Appeal No. 162/2003
Date of Decision
23.1.2006
In the matter of:
Kalpataru Agro (India) Ltd.
Mr. Sanjeev Arora, CA
Versus
Securities & Exchange Board
of India
Coram:
Justice N.K. Sodhi, Presiding Officer
R. N. Bhardwaj, Member
Per: Justice N.K. Sodhi, Presiding Officer (oral)
Kalpataru Agro (India) Ltd. (for short “the Company”) is a public limited company incorporated under the provisions of the Companies Act. It was operating collective investment schemes before the coming into force of the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999 (for short “the Regulations”). In terms of Regulation 68(1) the Company was deemed to be an existing collective investment scheme and was required to comply with the provisions of Chapter IX of the Regulations. An application was filed on 17.1.2000 with the Securities and Exchange Board of India (hereinafter called “the Board”) for registration as a collective investment scheme. It is not in dispute that the said application was rejected by the Board by its order dated 29.6.2002 and the said order was communicated to the Company by a letter dated July 5, 2002. The Company was informed that it did not fulfil the requirements of Regulation 70(1)(b) of the Regulations and therefore the application was being rejected. The Company was also informed that in view of rejection of its application it was required to wind up its existing schemes and make repayments to the investors. The Company was required to send within two months from the date of the intimation an information memorandum to its investors who had subscribed to the schemes. On completion of the winding up and repayment to the investors, the Company was further required to file a detailed report in the prescribed form within three and half months from the date on which the information memorandum was sent to the investors. The directions issued by the Board were not complied with. The Board exercising its powers under Section 11B of the Securities and Exchange Board of India Act, 1992 (for short “the Act”) read with Regulation 65 of the Regulations directed the Company by its order dated 10.2.2003 to refund the money collected under the schemes to its investors within one month from the date of the order failing which further action against it would follow. The Company still did not comply with the directions of the Board. It was then that by order dated 10.4.2003 passed by the Board under Section 11B of the Act read with Regulation 65 of the Regulations and without prejudice to the right of the Board to take any other action against the Company the latter, its promoters/its directors/its managers/persons in charge of its business were debarred from associating in any capacity with the capital market related activities, accessing the capital market, associating with any of the intermediaries in the capital market and from operating in the said market for a period of 5 years. It is against this order that the present appeal has been filed under Section 15T of the Act.
2. We have heard the learned representative of the appellant and the learned counsel for the Board. It may be mentioned at the outset that the order dated 29.6.2002 passed by the Board rejecting the application filed by the Company for the registration of its collective investment schemes has not been challenged in the present appeal. Even the order dated 10.2.2003 directing the Company to refund the money collected under the schemes to its investors is also not under challenge. As a matter of fact, the Company filed before the Board an estimated repayment schedule spanning over seven years till 2008-2009 agreeing to refund the amounts deposited by the investors which was not accepted by the Board and the fact remains that the payment has not been made to the investors in terms of the directions issued by the Board. It is clear from the facts as stated above that the application of the Company for the registration of its schemes had been rejected, and on the rejection of the same it became incumbent upon the Company to wind up the schemes and repay the investors in terms of Regulations 73 and 74 of the Regulations. When the Company did not make the payment the Board issued a direction to refund the amount within one month from the date of the order referred to hereinabove. Even that order was not complied with and the Board was left with no option but to issue the directions debarring the Company and its directors from accessing the capital market. Such a direction is in accordance with Regulation 65 of the Regulations read with Section 11B of the Act. In this view of the matter, no fault can be found with the impugned order.
3. Before concluding, we may mention that when this case was taken up for hearing in the morning session, a request was made for an adjournment by the learned representative of the Company. As a matter of fact, a request for an adjournment was also received through fax from one Shri K.K. Arora, advocate for the appellant. This request was received on 21.1.2006 which was a Saturday and the office was closed. The fax was received by the Registry only at 10 a.m. today. We decline the request for adjournment because of the past history of the case. The appeal has remained pending since the year 2003, and there is an interim order in favour of the appellant. Since then the case is being adjourned on one pretext or the other on the request of the appellant. This Tribunal noted this fact and vacated the interim order on 24.11.2004. Notice in the appeal was issued to the appellant to be present on 17.1.2005. On that day, Mr. Arora, the learned counsel for the appellant appeared before the Tribunal and stated that he could not be present on 24.11.2004 because the air services were disrupted due to fog. In the peculiar facts and circumstances the order dated 24.11.2004 was set aside and the order granting interim stay was revived. The case was adjourned to 21.2.2005 for final disposal. Since then the case is again being dragged and requests for adjournment are being made on one pretext or the other. As already stated, the case was fixed for final hearing today and a request was again made which we have declined and have disposed of the appeal after hearing the representative of the appellant and the learned counsel for the respondent.
4. In the result, the appeal fails and the same is dismissed with no order as to costs.
Presiding Officer
R.N. Bhardwaj
Member
Mumbai
Dated: 23.1.2006