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TMI Blog2021 (2) TMI 913X X X X Extracts X X X X X X X X Extracts X X X X ..... a show-cause notice dated 13.03.2020, issued by the Deputy General Manager of Securities and Exchange Board of India. 2. The parties to the writ petitions are referred to in this judgment in the order they appear in the cause title and the exhibits as they are marked, in W.P.(C) No.13682 of 2020. The 2nd respondent is Securities and Exchange Board of India (hereinafter referred to as 'the SEBI'). The 4th respondent is BRD Securities Limited (hereinafter referred to as 'the Company'). The Reserve Bank of India (RBI), in exercise of its powers under Section 45-IA of the Reserve Bank of India Act, 1934, issued Ext.P1 Certificate of Registration to the 4th respondent-Company to commence/carry on the business of Non Banking Financial Instituti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (6) Under Section 73 of the Companies Act, 1956, every Company making public offer shall, before making such an offer, make an application to one or more recognised stock exchange or exchanges and obtain permission for the securities to be dealt with in such stock exchange foreign exchanges. No such application was made by the Company. (7) The Company and its Directors failed to return money to investors as required under Section 73(3) of the Companies Act, 1956. (8) The Company has not registered the Prospectus with the Registrar of Companies, nor sent abridged prospectus along with application form and thereby violated Section 56(1), Section 56(3) and Section 60 of the Companies Act, 1956. (9) The Company failed to appoint a registe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chal Industries v. State of Karnataka [(2019) 7 SCC 203], (3) Rattan Singh and others v. MD, Moga Transport Company and another [AIR 1959 P & H 196], (4) Toubro Infotech and Industries Limited and another v. SEBI [2004 SAT 46 (Mumbai)], (5) Sahara India Real Estate Corporation Limited and others v. SEBI [(2013) 1 SCC 1], (6) UOI and others v. Madhumilan Syntex Pvt. Ltd. and others [AIR 1988 SC 1236], (7) State of Punjab and others v. Bhatinda District Cooperative Milk Producers Union [(2007) 11 SCC 363], (8) Adjudicating Officer, SEBI v. Bhavesh Pabari [(2019) 5 SCC 90], (9) Astra Zeneca Pharma India Ltd. v. SEBI [2019 SCC Online SAT 356-Mumbai Bench], (10) Ashok Shivlal Rupani and another v. SEBI [2019 SCC Online SAT 169-Mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioners against the show-cause notice is unsustainable. The petitioners can place all their objections/opinion before the SEBI. The writ petitions therefore should be dismissed, contended the Standing Counsel for SEBI. 6. Though the learned counsel for the petitioners made extensive arguments based on various judgments of the Hon'ble Apex Court, on the incompetence of SEBI to issue a notice in the nature of Ext.P2 for the reason that the Company being an NBFC, the field is governed by the Reserve Bank of India Act and the Companies Act, and the SEBI formed under the Securities and Exchange Board of India Act, 1992, cannot exercise ostensible powers over the Company, I do not deem it necessary to delve on the said issue, since it is for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey function as Debenture Trustee of the Company. 9. In Ext.P2, the charge against the petitioners- Debenture Trustees, is as follows:- "It is alleged that the noticees 13 and 14 acted as debenture trustees in public issue of NCDs without SEBI registration thereby violating Sec.12(1) of SEBI Act, 1992 read with Regulation 7 of SEBI (Debenture Trustees) Regulations, 1993. In this connection Noticees 13 and 14 are called upon to show cause as to why appropriate directions should not be issued against you, including but not limited to, restraining you all from accessing the capital market for a period as deemed appropriate." Therefore, the issue concerning the petitioners in these writ petitions is whether by acting as Debenture Trustees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sal of such application: Provided further that any certificate of registration, obtained immediately before the commencement of the Securities Laws (Amendment) Act, 1995, shall be deemed to have been obtained from the Board in accordance with the regulations providing for such registration." 10. Therefore, no Debenture Trustee can deal in securities except under, and in accordance with, the conditions of registration obtained from the SEBI, in accordance with the SEBI (Debenture Trustees) Regulations, 1993. Regulation 7 of the said Regulations, 1993 mandates that no person shall be entitled to act as a Debenture Trustee unless he is either - (a) a Scheduled Bank carrying on commercial activity; or (b) a public financial institution withi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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