TaxTMI 
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2025 (9) TMI 339
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..... Sumit Pandey, Advs. applicant in C.A. No. 262/2019 (Mob: 9369437916) Mr. Ashish Aggarwal & Ms. Shivangi Shokeen, Advs. (Mob: 9810077771) Mr. Akhil Sibal, Sr. Adv. with Mr. Abhinav Hansaria & Ms. Sugandh Shahi, Advs. for R-1 (Mob: 9810349842) Mr. Vivek Sibal, Senior Advocate with Mr. Bhuvan Gugnani, Mr. Ninad Dogra & Mr. Rupender Sharma, Advs. for CRB Mr. Pinaki Mishra, Sr. Adv with Mr. Bhuvan Gugnani, Mr. Anuj Kapoor & Ms. Devika Mohan, Advs. (Mob:8130324433). JUDGMENT PRATHIBA M. SINGH, J. Background 1. These are various applications filed by the Securities and Exchange Board of India (hereinafter 'SEBI') and certain other applicants in Co.Pet 379/2009. The said company petition i.e., Co.Pet 379/2009 (earlier Trust Petition 3/1997) was filed by SEBI under Section 11B of SEBI Act, 1992 and Indian Trusts Act, 1882 inter alia seeking to appoint any fit and proper person/entity to take charge of all the property and assets of Respondent No. 2, 3 and 4 i.e., CRB Trustees, CRB Asset Management Company, and IIT Corporate Services respectively and the assets of the Mutual Funds and the Arihant Mangal Growth scheme for such period as the Court may deem fit and proper. Pursuan....
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....August 1994. The said scheme was a close-ended scheme which was to operate for a period of 5 years from the date of allotment. The clause relating to redemption under the said scheme referred to Regulation 36 of the 1993 Regulations, which clearly provided that winding up of the scheme would take place under the following circumstances: "(a) at the close of the 5th year (or if extended between 5th and 6th year) from the year in which the allotment is made; or (b) on the happening of any event which in the opinion of the Trustee, requires the scheme to be wound up; or (c) if 75% of the unit holders of the Scheme pass a resolution that the Scheme be wound up; or (d) if SEBI so directs in the interest of the unit holders." 5. The Scheme was opened for subscriptions between 19th August, 1994, to 20th September, 1994, during which a sum of Rs. 229.28 crores was collected from 19,324 individual investors and 72 non-individual investors, which sums to a total of 19,396 investors. In exercise of its powers under the 1993 Regulations, SEBI conducted an inspection of the records of CRB Mutual Funds in December 1994, which revealed multiple regulatory vi....
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....ts of the Mutual Funds and the said schemes along with the books of accounts and other records of the Mutual Funds and the schemes, for such period as this Hon'ble Court may deem fit and proper and for managing the affairs of Respondents 2, 3 and 4" 8. The Bombay High Court, vide order dated 9th October, 1997, appointed Mr. M L T Fernandes as the Provisional Administrator (hereinafter 'P.A.') to take charge of all the assets of Respondent 2 and 3. Pursuant to his appointment, P.A. suggested a Premature Repayment Scheme whereby he proposed to repay small investors holding between 300 to 10,000 units. Simultaneously the P.A. vide the said scheme made it clear that no payments should be made to the group or associate companies of CCML or the relatives of CR Bhansali. A list of 133 companies which were identified to be related to CCML or CRB Bhansali was annexed to the Scheme as Annexure C in this regard. The Bombay High Court vide order dated 25th January, 1999 approved the said repayment scheme in the following terms: "6. The scheme for premature payment takes into account the interest of the small investors and the payment is to be made on the basis of certain princi....
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....ed, while the interest of the other investors also need protection, we are only passing an order in terms of prayer clause (a) of the chamber of summons, which is for the first time being limited to protecting the interest of the investors to the limited extent of 300 units held by them through they may be holding units up to 10,000. The premature repayment scheme does contemplate granting similar relief being granted in future. In our view having regard to the principles adopted while preparing the scheme for premature repayment, no objection can be taken to the limited relief that is being granted to the investors. They do not even get 50% of what they had invested. We make it clear that the premature repayment scheme is to pay all the unit holders up to 300 units which include 10126 unit holders who have responded to the postcard dated 1st Jan 1998 even if they are holding units up to 10,000. However, repayment is confined only up up to 300 units at the NAV of Rs. 4.95 per unit of Rs. 10. 11. In the circumstances, the chamber summons is made absolute in terms of prayer clause (a) . However, we make it clear that while granting the relief in terms of prayer clause. (a) w....
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.... TP (Civil) 756/2004, seeking to transfer both the cases to Delhi. Pursuant to the said petition, the Supreme Court vide order dated 13th August, 2007, was pleased to transfer the Trust Petition 3/1997 from the Bombay High Court to the Delhi High Court, and the same was numbered as Co. Pet.379/2009, which is the instant petition. 11. After the transfer petition, an application, being Co. Appl. 1143/2009, was filed by the P.A. wherein a second scheme of repayment (hereinafter 'Second Scheme') was proposed, seeking to redeem unit holders having holdings up to 1 lakh units. The stand of the Applicant/P.A., in the said application, is set out below: i. That all the unit holders below 1 lakh units be paid at Rs.8.20 per unit of Rs. 10. ii. There were a total of 13,054 unit holders, each below 1 lakh units, and they are individual unit holders, some of whom are senior citizens or suffer from physical infirmities. A sum of approximately Rs. 4.5 crores was available at that time, and considering that no dividend had been paid from 1994, even though the amount would be a loss for each of the unit holders, the amount deserves to be paid. The prayer in this application wa....
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....ual unit holders who have more than 1 lakh units; thus, it may require disposing of fixed assets of the company. It was also contended by SEBI that if the existing amounts are used for payment of unit holders who have up to 1 lakh units, then the others would be discriminated against and would lead to unequitable distribution. SEBI submitted that all unit holders were to be paid on a pro-rata basis under the said scheme. SEBI specifically pleaded as under: "11. The Non-Applicant herein is not opposing the modification of the order dated 25.01.1999 to the extent that the mode of payment to the unit holders of the Respondent company would be such which shall be the fair and just and would not cause serious prejudice to the unit holders. It is submitted that all the unit holders be paid on a pro-rata basis out of the present liquid assets of the Respondent Company and thereafter, if and when the fixed assets of the Respondent Company are disposed off, the balance payments be made to all the unit holders in proportion. Alternatively, the fixed assets be disposed off first and then all the unit holders be paid thereafter in equal proportion and in an equitable manner out of the....
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.... has prayed that the available funds with him be applied to redeem below 1,00,000 units held by smaller investors (excluding those covered by the Hon'ble Bombay High Court order dated 25.01.1999) as was done on the previous occasion to avoid further delays in payments to small investors. The securities held by the CRB Mutual Fund would still be available to meet redemption claims of those holding 1,00,000 and above units. The payment at Rs.4.95 per unit of Rs. 10/- permitted by the Hon'ble Bombay High Court on 25.01.1999 was based on funds then available for distribution. Likewise the proposed payment @ Rs.8.20 per unit of Rs. 10/- to those holding less than 1,00,000 units (excluding those covered by the Hon'ble Bombay High Court Order dated 25.01.1999) is based on funds available as on 31.03.2008. I wish to briefly mention the procedure for dematerialization of eligible listed securities. The securities of CRB Mutual Fund are currently held in physical form. Pursuant to the depository guidelines, all shares of listed companies are now compulsorily sold in demat mode in the stock exchange/s. Thus to effect sale, listed securities will first have to be held in d....
