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TMI Blog2021 (5) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Delegation of Power Order, the powers and functions delegated to any member or officer of the Board or authority under this Order may be exercised by any officer or authority, higher in grade or rank or position to the Deputy General Manager. The impugned Circular has been signed by Mr.Naveen Sharma, the General Manager in the Investment Management Department, who is stated in rank higher than the Deputy General Manager. In the circumstances, Mr.Naveen Sharma would be well within his authority to sign the impugned Circular issued under the SEBI Act. As stated earlier, SEBI is an expert regulatory body established under the SEBI Act and the Court, therefore, would have to exercise judicial restraint and the scope of interference would be extremely narrow. The Court cannot substitute own views in place of views of the expert body. Moreover, it is well settled that the Court should be very slow in staying a law by way of interim relief when the constitutional validity of the law is challenged. As noticed that the power to specify a ceiling on the fees exists in the IA principal 2013 Regulations much before the insertion of the impugned Regulation 15A. Regulation 15(9) un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) Assets under Advice (AUA) mode a. The maximum fees that may be charged under this mode shall not exceed 2.5 percent of AUA per annum per client across all services offered by IA. b. IA shall be required to demonstrate AUA with supporting documents like demat statements, unit statements etc. of the client. c. Any portion of AUA held by the client under any pre-existing distribution arrangement with any entity shall be deducted from AUA for the purpose of charging fee by the IA. (B) Fixed fee mode The maximum fees that may be charged under this mode shall not exceed INR 1,25,000 per annum per client across all services offered by IA. General conditions under both modes a. In case family of client is reckoned as a single client, the fee as referred above shall be charged per family of client . b. IA shall charge fees from a client under any one mode i.e. (A) or (B) on an annual basis. The change of mode shall be effected only after 12 months of on boarding/last change of mode. c. If agreed by the client, IA may charge fees in advance. However, such advance shall not exceed fees for 2 quarters. d. In the event of pre-mature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner s fundamental rights under Articles 14, 19(1)(g) or 21 of the Constitution. He has relied upon the following judgments- (i) Sahara India Real Estate Corporation Ltd. and ors. v/s. Securities and Exchange Board of India and anr., (2013) 1 SCC 1; (ii) Arun Kumar Agrawal v/s. Union of India and ors., (2014) 2 SCC 609; (iii) Price Waterhouse and Co. and ors. v/s. Securities and Exchange Board of India and ors., 2011 (2) BomCR 173; (iv) Ramrakh R.Bohra and ors. v/s. Securities and Exchange Board of India and ors., (2001) 5 CompLJ 429(Bom.); 8. Having heard the learned Senior Counsel for the Petitioner and the learned Senior Counsel for the Respondents, we are not inclined to grant any interim relief. 9. The Security Exchange Board of India (Investment Advisers) Regulations, 2013 (hereinafter referred to as the IA principal 2013 Regulations) are framed in exercise of powers conferred by section 30(1) read with section 11(2)(b) of the SEBI Act. In the Affidavit-in-Reply it is stated that the IA principal 2013 Regulations are made to register and regulate the working of Investment Advisers in the interest of securities market and to protect the intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be retained by the investment adviser. Pursuant to the approval of the SEBI, the impugned IA 2020 Amendment Regulations came to be notified on 03-07-2020 in the Official Gazette and the same came into force on 30-09-2020. It is submitted that the IA 2020 Amendment Regulations were issued after following the due process of public consultation and the approval of SEBI . 10. On perusal of section 11 and section 30 of the SEBI Act, we are of the prima facie view that there are sufficient powers conferred on SEBI under the SEBI Act in issuing the impugned IA 2020 Amendment Regulations and the consequential impugned Circular. The relevant extracts of section 11 and section 30 SEBI Act are reproduced heeinbelow: 11. Functions of Board. 11(1) Subject to the provisions of this Act, it shall be the duty of the Board to protect the interests of investors in securities and to promote the development of, and to regulate the securities market, by such measures as it thinks fit. (2) Without prejudice to the generality of the foregoing provisions, the measures referred to therein may provide for- (b) registering and regulating the working of stock brokers, sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of the SEBI Act can be discerned reads as follows:- An Act to provide for the establishment of a Board to protect the interests of investors in securities and to promote the development of, and to regulate, the securities market and for matters connected therewith or incidental thereto. 13. Learned Senior Counsel for the Respondent-SEBI has pointed out Form A of the IA principal 2013 Regulation which is the format of the Application for grant of certificate of Registration/Renewal as Investment Adviser. Clause 7 of the Application is the Declaration Statement to be signed by the IA declaring that the IA agrees that as a condition of registration the IA shall abide by such operational instructions/directions as may be issued by SEBI from time to time. It is pointed out by learned Senior Counsel for the Respondent-SEBI that SEBI has also prescribed limit on fees to be charged by the intermediaries under other Regulations. 14 It is now well settled that the scope of judicial review of delegated legislation is limited. There is always a presumption of validity of legislation/deligated legislation. In terms of Article 19(6) of the Constitution, reasonable restrictions in pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gazetted Notification of the impugned IA 2020 Amendment Regulations was laid before the both Houses of Parliament during the Monsoon Session of the year 2020. 16. Under section 19 of the SEBI Act, the SEBI is empowered to delegate its powers and functions by general or special order in writing to any member, officer of the SEBI or any other person subject to such conditions as specified by SEBI. Accordingly, the SEBI had issued SEBI (Delegation of Statutory and Financial Powers) Order, 2019 dated 31-07-2019 delegating various powers and functions to the members and officers of the SEBI, as approved by the Board. The said Delegation of Power Order is annexed at Exh.C to the Additional Affidavit-in-Reply. As per Clause 3(b) of Chapter-I of Part A of the Delegation of Power Order, a Deputy General Manager of the SEBI is authorised to issue and sign Guidelines/Schemes/Circulars under section 11(1) of the SEBI Act. In para 4 of the impugned Circular, it is clearly stated that the same is issued in exercise of the powers conferred under section 11(1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities and to promote the develop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es market, has not been curtailed or whittled down in any manner by any other provisions of the SEBI Act, as no provision has been given overriding effect over sub-section (1) of section 11 of the SEBI Act. 18. Petroleum and Natural Gas Regulatory Board v/. Indraprastha Gas Limited, (2015) 9 SCC 209, relied upon by learned Senior Counsel for the Petitioner, was a case in relation to Petroleum and Natural Gas Regulatory Board Act and would not assist the case of the Petitioner. In the said case the Supreme Court after perusing the provisions concluded that the provisions of the said Act do not confer any power on the Board therein. State of Bihar v/s. Project Uchcha Vidya, Sikshak Sangh, (2006) 2 SCC 545, was a case in which the executive powers of the State under Article 162 was in issue and in these circumstances, the Supreme Court held that citizen cannot be deprived of the right under Article 19(1)(g) of the Constitution except in accordance with laws, and such law must be one enacted by the legislature and not by an executive order under Article 162. In the present case, the Regulations are a piece of delegated delegation and have been laid before the Parliament. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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