TaxTMI 
TaxTMI 
2021 (5) TMI 86
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....tion 15A of the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 which was inserted by Regulation 3(XII) of the Securities and Exchange Board of India (Investment Advisers) (Amendment) Regulations, 2020, as also the consequential paragraph 2(iii) of the SEBI Circular dated 23 September 2020. 4. The impugned Regulation 15A which is inserted by the SEBI (Investment Advisers) (Amendment) Regulations 2020 (hereinafter referred to as the "impugned IA 2020 Amendment Regulations) reads as follows: "15A. Investment Adviser shall be entitled to charge fees for providing investment advice from a client in the manner as specified by the Board." 5. The impugned paragraph 2(iii) of the Circular dated 23 September 2020 ('the impugned Circular' for the sake of convenience) reads as follows: "Fees Regulation 15A of the amended IA Regulations provide that Investment Advisers shall be entitled to charge fees from a client in the manner as specified by SEBI, accordingly Investment Advisers shall charge fees from the clients in either of the two modes: (A) Assets under Advice (AUA) mode a. The maximum fees that may be cha....
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....t is contended that the impugned Circular has been issued under the signature of the General Manager of the Investment Management Department and there is no authority or power under law for the said General Manager to issue the impugned Circular. Learned Senior Counsel for the Petitioner in support of his submissions has relied upon the following judgments- (i) Petroleum and Natural Gas Regulatory Board v/s. Indraprastha Gas Limited and ors., (2015) 9 SCC 209; (ii) State of Bihar and ors. v/s. Project Uchcha Vidya Sikshak Sangh and ors., (2006) 2 SCC 545; (iii) Narinder S.Chadha and ors. v/s.Municipal Corporation of Gr.Mumbai and ors., (2014) 15 SCC 689; (iv) Cellular Operators Association of India and ors. v/s. Telecom Regulatory Authority of India and ors., (2016) 7 SCC 703; 7. Learned Senior Counsel for the Respondent-SEBI, on the other hand, submitted that there are sufficient powers under the SEBI Act to issue the impugned IA 2020 Amendment Regulations and impugned Circular. He submitted that the restrictions imposed are reasonable and in the interest of public and there is no violation of the Petitioner's fundamental rights under Article....
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....estors; ii) The cap on the fixed fees may be enhanced; iii) Since an IA is expected to provide an advice based on the risk profiling of the client, which is not akin to Portfolio Management Services, performance based fees model for advisory services is not desirable. The SEBI after considering all points of view, approved the following proposals to amend the IA principal 2013 Regulations: i) Cap on fixed fee enchanced from INR 75,000 to 1,25,000 per annum per "Family of Client" across all schemes/products/services offered by IA; ii) The maximum fees that can be charged under AUA Mechanism shall be 2.5% of AUA per annum per "Family of Client" across all schemes/products/services offered by IA; iii) "Family of Client" constitutes individual, dependent spouse, dependent children and dependent parents; iv) If agreed by client, IA can charge fees in advance. However, such advance cannot exceed fees for 2 quarters. v) In the event of pre-mature termination of the investment advisory services, the client shall be provided a refund of fees for unexpired period subject to a maximum breakage fee of not greater than one quarter fee can be....
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....ich are consistent with the SEBI Act and to carry out the purposes of SEBI Act. Section 30(2)(d), inter alia, provides for the conditions subject to which certificate of registration is to be issued to the intermediaries including Investment Advisers. Section 30(2)(db) empowers SEBI to make regulations in respect of 'any other matter'. The term 'any other matter', in our view, is of wide amplitude. Under section 11(1) a duty is cast upon SEBI to protect the interest of the investors and to regulate the securities market by such measures as it thinks fit. Under section 11(b) SEBI may take measure to provide for registering and regulating the working of Investment Advisers and such other intermediaries who may be associated with securities market in any manner. The impugned IA 2020 Amendment Regulations are thus issued by SEBI in exercise of powers conferred by section 30 and section 11(2)(b) of the SEBI Act which empowers SEBI to make Regulation in respect of working of Investment Advisers. The impugned IA 2020 Amendment Regulation is intravires the SEBI Act. 12. It is important to note that the SEBI is a statutory authority and an expert body which has been established under the....
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.... for protection of interest of the investors. The impugned IA 2020 Amendment Regulation is a beneficial piece of legislation. The restrictions imposed in our view cannot be said to be unreasonable. The Respondent-SEBI is an expert body which plays the role of a watchdog. The impugned IA 2020 Amendment Regulations and impugned Circular are issued to curb the practices by the IAs which are detrimental to the interest of investors and the securities market as a whole. After the consultation process, SEBI has applied its mind and the proposal of cap of Rs. 75,000/- was increased to Rs. 1,25,000/- for the Fixed fee mode. The IA has been given the option to charge fee either by Assets Under Advice (AUA) mode or the Fixed fee mode. Price is neither the function nor the forte of the Court. The impugned IA 2020 Amendment Regulation and the impugned Circular cannot be said to be violative of Articles 19(1)(g) and 21 of the Constitution. Neither can it be said that the impugned IA 2020 Amendment Regulation and impugned Circular are manifestly arbitrary and violative of Article 14 of the Constitution. Under section 31 of the SEBI Act, the Regulations are laid before the Parliament. In the Addi....
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....SEBI to take such measures as it thinks fit to perform its duty to protect the interest of investors in securities and to promote the development of, and to regulate the securities market and the wide sweep of the powers of SEBI leaves no manner of doubt that it is the supreme authority for the control and Regulations and orderly development of the securities market in India. In Sahara India Real Estate Corporation Ltd. v/s. SEBI, (2013) 1 SCC 1, the Supreme Court has held - "section 11 of SEBI Act casts obligation on SEBI to protect the interest of investors in securities, to promote the development of the securities market, and to regulate the securities market, "by such measures as it thinks fit". It is, therefore, apparent that the measures to be adopted by SEBI in carrying out its obligation are couched in open ended terms having no prearranged limits. In other words, the extent of the nature and the manner of measures which can be adopted by SEBI for giving effect to the functions assigned to SEBI have been left to the discretion and wisdom of SEBI. The said power to adopt "such measures as it thinks fit" to promote investors' interest, to promote the development of the secur....