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....ted so far to handle the sale of securities of the Mutual Fund. If this Hon'ble Court permits sale of securities, it is proposed that a stock broking firm or firms of public financial institution may be appointed to attend this work at the best available prices with a proviso that no sale be effected to their parent company/group/sister/ subsidiary companies." 15. Insofar as Chain Roop Bhansali and the group companies and the sister concerns are concerned, the stand of the Provisional Administrator was as under: "As permitted by this Hon'ble Court, a list of holders of 1,00,000 units and above classified as (i) relatives of Shri C.R. Bhansali (ii) CRB Group companies/ sister concerns (as per annex to order dated 04.11.1997) and (iii) companies which appear to be CRB Group companies/sister concerns, and (iv) other individuals/ companies is attached as Exhibit A. There are 9 unit holders who can be identified as relatives of Shri C.R. Bhansali, CRB 20 group companies/ sister concerns and 16 companies which appear to be CRB group companies/ sister concerns, and 22 other individuals/ companies as shown in statements attached as Exhibit A. The Hon'ble Bo....
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....the Directors of the Mutual Fund had resigned. It also notes that the entire administration and functioning of the scheme was placed under the direct control of the P.A. and beyond the purview of the Respondents. The Court also clearly records that the scheme deserves to be formally wound up, notwithstanding the fact that a close-ended scheme automatically lapses upon the expiry of its fixed tenure and that the Court could authorise any other person to take steps for winding up of the scheme. The Court, having initially appointed the P.A. for the said purpose, noted upon his demise that the final decision in the matter would henceforth rest with it. Accordingly, the Court constituted a Special Committee to discharge the functions of the trustee and to oversee the procedure for the formal winding up of the Arihant Mangal Growth Scheme. The Special Committee, so constituted, comprised the following members: * Mr. S. K. Tandon, Chairman, Retd. District Judge * Mr. S.C. Das, Member, SEBI, suggested by learned Counsel for the Petitioner. * Mr. M.D. Kanther, suggested by learned Counsel for the Ex-management. 19. The Court also came to the conclusion that th....
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....he scheme; and with a view to doing complete justice in the matter which has been pending in the courts for the last 16 years; and as prayed for by counsel for both parties; it would be in the fitness of thing if matters are now brought to a close with this Court constituting a special committee to carry out the functions of the Trustee and to proceed to wind up the Scheme in terms of the aforesaid Regulations 41 and 42 of the Securities Exchange Board of India (Mutual Funds) Regulations, 1996, with full power to act in this behalf in a manner similar to that of regularly constituted trustees, as contemplated under the said Regulations. This would include the power, inter alia, to dispose off all the securities of Arihant Mangal Scheme, presently lying with respondent No. 4, IIT Corporate Services Ltd., and all other securities, wherever they may be; and to distribute the sale proceeds thereof to all the unitholders at the Net Asset Value (NAV), which is to be ascertained by the committee after following the prescribed procedure in terms of provisions of the aforesaid SEBI (Mutual Funds) Regulations, 1996. 15. Consequently, a Committee is now constituted, consisting of Sh.....
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....total of 34 interim reports are on the record of the Court. The said reports are dated as under: Interim Report Dates 1st Interim Report 7th September, 2013 2nd Interim Report 21st December, 2013 3rd Interim Report 4th April, 2014 4th Interim Report 10th July, 2014 5th Interim Report 13th November, 2014 6th Interim Report 26th February, 2015 7th Interim Report 29th June, 2015 8th Interim Report 1st October, 2015 9th Interim Report 3rd February, 2016 10th Interim Report 28th April, 2016 11th Interim Report 1st August, 2016 12th Interim Report 21st November, 2016 13th Interim Report 28th March, 2017 14th Interim Report 10th July, 2017 15th Interim Report 10th November, 2017 16th Interim Report 15th February, 2018 17th Interim Report 29th May, 2018 18th Interim Report 30th August, 2018 19th Interim Report 28th November, 2018 20th Interim Report 5th March, 2019 21st Interim Report 22nd May, 2019 22nd Interim Report 14th September, 2019 23rd Interim Report 24th December, 2019 24th Interim Report 29th July, 2020 25th Interim Report 23....
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....ties to whom the payments were being made. The internal audit report submitted by 'A Sharma and Co.', the Chartered Accountants, also does not capture any details in relation to payments that have been made i.e., neither the unit holder's name nor the extent of the amount paid to them. The Special Committee, vide various applications, from time to time continued to seek extension of its tenure to continue its functioning. Third Party Intervention by M/s Rommel Investments Ltd. 27. An application was filed by the Special Committee, being Co. Appl. 1132/2017, against non-applicants, namely National Stock Exchange (hereinafter 'NSE) and Rommel Investment Private Ltd (hereinafter 'Rommel'), primarily seeking NSE to release - (i) 1,00,000 shares of Reliance Industries Ltd. along with all corporate benefits, including split of shares/merger of shares/dividend/bonus shares; and (ii) the amount of Rs. 43.75 lakhs lying in a fixed deposit along with interest withheld by it in favour of the Special Committee. 28. In this application, it was brought to the notice of the Court that a Civil Suit 225/2016 filed by Rommel was pending before the Bombay High Court, wherei....
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....led its reply denying all the allegations raised by the Special Committee. Rommel, on the contrary, contended that Rommel had entered into 2 agreements dated 22nd November, 1995 and 24th April, 1996 through which it had agreed to purchase 10,00,000 and 18,75,000 units of Arihant Mangal Growth Scheme from CCML and Exxon Financial Services Ltd respectively. In terms of the agreements, these units were to be redeemed/re-purchased by the respective parties within 180 days at a fixed price. In order to secure the said transactions, 22,000 and 80,000 shares of RIL were pledged in favour of Rommel. Upon default by the said parties in repurchasing the units, in accordance with the terms of the agreements, Rommel proceeded to sell the pledged RIL shares in exercise of its rights under the security arrangements. 32. Upon hearing the parties, this application was disposed of in favour of the Special Committee on 5th December, 2019 in the following terms: "22. Clearly, the best evidence available with Rommel has been hidden from the court. An adverse inference is liable to be drawn against Rommel. The defence of the non-applicant Rommel claiming that the share which are subject mat....
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....eds and repeatedly purchased the shares of Reliance in its own name. Learned senior counsel for the appellant submits that the learned Single Judge failed to appreciate that the Reliance shares sold by the appellant had been pledged to it in view of the investment made by it in 'Arihant Mangal Scheme' floated by CRB Capital Markets Ltd. He further states that the IIT Corporate Services Ltd., who was appointed as the custodian by the provisional Administrator, had admitted that sale consideration of 89400 shares had been received by CRB Mutual Fund. However, before the learned Single Judge the Special Committee appointed by this Court had taken the stand that it had not received any consideration in lieu of the alleged sale of 89400 shares. Learned Single Judge in the impugned order has held that no details of investment made by the appellant in CRB Capital Markets Ltd. had been shown to the Court. Further, no distinctive number of shares and no folio number of the pledged shares had been mentioned by the appellant. Learned Single Judge in the impugned order had further taken judicial notice of the fact that if the scheme of CRB Mutual Fund 'Ariha....
