TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 82
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....ulations, 1996 (Securities and Exchange Board of India (Venture Capital Fund) Regulations, 1996). 2. We have heard Shri Rakesh Dhingra, CMA, CS and Shri Anil Mehta, learned Advocate for the appellants and Shri Sumit Rai, learned Advocate for the respondent. 3. Brief facts of the case are, CIG Realty Fund ('Fund' for short), a 'Trust' created through a trust deed (Dated August 11, 2005) is a SEBI registered Venture Capital Fund. The Fund made investments in real estate sector. The Fund had launched three schemes [i.e., CIG Realty Fund Scheme-I, CIG Realty Fund Scheme-II and CIG Realty Fund Scheme-IV ('Scheme 1, Scheme II and Scheme IV' respectively for short)]. The appellants were appointed as trustees of the Fund on June 2, 2016. SEBI has received 139 complaints on SCORES (SEBI Complaints Redress System) between May 30, 2011 and January 28, 2022 with regard to extension of tenure beyond the period specified in placement memorandum, non-liquidation of scheme, non-receipt of money invested in fund and cheating and poor performance of the CIGRF. The Fund had not redressed the complaints forwarded to it by SEBI. 4. SEBI conducted an inspection for the period between April 1, 2....
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....arch 31, 2021. • That the appellants have no role in the activities of investment and disinvestment, etc. Private Placement Memorandum of the Fund has authorised the Investment Advisor only to do all activities and to manage the funds of the Fund in the interest of the Fund/trust/beneficiaries. • That the appellants of the Fund have to act on the advice of the Investment Advisor. The Investment Advisor has become defunct. Enforcement Directorate has attached the assets of the Fund since 2018. • That no records of the Fund are available with the appellants. The appellants got information from the published sources such as internet etc. Neither the staff nor the funds are available at the Fund for its routine activities. • That the tenure of the schemes can be extended upon the recommendations of the Investment Advisor. The three extensions in Scheme-I and two extensions in Scheme-II were approved by the earlier trustees. The approval for third extension in Scheme-II and second and third extensions in Scheme-IV were given by the appellants on the recommendations of the Investment Advisor. • That the Investment Advisor i....
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....ed loss by indulging in any transaction or activity in contravention of SEBI Act and its Regulations and the direction issued Section 11B(1) of the SEBI Act does not sustain. • That the appellants are not 'concerned person' during inspection under Regulation 25 to Regulation 29 of VCF Regulations. Hence, the direction issued under Regulation 29(e) of VCF Regulations does not sustain. 7. In reply, Shri Sumit Rai, learned Advocate for SEBI submitted that: • • That the appellants failed to wind up Scheme IV and also failed to take necessary steps for winding up and distribution of funds of Schemes I and II to investors, despite SEBI's order. • That the appellants' contention that the appellants as trustees are not being responsible for non-winding up is contrary to settled legal position. The Fund was registered under Indian Trust Act, 1882. According to Indian Trust Act, 1882, Trustee is primarily responsible to achieve the purpose of the Trust and owes a duty of care to deal with trust property prudently. Trustees have power to do all acts necessary for realisation, protection or benefit of the trust property and for prot....
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.... Tribunal vide Order dated May 4, 2021. The ED has attached the property vide order dated June 23, 2022 which is nearly one year after this Tribunal's Order. Thus, it is clear that appellants have not taken any action diligently. • That the appellants have extended the schemes contrary to law. In terms of Regulation 23(1)(a) read with Regulation 16 of VCF Regulations, under no circumstances, the tenure can be extended. The VCF Regulations do not permit change of the term already mentioned in the PPM/contributory agreement. • That clause 16 of the PPM provides that the contribution agreement may be amended only by written consent of the Trustees in consultation with the Investment Advisor and investors representing 75% of the capital contribution. Whereas, appellants have obtained consent from 75% of investors and not of the capital contribution. Therefore, such consent is not in accordance with law. Therefore, this appeal is devoid of merits. 8. We have carefully considered the rival contentions and perused the records. 9. Undisputed facts of the case are, 'CIG Realty Fund' is a 'Trust' created under the Indian Trust Act, 1882. It is a SEBI registere....