IN THE SECURITIES APPELLATE TRIBUNAL

MUMBAI

Appeal No. 149  of 2003

Present :  None for the appellant

                  Mr. Subhash Jha, Advocate for the respondent

Coram:

          Justice N.K. Sodhi, Presiding Officer

            C. Bhattacharya, Member

            R. N. Bhardwaj, Member

Per:  Justice N.K. Sodhi, Presiding Officer (oral)

             This appeal is directed against the order dated 29.5.2003 passed by the Securities and Exchange Board of India (for short “the Board”) debarring the appellant company, its promoters, directors, managers and persons in charge of running the business of collective investment schemes from operating in the capital market and accessing the capital market for a period of 5 years from the date of the order.  It is not in dispute that by a detailed order dated 14.2.2003 the Board found that the Company was running collective investment schemes whereunder it had mobilised large amount of money without complying with the statutory requirements of Securities and Exchange Board of India Act, 1992 (for short the Act) and the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999 (hereinafter referred to as the Regulations).  The Company had violated the provisions of Regulations 73 and 74 of the Regulations by not winding up the schemes and by not refunding the amounts due to the investors.  The Board also found that as on December 31, 2002 as many as 2896 complaints were pending redressal by the Company from its investors.  The Company by its letter dated 17.12.1999 had informed the Board that it was not desirous of getting itself registered under the Regulations for running any collective investment scheme and that it was willing to wind up the same.  It is thus clear that the schemes had to be wound up in the manner provided in Regulation 73.  Instead of adopting that course the Company appears to have formulated another scheme for repayment to its investors whereunder the Company allotted debenture to the existing investors instead of refunding the amounts to them.  Those debentures too are now mature for redemption and it is  the appellants own case that it had defaulted in the repayment of the debenture amounts due to the investors.  We are, therefore, satisfied that the Company has not wound up the schemes in terms of the Regulations and it had adopted its own novel procedure not known to law.  We have no hesitation in dismissing this appeal leaving it to the Board to take appropriate action against the appellant in accordance in law.

Justice N.K. Sodhi
Presiding Officer

C. Bhattacharya
Member

R.N. Bhardwaj
Member

19.4.2006