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....il, 2021 Application seeking exemption from filing certified copy of the impugned order is allowed. Issue notice. Learned counsel is permitted to file counter affidavit within a period of three weeks from today. Rejoinder affidavit within two weeks thereafter. List after five weeks. Status quo, as of today, shall be maintained in the meantime. Order dated 7th September, 2021 It is urged by the petitioner that as mentioned in the companion application, the order of status quo in effect has been partly frustrated by the action of the respondent No. 1. The respondents, however, are disputing the correctness of this claim. As the main matter is still pending before the High Court, we deem it appropriate to dispose of the special leave petition with liberty to the petitioner to urge all contentions as may be permissible in law, including to ask for appropriate consequential relief in the backdrop of subsequent developments if any in the pending proceeding. Needless to observe that all contentions will have to be decided on its own merits and in accordance with law and the liberty may not be underst....
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....ved payments from the sister companies iv. There is no transparency in the distribution of funds made by the Special Committee. The Provisional Administrator used to file a balance sheet on a quarterly basis, but the Special Committee did not. The interim reports filed by the Special Committee do not reveal any specific details of the persons/entities to whom the payments were made and the extent of redemption of units in respect thereof. The interim report, under the 'Works Executed' section, only provides the total number of units/unit-holders redeemed and the total amount disbursed in that regard. In view thereof, the application inter alia prays for the conduct of a forensic audit of the records of all the works executed by the Special Committee from 2013 till date. 36. Following the application made by Rommel, SEBI filed an application, being Co. Appl. 420/2022, seeking a final extension of one year for the purpose of winding up the scheme and carrying out all pending tasks, with a further prayer for the dissolution of the Special Committee thereafter. The primary ground urged by SEBI in support of the application was that the Special Committee was originally en....
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....e. The said Committee consists of the following three persons: namely, i. Mr. S.K. Tandon, Retd. ADJ (Chairperson); ii. Mr. S.C. Das, Former Executive Director, SEBI (Member) and; iii. Dr. A.A. Sisodia (Member). 4. The stand of SEBI is that though the Special Committee was initially appointed only for a period of 12 months vide order dated 29th May, 2013, its term has been repeatedly extended. In terms of the last extension given to the Special Committee, the tenure of the Committee has ended on 28th May, 2023. 5. It is submitted by Mr. Saurabh Kirpal, ld. Sr. Counsel for the Committee, that IA 351/2023 has been filed by the Special Committee seeking another extension of twelve months. In the said application, the stand of the Committee is that there are certain unit holders who are yet to be disbursed the amounts. The application further states that funds to the tune of approximately Rs.120 crores are lying with the Committee. The same is also clearly earning a substantial amount of interest on a monthly basis. 6. Considering the nature of contentions that have been raised in the applications filed by the SEBI as also the averm....
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....In the said sum Rs. 21,12,66,885/- was earmarked for Rommel in view of the status quo ordered by the Supreme Court vide order dated 7th September, 2021 in SLP No. 5159/2021. Further, a sum of Rs. 99,99,526.55/- was permitted to be retained with the Special Committee to manage its expenses. 41. On 12th September, 2023, bearing in mind the allegations made against the Special Committee and Ex-Management, the Court re-constituted the Special Committee with only two members in the following terms: - "14. Considering this position as also considering the fact that a substantial amount disbursement has already been made by the Special Committee, it is deemed appropriate that until further orders, the Special Committee shall now consist only of the following members: i. Mr. S.K. Tandon, retired AD] (Chairperson) ii. Mr. S.C. Das, Ex-Executive Director of SEBI (Member). 15. Mr. A.A. Sisodia shall no longer function as a member of the Special Committee. Mr. Tandon is free to engage his own staff for the purpose of conducting affairs of the Special Committee and shall not allow any interference by Mr. Bhansali or any of his family members or officials. ....
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.... STONE WARE LTD 1,34,77,304 @ 222 13 4237 JAI HIND MARMO PVT LTD 6,73,32,600 @ 250 14 4392 JAYANT SECURITIES PVT. LTD 3,37,67,400 @ 259 15 4491 JINPRABHU INNFASTRUCTURE DEVELOPMENTS LTD 4,04,40,000 @ 265 16 4492 JIN PRABHU SECURITIES PVT LTD. 5,39,20,000 @ 265 17 5383 KIEV FINANCE LTD 8,76,20,000 @ 317 18 7750 NAV SURYA HOLDING (P) LTD 1,34,80,000 @ 456 19 8898 PRAMUKH SOFT TECHNOLOGIES PVT. LTD. 2,82,40,600 @ 524 20 10329 RAVITEJ EXPORTS LTD 6,74,00,000 @ 608 21 12043 SHREE TULSI ONLINE COM LTD 3,77,44,000 @ 709 22 12175 SIDH PROPERTIES LTD 67,40,000 @ 717 23 12199 SIL LEASING & INDUSTRIAL FINANCE P. LTD 2,56,79,400 @ 718 24 12366 SPECTRUM EQUITY LTD 6,74,00,000 @728 25 13485 TOPSEY IMPEX PVT LTD. 1,34,80,000 @749 26 13575 TSW INFOTECH LTD 3,37,00,000 @ 796 27 14575 ZERRY EXIM PVT LTD 1,34,80,000 @ 858 28 702 ANJANA DEVI 1,48,28,000 @ 42 29 1434 BABULAL L SHAH 1,07,84,000 @ 85 30 1438 BABULAL SHAH HUF 2,68,92,600....
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.... access was permitted only under her supervision. 46. Mr. C. R. Bhansali appeared before the Court on 18th January, 2024. His statement is extremely relevant for this case and is extracted below:- "I am a Chartered Accountant by profession and currently practice on a smaller scale due to my age. My office is located at my residence itself. My mother's name is Ms. Bhanwari Devi Bhansali, and my wife is Ms. Manjula Bhansali. I have two sons, namely, Mr. Manish Jain and Mr. Piyush Jain, both of whom are MBA graduates. They provide their own consultancy services. My father, Mr. Fateh Chand Bhansali passed away approximately four years ago. Ms. Sangeeta Jain is my sister, and Ms. Sweta Jain is my brother's daughter-in-law. I am aware of Bill Finance Corporation Ltd. My father promoted this company. I am not a Director of this company, but it is managed by me and even instructions are also given by me for the operations of the company. Cravetex Impex and Consultants Pvt. Ltd. is a business-associate company. We have a say in this company and we give instructions to this company for conducting its business. I can file the list of shareholders and pro....
