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c) Expression 'Collective Investment Scheme' is defined under Section 11AA of SEBI Act which is inserted with effect from 22.02.2000. Reference to a 'company' in the opening words of Section 11AA(2) is intended to reiterate the position that it is only a Collective Investment Management company which is entitled to obtain a certificate for carrying on a CIS. Section 11AA(2) cannot be construed to mean that the CIS carried on by an entity other than a company falls outside the purview of SEBI Act and the CIS Regulations. To construe that Section 11 AA restricts the power of SEBI to regulate CIS made or offered by a company alone would render Section 12(1B) of the SEBI Act and Regulations 3 and 4 of the CIS Regulations otiose and would also run counter to the intent and the object of the SEBI Act and the CIS Regulations.

Thus, the expression 'collective investment scheme' was initially defined under the CIS Regulations, 1999 thereafter, by inserting Section 11AA the expression 'Collective Investment Scheme was defined under the SEBI Act' with effect from 22.02.2000.

11. With this background, we may now consider the first question raised in this appeal, namely, whether SEBI is justified in holding that the Art Fund sponsored by the appellant as AMC of the Trust constitutes CIS under Section 11AA of SEBI Act 1992.

13. Appellants however contend that since Section 11AA(2) begins with the words "any scheme or arrangement made or offered by any company", it must be held that the expression "Collective Investment Scheme" defined under Section 11AA(1) is restricted only to a scheme or arrangement made or offered by any company which satisfy the conditions set out under Section 11AA(2). It is contended that in the present case the scheme is floated on behalf of a Trust and not by a company and therefore the scheme in question falls outside the purview of SEBI Act. There is no merit in the above contention because, as noted earlier, the expression 'Collective Investment Scheme' defined under Section 11AA(1) is wide enough to cover any scheme or arrangement made or offered by any entity and is not restricted to any scheme or arrangement made or offered by any company. The words 'any scheme' under Section 11AA(1) is wide enough to cover any scheme made or offered by any entity. Since SEBI is empowered under the SEBI Act to regulate CIS made or offered by any entity and SEBI has framed CIS Regulations in the year 1999 and in the said regulations it is provided that no person other than a collective investment management company which has obtained a certificate under CIS Regulations shall carry on CIS, Section 11AA inserted to SEBI Act with effect from 22.02.2000 reiterates that any scheme or arrangement made or offered by any entity which satisfies the conditions set out under Section 11AA(2) would be CIS, however, only a collective investment management company which satisfies the conditions set out under Section 11AA(2) shall be eligible to obtain registration from SEBI for operating CIS.

15. Apart from the above, Section 12(1B) inserted to the SEBI Act with effect from 25.1.1995 provides that no person shall sponsor/carry on any CIS unless he obtains a certificate of registration from SEBI in accordance with the regulations framed by SEBI. Proviso to Section 12(1B) provides that any person sponsoring/carrying on any CIS prior to the insertion of Section 12(1B) may continue to operate the CIS till such time regulations are framed by SEBI. Accordingly SEBI has framed the CIS Regulations 1999 which came into force with effect from 15.10.1999. Under the CIS Regulations, the expression 'Collective Investment Scheme' was defined under regulation 2(2). Regulation 3 of CIS Regulations provides that no person other than a Collective Investment Management Company which has obtained a certificate under the CIS Regulations shall carry on or sponsor or launch a CIS. Thus, reading section 12(1B) together with the CIS Regulations, it is apparent that under the SEBI Act any CIS made or offered by any entity could be carried on only till 14.10.1999 and on the CIS Regulations coming into force from 15.10.1999 only a Collective Investment Management Company which has obtained a certificate under the CIS Regulations could carry on a CIS. In other words, prior to the CIS Regulations were notified, any entity could carry on CIS and after CIS Regulations came into force it is only a Collective Investment Management Company which has obtained a certificate from SEBI under the CIS Regulations is entitled to carry on or sponsor or launch a CIS.