9911796707
TMI Blog2008 (10) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... number of investors was involved and lest there was any miscarriage of justice, we acceded to the request and adjourned the case to 5-4-2007. After getting the case adjourned, the appellant filed a writ petition in the High Court of Karnataka challenging the definition of networth as contained in the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999 ('the Regulations'). Further proceedings before the Tribunal were stayed. The case was then being adjourned from time to time in view of the stay order granted by the Hon'ble High Court. The writ petition has since been dismissed by a learned Single Judge on 8-7-2008, The Securities and Exchange Board of India ('the Board') then filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficate of provisional registration of the schemes on 9-7-2001 subject to the following conditions: (a) Company shall get existing schemes rated by a Credit rating agency within one year from the date of grant of Provisional Registration; (b) The company shall not launch any new scheme or raise money from the investors under the existing scheme; (c) Company shall get the existing schemes audited by an auditor within one year from the grant of Provisional Registration; (d) Company shall get the existing schemes appraised by appraising agency within one year; (e) Company shall create trust and appoint trustees as specified in Chapter IV of Regulations within one year; (f) Company shall comply with accounting and v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egulation 73 of the Regulations and send a draft thereof to the Board and it was open to the latter to make suggestions if it so wanted within two weeks from the date of receipt of the information memorandum. The suggestions, if any that were to be made by the Board were required to be incorporated in the information memorandum before the same was sent to the investors. The appellant company was also directed to obtain positive consent of the investors in terms of said Regulations and after the receipt of the views of the investors, the appellant was required to prepare a summary in a tabulated form for further perusal of this Tribunal if it became necessary. The appellant company was directed not to mobilize any further funds from the inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Managing Director, Directors and Advisory Committee members and have not been transferred to the Trust. We wonder how, under the circumstances, the schemes can be allowed to operate. The scheme of the Regulations is that different collective investment schemes shall be operated by the collective investment management company but the assets shall be held by the trustees for the benefit of the unit holders. Only such persons who are registered with the Board as debenture trustees under the Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993 are eligible to be appointed as trustees of collective investment schemes. This apart, the company has not been able to meet with the requirement of minimum networth under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or raise money from the investors even under the existing scheme(s) unless a certificate of registration is granted to it by the Board under regulation 10. Admittedly, a certificate of registration has not been issued to the appellant under regulation 10. Despite this, the appellant company has been collecting funds from the investors and has collected a sum of ₹ 53.52 crores during the period from 1-4-2000 to 31-3-2004 which is contrary to law and the conditions enumerated in the order granting provisional registration. 5. There is yet another reason why we are not inclined to allow the appellant company to continue to operate its collective investment schemes. In pursuance to the interim order passed by us, the appellant compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned Counsel for the respondent Board has also brought to our notice some of the suggestions which the Board had made on receipt of the draft information memorandum from the appellant which it failed to incorporate therein before sending the same to the investors. This again is a serious matter and the appellant company cannot be allowed to operate the schemes. 6. In view of what we have observed hereinabove, it is not necessary to deal with the other contentions raised on behalf of the respondent Board. 7. For the reasons recorded above, the appeal fails and the same is dismissed. The appellant will now wind up the schemes in accordance with the provisions of the Regulations and repay the investors in accordance with the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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