9911796707
TMI Blog2020 (7) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... he Statute read with the CIS Regulations and would thus be illegal. This being the case, it is difficult to upset any part of SEBI's order that remains after the penultimate part of the order was set aside by the Appellate Tribunal. This litigation has been going on for an extremely long period of time and instead of remanding the matter to SEBI to decide the refund issue afresh, we order as follows: The principal amount repayable to each investor of both the Schemes shall be paid back within a period of six months from today in the following manner: We are informed that so far as the first Fund is concerned, 81.32 per cent of the total principal sum of ₹ 10.95 crores has been repaid. Insofar as Fund No. 2 is concerned, we have been informed that 50 per cent of the principal amount of ₹ 21.92 crores has been repaid. The balance owing to the 50 investors of Fund No. 1 and to the 132 investors of Fund No. 2 be therefore, repaid within six months from the date of this judgment. So far as the interest at the rate of 10 per cent is concerned, this amount will be paid on the principal outstanding amount from the date on which it becomes due to each su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ponded to by Fund I on 16-7-2007, denying that the activities would amount to the activities of a Collective Investment Scheme. As a result thereof, on 12-10-2007, SEBI issued a Show Cause Notice to show cause as to why the Yatra Art Fund should not register itself with SEBI in the prescribed corporate form, as otherwise the collective investment scheme carried out by the Trust would be illegal. The show cause notice also mentioned that all amounts collected should be refunded within a period of 30 days from the said show cause notice. On 5-11-2007, the appellants responded to the aforesaid show cause notice stating that there was no violation of Section 12 (1B) of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as 'SEBI Act') read with Regulation 3 of SEBI (Collective Investment Scheme) Regulations, 1999 (hereinafter referred to as 'CIS Regulations'); and as the appellants were not registered in the form of a company, the Regulations themselves would not apply. Secondly, detailed arguments were made as to why the schemes involved could not be said to be collective investment schemes. One year later, on 3-11-2008, a joint representation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in Paragraph 29(c) above, till all the monies mobilized through such schemes are refunded to its investors with interest, which are due to them. - SEBI would make a reference to the State Government/Local Police to register a civil/criminal case against Yatra Art Fund, its promoters, directors and its managers/persons in-charge of the business and its schemes, for offences of fraud, cheating, criminal breach of trust and misappropriation of public funds; and - SEBI shall also initiate attachment and recovery proceedings under the SEBI Act and rules and regulations framed thereunder. An appeal was carried to the Securities Appellate Tribunal, which was then disposed of on 21-8-2017, following the Appellate Tribunal's judgment dated 13-10-2015 in Osian's - Connoisseurs of Art Private Limited v. Securities and Exchange Board of India Anr. It may be pointed out that the Appellate Tribunal set aside the paragraphs of the SEBI's order which required the State Government to make a reference to register civil/criminal cases against the Fund and initiate attachment and recovery proceedings under the SEBI Act and Rules and Regulations. However, insofar as paragraph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whatever name called, are pooled and utilized for the purposes of the scheme or arrangement; (ii) the contributions or payments are made to such scheme or arrangement by the investors with a view to receive profits, income, 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. (2A) Any scheme or arrangement made or offered by any person satisfying the conditions as may be specified in accordance with the regulations made under this Act. (3) Notwithstanding anything contained in sub-section (2) or sub-section (2A), any scheme or arrangement- (i) made or offered by a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912) or a society being a society registered or deemed to be registered under any law relating to co-operative societies for the time being in force in any State; (ii) under which deposits are accepted by non-banking financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Once the statutory scheme becomes clear, it is clear that the collective investment scheme that was being carried on by the appellants in the form of a private Trust would be in the teeth of the Statute read with the CIS Regulations and would thus be illegal. This being the case, it is difficult to upset any part of SEBI's order that remains after the penultimate part of the order was set aside by the Appellate Tribunal. However, we find that this litigation has been going on for an extremely long period of time and instead of remanding the matter to SEBI to decide the refund issue afresh, we order as follows: The principal amount repayable to each investor of both the Schemes shall be paid back within a period of six months from today in the following manner: We are informed that so far as the first Fund is concerned, 81.32 per cent of the total principal sum of ₹ 10.95 crores has been repaid. Insofar as Fund No. 2 is concerned, we have been informed that 50 per cent of the principal amount of ₹ 21.92 crores has been repaid. The balance owing to the 50 investors of Fund No. 1 and to the 132 investors of Fund No. 2 be therefore, repaid within six ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
