Alternative Investment
Copal Art fund investors allege they have been cheated

Investors say paintings in which they invested were priced too high and hence could not find any buyers. Copal not too keen on promised buyback, says it was a “goodwill gesture”

Investors, who put their money into art funds launched by Copal Art in 2006, have alleged that they have been cheated by the management and haven't got their money back.

Copal's business model allowed investors to actually possess the paintings they invested in. Later, when the paintings would appreciate in value, they were to be sold through Copal's portals. Investors were promised multiple returns.

About a year ago, the company offered to buy back those paintings owned by its investors that had remained unsold. Investors, however, have complained that the exercise has not resulted in returns.

"There are four cases of cheque bounce and stop payments. These investors got money from Copal after sending legal notices. It's very difficult to believe Copal's promises and after the cases of cheques bouncing, investors are afraid of sending the painting (to Copal) without receiving the amount on the cheque," says Sachin Kaluskar, a financial advisor. Back in 2006, Mr Kaluskar was a partner of InvestmentIdea Financial Services that handled many transactions for those investing with Copal.

Strangely, Copal denies it is an art fund and says there is no buyback policy. "We would like to clarify that Copal is not a fund. Copal is an art advisory for emerging and established collectors of art," says Ajay Seth, chief mentor, Copal Art. "According to our service terms and conditions, we do not offer a buyback facility. The buyback service was an exceptional service provided as a goodwill gesture."

Mr Seth insists there are no instances of investors not receiving their money in full if they have returned the paintings to Copal, and that they are always in touch with their clients.

Investors, have a different story. Amit Makwana, from Junagadh, had invested in Copal's art fund, and also got some of his friends to do so. "I have not got my Rs2 lakh back. I had invested in a painting which was priced at Rs7,500 per sq ft on canvas. Now, I cannot sell at such a price, so I am holding back."

One of Mr Makwana's friends threatened Copal with legal action, after which, the fund agreed to buy back his paintings. However, Copal asked him not to deposit the cheque that he received, saying that the money was being transferred. When the cheque was deposited after two-three months, it was revealed that there was a stop payment order against it. When the investor threatened to go to court, Copal transferred his funds to his account.

Baroda-based advocate Amit Shah has filed legal complaints against Copal on behalf of two investors. "One investor got his money back after almost six months of dilly-dallying, after we filed a criminal complaint under Section 138 of the Indian Penal Code when the cheques for the buyback scheme bounced. Copal also claims that the paintings were damaged, which is a lie, because investors know how to take care of their investments. My second client has a huge portfolio of Rs45 lakh with Copal, and his case has suffered the same delay."

Though Copal denies not paying any investor, there have been many complaints. A chemical trader from Surat is following up with Copal for payment on behalf of his friends as well, but they have not received any money. A managing director of a chemical company is saddled with a Kishore Shinde painting-cum-sculpture since 2008, which hasn't found any buyers despite Copal's assurances.

Copal Art, a gallery in New Delhi, launched two art funds at a time when the economy was going through a short 'feel-good' phase. Unlike high-flying Osians which catered to HNIs, Copal said it was different-it allowed people to enter with an amount of Rs1 lakh.

But with the recession in 2008, all dreams crashed. Investors discovered that Copal had priced the paintings so high that there were no takers in the market. Replying to a question, Mr Seth said art had to be withheld for 3-4 years for value appreciation. Pressured by investors who threatened legal action, Copal decided to buy back the paintings from investors. The buyback is expected to finish by December.




5 years ago

I do agree with the comments made above....Also i would like to inform the general public that Mr Seth does not have any sale portal, its a fake portal wherein he purchases only those paintings again for which he gets the demand and sells them at a higher price to other client.

UK Service Provider

5 years ago

We are a UK based firm and are still waiting for full payment for services rendered and have had to instruct a lawyer...

P S Patel

5 years ago

Copal is a cheat company. And we have knowledge that Copal has cheated many other investors in Gujarat. I have invested large sum in its art fund. We were lured by Mr. Ajay Seth's marketing skills. Business also runs on trust. Mr. Seth took me in his trust and promised huge returns from the investments I made with his Company - Copal. Mr. Seth told me to keep my Kishore Shinde painting in his custody. He said, Kishore Shinde's price would double in just SIX Months. He also called me and told me that Kishore Shinde's price doubled to 60,000 per Sq Ft from 32,000 per Sq Ft (my buying price). I told him to sell my painting. He then, started showing his true colours. He was giving me various dates to sell my painting. His Portal - came in exsistance after One Year of my investment. He said, he would surely sell my painting through the portal. Nothing happened since 2008.

In this article, Mr. Seth denies launch of any Art Fund which is Ridiculous. He was trying to take money from me in his 1000 cr art fund.

Now when I call him, he never takes my calls and if he takes, he gives very nasty answers. He has told me not call him. His office would inform me if my painting would get sold.

In past, when an investor filed a legal case against Copal for recovery of his money, Mr. Seth met me and promised to sell my painting. He also convinced me not to accept Buy-Back, instead he would sell my painting with huge profits. None of his promise he has kept. I have consulted a Lawyer and I will connect will all other investors of Gujarat and file a Criminal case against entire team of Copal Art Pvt Ltd for cheating us. I have got to know that Mr. Ashok Vajpeyi is now Chairman of Copal Art. There will be case against him also.

bhupesh gupta

5 years ago

the consultants name should read as ernst & young and not price waterhouse coopers as mrentioned in the above comments.

bhupesh gupta

5 years ago

well it is indeed sad that fly by night operaters flourish in art business and indulge in open loot thanks to lack of regulation these dream merchants siphon off the amount thus collected from naive investors and saddle them with duds in the name of art works which are hugely inflated in price by bringing out so called research reports which are not worth the paper it's written on!

the only recourse left to these hapless individuals is to form a collective fora and initiate collective action.
in recent past copal was boasting about price waterhouse coopers as consultant for it's impending art fund of 1000 crores and sent out mails to this effect suddenly now copal is trying to side -step the issue because they don't want to face the regulatory heat.
well if might is right then they should be held accountable for their misdeeds of ommission and commission on a collective basis rather than in scattered instances where only a few who are slapping them with legal notices for criminal breach of trust are getting their money back.

