SEBI prohibits transfer of assets in Trustline PMS and AIF recovery case

The Enforcement Action

The Securities and Exchange Board of India (SEBI) has issued a prohibitory order barring R Senthil Kumar from disposing of, transferring, alienating or charging attached immovable property, as it moves to recover unpaid dues in the matter of Trustline Holdings Pvt. Ltd PMS and Trustline Deep Alpha AIF. The order, Prohibitory Order No. RRD/SRO/1579/2026, was signed by the Recovery Officer and Deputy General Manager at SEBI's Southern Regional Office in Chennai on 26 October 2026.

The order is issued under Recovery Certificate Nos. 7902 of 2024, 7904 of 2024 and 7905 of 2024. It describes R Senthil Kumar as the "Defaulter" and states that recovery proceedings were initiated "for failure to pay the dues" under those certificates, which were drawn up by the Recovery Officer, Southern Regional Office.

According to the order, the certificates carry the following principal amounts, each "+ further interest, costs, expenses and charges etc.": Rs 10,71,000 under certificate 7902 of 2024; Rs 7,14,059 under certificate 7904 of 2024; and Rs 50,60,897 under certificate 7905 of 2024. Taken together, the three certificates list principal sums of Rs 68,45,956 before interest and costs. The order's schedule lists Prakash V alongside R Senthil Kumar as a defaulter under certificates 7904 and 7905, and Geetha V additionally under certificate 7905.

The prohibitory order is an enforcement step on an existing demand, not a fresh adjudication. R Senthil Kumar has not publicly responded to the order.

How the Scheme Worked

The prohibitory order is a recovery document. It does not restate the findings in the underlying Trustline proceedings, and this report does not characterise that conduct beyond what the order records. What the order does set out, step by step, is how the recovery itself has progressed.

First, according to the order, Notices of Demand under all three certificates were issued on 24 July 2024. Those notices demanded payment of the sums, with interest, costs and expenses, "within 15 days from the date of receipt of the said notice". The order records that the defaulter "did not pay the said amount within the stipulated time period".

Second, the Recovery Officer sent Notices of Attachment to banks, depositories and mutual funds to attach the defaulter's bank accounts, demat accounts and mutual fund folios. This is the standard first line of recovery, aimed at liquid assets.

Third, the order states that "the entire dues could not be recovered" from those accounts, and that the defaulter's assets, including immovable property, are therefore liable to be attached. The Recovery Officer recorded that the defaulter is in possession of a specified property and that it was "felt that he may dispose or transfer or alienate the assets" with a view to obstructing or delaying recovery, which the officer said needed to be prevented immediately by attachment.

Fourth, the order attaches "All the immovable properties held by the defaulter", including a property of 2,421 sq ft in Potheri village, Chengalpattu, identified by document and survey numbers in the schedule. It directs the defaulter to furnish complete details of all movable and immovable properties, with charges and original title deeds, in the Annexure-A format "within two weeks from the date of this Order".

Finally, the order is to be served on the Inspector General of Registration in Tamil Nadu and the concerned District Registrars and Sub-Registrars, who are directed to report the defaulter's immovable properties and not to act on documents dealing with transfer, mortgage, charge or lease of those properties if presented for registration.

The Law Invoked

The order is issued "under Rule 16 and 48 of the Second Schedule to the Income-tax Act, 1961 read with Section 28A of the Securities and Exchange Board of India Act, 1992". These are the only provisions the document cites.

Section 28A of the SEBI Act is the gateway provision. Where a person fails to pay a penalty, fails to comply with a direction for refund or disgorgement, or fails to pay fees due to SEBI, it allows SEBI's Recovery Officer to recover the amount and imports specified recovery provisions of the Income-tax Act, 1961, with the necessary modifications.

