Document Fragment View
Matching Fragments
CORAM: Justice J.P. Devadhar, Presiding Officer Jog Singh, Member Per: Justice J.P. Devadhar
1. Whether the Securities and Exchange Board of India ('SEBI' for short) by its order dated 22.08.2014 is justified in holding that the schemes floated by PACL Ltd. ("PACL" for short) constitute Collective Investment Schemes ('CIS' for short) under the Securities and Exchange Board of India Act, 1992 ('SEBI Act' for short) and assuming that the said schemes are CIS, whether SEBI is justified in holding that as a natural consequence, PACL and its promoters and directors, are liable to wind up the said schemes and refund the monies collected from the investors as per the terms of offer, without giving an opportunity to the appellants to register the said schemes in accordance with the regulation framed by SEBI is the basic question raised in all these appeals.
8. Mr. Gaurav Pachnanda learned Senior Advocate appearing on behalf of Mr. Balkaran Singh (applicant in Misc. Application No. 129 of 2015 in Appeal No. 368 of 2014) submitted that the applicant be impleaded as party respondent in Appeal No. 368 of 2014 because pursuant to a Memorandum of Understanding ('MOU' for short) executed on 19th February 2015 by and between M/s. Pearl Group (i.e. PACL Ltd. and its subsidiaries/ associate companies including its directors Mr. Tarlochan Singh, Mr. Sukhdev Singh, Mr. Gurmeet Singh, Mr. Subrata Bhattacharya and Mr. Gurjant Singh Gill and Mr. Balkaran Singh, the said Mr. Balkaran Singh has been appointed as an Additional Director on the Board of PACL with effect from 5th February 2015 along with one Mr. Anil Choudhary Legha as Additional Director. Without allowing the application for impleadment, we permitted counsel for Mr. Balkaran Singh to make submissions as intervener. Accordingly, counsel for Mr. Balkaran Singh submitted that as per MOU dated 19 th February 2015 Mr. Balkaran Singh was to hold 65% shareholding of PACL and the remaining 35% shareholding of PACL was to be with the Pearl Group. Counsel further submitted that Mr. Balkaran Singh will be taking complete control of the management and the Board of Directors of PACL and is at present actively participating in the day to day affairs of PACL. He further submitted that steps are being taken to ensure that funds for repayment to the eligible investors are made available and for that purpose sought time. When asked as to how much time would be required to arrange funds for repaying to customers counsel, for Mr. Balkaran Singh had no answer.
42. Strong reliance was placed by counsel for appellants on decision of this Tribunal in case of Alchemist Infra Reality Ltd. (supra). In that case, the scheme floated by Alchemist, after the CIS Regulations came into force was held to be CIS and since the said CIS was carried on without obtaining registration from SEBI, the CIS was ordered to be wound up under Section 11,11B of SEBI Act read with regulation 65 and 73 of CIS Regulations. While upholding the order of SEBI and rejecting the argument of Alchemist that regulation 73 cannot be applied to a CIS floated after the CIS Regulations came into force, this Tribunal in para 17 held that the provisions for winding up contained in regulation 73 is applicable to CIS existing at the time when the CIS Regulations were introduced as also to the CIS which may have been launched at any point of time thereafter. Whether a CIS floated and operated after the CIS Regulations came into force without obtaining registration from SEBI was entitled to seek registration under regulation 73 read with regulation 68 was neither an issue raised by Alchemist nor decided by this Tribunal. Only issue raised and decided by SEBI as also by this Tribunal in Alchemist was that a CIS floated after the CIS Regulations came into force without obtaining certificate of registration from SEBI is liable to be wound up under the regulation 65 read with regulation 73 of the CIS Regulations. Therefore, the argument that in view of the decision of this Tribunal in case of Alchemist Infra Realty Ltd. (supra) PACL has a right to seek registration under CIS Regulations cannot be accepted.