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....am aware of Bill Finance Corporation Ltd. My father promoted this company. I am not a director of this company, but it is managed by me and even instructions are also given by me for the operations of the company. 8) BILL FINANCE CORPORATION LTD. I am aware of Bill Finance Corporation Ltd. My father promoted this company. I am not a director of this company, but it is managed by me and even instructions are also given by me for the operations of the company. 9) CRAVETEX IMPEX & CONSULTANTS PVT LTD This company is our business-associate. Some of the shareholders are from my family and therefore I exercise control. 10) GLOBAL FINANCE CORPORATION LTD This company is our business-associate. 11) GREENQUEST TRADE ASSOCIATION LTD I was a Director in this company, but I resigned before the Special Committee was formed. I have direct control on the operations of the company, because it was promoted by my father. 12) HAENGNAM RNT STONEWARE LTD This company is our business-associate. 13) JAI HIND MARMO PVTLTD This company is our business-associate. 14) JAYANT SECURITIES PVT.LTD I exercise direct control. This company must have bee....
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....lled with the Bar Council of Delhi and my enrolment number is D/1252/2001 I was appointed as a member of the Special Committee in 2014. Mr. C.R. Bhansali suggested that I become a member of the Special Committee. Prior to becoming a member of the Special Committee, I was an Independent Director of two of the companies, namely, T.S.W. Infotech Limited and T. Spiritual World Limited. The other directors/shareholders in these two companies were the relatives of Mr. C.R. Bhansali. I had resigned as Director from these two companies in 2014. Apart from the above I also used to give legal consultancy services to Mr. C.R. Bhansali. I did not inform the Chairperson of the Committee, Mr. SK Tandon, - that these two companies namely, T.S.W. Infotech Limited and T. Spiritual World Limited were connected with Mr. C.R. Bhansali. The everyday affairs of the Committee were being managed from the office of the Committee in which there were employees, including a Chartered Accountant and also one clerk. The said Chartered Accountant was Mr. Kapil Goel. He was not connected to Mr. C.R. Bhansali. I was not a signatory to the bank account of the Special Committee. I....
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....ation was filed by the SEBI, being Co. Appl. No. 506/2024, seeking the following prayers:- "A. Allow the present application and pass appropriate directions and/ or orders dissolving the Special Committee; B. Pass appropriate directions and/or orders declaring the Arihant Mangal Scheme of CRB Mutual Fund as wound up; C. Pass appropriate directions and/or orders permitting the Petitioner/SEBI to replace the Special Committee in the litigations which are pending adjudication before this Hon'ble Court, in place of Special Committee and to appropriately defend the interest of all the unit holders and securities market; D. Pass appropriate directions appointing a forensic auditor to conduct a forensic audit of all the records, bank accounts, documents etc. pertaining to the Arihan Mangal Mutual Fund Scheme and the Special Committee and thereafter, submit a report to this Hon'ble Court in a time bound manner; E. Pass appropriate direction that after receipt of the report of the forensic auditor, all the records and documents maintained by the Special Committee may be transferred to a Registrar and Transfer Agent/Share Transfer Agent, to be....
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....and (ii) The manner in which it would deal with the depositors/investors, who may file further claims or whose claims are still pending. Both the aforesaid directions are dealt in the manner hereinbelow: (a) It is submitted that the aforesaid task would be taken under the supervision of the Cell in terms of the SOP, which would abide by the cut off date fixed by this Hon'ble Court i.e. 18.07.2017, in terms of Order dated 18.07.2017. (b) The SEBI would deal with the pending litigations, arising out of rejection of claims by the Special Committee and the same will be dealt in accordance with the directions issued by this Hon'ble Court. 6. With respect to direction No. 3, it is submitted as under: (iii) The manner in which the funds deposited with the worthy Registrar General would be utilized, if transferred to SEBI, and the Registrar and Transfer agents (RTA) or any other organisation, which would be in charge of the same. (a) As submitted in preceding paragraphs, SEBI would open an Escrow Account for transfer of funds from the worthy Registrar General and the same will be subsequently dealt in terms of the SOP. ....
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.... (i) take over the documents/ records and accounts; (ii) co-ordinate with QRTA to take appropriate actions based on the findings and recommendations in the Forensic Auditor's report. (iii) take steps to digitize, catalogue and securely store these with the QRTA, in a searchable format for the purpose of dealing with any claim or verification of unit holders, as per the directions of this Hon'ble Court; (iv) take stock of unresolved issues in 34th Interim Report of the Special Committee; (v) proceed with all pending work except ongoing litigation; (vi) take steps to close all bank accounts previously opened by the Special Committee; (vii) co-ordinate with QRTA and in accordance with SEBI (Mutual Funds) Regulations, 1996, shall determine Net Asset Value ('NAV') for the purpose of distribution; (viii) file a winding up report, thereby only awaiting the outcome of pending litigations. A list of SEBI empanelled forensic auditors is annexed herewith as Annexure -B. g. In respect of any unit holder's claim (as permitted by this Hon'ble Court), the QRTA shall analyze, verify, and scru....
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....d to be followed as per which the reports of disbursal and the expenses incurred would first be submitted to the current Head of the Department i.e. Chief General Manager, then to the Executive Director, (Investment Department) Management SEBI and thereafter to the WTM, SEBI. 5. Who will be the supervising authority of the Special Cell. The Special Cell will be under overall supervision of Shri Amarjeet Singh, the Whole Time Member, SEBI (appointed under Section 4(1)(d) of the SEBI Act, 1992). 57. Thereafter, written submissions were filed by all the parties, and Judgment was reserved in Co. Appl. 420/2022, 351/2023, 546/2023, 37- 39/2024, 203-04/2024, 506/2024, 403-4/2025 on 22nd May, 2025. Submissions on behalf of Parties 58. Mr. Pratap Venugopal, ld Senior Counsel, appeared on behalf of SEBI and Mr. Sandeep Sethi, ld Senior Counsel, appeared on behalf of the Special Committee. Mr. Pinaki Mishra, ld Senior Counsel made submissions on behalf of the Ex-Management and Mr. Vivek Sibal, ld Senior Counsel, made submissions specifically on behalf of CRB Asset Management Company. Mr. Avneesh Garg appeared on behalf of Rommel Investments Private Ltd. Submissions on be....
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.... cases; (e) Consideration of certification applications received after the prescribed cut-off date of 18th July, 2017; (f) Issuance of duplicate share certificates, and attending to audit and tax- related matters; (g) Completion of statutory compliances; (h) Sale of shares, including both physical and dematerialised holdings. 61. It is pointed out that the Special Committee had, as early as 2017, acknowledged in Co. Appl. 1028/2017 that 90% of its mandate, as envisaged in the order dated 29th May, 2013, had already been completed. In this background, the learned Senior Counsel emphasised that the cost of these continued extensions and delays is ultimately being borne by the corpus belonging to the unit holders and therefore, such extensions ought not to be permitted any further. 62. Thereafter, it was also contended that the Special Committee has turned a blind eye towards the order dated 25th January, 1999 of the Bombay High Court inasmuch as payments have been made to C.R. Bhansali, his family members and entities associated or connected with him or his group companies (40 entities). The Special Committee has pleaded merger of the order o....