Rule 16 of the Second Schedule restricts a defaulter, once served with a notice, from mortgaging, charging, leasing or otherwise dealing with property except with the Recovery Officer's permission, and treats contrary dealings as void against claims under the attachment. Rule 48 provides for attaching immovable property by an order prohibiting the defaulter from transferring or charging it and prohibiting others from taking any benefit from such a transfer. Paragraphs 4 and 5 of this order mirror that structure.

What Happens Next

The order sets one immediate deadline: within two weeks of 26 October 2026, the defaulter must supply details of all movable and immovable properties, encumbrances and original title deeds to SEBI's Southern Regional Office in Chennai. In parallel, the registration authorities in Tamil Nadu have been told not to register dealings in the defaulter's properties.

Under the Second Schedule framework that Section 28A applies, attachment is ordinarily a step towards realising the dues. If the amounts remain unpaid, the Recovery Officer can take further steps under the same rules, which may include sale of attached property, with proceeds applied towards the certificates. Recovery proceedings typically end with a release or completion order once dues are fully recovered.

The prohibitory order does not mention an appeal route. Remedies against recovery proceedings and against the orders on which recovery certificates rest exist under the SEBI Act framework, including before the Securities Appellate Tribunal for appealable orders. This report does not predict the outcome of any such proceeding.

What It Means

For investors, the main signal is that SEBI recovery does not stop at a demand notice. In this matter the Recovery Officer moved from notices issued in July 2024, through attachment of bank, demat and mutual fund holdings, to attachment of land and a formal bar on transfers more than two years later. Unpaid regulatory dues can follow a person's assets, and registration offices are brought in to stop property changing hands.

The matter's title involves a portfolio management service and an alternative investment fund, two products sold mostly to wealthier investors with high minimum tickets. Before committing money to either, check the provider's registration on SEBI's list of registered intermediaries, match the exact legal name and registration number, and read the disclosure document or private placement memorandum. A PMS should hold client securities in demat accounts in the client's own name, which you can verify through your depository statements.

If you invested in an entity named in a SEBI matter, keep copies of agreements, statements and payment proofs, follow updates on SEBI's website, and use SEBI's SCORES grievance platform for complaints against registered entities. Recovered amounts are applied as SEBI's orders direct, so the official orders are the place to check whether any refund mechanism exists.

FAQ

What exactly did SEBI order?

SEBI's Recovery Officer at the Southern Regional Office in Chennai issued Prohibitory Order No. RRD/SRO/1579/2026 on 26 October 2026. It prohibits R Senthil Kumar, the defaulter named in Recovery Certificate Nos. 7902, 7904 and 7905 of 2024, from disposing of, transferring, alienating or charging attached immovable property, and bars all other persons from taking any benefit from such a transaction.

Does this order mean the person named has been found guilty of a crime?

No. This is a civil recovery step to collect sums SEBI says remain unpaid under recovery certificates; it is not a criminal conviction. The order itself does not set out the underlying findings in the Trustline matter, and it should not be read as a fresh finding of wrongdoing. The person named has not publicly responded to the order.

Can the order be challenged?

The prohibitory order does not itself mention an appeal route. Recovery proceedings under the SEBI Act can be contested through the remedies the law provides, and the underlying orders that give rise to recovery certificates are generally appealable to the Securities Appellate Tribunal. Anyone affected should take independent legal advice rather than rely on a general summary.

How can I check whether a portfolio manager or AIF is registered?

SEBI publishes lists of registered intermediaries on its website, including portfolio managers and alternative investment funds, searchable by name and registration number. Before investing, match the entity's exact legal name and registration number against that list, and read the disclosure documents and placement memoranda the regulations require.

Where can I read the official order?

The full four-page order, including Annexure-A, is published on SEBI's website under Enforcement, Recovery Proceedings, dated 26 October 2026. A link appears at the end of this report.

This report is based on the official SEBI Prohibitory Order No. RRD/SRO/1579/2026 dated 26 October 2026, published by SEBI's Southern Regional Office, Chennai. The signed order is available as a PDF.