Nicer Green Housing Infrastructure Developers Ltd And Others vs Securities And Exchange Board Of India

Tarun Agarwala, Presiding Officer

The present appeal has been filed by the appellants challenging the order dated 18th January, 2021 passed by the Adjudicating Officer (‘AO’

for short) imposing a penalty of Rs.70 lakhs to be paid jointly and severally by the appellants for violating the provisions of Section 12(1B) of the

Securities and Exchange Board of India Act, 1992 (hereinafter referred to as the ‘SEBI Act’) and Regulation 3 of the Securities and Exchange

Board of India (Collective Investment Schemes) Regulations, 1999 (hereinafter referred to as the ‘CIS Regulations’).

The facts leading to the filing of the present appeal is, that certain complaints were received by Securities and Exchange Board of India (hereinafter

referred to as ‘SEBI’) against the Company for not repaying the investors the amount that became due upon maturity. Upon examination and

enquiry it was found that the activity of fund mobilization by the appellant no.1 Company under its schemes/plans with a resultant promise of returns

fell within the ambit of collective investment scheme as defined under Section 11AA of the SEBI Act.

Accordingly, the WTM passed an ex-parte interim order dated 28th July, 2014 restraining the appellants from mobilizing any funds from the public

and also issued a show cause directing the appellants to show cause as to why appropriate orders should not be passed against them for violating the

CIS Regulations. After giving an opportunity of hearing, the WTM passed a final order dated 9th November, 2015 directing the appellants to wind up

the collective investment scheme and refund the money collected with returns which are due to the investors as per the terms of offer within a period

of three months from the date of the order. The appellants were further restrained from accessing the securities market and from launching any

scheme for a period of four years. The said final order was challenged before this Tribunal in appeal no.86 of 2017 wherein the appellants showed

their willingness to comply with the order of the WTM and refund the money that was collected. Accordingly, this Tribunal passed an order dated 13th

November, 2017 disposing of the appeal by permitting the appellants to make a representation which if made would be considered by SEBI.

Thereafter, the representation of the appellants was duly considered by the respondent and, by an order dated 1st June, 2018 the appellants’

representation was rejected. The appellants accordingly preferred appeal no.307 of 2018 which was dismissed by this Tribunal by an order dated 25th

February, 2019 with the following observation;

“4. Having heard the learned counsel for the appellants and upon perusal of the memo of appeal and the impugned order, we find that no proof has

been filed either before SEBI or even before this Tribunal to show that the appellants had refunded a sum of Rs. 27.48 crore and that they are ready

and willing to pay the balance amount in a time bound manner. In the absence of any evidence being filed, we are of the opinion that there is no

infirmity in the order passed by SEBI disposing of their representations.

The appeal lack merit and is dismissed summarily.â€​

A review application no.3 of 2019 was also dismissed by this Tribunal on 27th June, 2019. Thereafter, civil appeal no.7017-7018 of 2020 was

preferred by the appellants before the Supreme Court of India which was also dismissed by judgment dated 2nd September, 2019.

Thus, the order of the WTM holding that the activity of fund mobilization by the appellant Company under its schemes/plans were collective

investment schemes as defined under Section 11AA of the SEBI Act has become final.

The AO issued a show cause notice dated 12th November, 2020 calling upon the appellants to show cause as to why an enquiry should not be held

and penalty should not imposed against them under Section 15D(a) of the SEBI Act for the alleged violations of running a collective investment

scheme. The AO on the same lines as that of the WTM found that the appellants were running a collective investment scheme without obtaining

registration under Section 11AA of the SEBI Act and, accordingly, by the impugned order has imposed a penalty of Rs.70 lakhs.

We have heard the learned counsel for the parties at some length.

The fact that the appellants were running a collective investment scheme without obtaining a registration is no disputed. The fact that before this

Tribunal the appellants made a submission that they will refund the amount which they collected under the scheme to the investors is also not disputed.

This Tribunal accordingly passed an order directing the appellants to make a representation. Till date the amount has not been refunded to the

investors inspite of the order becoming final up to the stage of the Supreme Court.

Thus, there is no equity in favour of the appellants for any kind of relief. The appeal fails and is dismissed with no 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 Private Secretary 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.