SBI Mutual Fund floats Debt Fund Series 180 Days-20

SBI Mutual Fund new issue closes on 23rd June

SBI Mutual Fund has launched SBI Debt Fund Series 180 Days-20, a close-ended income scheme.

The investment objective of the scheme to provide regular income, liquidity and returns to the investors through investments in a portfolio comprising of debt instruments such as government securities, AAA/AA+ Bonds and Money Market Instruments maturing on or before the maturity of the scheme. The tenure of the scheme is 180 days.

The new issue closes on 23rd June. The minimum investment amount is Rs5,000.

CRISIL Liquid Fund Index is the benchmark index. Rajeev Radhakrishnan is the fund manager.


ONGC overstated reserves in KG basin block: Cairn India

The warning by Cairn is significant in view of the fall in gas output from RIL’s neighbouring KG-D6 block

New Delhi: State-owned explorer Oil and Natural Gas Corporation (ONGC) may have overstated the natural gas reserves in its much-talked about KG basin KG-DWN-98/2 block, which sits next to Reliance Industries’ (RIL) prolific KG-D6 fields, reports PTI.

Cairn India, which had made four discoveries in the KG-DWN-98/2 block before selling 90% out of its 100% stake in the block to ONGC in 2005, has written to the oil regulator Directorate General of Hydrocarbons (DGH) saying the state-owned firm is grossly overstating the reserves in block, sources said.

It believes that “the hither-to discovered oil and gas resources in the block are only marginal to non-commercial, because of their small size and the potential high development costs due to water depth versus the prevailing gas prices.”

ONGC estimates that the block holds an in-place volume of 25.61 million tonnes of oil and 197 billion cubic metres of natural gas. It is proposing an investment of over $7.3 billion to produce up to 30 million standard cubic metres per day of gas.

The warning by Cairn, which holds a 10% interest in the acreage and is credited with finding oil in an area in Rajasthan where global giant Royal Dutch/Shell exited saying there was no hydrocarbons, is significant in view of the fall in gas output from RIL’s neighbouring KG-D6 block.

RIL had in 2007 estimated that the Dhirubhai-1 and 3 fields in the KG-D6 block would hit 69 million metric standard cubic metres per day (mmscmd) of output, but production has fallen to 40 mmscmd due to what the Mukesh Ambani-led firm says are reservoir complexities.

Cairn, which is recognised the world-over for its expertise in assessment of hydrocarbon resources, wants “a correct reserve estimation of the block through an independent agency.”

“The work undertaken (to assess reserves in the block) by Schlumberger Data and Consulting Services in 2007 (at the behest of ONGC) is flawed and they substantially over-estimated the resources in the block,” it wrote to DGH.

Stating that it had on various occasions pointed out to the flaws, Cairn said, “It is imperative that a new study is undertaken by a third party of repute which enjoys the confidence of both ONGC and Cairn, such as DeGolyer & MacNaughton, in order to establish a correct assessment of the resources, based on which the stakeholders would be able to take appropriate decisions."

Cairn said ONGC had submitted a proposal to declare some of the discoveries in the block as commercial, a step toward developing the finds, without keeping it informed.

ONGC, it said, was submitting various proposals without prior approval of the Operating Committee (OC)—an oversight body comprising representatives of both partners. Submission of proposals without OC approval is a violation of the Production Sharing Contract and Joint Operating Agreement.

Cairn claims that an innovative production method has to be worked out for the block in discussion with the DGH and the oil ministry.

It also questioned the basis on which ONGC is seeking an extension of the appraisal period, which was completed as per the provisions of the PSC. It has asked for re-submission of the Declarations of Commerciality for the discoveries made in the block as well.

ONGC bought 90% interest in Block KG-DWN-98/2 from Cairn Energy India in 2005. Cairn still holds 10% in the block. Before selling most of its stake and giving away operatorship of the block, Cairn made four discoveries in the area—Padmavati, Kanakdurga, N-1 and R-1 (Annapurna).

Subsequently, ONGC made six significant discoveries—E-1, A1, U1, W1, D-1/KT-1 and the first ultra-deepwater discovery UD-1 at a record depth of 2,841 metres.

The block is divided into a Northern Discovery Area (NDA) and Southern Discovery Area (SDA). The NDA comprises discoveries like Padmavati, Kanakdurga, D, E, U, A, while the ultra deep-sea UD find lies in SDA.

Even ONGC has acknowledged that the NDA discoveries are small to marginal and cannot be developed on a standalone basis due to high deepwater development costs. Accordingly, it is proposing to develop the discoveries in an integrated cluster.

Sources said the ONGC Declaration of Commerciality (DOC) of NDA on 15 July 2010, was submitted without OC approval and so was the DOC of SDA on 21 December 2009.

The DGH, they said, wants a fresh proposal for DOC to be submitted by the operator after completion of the proposed appraisal drilling programme by 16 July 2013, in case of NDA and by 22 December 2012, in case of SDA, or by 16 July 2013, for both the NDA and SDA.


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