Calcutta, July 23: Calcutta High Court today dismissed a petition moved by Rose Valley Real Estate and Construction Company that had challenged stock market watchdog Sebi’s power to regulate deposit-mobilising firms.

The company, under scanner after the Saradha default crisis, has said it would challenge the single-bench judgment before a division bench.

Today’s verdict has clouded the future of deposit-mobilising firms that have been mushrooming in Bengal over the past three years.

This is a second blow to Rose Valley, one of the largest deposit-mobilising firms in Bengal. Earlier this month, Sebi had ordered the closing down of one of Rose Valley’s group firms. The watchdog told the company to shut its holiday membership plan and refund money to depositors.

In today’s case, Rose Valley challenged two sections of the Sebi Act — Section 11AA and Section 12 — that empowered it to compel a company running collective investment schemes to register before starting the business, and to take action id the company is found guilty of violating norms laid down by Sebi.

“The sections of the Sebi Act, which were challenged before this court, are valid and in accordance to the law,” Justice Dipankar Dutta said and dismissed the petition. He also imposed a cost on the petitioner.

“The petitioner company will have to deposit Rs 10 lakh before the registrar-general of the court as cost of the case,” Justice Dutta said.

Rose Valley moved the petition after Sebi issued a notification accusing the company of flouting norms laid down by it under the Sebi Act. The notification also asked the company to stop collecting money from the market because it was not registered with Sebi.

“Rose Valley Real Estate & Construction Co had been barred by Sebi from continuing its ongoing Ashirvad scheme in 2010 itself and the company has ever since abided by that, although the decision of the regulator was unacceptable. Hence, the company appealed to high court which got rejected by a single bench judgment today. Rose Valley Real Estate & Constructions will appeal to the division bench of Calcutta High Court within next few days against today’s judgment,” Rose Valley said in a statement.

Rose Valley counsel Arup Bhattacharya told the court: “Our company does not come under the purview of Sebi. So Sebi cannot issue such a notification. Moreover, the sections of the Sebi Act, on the basis of which Sebi had issued the notification, are contrary to the provisions of the Constitution.”

Sebi lawyer Hirak Mitra, opposing the petitioner company’s claim, said: “Section 12 of the Sebi Act clearly states that each and every company, which is running a collective investment scheme, will have to take registration from the Sebi.”

“The Rose Valley Real Estate and Construction Company was running the business both by violating the norms and without taking Sebi’s registration. So the notice was issued,” lawyer Mitra said.

The judge had heard the petition seven months back but reserved its verdict which was delivered today.