Navneet Kumar & Anr. vs Sebi

Date of Decision : 02.03.2023

Appeal No. 224 of 2023

1.

Navneet Kumar House No. 101, Street No. 13, New Ram Nagar, Mundian Kalan, Ludhiana - 141015.

2. Kamaljeet Singh House No. 84, Vill. Birmi, Ludhiana - 142027. ......Appellants

Versus

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

Ms. Simranjeet Kaur, Advocate for the Appellants.

Mr. Sumit Rai, Advocate with Mr. Ravishekhar Pandey, Ms. Shefali Shankar, Ms. Rasika Ghate, Mr. Nishit Dhruva, Advocates i/b. MDP & Partners for the Respondent.

CORAM : Justice Tarun Agarwala, Presiding Officer Ms. Meera Swarup, Technical Member

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

1. The present appeal has been filed against the order dated

December 30, 2022 passed by the Executive Director of Securities

and Exchange Board of India (hereinafter referred to as 'SEBI')

imposing a penalty of Rs. 5 lacs each on the appellants for carrying

out investment advisory activities without getting itself registered

under Securities and Exchange Board of India (Investment Advisers)

Regulations, 2013 (hereinafter referred to as 'Investment Advisers

Regulations').

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

complaint was received by SEBI that the appellants are giving false

assurances of handsome returns and are operating through a website.

Based on the complaint, SEBI conducted an examination into the

affairs of the appellants and found that the appellants were

collectively carrying out an unregistered investment advisory

activities. Accordingly, a show cause notice dated July 18, 2022 was

issued to show cause as to why an enquiry should not be held and

penalty should not be imposed. The authority after considering the

reply and the material evidence on record found that the appellants

were carrying out investment advisory services without getting

registered under the Investment Advisers Regulations, 2013 and, 3

accordingly, issued a number of directions for refund of the amount

collected and also imposed a penalty of Rs. 5 lacs each.

3. We have heard Ms. Simranjeet Kaur, the learned counsel for

the appellants and Mr. Sumit Rai, the learned counsel with

Mr. Ravishekhar Pandey, Ms. Shefali Shankar, Ms. Rasika Ghate,

Mr. Nishit Dhruva, the learned counsel for the respondent.

4. The contention of the appellant Navneet Kumar is that he was

a freelance website designer and software developer and is not

involved in advisory services. The said appellant contended that

Kamaljeet Singh had approached him to prepare a website for his

advisory services which he had done and beyond creating the

website, the said appellant had nothing to do with the advisory

activities carried out by Kamaljeet Singh.

5. In so far as the appellant Kamaljeet Singh is concerned, he

admitted that he carried out the advisory activities without obtaining

registration from SEBI as had no knowledge about the SEBI Act and

its Regulations and immediately upon coming to know he had

stopped the business activities. It was contended that a lenient view

should be taken.

4

6. Having heard the learned counsel for the parties, we find that

the appellants were known to each other for many years and were

engaged together in many business activities. In so far as the

investment advisory activities is concerned, admittedly the appellant

Navneet Kumar designed the website. We however find that in the

website that was designed by the appellant Navneet Kumar, his bank

accounts were mentioned in the website for receiving fees from the

clients. Further the address of the appellant Navneet Kumar was also

used in the website. Thus, the contention of the appellant Navneet

Kumar that he was not involved in the advisory activities and had

only business relationship with Kamaljeet Singh for the purpose of

website designing is erroneous.

7. The evidence that has come on record clearly indicates that

the advisory activities was being carried out by both the appellants

Navneet Kumar and Kamaljeet Singh without registration and,

therefore, there was a contravention to Section 12(1) of the SEBI Act

read with Regulation 3(1) of the Investment Advisers Regulations.

8. Consequently, we do not find any error in the impugned order

passed by the Executive Director. The appeal fails and is dismissed. 5

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

Ms. Meera Swarup Technical Member PRAMILA Digitally signed by PRAMILA TANAJI 02.03.2023 TANAJI MISAL Date: 2023.03.03 PTM MISAL 16:14:48 +05'30'