TaxTMI 
TaxTMI 
2019 (8) TMI 1143
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....d to as, 'SEBI') issued a show cause notice dated November 21, 2012, contending that the appellant was found to be running a collective investment scheme as defined under Section 11(AA) of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as, 'SEBI Act') without obtaining the certificate of registration and, accordingly, required the appellant to show cause as to why direction should not be issued under Section 11 and 11B of the SEBI Act read with Regulation 65 of the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999 (hereinafter referred to as, 'CIS Regulations'). The Whole Time Member (hereinafter referred to as, 'WTM') after considering the reply and the evidence that was brought on record and after giving them an opportunity of hearing passed an order dated June 21, 2013 holding that the operations of the appellant were in the nature of collective investment scheme as defined under Section 11A of the SEBI Act and directed the appellant to refund the money collected from its investors within three months from the date of the order. 2. The appellant being aggrieved by the said order filed an appeal. The Tribuna....
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....he Tribunal dated June 15, 2015 the requisite information was submitted within the stipulated period. Thereafter, the appellant again made a fresh representation dated August 7, 2015 seeking permission to circulate an information memorandum under Regulation 73 of the CIS Regulations. 7. Pursuant to the requisite information submitted, SEBI appointed an independent auditor dated August 6, 2015 in order to verify the payments made by the appellant to the investors. Since the appellant was not cooperating with the auditor, SEBI issued a show cause notice dated November 20, 2015 to show cause as to why the order of SEBI dated May 27, 2015 should not be revived. The appellant submitted its reply contending that they are making the payments to the investors and that they have already moved an application seeking further time. The hearing was concluded on April 2, 2016. It transpires that an interim audit report dated May 28, 2016 was submitted to SEBI indicating the methodology for scrutinising the payments made to the investors by the company. The report indicated that the auditor had to discontinue the audit as requisite data was not being supplied by the appellant and even as on th....
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....Mr. Narayan Madhav Kumar shall wind up the existing collective investment schemes and refund the money collected by the said company under the schemes with returns which are due to its investors as per the terms of offer within a period of three months from the date of this Order and submit a winding up and repayment report to SEBI in accordance with the SEBI (Collective Investment Schemes) Regulations, 1999, failing which the following actions shall follow : (i) SEBI would initiate prosecution proceedings under section 24 and adjudication proceedings under Chapter VI of the Securities and Exchange Board of India Act, 1992 against Alchemist Infra Realty and its directors; (ii) SEBI would make a reference to the State Government/Local Police to register a civil/criminal case against Alchemist Infra Realty Limited and its 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 (iii) SEBI would make a reference to the Ministry of Corporate Affairs, to initiate the process of winding up of the company, Alchemist Infra Realty Limited. ....
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....the Board; or (c) having obtained provisional registration fails to comply with the provisions of regulation 71; shall wind up the existing scheme. (2) The existing Collective Investment Scheme to be wound up under sub-regulation (1) shall send an information memorandum to the investors who have subscribed to the schemes, within two months from the date of receipt of intimation from the Board, detailing the state of affairs of the scheme, the amount repayable to each investor and the manner in which such amount is determined. (3) The information memorandum referred to in subregulation (2) shall be dated and signed by all the directors of the scheme. (4) The Board may specify such other disclosures to be made in the information memorandum, as it deems fit. (5) The information memorandum shall be sent to the investors within one week from the date of the information memorandum. (6) The information memorandum shall explicitly state that investors desirous of continuing with the scheme shall have to give a positive consent within one month from the date of the information memorandum to continue with the scheme. (7) The inve....
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....ing the contributors / investors to give their consent under Regulation 73(7) does not arise. Such exercise would be defeating the order of refund of the monies collected illegally under the CIS Scheme. 18. We are further of the view that merely quoting a wrong provision of the Statute while exercising power under an Act would not invalidate the order passed by the authority if it is shown that such order could be passed under other provisions of the Statute. This principle has been approved by the Hon'ble Supreme Court in the catena of cases and recently in Kedar Shashikant Deshpande and Ors. vs. Bhor Municipal Council and Ors. [(2011) 2 SCC 654]. In our view, Regulation 73 has wrongly been quoted in the order of SEBI. No directions have been issued under Regulation 73 and the directions issued are under Sections 11 and 11B of the SEBI Act read with Regulation 65 of the CIS Regulations. 19. In this regard, we also find that the arguments on Regulation 73 and its applicability was raised by the appellant before the Tribunal which was unnecessary and was not required since no direction under Regulation 73 was issued. However, since arguments were raised, the Tribunal dealt wit....
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....dated May 27, 2015 would revive. 23. It was contended by the appellant that necessary details were provided to the WTM who instead of verifying itself, appointed an independent auditor on August 6, 2015 for verification. It was alleged that before it could be verified, the impugned order was passed in violation of principles of natural justice. 24. In our view, upon consideration of the material that has been brought on record, we find that even though the independent auditor was appointed on August 6, 2015, for almost three months, the appellant did not schedule a meeting with the auditor. As a result, the auditor had to intimate SEBI that they were unable to continue with the audit on account of non-cooperation by the appellant. Based on this non-cooperation, a show cause notice dated November 20, 2015 was issued to show cause as to why the order dated May 27, 2015 should not be revived. In this show cause notice, it was categorically indicated that the auditor had made request on September 2, 2015, October 6, 2015, October 20, 2015 and November 2, 2015 for holding a meeting which the appellant failed to adhere. The record also indicates that the audit recommenced on March ....