgment if you can show the company is likely to defeat the decree. These interim orders are powerful tools — they put pressure on the opposing side and preserve assets while the case proceeds.
If You Are the Victim
- Collect and secure all original documents — certificates, receipts, bank statements, SEBI orders, and all correspondence.
- Do not sign any settlement or waiver without showing it to your advocate first.
- File a police complaint if there is evidence of criminal fraud — cheating under the BSA and criminal breach of trust can apply.
- Approach the civil court with a recovery suit — you don't have to wait for SEBI to finish its process.
- Contact an advocate who handles securities and civil recovery matters specifically.
Documents You Must Keep Ready
- Original investment certificates and share certificates
- All payment receipts, bank statements, and cheque copies
- SEBI Final Order against the company
- All correspondence with the company, brokers, and SEBI
- Identity proof — Aadhaar, PAN, and address proof
- Any brochures, advertisements, or scheme documents you received
- Bank statements showing returns received (if any)
- Copy of emails sent to SEBI and their responses (or lack thereof)
What Evidence Is Required?
- Primary evidence: Original certificates, receipts, and bank statements showing payments made to the company.
- Documentary evidence: SEBI orders, scheme documents, correspondence, and emails.
- Witness evidence: Your own testimony and that of any family members who made the investments.
- Expert evidence: A chartered accountant or financial expert may be needed to calculate the loss and interest due.
- Circumstantial evidence: The company's pattern of default, promises made, and failure to repay.
- Secondary evidence: Certified copies of SEBI orders if originals are not available.
How Courts Typically Approach Such Cases
Civil courts take a practical view in recovery cases where SEBI has already found the scheme illegal. Courts typically treat the SEBI Final Order as strong evidence that the investment was made in an unregistered, fraudulent scheme. This shifts the burden of proof — the company must show it did not receive money or that it had a valid defence. Courts are generally sympathetic to investors who have lost their savings in such schemes. That said, courts expect clean hands — you must prove the exact amount invested, the terms of the scheme, and the fact of default.
Timeline of Legal Process
- Initial consultation and document collection: 1-2 weeks
- Filing physical claim with SEBI: 1 week for preparation, 1-2 months for initial response
- Filing civil recovery suit: 2-4 weeks for drafting and filing
- Service of summons on defendants: 2-6 weeks depending on jurisdiction
- Written statement by defendants: 30-90 days after service
- Issues framing and evidence stage: 3-6 months
- Arguments and judgment: 3-6 months after evidence
- Execution of decree (if won): 3-12 months depending on defendant's assets
- Full recovery in typical contested case: 12-24 months
A negotiated settlement can close the matter in 3-6 months if the company is willing to pay.
Understanding the Costs
The total cost of a matter like this varies significantly from one case to the next — it depends on the complexity of the dispute, the forum involved, the number of hearings, and the specific facts of your situation. There is no single fixed figure that applies to everyone.
A professional advocate can give you an accurate estimate only after reviewing all your facts and documents in a consultation.
Can the Matter Be Settled Out of Court?
Yes — and it's often the best outcome for investors. A negotiated settlement saves time, avoids the stress of litigation, and ensures some recovery rather than a long wait. Mediation can be attempted before filing the suit or even during the proceedings. Lok Adalat is not typically used for recovery suits but can be an option if both sides agree. In this case type, a settlement deed is signed where the company pays a lump sum amount in full and final settlement, and the investor withdraws the suit. Always have your advocate review any settlement offer before you sign — companies sometimes try to get a full release for a fraction of what you are owed. Settlement is advisable when the company shows genuine willingness to pay and has assets to back it up.
Common Mistakes People Make
- Waiting too long for SEBI to act: SEBI's process can take months or years. Filing a civil suit early preserves your legal rights and keeps the pressure on.
- Destroying or losing original documents: Without original certificates and receipts, your case becomes difficult. Keep them in a bank locker or secure place.
- Engaging an advocate without domain-specific experience: A general practitioner may not know how to leverage a SEBI order in a civil suit, or how to use the SEBI Act provisions to argue recovery. An advocate who regularly handles securities and investment recovery matters knows the procedural shortcuts and evidentiary strategies that can make or break your case.
- Signing settlement documents without legal review: Companies often pressure investors into signing full and final settlement receipts for much less than they are owed.
- Posting about the case on social media: This can prejudice your case and alert the company to hide assets. Keep it confidential until advised otherwise by your advocate.
- Not filing a police complaint when fraud is involved: If the company never intended to repay, criminal provisions may apply. A civil suit alone may not recover money from absconding directors.
FAQs People Normally Have
Can I recover money if the company has declared bankruptcy?
Yes, but the process is harder. You may need to file your claim before the company's liquidator. The SEBI order helps establish your claim as legitimate. A lawyer can guide you on filing in the insolvency process under the IBC.
What if the company has changed its name or been merged?
You can still sue the successor entity or the directors personally if they were part of the fraud. The advocate will check corporate records to trace the corporate history.
Do I need to wait for SEBI to complete all proceedings?
No. You can file a civil suit immediately. The SEBI order is evidence, but it's not a prerequisite for filing your own recovery case.
Can I claim interest on the invested amount?
Yes. Courts usually award interest from the date of default until recovery, typically at the rate specified in the agreement or the court's discretion (often 9-12% per annum).
What if the directors have left the country?
You can still sue them by serving summons through substituted service (newspaper notice) or through diplomatic channels. Recovery becomes harder but not impossible, especially if they have assets in India.
This article is general legal information, not legal advice. Consult a qualified advocate about your specific situation.
Advocate Sudhir Rao, Supreme Court of India