Copal Art fund investors allege they have been cheated
Moneylife Digital Team 22 June 2011

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.

Comments
Anonymus
10 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
10 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
1 decade 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 - http://www.copalart.com 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
1 decade ago
ERRATA
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the consultants name should read as ernst & young and not price waterhouse coopers as mrentioned in the above comments.
bhupesh gupta
1 decade 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.
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