TaxTMI 
TaxTMI 
TaxTMI 
2020 (10) TMI 332
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....ce Company registered with the National Housing Bank which registration was cancelled vide an order dated June 13, 2017 issued by NHB. Pursuant to a reference from NHB stating that the Corporate Debtor had raised capital from Public through issuance of sureties without issuing any prospectus or offer document, SEBI being the regulator for the securities market, initiate an examination into the alleged money mobilisation. Hence the SEBI has issued two interim orders dated 31.7.2015 in respect of deemed public issue of equity shares made by the corporate debtor and another dated 20.11.2015 issued in respect of deemed public issue of non-convertible debentures and preference shares. The aforesaid examination finally culminated in the passing of the final order dated 10.8.2017 where the SEBI found that the Corporate Debtor had not complied with the public issue norms ie., provisions of the Companies Act and SEBI regulations that govern the issue of securities to the public with respect to its issuances of equity shares, non-convertible debentures and preference shares. Hence by final order SEBI directed the CD and its directors jointly and severally to refund the monies collected from ....
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....that the SEBI would maintain status quo in the recovery proceedings and that they will be challenging the same under the relevant provisions of the Code 2016. Hence they filed the aforementioned I.As before this Tribunal. 3. The grounds for challenge are: (a) Under the regulatory framework, SEBI performs executive functions, quasi-judicial functions and legislative functions. (b) The recovery proceedings initiated under Section 28A of the SEBI Act was pursuant to non-compliance by the CD and its directors to make refunds to the investors who have subscribed to the securities issued by the said debtor in deemed public issues without complying with the required legal formal ties and compliances. Hence, the objective of SEBI is different than what is sought to be achieved by the Tribunals order. (c) The claims made by the operational creditors in the matter amount to few lakhs. However, the recovery proceedings by SEBI is for recovery of Rs. 261 crores for all investors who had subscribed to the securities illegally/irregularly issued by the CD. (d) The Tribunal has no jurisdiction to issue any order or direction in conflict to SEBI which is another statutory authority under ....
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....nt is not maintainable either in law or on facts. The non-convertible debentures issued by the Corporate Debtor falls within the definition of "financial debt" under Section 5(8)(a)(c) of the IBC which says: "Financial debt" means a debt along with interest if any, which is disbursed against the consideration for the time value of money and includes: (a) money borrowed against the payment of interest; (c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan, stock or any similar instruction. It is further stated that the submission of the learned counsel for the applicants that Section 28A of the SEBI Act 1992 will have overriding effect on the provisions of Section 114 of the I&B code cannot be accepted as Section 28A of SEBI Act relates to recovery of amounts; if a person fails to pay the penalty imposed by the adjudicating officer or fails to comply with any direction of the Board for refund of moneys or fails to comply with a direction for disgorgement order issued under Section 11B or fails to pay any fees due to the Board, the Recovery officer may draw up under his signature and statement in the specified form specifying the ....
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.... 7 is maintainable while step has been taken by the 'Securities and Exchange Board of India' the 'Resolution Professional' is required to act in terms of Section 17(2) (e) of the 'I&B Code' for complying with the requirements under the 'Securities and Exchange Board of India Act' and Regulations framed thereunder as well as the guidelines issued by the Regulatory Authority. It is also made clear that the 'Securities and Exchange Board of India' is however entitled to take action against individual including the former Directors and Shareholders of the 'Corporate Debtor'. Hence till the period of Moratorium continues the Securities and Exchange Board of India cannot recover any amount nor can sell the assets of the Corporate debtor during the Moratorium Period. 8. The applicant in the IA filed a counter to the written statement of the RP reiterating most of his contentions in the IA. He has further stated that the applicants in the TIBA have suppressed material facts and without impleading SEBI obtained an order appointing the IRP in the above matter. 9. The financial creditors have filed a written argument stating that Parliament w....
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....sional and the financial creditors and have perused the case records as well a case laws submitted by the learned counsels of both parties in support of their arguments. From the above averments we have framed the following issue: (A) Whether Section 14 and 238 of IBC 2016 have an overriding effect on the provision of Section 28 of SEBI Act? We accordingly gone though Section 28A of the SEBI Act 1992 which relates to recovery, reads as under: "(i) if a person fails to pay the penalty imposed by the adjudicating officer or fails to comply with any direction of the Board for refund of moneys or fails to comply with a direction for disgorgement order issued under Section 11B or fails to pay any fees due to the Board, the Recovery officer may draw up under his signature and statement in the specified form specifying the amount due from the person (such statement being hereafter in this Chapter referred to as certificate) and shall proceed to recover from such person the amount specified in the certificate by one or more of the following modes: (a)Attachment and sale of the persons moveable property (b) attachment of the persons bank accounts. (c) attachment and sales of the....
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....editors as well as the Resolution Professional. In this context it is pertinent to go through the judgment of the Hon'ble Supreme Court in Innoventive Industries. Vs. ICICI Bank and others reported in (2019) 1 SCC 407, where the Hon'ble Supreme Court observed as follows: "The non-obstante clause, in the widest terms possible, is contained in Section 238 of the Code, so that any right of the corporate debtor under any other law cannot come in the way of the code." The above judgment of Hon'ble Supreme Court shows the primacy of IBC over other Acts. By a plain reading of the judgment, we are of the view that SEBI Act is not an exception of this ruling of the Hon'ble Supreme Court. We have also gone though the judgment given by the Hon'ble NCLAT in Bohar Singh Dhillon Vs. Mr.Roghit Sehgal (IRP) and others in CA(AT(Insolvency) No. 65 of 2018 dated 9th May, 2019 in which it was observed as under: "Till the period of 'Moratorium' continues, the 'Securities and Exchange Board of India' cannot recover any amount nor can sell the assets of the 'Corporate Debtor' during the 'Moratorium' period. Though NCLAT have held that the applicati....