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....l Committee, held as under: "9. ..., we are of the prima facie view that he would be in the position of a Trustee within the meaning of Section 3 read with Section 34 of the Indian Trust Act." 65. Despite the fiduciary role entrusted to it, the Special Committee, in a complete lack of transparency, failed to disclose any specific details regarding the unit holders to whom payments had been made, in any of its interim reports. Particularly, both SEBI and this Court were kept uninformed of the payments being made to the CRB Group. It was only pursuant to the order dated 17th August 2023 that the distribution charts, containing the complete breakup of disbursements made, were placed on record. Learned Senior Counsel Mr. Venugopal has emphasised this lack of disclosure as the principle reason for SEBI's delayed objection to the extension of the tenure of the Special Committee. 66. On the same lines, it is also contended that no accounts were furnished by the Special Committee for the sum of Rs. 1 crore, which was permitted to be retained by the Committee vide order dated 17th August, 2023 until the Court had directed it to file an affidavit regarding the same. Such a lac....
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....over its affairs. Further vide the inspection report dated 30th October, 2023, Rommel has also flagged that payments to the tune of Rs. 131.90 crores (Approx.) have been made to the CRB Group, which is in flagrant violation of the Bombay High Court order dated 25th January, 2025. In view thereof, it is his submission that the Special Committee has lost its reliability and thereby deserves to be restrained from dealing with the liquidation or any other ancillary aspects of the CRB mutual fund. Further learned Counsel also prays to direct an inquiry into the affairs of the Special Committee, including by way of a forensic audit and recovery of the amounts disbursed to the CRB Group. 71. The following facts and records, according to learned Counsel Mr. Garg, show direct and impermissible influence of Mr. C.R. Bhansali over the Special Committee: (i) It was C.R. Bhansali only who, while opposing the functioning of the P.A. and despite having been deleted in the Trust Petition, continued to participate in the proceedings. It was Mr. C.R. Bhansali who sought the appointment of a Special Committee with one of its Members as his nominee; (ii) Immediately on its appoint....
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....order appointing the Official Liquidator attached to this Hon'ble Court as the Provisional Liquidator of CRB Capital Markets Ltd. The committee derives the information from the record maintained by it " 72. Thereafter, the fact that disbursements to the extent of Rs. 131.9 crores (approx.) have been made to the CRB Group is not disputed by the Special Committee or the Ex-Management. Therefore, the continued functioning of the Special Committee is liable to be restrained. 73. Insofar as the locus standi of Rommel in the present proceedings is concerned, learned Counsel places reliance on the status quo orders passed by the Supreme Court on 12th April, 2021 and 7th September, 2021. It is submitted that, in view of the ongoing dispute regarding the title over the subject RIL shares, which is presently pending adjudication before the Mumbai Courts, the Supreme Court directed that status quo be maintained during the pendency of Civil Appeal No. 1 of 2020 before this Court. Accordingly, it is Rommel's stand that it is entitled to secure its interest against the alleged irregularities in the functioning of the Special Committee, until Civil Appeal No. 1 of 2020 is finally adjudi....
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....16. 4. Co. Appl. 1028/2017 No objection raised by SEBI - Extension granted for a period of 6 months vide order dated 23rd May, 2017. 5. Co. Appl. 1845/2017 SEBI partly objected and requested to grant an extension only for 3 months - Extension for a period of 12 months was granted as a final opportunity vide order dated 20th November, 2017. 6. Co. Appl. 1290/2018 None appeared for SEBI - Extension granted for a period of 9 months vide order dated 16th November, 2018. 7. Co. Appl. 813/2019 No objection raised by SEBI - Extension granted for a period of 12 months vide order dated 14th August, 2019. 8. Co. Appl. 449/2020 No objection raised by SEBI - Extension for a period of 12 months vide order dated 14th August, 2020. 9. Co. Appl. 507/2021 No objection raised by SEBI - Extension for a period of 9 months granted vide order dated 25th August, 2021. 10. Co. Appl. 307/2022 No objection raised by SEBI - Extension granted for a period of 6 months vide order dated 13th May, 2022. 11. Co. Appl. 684/2022 No objection raised by SEBI - Extension granted for a period of 6 months vide order dated 22nd November, 2022. 12. ....
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....he disbursement of payments to all unit holders, including entities belonging to the CRB Group. In fact, it advocated payments being made to all unit holders on a pro- rata basis. For ease of convenience, the relevant part of SEBI's reply has been extracted below: "11. The Non-Applicant herein is not opposing the modification of the order dated 25.01.1999 to the extent that the mode of payment to the unit holders of the Respondent company would be such which shall be the fair and just and would not cause serious prejudice to the unit holders. It is submitted that all the unit holders be paid on a pro-rata basis out of the present liquid assets of the Respondent Company and thereafter, if and when the fixed assets of the Respondent Company are disposed off, the balance payments be made to all the unit holders in proportion. Alternatively, the fixed assets be disposed off first and then all the unit holders be paid thereafter in equal proportion and in an equitable manner out of the total proceeds available with the Provisional Administrator. 12. It is stated that all the unit holders of the Respondent Company should be treated equally, irrespective of the number of....
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....ons in the following terms: (i) On 1st April, 2015 - Rs. 6.48 per Unit (ii) On 9th December, 2017 - Re. 1 per Unit (iii) On 10th September, 2018 - Re. 1 per Unit (iv) On 15th February, 2019 - Re. 1 per Unit (v) On 10th March, 2021- Rs. 4 per unit 85. Further elaborating on the rationale behind making payments in intervals, it is submitted that the disbursements are being effected in phases because the funds become available to the Committee at different points in time owing to the gradual and progressive realisation of assets of the Mutual funds. Consequently, repeated payments are being made to the same set of unit holders in accordance with the provisional NAVs declared from time to time. The mandate of the Special Committee was "to distribute the sale proceeds thereof to all the unit holders at the Net Asset Value (NAV), which is to be ascertained by the committee after following the prescribed procedure in terms of provisions of the aforesaid SEBI (Mutual Funds) Regulations, 1996". Since monies have been paid to only the unit holders, it is obvious that repeated disbursals to the same unit holders shall be made whenever the subseq....
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....ons on a cooperative model through various standing committees and working groups, cannot be vested with the responsibility of defending cases on behalf of the Special Committee. It is further contended that the prayer seeking transfer of unclaimed funds to the Investor Protection and Education Fund (hereinafter 'IPEF') also lacks legal foundation, inasmuch as the 1996 Regulations does not contemplate any procedure or mechanism to deal with unclaimed redemption amount. 89. Insofar as the work undertaken by the Special Committee is concerned, it is submitted that a total sum of approximately Rs. 350 crores was realised by the Committee through the sale of all assets of the Mutual Fund. Out of this, an amount of Rs. 211,65,55,560 has been disbursed to approximately 5,000 unit holders. The unclaimed redemption amount stands at Rs. 95,40,51,044, corresponding to 7,22,34,100 units, in respect of which 9,860 unit holders did not approach the Committee by the prescribed cut-off date. It is further submitted that, out of a total of 22,92,51,100 units issued to 19,396 unit holders, payments have already been made to around 10,000 unit holders. Consequently, 15,70,17,000 units have been d....
