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TMI Blog2013 (7) TMI 279X X X X Extracts X X X X X X X X Extracts X X X X ..... to be achieved by defining 'net worth', which means the aggregate capital and free reserves and excluding the funds created out of revaluation. The funds created on revaluation would at times amount to an artificial valuation and not the true value. That the interest of the investors would necessarily be affected if 'net worth' includes such revaluation. Therefore, 'net worth' has been defined to exclude such a revaluation. Hence, the contention of arbitrariness by offending Article 14 or the right to do business under Article-19(l)(g) is unsustainable. Appeal dismissed. - WRIT APPEAL NO. 1178 OF 2008 (GM-RES) - - - Dated:- 10-4-2013 - K.L. Manjunath AND RAVI MALIMATH , JJ. For the Appellant : Naganand. For the Respondent : Kalyan Basavaraj, S. Vijayashankar and Sudarshan Suresh. JUDGMENT:- PER : Ravi Malimath Aggrieved by the order dated 08.07.2008, passed by the Learned Single Judge in W.P. No. 3922/2007, dismissing the petition, the petitioners have filed the present appeal. 2. The first appellant was incorporated in the year 1996, under the provisions of the Indian Companies Act 1956. It is engaged in the business of Collective Investment Scheme (C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Learned Single Judge. That excluding the funds created for revaluation, has caused injustice to the appellants leading to miscarriage of justice by offending Article 14. He contends that if the revaluation is taken into account, the 'net worth' of the company would be far greater than Rs.5 crores, as stipulated in the Regulation. He therefore pleads that the writ be allowed and Regulation 2(l)(s) be held to be ultra-vires Article 14 of the Constitution of India. 7. On the other hand, the learned counsels appearing for the respondents defend the impugned order. They contend that there is no error committed by the Learned Single Judge. That the Learned Single Judge has rightly considered the contentions advanced. That the Learned Single Judge was right in holding that the regulation is consistent and that there is no ambiguity which calls for any interference. Therefore, they plead that the appeal be dismissed. 8. Heard learned counsels and examined the material on record. 9. The plea of the petitioner is to declare Regulation 2(1)(s) as ultra vires Article 14 of the Constitution of India. That the conditions as stipulated in Regulation 9(c) would consequently be requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Single Judge also placed reliance on the judgment in the case of CIT v. Mahindra Mahindra Ltd. wherein the meaning of 'net worth' was explained. On so considering the same, the Learned Single Judge was of the view that in deciding the 'net worth' of a company the market value can never be taken into consideration. That there is no scope for any interpretation by the Court regarding the aforesaid definition. The definition is simple, clear and unambiguous. 14. On considering the reasonings of the Learned Single Judge, we are of the considered view, that there is no error committed by the Learned Single Judge that calls for interference. The definition of 'net worth' as contained in the Companies Act, as well as the Sick Industries Act are pari materia. That the definition of 'networth' in these two enactments has stood ground. Hence, we find no good ground to hold that only so far as the definition of 'net worth' in these regulations is concerned, it is arbitrary. It is unacceptable. The writ petition was rightly dismissed. 15. However, the learned counsel for the appellants contends that his contention on the violation of Article 14, was not considered by the Learned Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are of the considered view that the contentions put forth on Article 14 are unacceptable. We do not find any infringement of Article 14. The Regulations are made in exercise of the powers conferred under Section 30, read with Sections 11 and 19 of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as 'Act'). The Act was promulgated to provide for the establishment of a Board, to protect the interests of the investors in securities and to promote development of and to regulate the securities market and for matters connected with or incidental thereof. Chapter 4 of the Act enumerates Sections 11 to 11D. They relate to the powers and functions of the Board. That is shall be the duty of the Board to protect the interest of the investors in securities, to promote development and to regulate the securities market by such measures as it thinks fit. Various provisions have been enacted to provide for such measures. Section 30 confers the power on the Board to make regulations consistent with the Act to carry out the purposes of the Act. It is under these provisions that the regulations have been formed. The regulations would state that - no person other than a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterests of the investors etc. Therefore there is a nexus with the regulation and the object sought to be achieved. Hence, the contention of arbitrariness by offending Article 14 or the right to do business under Article-19(l)(g) is unsustainable. 20. It is presently submitted at the Bar that aggrieved by the order dated 8.2.2006, an appeal in appeal No.48/2006 was filed before the Securities Appellate Tribunal, which was pending as on the date of filing of the writ appeal. However, by the order dated 29.8.2008, the Tribunal dismissed the appeal and held that the appellant should wind up the scheme according to the provision of the regulations and repay the investors in accordance with the Regulation 73 and other directions were issued. 21. However, it is further submitted by the respondent, that this order of the Tribunal was questioned by filing Civil Appeals No.326/09 before the Hon'ble Supreme Court, wherein by the order dated 2.4.2009, the civil appeal was dismissed keeping open the question of law. 22. Therefore, for the aforesaid reasons, we find no error committed by the Learned Single Judge that calls for interference on merits, Law and facts. That the order of the L ..... X X X X Extracts X X X X X X X X Extracts X X X X
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