M/S. Capital Mirror vs Sebi

Date of Decision : 23.01.2023

Misc. Application No. 388 of 2020 And Appeal No. 379 of 2020

M/s. Way2Gains and its Proprietor Mr. Rajeev Kumar Tiwari No. 365, 19th Cross, N S Palya, BTM Layout, 2nd Stage, Bengaluru - 560 076. ..... Appellant

Versus

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

Mr. Vedchetan Patil, Advocate with Ms. Sunayana Kashid, Advocate i/b MJ Juris for the Appellant.

Mr. Sumit Rai, Advocate with Mr. Manish Chhangani, Mr. Ravishekhar Pandey and Ms. Samreen Fatima, Advocates i/b The Law Point for the Respondent.

WITH Misc. Application No. 391 of 2020 And Appeal No. 380 of 2020

M/s. Astro Capital and its Proprietor Mr. Ankit Kumar Upadhayay No. 23, 1st Floor, 45th Cross, Sri Sai Complex, Jayanagar 8th Block, Bengaluru - 560 085. ..... Appellant 2

Versus

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

Mr. Vedchetan Patil, Advocate with Ms. Sunayana Kashid, Advocate i/b MJ Juris for the Appellant.

Mr. Sumit Rai, Advocate with Mr. Manish Chhangani, Mr. Ravishekhar Pandey and Ms. Samreen Fatima, Advocates i/b The Law Point for the Respondent.

AND Misc. Application No. 394 of 2020 And Appeal No. 381 of 2020

M/s. Capital Mirror and its Proprietor Mr. Saurabh Sameer No. 8, 16th Main, 2nd Floor, BTM Layout, 2nd Stage, Bengaluru - 560 076. ..... Appellant

Versus

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

Mr. Vedchetan Patil, Advocate with Ms. Sunayana Kashid, Advocate i/b MJ Juris for the Appellant.

Mr. Sumit Rai, Advocate with Mr. Manish Chhangani, Mr. Ravishekhar Pandey and Ms. Samreen Fatima, Advocates i/b The Law Point for the Respondent. 3

CORAM : Justice Tarun Agarwala, Presiding Officer Justice M.T. Joshi, Judicial Member Ms. Meera Swarup, Technical Member

Per : Ms. Meera Swarup, Technical Member

1.

Three appeals were filed by the Appellants challenging

the common order dated July 30, 2020 (Impugned Order)

passed by the Whole Time Member („WTM‟ for short) of the

Securities and Exchange Board of India („SEBI‟, the

respondent) concluding that the appellants were providing

unregistered investment advisory activities in breach of

Section 12(1) of SEBI Act, 1992, SEBI (Investment Advisers)

Regulations, 2013 („IA Regulations, 2013‟ for short) and

SEBI (Portfolio Managers) Regulations, 1993. Vide the

impugned orders the WTM issued directions to the Appellants

to primarily, refund within a period of 3 months the money

collected from their clients / investors in form of fees. They

were also debarred from accessing the securities market for a

period of two years.

2. SEBI conducted preliminary examination into the

activities of the Appellants based on the complaints received

against the three Appellants and their Proprietors. On 4

examination of the websites and material on record like Bank

Statements, information from payment gateways etc, SEBI

concluded that all the Appellants were engaged in providing

investment advisory activities and portfolio management

services (Appellant no. 1) without obtaining registration from

SEBI in violation of provisions of SEBI Act, 1992, SEBI

(Investment Advisers) Regulations, 2013 and SEBI (Portfolio

Managers) Regulations 1993. An Interim Order dated March

29, 2019 was passed by SEBI directing the Appellants to

cease and desist from acting as an investment advisor or

portfolio manager and from accessing the securities market

and including buy, sell or otherwise deal in securities until

further orders. The Appellants were directed to show cause as

to why various schemes offered by them should not be held as

"Investment Advisory Services" or "Portfolio Management

Services" in terms of IA Regulations, 2013 and the same be

treated as unregistered activities and why appropriate

directions under Section 11(1), 11(B) and 11(D) of SEBI Act

should not be issued against them.

3. The Appellants, through their written replies dated April

22, 2019 and April 19, 2019 admitted that they were involved

in providing advisory services for investment in equity shares, 5

commodities and derivatives. They were provided opportunity

of personal hearing wherein they reiterated the submissions

made in their written replies. The WTM after considering the

replies and all other relevant material available concluded in

the impugned order that the activities preferred by the three

appellants establish that they were engaged in providing

illegal unregistered investment advisory services which were

glaringly in violation of Section 12(1) of SEBI Act and

Regulation 3(1) of the IA Regulations. The WTM also

concluded that the charges against the Appellant in Appeal

no. 379 of 2020 (Way2Gains) of engaging in offering

unregistered portfolio management services is not

maintainable.

4. We have heard Shri Vedchetan Patil, the learned

counsel for the appellants and Shri Sumit Rai, the learned

counsel for the respondent.

5. The only contention raised by the Appellants is that

SEBI ought to have restricted the order of refund of monies

collected in the form of fees only to the extent of the clients /

investors who had a grievance with and specifically complaint

against the Appellants. The respondent could not have passed

an order to refund the entire monies collected by the 6

Appellants including those clients / investors who did not

raise any complaints against the appellant.

6. We find that admittedly all the three Appellants were

engaged in carrying out investment advisory services without

registration with SEBI as required under the SEBI Act and its

relevant Regulations. Thus, the activities that the Appellants

were carrying out were unlawful and, thus, the entire money

collected by the Appellants needs to be refunded. The

directions given by the WTM in the impugned order require

no interference.

7. We find that the controversy involved in the present

appeal is squarely covered by a decision of this Tribunal in

Eprofitzone Fincap Consultant Private Limited & Ors. vs

SEBI (Appeal no. 490 of 2022 decided on August 25, 2022),

Shri T. Prabhu vs SEBI (Appeal no. 1019 of 2022 decided

on January 3, 2023) and Murugan Deivendran vs SEBI

(Appeal no. 309 of 2022 decided on November 16, 2022).

8. In view of the aforesaid, we do not find any error in the

impugned order. The appeals are dismissed with no order as

to costs. The miscellaneous applications are disposed of. 7

9. This order will be digitally signed by the Private

Secretary on behalf of the bench and all concerned parties are

directed to act on the digitally signed copy of this order.

Certified copy of this order is also available from the Registry

on payment of usual charges.

Justice Tarun Agarwala Presiding Officer

Justice M.T. Joshi Judicial Member

Ms. Meera Swarup Technical Member

23.01.2023 MADHUKAR Digitally signed by MADHUKAR SHAMRAO SHAMRAO BHALBAR

msb BHALBAR Date: 2023.01.24 16:14:15 +05'30'