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....e order passed by the Bombay High Court and has failed to pay all unit holders. It is further alleged that entities connected with the promoters of CRB (C.R. Bhansali) have wrongly been paid. In respect of the allegation regarding unit holders connected to Mr. Bhansali being wrongly paid, Mr. Sibal submits that there was no embargo on making payment to them upon winding up of the Scheme, either in law or in the order dated 29th May, 2013 passed by this Court. The order passed by the Bombay High Court on January 25, 1999, was an interlocutory order which has no relation to the winding up of and final distribution of funds under the Scheme. In fact, it is the entitlement of all unit holders (including those connected to C.R. Bhansali) to get back the funds invested by them in the Scheme, pro rata with all other unit holders. 92. It is further the stand of the Ex-Management that there is no allegation that the connected unit holders did not actually bring in the funds for the purchase of units, or that there was any violation of any law by them in subscribing to the units. Neither is there any allegation to the effect that they played any fraud while investing the funds. In the abs....
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.... has no jurisdiction to grant the aforesaid prayers to either dissolve the Special Committee or to wind up the scheme. 96. In view of the aforesaid submissions, it is submitted that the application filed by SEBI being Co. Appl. No. 506/2024 is liable to be dismissed as not maintainable and even otherwise on merits. 97. Insofar as M/s Rommel is concerned, Mr. Pinaki Mishra learned Senior Counsel, questions its locus standi in the present petition. In this regard, he relies upon the order dated 5th December, 2019 passed by the ld. Single Judge of this Court to submit that the entire argument of Rommel is based on the 1,02,000 shares of the Reliance, which were sold and Rs. 80 crores were realised. Rommel tried to stake a claim in respect of the said shares, which was rejected by the ld. Single Judge vide order dated 5th December, 2019 as Rommel was unable to substantiate its claim. Analysis and findings Co. Appl. No. 420/2022, 506/2024 and 403/2025 98. These are applications filed by SEBI and Rommel primarily seeking the following directions from the Court: (i) Not to extend the tenure of the Special Committee; (ii) To conduct a forensic audit of all ....
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....umstances, SEBI and Rommel seek the above prayers on various grounds, including but not limited to the fact that the Special Committee has failed to act as a Trustee in the best interest of all the unit holders. For the sake of convenience, the submissions of SEBI and Rommel are collectively summarized below: (a) The Special Committee was initially envisioned to complete its mandate within a period of one year. However, even after 12 years, repeated extensions are being sought, despite having admitted way back in 2017 that nearly 90% of the work was already complete. This, according to SEBI, imposes an undue burden on the investor corpus and defeats the objective of timely resolution; (b) The Committee, by making payments to the CRB group, has clearly violated the embargo in the order dated 25th January 1999. It is respectfully submitted that although the final order dated 29 May 2013 does not expressly impose any embargo, the fact that the scheme has not yet been wound up in accordance with paragraph 18(xxii) of the said order implies that the cause of action relating to the disposal of assets and the distribution to unit holders still subsists. In the absence of....
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....he affidavit filed by Mr. S.C. Das in Co. Appl. 380/2025, wherein he states: (i) He became a joint account holder and signatory of the Committee's bank accounts following the demise of M.D. Kanther in June 2014; and (ii) He remained in continuous communication with SEBI through emails and other correspondence. (e) Insofar as the phased manner of disbursements in terms of NAV is concerned, it is completely in compliance with the directions of the Court vide the final order dated 29th May, 2013 and the 1996 Regulations; (f) The rejection of M/s NCM International's claim was well within the Committee's authority, as the said decision was taken on 29th November 2023, prior to the Court's order dated 7th December 2023, vide which the Committee was declared defunct; (g) Lastly, challenging the alternatives suggested by SEBI, it was submitted that : (i) AMFI, which is a self-regulatory body functioning on a cooperative model through various standing committees and working groups, cannot be vested with the responsibility of defending cases on behalf of the Special Committee. (ii) The prayer seeking transfer of unclaimed fun....
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....ory body authorised under Section 11B of the said Act to protect of the interest of the investors, for appropriate orders and reliefs by this Hon'ble Court in its inherent-and-extraordinary jurisdiction. The Petitioner submits that under the provisions of the said Act the Petitioner is duty bound to protect the interests of the investors including the unit holders. The Petitioner is bound as a matter of public duty to protect the interest of and to act for and on behalf of the beneficiaries of a scheme of the CRB Mutual Fund. The Petitioner submits that pursuant to Section 11B of the said Act the Petitioner has authority to give appropriate directions for preventing the affairs of the intermediary and other persons from being conducted in a manner detrimental to the interest of the investors or securities or to secure the proper management of an intermediary. However the Petitioner apprehends that it may be contended that the Petitioner is not empowered either under the said Act or the said Regulation to appoint Trustees for the purpose of administration and management of the Trust of any mutual funds. The Petitioner submits that it has no other adequate alternative remedy avai....
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....eclared that the power to issue directions under this section shall include and always be deemed to have been included the power to direct any person, who made profit or averted loss by indulging in any transaction or activity in contravention of the provisions of this Act or regulations made thereunder, to disgorge an amount equivalent to the wrongful gain made or loss averted by such contravention.]" 108. A collective reading of the provisions reveals that, beyond the general powers, SEBI's authority is confined to the registration and regulation of trustees under a trust deed, and does not extend to the appointment or substitution of such trustees in the event of disqualification. Whereas on the other hand, the 1996 Regulations mandate that Mutual Funds be constituted in the form of trusts, and the appointment of trustees is governed by the provisions of the Indian Trusts Act, 1882. The said act empowers the Principal Civil Courts with Original Jurisdiction the power to appoint trustee in the following terms: "Section 73. Appointment of new trustees on death, etc.-Whenever any person appointed a trustee disclaims, or any trustee, either original or substituted, dies,....
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...., being Co.Pet 191/1997, for winding up was already pending before this Court. The Supreme Court directed the Trust Petition 3/1997 pending before the Bombay High Court to be listed along with the said RBI petition vide order dated 13th August, 2007 in TP(Civil) 756/2004. The said transfer order is extracted below for ready reference: "Heard learned counsel for the parties. In the facts and circumstances of the case, Trust Petition No. 3 of 1997, titled as Securities and Exchange Board of India vs. CRB Capital Markets Ltd. & Ors., pending before the High Court of Judicature at Bombay is transferred to the Delhi High Court. The transfer petition is, accordingly, allowed." 111. Further, the order dated 25th January, 1999 as well as order dated 29th May, 2013 clearly recognise the Provisional Administrator and his successor, the Special Committee, to have been constituted to function in the capacity of a trustee, respectively. 112. In light of these provisions, pleadings and orders cited above, read with the inherent powers conferred upon it under Rule 9 of the Companies (Court) Rules 1959, this Court has no hesitation in holding that it possesses jurisdiction ....
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....ission. The rejection order dated 29th November 2023 was passed at a time when the tenure of the Special Committee had already lapsed, and Co. Appl. 351/2023 seeking its extension was still pending consideration. In the absence of any subsisting order extending the Committee's mandate, its actions cannot be retrospectively validated. Accordingly, the said rejection order is set aside, and the claim of M/s NCM International shall be remitted for fresh consideration to the authority that may be designated in accordance with the present judgment. Case on Merits - Applicability of Doctrine of Merger 116. Coming to the merits of the applications, one of the primary points of contention was whether, in the facts and circumstances of the present case, the interim order dated 25th January, 1999, particularly the embargo placed against making payments to the CRB group, can be construed to have merged into the final order dated 29th May, 2013 which is silent on the said aspect. 117. Considering that the Doctrine of Merger lies at the core of the present controversy, the Court, at this juncture, deems it appropriate to delve into judicial precedents that illustrate the scope and exce....
