Mr. Nitin Sharma vs Sebi

BEFORE THE SECURITIES APPELLATE TRIBUNAL MUMBAI Date of Decision : 01.11.2022 Appeal No. 742 of 2022 Mr. Nitin Sharma Proprietor, National Investment Adviser Organization 48, Duplex Colony, L.I.G., Indore, (M.P.) - 452001. ..... Appellant Versus Securities & Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051. ...... Respondent Mr. Abhishek Mishra, CS for the Appellant. Mr. Suraj Chaudhary, Advocate with Ms. Nidhi Singh, Ms. Deepti Mohan, Ms. Binjal Samani, Ms. Purvi Jain, Mr. Niket Dalal, Advocates i/b Vidhii Partners for the Respondent. CORAM : Justice Tarun Agarwala, Presiding Officer Ms. Meera Swarup, Technical Member Per : Justice Tarun Agarwala, Presiding Officer (Oral) 1. The present appeal is filed against the order dated July 28, 2022 passed by the Whole Time Member (hereinafter referred to as 2 'WTM') of Securities and Exchange Board of India (hereinafter referred to as 'SEBI') imposing a penalty of Rs. 6 lacs under Section 15HA and 15HB of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as 'SEBI Act') for running an investment advisor services without getting registered under Section 12(1) of the SEBI Act read with Regulation 3(1) of the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 (hereinafter referred to as 'Investment Advisers Regulations').

The WTM further directed the appellant to refund the monies received from the investors within two months. 2. The facts leading to the filing of the present appeal is, that pursuant to a complaint received by SEBI, an investigation was conducted which led to the issuance of the show cause notice to National Investment Adviser Organization and its proprietor Nitin Sharma, the appellant. The show cause notice alleged that investment advisor was carrying out without obtaining registration from SEBI which was in violation of Section 12(1) of the SEBI Act read with Regulation 3(1) of the Investment Advisers Regulations. The WTM after considering the reply and the material evidence on record found that the investment advisor service carried out by the appellant was being done without obtaining registration and WTM 3 accordingly directed the appellant to refund the money received from the investors and further imposed a penalty of Rs. 6 lacs. 3. We have heard Mr. Abhishek Mishra, Company Secretary for the appellant and Mr. Suraj Chaudhary, the learned counsel with Ms. Nidhi Singh, Ms. Deepti Mohan, Ms. Binjal Samani, Ms. Purvi Jain, Mr. Niket Dalal, the learned counsel for the respondent.

4. The only ground urged is, that the WTM has not taken into consideration the submission made by the appellant. It was contended that the appellant is not the sole proprietor of the National Investment Adviser Organization and that he was a partner of 33% alongwith Jitendra Bhensadadiya and Bhavesh and, therefore, cannot be made responsible for the activities carried out by the partnership firm. It was also stated that in support of the submission that the appellant was carrying out a partnership with others had filed the draft partnership deed. The appellant further contended that since the business was incurring losses, he exited and handed over the entire business to one Sameer Singh Parihar on May 23, 2016. It was alleged that all these facts were not considered by the WTM in the right perspective and consequently prayed that the order of the WTM should be set aside. 5. Having heard the company secretary for the appellant and having perused the record, we find that the admittedly no registration was taken by the firm / organization for carrying out advisory service under Regulation 3(1) of the Investment Advisers Regulations read with Section 12(1) of the SEBI Act.

These activities carried by the organization without registration was wholly unlawful. The aforesaid facts are admitted. The only contention raised by the appellant is that he was not a sole proprietor of the organization and that he was only 33% partner in the partnership firm alongwith Mr. Jitendra Bhensadadiya and Bhavesh. In this regard, we have perused the agreement which has been filed and we find that it is an incomplete and draft agreement and only contains the signature of the appellant and not of the other partners. In this regard, we also find that the WTM has considered the aforesaid document and found that such document cannot be relied upon in the absence of any other material. No such material has been shown to us to indicate that the appellant was not carrying on its business as a sole proprietor. In fact, the bank account opened for this purpose shows that the appellant was the sole proprietor. 6. In the light of the aforesaid, we do not find any manifest error in the order passed by the WTM. The appeal fails and is dismissed with no order as to costs. 7. 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 Ms. Meera Swarup RAJALAKS Digitally signed by Technical Member HMI 01.11.2022 RAJALAKSHMI HARISH HARISH NAIR Date: 2022.11.02 PTM NAIR 16:11:23 +05'30'