Life Fund vs Sebi

Date of Decision : 10.02.2020

Appeal No. 26 of 2020

Life Fund First Floor, Cambay Plaza, Inside Cambay Grand, Behind PERD Centre, Near Sola Over Bridge, Thaltej, Ahmedabad - 380 054, Gujarat. ......Appellant

Versus

Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051. ... Respondent

Mr. Santosh Thakur, Advocate for the Appellant. Mr. Anubhav Ghosh, Advocate i/b The Law Point for the Respondent.

CORAM : Justice Tarun Agarwala, Presiding Officer Dr. C. K. G. Nair, Member Justice M. T. Joshi, Judicial Member

Per : Justice Tarun Agarwala, Presiding Officer (Oral) 2

1.

The present appeal has been filed against the order dated

September 3, 2019 passed by the Whole Time Member (hereinafter

referred to as 'WTM') of Securities and Exchange Board of India

(hereinafter referred to as 'SEBI') prohibiting the appellant from

taking up new clients and new contracts and cancelling the certificate

of registration as an Alternate Investment Fund.

2. The facts leading to the filing of the present appeal is, that

SEBI found that the funds raising activity of Neesa Technologies

Ltd. by offering Non-Convertible Debentures (NCDs) in the financial

year 2013-14 was in violation of Securities and Exchange Board of

India Act, 1992 and the Companies Act, 1956. Accordingly, SEBI

passed an order dated June 2, 2016 issuing various directions to

Neesa Technologies Ltd. and to its promoters and directors directing

refund of the money collected by the company through the issuance

of the NCDs and further restrained them from accessing the

securities market and from buying, selling or otherwise dealing in the

securities market.

3

3. One such director of Neesa Technologies Ltd. was Mr. Sanjay

Gupta who was also a sponsor in the appellant and was a director of

Manager of Life Fund, namely, M/s. Global Life Investment and

Advisory Services Pvt. Ltd.

4. SEBI, accordingly initiated proceedings against the appellant

under the Securities and Exchange Board of India (Intermediaries)

Regulations, 2008 in order to determine whether the appellant

continues to satisfy the criteria of "fit and proper person". The

designated authority submitted a report dated November 10, 2017

recommending cancellation of the certificate of registration granted

to the appellant on the ground that the appellant failed to satisfy the

criteria of fit and proper person.

5. Based on the report, SEBI issued a show cause notice and

pursuant to the reply submitted, the impugned order was passed.

6. We have heard the learned counsel for the parties at some

length.

4

7. We find that against the order dated June 2, 2016 passed by

SEBI against Neesa Technologies Ltd. and its directors, Mr. Sanjay

Gupta filed an appeal No. 156 of 2017 before Securities Appellate

Tribunal (SAT) which was dismissed by the Tribunal by an order

dated April 16, 2019. We find that initially the appellant took a stand

that it was essential for the appellant that Mr. Sanjay Gupta

continued as the sponsor of the appellant. Subsequently, they took a

stand that the resignation of Mr. Sanjay Gupta would be taken and,

therefore, some time may be allowed to process the resignation of

Mr. Sanjay Gupta. We, however, find that the said request was made

as far as long back on December 24, 2017 but till the date of passing

of the order on September 3, 2019 and even as on date there is

nothing to indicate that the appellant had taken any concrete steps to

obtain the resignation of Mr. Sanjay Gupta. In the absence of any

evidence to show that Mr. Sanjay Gupta was no longer the sponsor of

the appellant or a shareholder / director or the manager of the

appellant, we are of the opinion that the finding of the WTM that the

appellant failed to satisfy the criteria of "fit and proper person" in

terms of Regulation 4(f) of Securities and Exchange Board of India

(Alternative Investment Funds) Regulations, 2012 (hereinafter

referred to as 'AIF Regulations') cannot be faulted with. 5

8. In the light of the aforesaid, the appeal lacks merit and is

dismissed summarily at the admission stage itself.

Sd/-

Justice Tarun Agarwala Presiding Officer

Sd/-

Dr. C. K. G. Nair Member

Sd/-

Justice M. T. Joshi Judicial Member 10.02.2020 Prepared & Compared by PTM