Appeal No.26/2002
And
Application No.16/2002

In the matter of

Ridah Farms Pvt. Ltd.                                                Appellant/Applicant
 Vs.
Securities and Exchange Board of India                     Respondent
 

Appearance

Shri H. Karthik Seshadri
Advocate                                                                     for Appellant/Applicant

Shri Praveen Trivedi
Asst. Legal Adviser,
SEBI                                                                              for Respondent
 

(Appeal arising out of the order dated 2.7.2001 made by the Chairman, Securities and Exchange Board of India)
 
 

The present appeal is directed against the order dated 2.7.2001 made by the Chairman, Securities and Exchange Board of India.  This is a common order directed to 490 entities.  The Appellant is one among them.  Core portion of the order is as under:

�DIRECTIONS UNDER SECTION 11 B OF THE SEBI ACT 1992 READ WITH REGULATIONS 65, 73 & 74 OF SEBI (COLLECTIVE INVESTMENT SCHEMES) REGULATIONS, 1999 ISSUED TO THE ENTITIES WHOSE NAMES ARE MENTIONED HEREINBELOW:-

Vide Order dated December 7, 2000, directions under Section 11B of the SEBI Act, 1992 read with Regulations 65 & 73 Of SEBI (Collective Investment Schemes) Regulations, 1999 were issued to you as you, having failed to make  an application for grant of registration, had failed to wind up your  existing  collective  investment  schemes and  make repayments to your investors  in  accordance  with  the  provisions  of  the  SEBI (Collective Investment Schemes) Regulations, 1999.  As per the said Order, you were directed to refund the money collected under the scheme(s) with returns which is due to the investors as per the terms of the offer within a period of one month from the date of the said Order.

As you have failed to comply with the directions of the said Order, you have violated the provisions of Regulation 5 read with Regulations 68(1), 68(2), 73 and 74 of the SEBI (Collective Investment Schemes) Regulations, 1999.

Now, therefore, in exercise of the powers conferred under Section 11B of the SEBI Act, 1992, I hereby debar you/your promoters/your directors/ your managers/ persons in charge of the business of your schemes from operating in the capital market for a period of 5 years from the date of this Order.�

The appeal against the order dated 2.7.2001 has been filed on 22.5.2002. According to the Appellant, the order was transmitted by the Respondent vide its letter dated 10.7.2001 which reached the Appellant on 16.7.2001.  Since the appeal was filed  involving  a  delay of 260 days, the Appellant has sought condonation of the delay vide application No.16/2002.  The Appellants main submission in this regard is as under:

�it had received the Impugned Order only on 16.7.2001 and the time for filing an Appeal against the said Order expired 45 days from the date namely on 31.08.2001.  The Applicant was totally confused about the very applicability of the Order itself.  The Order was passed in respect of 490 Companies at a time and there was no particular reference to any of the Promoters, Directors or Managers of the Applicant.  The Directors of the Applicant had no intention of operating in the Capital Market.  The Directors of the Applicant and the Applicant were involved in only maintaining the Plantations and ensuring that the interest of its Investors were adequately protected.  The Applicant submits that so far only 80 investors had sought for refund of any of their monies and they have been refunded by the Appellant.  None of the other customers have preferred any complaint to any authority seeking refund or accusing the Applicant of not refunding the amounts.

The Applicant had acted bona fide and had the interest of its Investors in their mind.  However the Applicant was shocked to find out that the Respondent had initiated steps for Prosecuting the Promoters of  the Applicant and the Applicant for allegedly violating the provisions of the CIS Regulations, 1999 on 30.04.2002.  The Applicant submits that it had complied with each and every provision of the CIS Regulations, 1999.  There was no cause for the Respondent to have continued with the exercise of its powers and to take steps to initiate prosecution.  The Applicant is feeling the effect of the Orders of the Respondent only now..........................

The Applicant submits that no one would be prejudiced if the Application for condoning the delay in filing the above Appeal is allowed and the Appeal is taken on file.  On the other hand the Applicant would be gravely prejudiced if the Application is not allowed.  It is settled principle of law as laid down by the Hon�ble Supreme Court of India that while considering an Application for condoning the delay there is no requirement to explain each and every day�s delay.�

I have carefully considered the rival submissions.  The impugned order debars the Appellant and its officers from operating in the capital market for 5 years.  Learned Counsel for the Appellant has fairly admitted during the course of the arguments that the Appellant has no intention of operating in the capital market, that at present the Appellant is mainly concerned about the prosecution launched against it.

I do not find any merit in the submission made by the Appellant in this regard.  Submission that the Appellant was totally confused about the very applicability of the order itself is baseless.  I do not find any scope for one to get confused on the scope of the order as it is very clear and unambiguous as could be seen from the text of the order extracted above.  The argument that the Appellant has substantially complied with the requirements of the SEBI (Collective Investment Schemes) Regulations, 1999 is not a reasonable excuse to file an appeal at its sweet will at any time beyond the prescribed time limit.  The Appellant itself has stated as to why it has preferred to file at this juncture in the following words in its application that �The Applicant is feeling the effect of the orders of the Respondent only now�.  I am not satisfied by the explanation put forth by the Appellant seeking condonation of the delay.  The Appellant has not put forth any convincing reason to extend the time limit by 260 days to file the appeal.  It was Appellant�s own decision not to file the appeal with in the stipulated time.

I am not satisfied by the reasons put forth by the Appellant to condone the delay and entertain the appeal at this point of  time.  The appeal is time barred and not maintainable.  Therefore the appeal is dismissed.