TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 1233
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.... of SEBI Act, 1992 ("SEBI Act") read with regulation 3(1) of SEBI (Investment Advisers) Regulations, 2013 ("IA Regulations") and regulation 4(2)(k) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market), 2003 ("PFUTP Regulations"). 2. Accordingly, the Final Order inter alia issued directions against the Noticee and other entities to refund the money received from investors as fees in respect of unregistered investment advisory activities. Further, inter alia the Noticee was debarred from accessing the securities market for a period of 2 years from the date of completion of refund to investors. 3. For the failure to comply with the directions of the SEBI Final Order directing refund, recovery proceedings were initiated against 6 entities including the Noticee. The Noticee challenged the Final Order before the Hon'ble Securities Appellate Tribunal (hereinafter referred to as "SAT") inter alia, on the ground that neither the Interim Order nor the Final Order was served on her and that she came to know of the Final Order only when her husband carried out an internet search. The Hon'ble SAT vide its order dated January 15, 2025 set aside the Final....
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....f profit or loan from Prowise Capital (her bank account statement is submitted). 5.4. The present proceeding has been initiated pursuant to section 25 of the Indian Partnership Act, 1932, which is not applicable as Prowise Capital is an unregistered partnership firm. Hence, the provisions of partnership deed will be binding on the partners. Ms. Swati had diligently followed the provisions of partnership deed to retire (the partnership firm was "partnership at will") and no other partner had raised any objections over her retirement. Without prejudice to the aforesaid, in the event Indian Partnership Act, 1932 is applicable to Prowise Capital, Ms. Swati had duly retired with consent of all the partners. 5.5. During her tenure as partner of Prowise Capital, it had not received any communication from SEBI. Since Ms. Swati resigned in a short span of time, registering Prowise Capital with SEBI was beyond her scope and ability. Ms. Swati was neither part of any decisions taken nor involved in the day-to-day affairs of Prowise Capital. Two partners who were also Noticees (Mr. Vaibhav and Mr. Yogendra) had filed an affidavit dated August 05, 2020 with SEBI wherein they had inter alia ....
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.... I note that the Final Order held that Prowise Capital and its partners acted as an 'investment adviser' without holding the mandatory certificate of registration during the period from January 30, 2016 to February 20, 2020 in violation of section 12(1) of SEBI Act read with regulation 3(1) of the IA Regulations. Further, it was held that the Prowise Capital and its partners without holding certificate of registration, knowingly held themselves as 'investment adviser' in violation of regulation 4(2)(k) of PFUTP Regulations. I note that the said findings have become final against Prowise Capital and its other partners but set aside only qua the Noticee vide SAT Order dated January 15, 2025 on the grounds that the she was neither in receipt of the Interim Order nor the hearing notice nor the impugned order. Further, I note that vide the Final Order, the Noticee was found to be one of the partners of Prowise Capital and was held liable for unregistered investment advisory activities of Prowise Capital along with other partners. Consequently, inter alia, directions for refund of monies received as consideration and restraint from dealing in securities were issued in respect of the Noti....
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....mitted by the firm if he was in charge of and responsible to the firm for the conduct of the business, in the context of criminal proceedings. The AR of the Noticee also submitted during the personal hearing before me that the Noticee could be held liable for transactions in the bank account of Prowise Capital, if any, prior to her resignation. 10. I note that a partnership firm is not a separate legal entity but merely an association of persons who agree to carry on business together. The partnership deed of Prowise Capital, at Clause 4, specifically mentions that the partners will act as "working partners". Further, the judgments relied upon by the Noticee apply to criminal liability and not civil liability. In this regard, I place reliance on the order of the Hon'ble High Court of Andhra Pradesh in the matter of G. PRAMEELA (Smt) v. Smt. AVULA HYMAVATHI, 1997(2) ALD(CRI) 1) wherein the court held the following: "...It is true that under the Indian Partnership Act, 'firm' or 'partnership' is not a legal entity, but merely an association of persons agreed to carry on business. It is only a collective name for individuals carrying on business in partnership. The ....
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....ries India Ltd. - see SEBI order dated March 27, 2018), that the refund obligation is limited to the extent of the amount collected during the tenure of directorship (in case of companies). I am guided by the principle expressed in such orders and find that the Swati Purwar's (i.e. Noticee's) refund obligation must be limited to the period that she was a partner in Prowise Capital. Between January 15, 2016 and March 15, 2016, the total credits received by Prowise Capital, as per the Final Order, was INR 2,23,404.10. Therefore, Noticee's refund liability, along with the other noticees to the Final Order, is to the extent of the aforesaid amount. CONCLUSION & DIRECTIONS 13. In view of the findings above, I deem it necessary to issue directions to the Noticee to refund the monies received during her partnership period, amounting to INR 2,23,404.10 (Two lakh Twenty-three Thousand Four hundred and four Rupees and Ten paise only), jointly and severally, with Prowise Capital and its other partners. I note that Prowise Capital and its partners failed to refund the money received, as directed in the Final Order. Consequently, recovery proceedings have been initiated against them and are s....