Insure Life Infrastructure (India) Ltd. And Others vs Securities And Exchange Board Of India

M.T. Joshi, J

There is a delay of 101 days in filing appeal no.375 of 2018. For the reasons stated in the application, the delay in filing the appeal is condoned. Misc. application is allowed.

Aggrieved by the directions of learned Whole Time Member ('WTM' for short) of the respondent Securities and Exchange Board of India (hereinafter referred to as 'SEBI') dated 5th February, 2018 for violation of section 12(1B) of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as 'SEBI Act') read with section 11AA and Regulation 3 of the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999 (hereinafter referred to as 'CIS Regulations'), the present appeal is preferred by original noticee no.1 Insure Life Infrastructure (India) Ltd. (hereinafter referred to as the 'Company'), noticee no.4 Jagdish Khandelwal and separate appeal bearing no.375 of 2018 original noticee Laxmi Khandelwal.

The order would show that the present appellants alongwith some other directors/entities had in the year 2011 to 2013 launched various investment schemes for purchase of plots and for selling them to the customers. Some of those schemes included selling of one plot to various entities with undivided shares.

Show cause notices were issued to six entities including the present appellants. Despite due services notice except the appellant Company no other noticees including the rest of the appellant had filed any reply. The learned WTM assumed the reply as a joint reply of all the noticees. Thereafter, on two occasions opportunity of personal hearing was granted by service of due notices upon all the noticees. However, none of them including the present appellants remained present for personal hearing. The learned WTM, therefore, took into consideration the material found in the investigation, the reply of the appellant Company and came to the conclusion that the schemes floated were collective investment scheme which required registration as per section 12 (1B) of the SEBI Act and, therefore, the impugned order came to be passed.

In the impugned order, the directions were issued for winding up the collective investment schemes, to refund the money collected under the scheme within a period of three months in the manner as detailed in the directions. The entities were directed not to alienate or dispose the assets of the Company and futher they were restrained from accessing the securities market or holding position as directors or a key managerial person of a listed company for a period of four years. Aggrieved by the said directions, the present appeal is preferred.

Heard Mr. Ramesh Gogawat, Advocate assisted by Mr. Anshuman Sugla, Advocate for the Appellant and Mr. Mustafa Doctor, Senior Advocate assisted by Mr. Anubhav Ghosh, Advocate for the Respondent.

The record would show that the Company of which the present appellants were Directors had floated four schemes. Contribution from the customers was collected. Upon considering the material the WTM found that the schemes were nothing but collective investment schemes as the test of collective investment scheme as defined in section 11AA of the SEBI Act were present in the transactions. Those are:-

"(i) whether there was pooling of contributions for purposes of a scheme;

(ii) whether contributions were made with a view to receive assured realisable value;

(iii) whether the contributions were managed on behalf of the investors; and

(iv) whether the investors did not have day to day control over the management of the scheme.

The appellants did not deny the nature of the schemes. According to them, however, these schemes were not collective investment schemes. However, considering the nature of the scheme as detailed supra, we do not find any merit in the submissions. The learned counsel for the appellant further submitted that certain directions by the High Court of Rajasthan are also given for repayment of the amount under the schemes and those directions are already complied with however the documents are with the appellant. It was also submitted that the appellant Mrs. Laxmi Khandelwal in appeal no.357 of 2018 was Director for a limited period and, therefore, as the directions are complied with she submitted that the order be vacated.

The learned counsel for the respondent submitted that the present submission of the learned counsel would show that as per the appellants the directions are not only accepted but after were implemented. In the circumstances, if appellants and/or other noticees submit the material in this regard to the satisfaction of the WTM necessary order in this regard would be passed of compliance.

Upon hearing both the sides, in our view, the appeals fails on merit. The same are therefore dismissed without any order as to costs. The appellants would be at liberty to place the material before the learned WTM and to satisfy that the directions are complied with. The appeals are accordingly disposed of without any order as to costs.

The present matter was heard through video conference due to Covid-19 pandemic. At this stage it is not possible to sign a copy of this order nor a certified copy of this order could be issued by the registry. In these circumstances, this order will be digitally signed by the Presiding Officer on behalf of the bench and all concerned parties are directed to act on the digitally signed copy of this order. Parties will act on production of a digitally signed copy sent by fax and/or email.