Shree Sai Spaces Creations Ltd. & Ors. vs Sebi

Date of decision: 20/04/2016

Misc. Application No.43 of 2016 With Misc. Application No.151 of 2015 And Appeal No.180 of 2015

1.

Shree Sai Spaces Creations Ltd.

Sai Villa Bungalow, CDC-50, Vir Sawarkar Road, Purna Nagar, Behind H.P. Petrol Pump, Chinchwad, Pune - 411 019.

2. Suresh Lal Shrivastav Sai Villa Bungalow, CDC-50, Vir Sawarkar Road, Purna Nagar, Behind H.P. Petrol Pump, Chinchwad, Pune - 411 019.

3. Ms. Laxmi Suresh Lal Shrivastav Sai Villa Bungalow, CDC-50, Vir Sawarkar Road, Purna Nagar, Behind H.P. Petrol Pump, Chinchwad, Pune - 411 019.

4. Ritesh Kumar Shrivastav Sai Villa Bungalow, CDC-50, Vir Sawarkar Road, Purna Nagar, Behind H.P. Petrol Pump, Chinchwad, Pune - 411 019.

5. Vivek Kumar Shrivastav Sai Villa Bungalow, CDC-50, Vir Sawarkar Road, Purna Nagar, Behind H.P. Petrol Pump, Chinchwad, Pune - 411 019.

6. Rajkumar Laxman Konde PL No.312, SCT-28, PL No.06, Pradhikaran Nigadi, Pune - 411 044. ... Appellants -2-

Versus

Securities and Exchange Board of India having its registered office at SEBI Bhavan, Plot No.C4-A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051. ... Respondent

Mr. Sharan Jagtiani a/w Mr. Sukrut Mahatre, Advocates i/b Mindspright Legal for Appellants.

Mr. Vikram Nankani, Senior Advocate a/w Mr. Tomu Francis, Advocate for the Respondent.

CORAM : Justice J.P. Devadhar, Presiding Officer Jog Singh, Member Dr. C.K.G. Nair, Member

Per : Justice J.P. Devadhar (Oral)

1. This appeal is filed to challenge the order passed by the Whole Time

Member of Securities and Exchange Board of India ("WTM of SEBI" for short)

on 24th November, 2014. By the said order, it is held that the schemes floated

by the appellants constitute Collective Investment Scheme ("CIS" for short)

under the SEBI (Collective Investment Scheme) Regulations, 1999 ("CIS

Regulations" for short) and the appellants, inter alia, have been directed to

refund the monies collected by the company under the schemes with returns

which are due to its investors as per the terms of offer within the time

stipulated therein. Appellants have filed Misc. Application No.151 of 2015

seeking stay of order dated 24th November, 2014.

2. During the pendency of the appeal, Recovery Officer of SEBI issued a

recovery certificate on 24th February, 2016, wherein it is stated that as the

appellants have not taken any steps to refund the amounts to the investors as -3-

per the order dated 24th November, 2014, the appellants are liable to pay

Rs.39,22,03,162 and with a view to protect the interests of investors, it is

stated that the assets of the appellants have been attached. Appellants have

filed Misc. Application No.43 of 2016 seeking stay of the recovery certificate

inter alia on the ground that the refundable amount quantified under the

recovery certificate is incorrect. By our order dated 11th March 2016, we had

directed that no coercive steps shall be taken to implement the impugned

order till the next date of hearing and that order has been continued from

time to time.

3. It is not in dispute, that the Recovery Officer of SEBI has considered

the grievance of the appellants and has agreed to amend the recovery

certificate by recording that the amount refundable by the appellants to the

investors would be Rs.3,92,20,316 and not Rs.39,22,03,162 as originally stated

in the Recovery Certificate dated 24th February 2016. It is also not in dispute,

that during the pendency of the appeal, the appellants with a view to put an

end to the controversy have agreed to implement the impugned order by

refunding the amount to the investors and accordingly the Recovery Officer

of SEBI has granted three weeks time to the appellants to submit a proposal

setting out the modalities for refunding the amount to the investors.

4. Since the appellants, during the pendency of the appeal, have agreed

to implement the impugned order, the basic dispute raised in the appeal that

the schemes floated by the appellants are not covered under CIS becomes

academic. In such a case, depending on the proposal to be submitted by the

appellants, the dispute if any, will only be in relation to the implementation

of the impugned order.

-4-

5. In these circumstances, we pass the following order:-

(a) In view of the appellants agreeing to implement the impugned

order, the question as to whether the schemes floated by the

appellants are covered under CIS or not, becomes academic and

hence need not be answered in this appeal.

(b) If the proposal to be submitted by the appellants within three

weeks as directed by the Recovery Officer, is accepted, then the

impugned order shall be implemented as per the approved

proposal.

(c) If the proposal submitted by the appellants is rejected, then the

appellants shall be at liberty to challenge the same before his

Tribunal.

(d) If the appellants submit the proposal for implementation of the

impugned order within the stipulated time, the Recovery

Officer of SEBI shall consider the said proposal of the appellants

within one week of receiving the proposal. In the event of the

Recovery Officer rejecting/modifying the proposal, in order to

enable the appellants to move this Tribunal, we extend the

interim order granted on 11th March 2016 for a period of six

weeks from today.

(e) It is made clear that if the appellants fail to submit the proposal

for implementation of the impugned order within the stipulated

time or fail to implement the proposal as approved by the

Recovery Officer or as directed by this Tribunal, then SEBI shall -5-

be entitled to implement the impugned order in toto as more

particularly set out in para 9 & 11 of the impugned order.

6. Appeal is disposed of in the above terms with no order as to costs.

7. In view of the disposal of appeal, two Misc. Applications filed by the

appellants become infructuous and hence those Misc. Applications are

disposed of as infructuous.

Sd/-

Justice J.P. Devadhar Presiding Officer

Sd/-

Jog Singh Member

Sd/-

Dr. C.K.G. Nair Member 20/04/2016 Prepared & compared by ddg