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....inem gravabit', meaning the act of the Court shall prejudice no one. Accordingly, the judgment not only establishes the primacy of the said principles of equity but also affirms that the application of the Doctrine of Merger must be harmonized with overriding principles of equity. In essence, the doctrine in its application must also yield to foundational equitable considerations in appropriate circumstances. In other words, it can be said that the Doctrine of Merger is subject to the said principles of equity. 119. Similarly, the Full Bench of the Punjab and Haryana High Court in Parkash Singh v. Joint Development Commissioner, 2013 SCC OnLine P&H 26809, while answering a reference from the Division Bench, explained the rationale, scope and applicability of the said Doctrine in the following terms: "84. The doctrine of merger postulates that an order passed by a Court or a Tribunal shall merge into the order passed by a superior forum whatever be the nature of the order, passed by the superior forum. The doctrine of merger is not universal in its application and admits to certain significant exceptions particularly in cases where the writ petitions or the special le....
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....n a number of Judgments, including in Commissioner of Central Excise, Delhi v. Pearl Drinks Limited. (2010) 11 SCC 153 that the Doctrine of Merger is not one of rigid and universal application. Its applicability, the Court held, depends upon the nature of jurisdiction exercised and the content and subject matter of challenge laid or capable of being laid. The relevant portions are extracted below: "11. Appearing for the appellant Mr. Gourab Banerjee, learned Additional Solicitor General argued that the Tribunal had fallen in a palpable error in applying the doctrine of merger and dismissing the appeal filed by the Revenue. It was submitted that the doctrine of merger had no application to a case like the one at hand where the content and the subject-matter of challenge in the two proceedings, namely, the appeal filed by the assessee and that filed by the Revenue were totally different. Reliance in support was placed by the learned counsel upon the decision of this court in Kunhayammed v. State of Kerala. Reliance was also placed upon the decision of this court in Mauria Udyog Ltd. v. CCE to contend that the doctrine of merger is not a doctrine of universal application and ....
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....n-speaking or dismissed in limine; • The nature of jurisdiction exercised by the superior forum and the content or subject matter of the challenge/dispute. 122. On the other hand, Indian Courts have, through a number of decisions, recognised and given effect to foundational principles of equity within the framework of Indian jurisprudence. Notably, the following maxims have been repeatedly affirmed: • Nullus commodum capere potest de injuria sua propria - no one can derive an advantage from their own wrong; and • Commodum ex injuria sua nemo habere debet - no party should be permitted to benefit from a wrong of their own making. These principles serve as critical safeguards against the abuse of process and ensure that procedural or substantive lapses do not result in unjust enrichment or inequitable outcomes. 123. The Supreme Court, vide the decision in Eureka Forbes Ltd. v. Allahabad Bank in Civil Appeal No. 4029 of 2010 (at SLP (C) No. 3883 of 2008), establishing the said principle, has held as under: "36. The purpose was also to prevent wrong doers from taking advantage of their wrong/mistakes, whether permissible in law o....
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.... to the dissolution of the mutual fund, i.e., irregularities which were alleged by SEBI, RBI and other banks/financial Institutions apart from the investors/unit holders. 127. The initial Bombay High Court order dated 25th January, 1999 had an express embargo on any payments being made to the CRB Group. The relevant portion of the said order, for ready reference, is extracted below: "6. The scheme for premature payment takes into account the interest of the small investors and the payment is to be made on the basis of certain principles which are enunciated in the said scheme namely: (i) premature payment to allay fears of unit holders. (ii) payment to all unit holders- both individual and non- individual who have responded to the postcard dated1.1.98 (iii) payment at NAV of Rs. 4.95 as on 31.3.97 (iv) payment up to 10,000 units per holder (v) utilisation of available liquid funds for payment at first stage (vi) sale of securities to affect payment at second/ third stages. However, the scheme makes it clear that at the first stage, it was propose that all 10,126 unit holders who had responded to the postcard....
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....what they had invested. We make it clear that the premature repayment scheme is to pay all the unit holders up to 300 units which include 10126 unit holders who have responded to the postcard dated 1st Jan 1998 even if they are holding units up to 10,000. However, repayment is confined only up up to 300 units at the NAV of Rs. 4.95 per unit of Rs. 10. 11. In the circumstances, the chamber summons is made absolute in terms of prayer clause (a). However, we make it clear that while granting the relief in terms of prayer clause. (a) we are granting approval to the draft of premature repayment scheme, which is annexed as. Exh. B of the affidavit in support dated 20 July 1998 made by Mr MLT Fernandes. Further make it clear that that the player clause of Exh. B namely para 24 is granted under this order only in so far as clause (i) (iv) & (v) are concerned. Rest of the clauses viz. (ii) (iii) and (vi) of prayer clause 24 of Exh. B are not granted under this order. Chamber summons is disposed of accordingly with no orders as to costs." 128. However, a bare perusal of the final order dated 29th May, 2013, reveals that, surprisingly, none of the parties raised the issue concerni....
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....d been placed by the Bombay High Court. 131. However, it is both surprising and disconcerting to see that the Special Committee, rather than seeking appropriate clarifications or directions from this Court, particularly in light of the serious allegations levelled by SEBI and the RBI, chose to act unilaterally and proceeded to effect disbursals in favour of entities belonging to the CRB Group. Such an approach demonstrates a troubling disregard for the underlying purpose for which the Committee was constituted, as well as for the broader concerns of transparency and accountability. The act of effecting substantial payments to individuals and entities who are alleged to have played a central role in the collapse of the Scheme, without even seeking clarification or prior leave of this Court, not only reflects a lapse in judgment but also constitutes a fundamental dereliction of duty, whether such omission was deliberate or out of sheer callousness. It is highly possible that the nominee of the CRB Group on the Special Committee may have been instrumental in such payments, but the others, including the Chairman, could not have turned a blind eye. Both the Chairman and SEBI's nomine....
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....d eye to the said circumstances and to the functioning of the Committee. It is only upon Rommel's intervention and the consequent order of this Court dated 17th August, 2023, directing that the details of all the disbursements be submitted in the form of a complete chart, that volumes of materials were placed on record, disclosing the actual extent of disbursements made. This was further confirmed by Mr. C. R. Bhansali, who appeared in Court and admitted that a substantial amount of the money had been received by him, his family members, the CRB group of companies, and its sister concerns. 135. It is also noticed that out of the Rs. 211 crores(approx.) disbursed by the Committee, only Rs. 79 crores (approx.) have been disbursed to non-CRB companies, individuals and entities. Though there were some individual investors in the mutual funds who were initially paid some money by Mr. Fernandez, the Provisional Administrator, there are a large number of individual unit holders who have not even approached the Special Committee for redeeming their units, and the value of the said units, as per the calculated NAV, is to the tune of Rs. 90 crores. 136. In the above circumstances, this....
