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TMI Blog2019 (11) TMI 845X X X X Extracts X X X X X X X X Extracts X X X X ..... re project / scheme during 2012-13 and for periods ranging from 4 to 7 years. Therefore, the Company and the scheme came into existence many years after notification of the CIS Regulations, 1999 and the schemes were flouted despite the fact that Regulations notified in the year 1999 makes it mandatory for obtaining registration from SEBI for hoisting any such a scheme. Accordingly, we do not find any anomaly in the direction to pay a penalty of ₹ 25 lakh jointly and severally by the appellants which takes into account the mitigating factors under Section 15J of SEBI Act - Appeal is dismissed. - Appeal No. 304 of 2018 - - - Dated:- 1-8-2019 - Justice Tarun Agarwala, Presiding Officer And Dr. C.K.G. Nair, Member For The Appellants : Mr. Saurabh Bachhawat, Advocate with Mr. Jitendra Sharda, Advocate i/b Mindspright Legal For The Respondent : Mr. Mustafa Doctor, Senior Advocate with Mr. Abhiraj Arora and Mr. Vivek Shah, Advocates i/b ELP JUDGMENT Per : Dr. C.K.G. Nair, Member 1. This appeal has been filed challenging the order of the Adjudicating Officer ( AO for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal were disposed of by this Tribunal on April 20, 2016 directing appellants to file a proposal for the refund of the entire amount before the Recovery Officer without going into the question of whether the appellants has been in fact covered under the CIS Regulations, 1999 as sought by the appellants. Thereafter the appellants have been in the process of protracted correspondence and negotiations with SEBI. Finally, on August 18, 2016 appellants submitted original documents of land to SEBI and SEBI started the auction process on July 20, 2017. On December 4, 2017 the AO issued a show cause notice seeking why an enquiry should not be held and penalty be not imposed under Section 15D(a) of the SEBI Act and Regulation 3 of CIS Regulations, 1999. Following personal hearing and written submissions etc. the impugned order has been passed on April 5, 2018. 4. Shri Saurabh Bachhawat, learned counsel for the appellant submits that the appellant Company is in the business of solar energy generating panels and for expanding its business entered into separate agreements with investors and the entire business was managed together by the Company and the investors. He cited a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to a maximum of ₹ 1 crore. In the context of this matter, after providing for a mitigating factor under Section 15J the AO has imposed a penalty of ₹ 25 lakh jointly and severally which is just and reasonable. 6. We do not agree with the contentions of the appellant. The preliminary objection to the impugned order that the appellants are complying with the order of the WTM on the direction of the Tribunal and it is without accepting that the appellants were running CIS and hence parallel adjudication process could not have been initiated has no merit since it was on appellants own willingness that the Tribunal passed such an order without going into the question of whether appellants were running CIS or not. It does not prevent SEBI from initiating parallel proceedings as provided under law. It is also a fact that appellants have not yet completed the process of repayment to the investors despite lapse of three years from the date of our order dated April 20, 2016. 7. The submission that the joint venture agreement is a proof of joint management of the business has no merit since there is nothing on record to show that the investors ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , produce or property, whether movable or immovable, from such scheme or arrangement; ( iii) the property, contribution or investment forming part of scheme or arrangement, whether identifiable or not, is managed on behalf of the investors; ( iv) the investors do not have day-to-day control over the management and operation of the scheme or arrangement. Section 12(1B) of SEBI Act 1B) No person shall sponsor or cause to be sponsored or carry on or caused to be carried on any venture capital funds or collective investment schemes including mutual funds, unless he obtains a certificate of registration from the Board in accordance with the regulations: Provided that any person sponsoring or causing to be sponsored, carrying or causing to be carried on any venture capital funds or collective investment schemes operating in the securities market immediately before the commencement of the Securities Laws (Amendment) Act, 1995, for which no certificate of registration was required prior to such commencement, may continue to operate till such time regulations are made und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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