9911796707
TMI Blog2020 (7) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Yatra Art Fund II (Fund II) were created under the Indian Trusts Act, 1882, through execution of Indentures of Trust dated 15-6-2005 and 1-12-2006. A perusal of the trust deed shows that both these trust Funds were created for an initial period of 4-4½ years, the first Fund ending, after extension of one year, on 15-9-2011. Insofar as the second Trust Fund is concerned, this Trust Fund was also extended and ended on 31-1-2012. It may also be mentioned that these Trusts Funds were established so that investors could invest in works of art. In the Confidential Information Memorandum, it was made clear to the investors that these were investments which were fraught with grave risks and that the investors invest in these Trusts Funds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to SEBI was made stating that the aforesaid schemes floated by the appellants were not collective investment schemes, reiterating that they were not made in the corporate form. It appears that, at this point of time, SEBI itself was unsure as to whether such funds would amount to collective investment schemes. However, in 2013, the matter was resuscitat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in securities market for a period of four (4) years. d. Yatra Art Fund is also directed to immediately submit the complete and detailed inventory of the assets owned by Yatra Art Fund. e. In the event of failure by Yatra Art Fund to comply with the above directions, the following actions shall follow: - Yatra Art Fund shall remain restrained from accessing the securities market and would further be prohibited from buying, selling or otherwise dealing in securities, even after the period of four (4) years of restraint imposed 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent-SEBI, for some time, it would not be possible to state that the Schemes in the present case would not be Collective Investment Schemes. It is difficult, therefore, to interfere with the concurrent findings made in this behalf by both SEBI and the Appellate Tribunal. Further, the arguments made by Shri Vishwanathan, learned senior counsel, based upon the language of Section 11AA of the SEBI Act does not commend itself to us. It may be mentioned that Section 11 (2)(c) of the SEBI Act states as follows: "11 (2) Without prejudice to the generality of the foregoing provisions, the measures referred to therein may provide for... ** ** ** (c) registering and regulating the working of venture capital funds and collective inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rangement, 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) und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive Investment Management Company" means a company incorporated under the Companies Act, 1956 and registered with the Board under these regulations, whose object is to organise, operate and manage a collective investment scheme;" Regulation 3 of the CIS Regulations states: "3. No person other than a Collective Investment Management Company which has obtained a certificate under these regulations shall carry on or sponsor or launch a collective investment scheme." The statutory scheme, therefore, is that, if a collective investment scheme, as defined, is to be floated by a person, it could only be done in the form of a collective investment management company and in no other form. This is the reason why Section 11AA uses the expression ..... X X X X Extracts X X X X X X X X Extracts X X X X
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