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....med redemption amount. It has been decided that the unclaimed redemption and dividend amounts may be deployed by the mutual funds in call money market or money market instruments only and the investors who claim these amounts during a period of three years from the due date shall be paid at the prevailing Net Asset Value. After a period of three years, this amount can be transferred to a pool account and the investors can claim the amount at NAV prevailing at the end of the third year. The income earned on such funds can be used for the purpose of investor education. It should be specifically noted that the AMC should make a continuous effort to remind the investors through letters to take their unclaimed amounts. Further, the investment management fee charged by the AMC for managing unclaimed amounts shall not exceed 50 basis points. For the schemes to be launched in the future, disclosures on the above provisions should be made in the offer documents. Also, the information on amount unclaimed and number of such investors for each scheme shall be disclosed in the annual report." (ii) The above Circular was amended by Circular SEBI/HO/IMD/DF2/CIR/P/2016/37 dated 2....
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....ird year, the income earned on such unclaimed amounts shall be used for the purpose of investor education." 139. The above provision and the circulars make it evident that residual amounts disgorged pursuant to a direction under Section 11B are required to be credited to the Investor Protection and Education Fund ('IPEF') and utilised for the purpose of investor education. Moreover, specifically in respect of incomes from the unclaimed redemption amounts from a Mutual Fund, after the three-year period shall be used to investor education. Following the above provisions, the Court has no doubt in holding that the Investor Protection and Education Fund, constituted on 23rd July 2007 under Section 125 of the Companies Act, 2013 read with the SEBI (Investor Protection and Education Fund) Regulations, 2009 shall be the appropriate body to which such transfer ought to be effected. Conclusions and Reliefs 140. Under these facts and circumstances, this Court, arrives at the following conclusions and issues the ensuing directions: FORENSIC AUDIT BY SEBI (a) In view of the circumstances highlighted in these proceedings and the manner of distribution adopted by the Special....
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....count of SEBI. For ready reference, the complete statement of amounts retained by the Worthy Registrar General, along with the interest accrued thereon, excluding the amounts earmarked for Rommel, is extracted below: (1) (2) (3) Principal Amount initially transferred to the Registrar General (excluding the amounts earmarked for Rommel) Interest Accrued on the principal amount in column (1) as of 19th August, 2025 Total Amount as on [Column (1) + Column (2)] as of 19th August, 2025 Rs. 101,78,41,035.37/- (i.e., total amount transferred being Rs. 1,22,86,05,000 - Amount earmarked for Rommel being Rs. 21,13,71,324.63) Rs. 13, 28,06,884/- Rs. 115,06,47,919.37/- (Subject to the requisite taxes, including TDS, and the premature penalty, if any) For ready reference, the detailed statement of the accounts has been attached as annexure-I to this judgment. The SEBI shall, in turn, transfer the amount received to the designated bank account of the Special Cell upon the same being set up. The funds so received shall thereafter be utilised for discharging the mandate of the Special Cell, including for effecting payments to successful applicants....
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....and determine Net Asset Value in accordance with 1996 Regulations for the purpose of distribution of the remaining funds to the eligible applicants; (vi) Insofar as dealing with the claims of unit holders is concerned, the QRTA, upon receiving any claims of the unit holders, shall analyze, verify, and scrutinise such claims and associated documents, and submit a detailed report to the Special Cell within 30 days of receipt. The Special Cell shall consider the report submitted by the QRTA and take a decision on the proposal within 30 days of its receipt. The decision of the Special Cell in this regard shall be final. If the report of QRTA is accepted by the Special Cell, the Special Cell shall coordinate with QRTA for disbursal of payment from the dedicated Bank Account to the unit holder. (vii) As a part of statutory compliance, the Special Cell shall continue to - (1) File Audited Annual Accounts as required under Section 137 of the Companies Act, 2013, (2) File Annual Returns as required under Section 92 of the Companies Act, 2013 before the Registrar of Companies. (3) Maintain records, Registers, Forms, Returns, etc., as are required ....
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....mpliance with any statutory authorities. (4) filing of Income Tax Returns and TDS Returns. (xv) If there are any ambiguities or clarifications that are required, the same shall be sought from this Court. (c) No further payments shall be made in favour of C.R. Bhansali, individuals and entities related to him as identified in the order dated 7th December, 2023 or any other such persons/entities that may be identified by SEBI in the future., till the forensic Audit is completed. Post the Audit, SEBI shall take a decision as to whether any payment is to be made to CRB Group or any decision is to be taken for recovery of payments already made. (d) Insofar as non-CRB unit holders are concerned, the SEBI is free to consider if the cut-off date for applying for redemption deserves to be extended. A total of 34 applications are stated to have been received by the Special Committee, valued at Rs. 13.50 crores. After due verification, SEBI is free to release this amount, via the Special Cell, in favour of these unit holders who are non-CRB unit holders. (e) The reports of disbursal and expenses incurred by the Cell shall be submitted to and review....
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....vestor education after a period of one year from the establishment of Special Cell. Some reasonable amount may be retained for expenses and for defending litigation. (i) The Local Commissioner, Ms. Ruchi Sindhwani shall hand over the records to the Officials of SEBI as may be nominated for taking over the records in the presence of an official nominated by the Worthy Registrar General on 10th September, 2025. The keys shall, therefore, be returned to the Local Commissioner by the Worthy Registrar General to enable the said transfer of records. 141. The applications are disposed of in the above terms. Co. Appl. No. 351/2023 142. This is an application filed by the Special Committee seeking extension of its tenure. 143. In view of the order passed above, the application is infructuous and is, accordingly, disposed of. Co. Appl. No. 546/2023 144. This is an application filed by the Special Committee seeking permission to deal with unclaimed amounts and for permission to prosecute the existing cases. 145. In view of the order passed above, the application is infructuous and is, accordingly, disposed of. Co. Appl. Nos.37 & 38/2024 146. These are appli....
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....ual Fund" having Account No. 15530110167656 and IFSC Code- UCBA0001553 in Co. Pet. 379/2009) Rs. 6,07,360/- 1 15530311580881 dated 5.9.2023 Rs.21,13,71,324.63/ -* Rs.2,82,32,827/- Rs.23,96,04,151.63/- Amount in respect of 19 FDRs/e-FDRs of 04 banks earmarked to Rommel Investment Private Limited as per the order of the Hon'ble Supreme Court in SLP No. 5159/2021 *Original principal amount of Rs.21,12,66,885/- + Interest amount of Rs.1,04,439.63/- accrued on the savings bank A/c Total Maturity/present value of the abovementioned FDR {as on 19.8.2025, subject to TDS & Premature penalty, if any} = Rs.23,96,04,151.63/- 2 15530311580973 dated 5.9.2023 Rs. 10,00,00,000/- Rs. 1,30,78,719/- Rs. 11,30,78,719/- 3 15530311580980 dated 5.9.2023 Rs. 10,00,00,000/- Rs. 1,30,78,719/- Rs. 11,30,78,719/- 4 15530311580966 dated 5.9.2023 Rs. 10,00,00,000/- Rs. 1,30,78,719/- Rs. 11,30,78,719/- 5 15530311580959 dated 5.9.2023 Rs. 10,00,00,000/- Rs. 1,30,78,719/- Rs. 11,30,78,719/- 6 15530311580942 dated 5.9.2023 Rs. 10,00,00,000/....