- (1.) THE Appellant is a public limited company incorporated on December 14, 1993. THE certificate of commencement of business was issued to the Appellant on January 5, 1994 by the Registrar of Companies. Its paid capital is Rs.13.3 lakhs comprising 132990 equity shares of Rs.10/- each. Out of the said 132990 shares Phenomenal Housing Finance (I) Ltd is holding 129960 shares. THE remaining 3030 shares are held by 7 others. THE Appellant is engaged in plantation business and is operating collective investment schemes. THE Appellant has mobilised funds from the public on 3 stages with different amounts of subscription and benefits for the same scheme of "PPL Teak Bond". It had floated three "schemes" - 1st scheme was floated in 1994-95, 2nd one in 1995-96 and the third one in 1996-97. While the 1st scheme maturity period is for 15 years, the maturity period for the 2nd scheme is 16 years. THE 3rd scheme has Plan A and Plan B. While Plan A extends upto 16 years Plan B extends upto 22 years. THE schemes have a total number of about 38,000 investors. As per the information available on record the total funds mobilised from public against issuing PPL Teak Bond (as per the audited accounts as on 31.3.1997) was to the tune of Rs.5,10,79,640 (after deducting the amount pertaining to the discontinued Teak Bonds). Since neither party to the appeal has produced the audited balance sheet of the Appellant, the Appellant's current financial position- assets and liabilities- is not known.
(2.) Section 11AA of the Securities and Exchange Board of India Act, 1992 (the Act6) defines collective investment scheme. The Appellant comes under the purview of the said definition. In terms of the Act, and the Securities and Exchange Board of India (Collective Investment Schemes), Regulations, 1999 ( the Regulation) the Respondent is mandated to regulate the working of collective investment schemes. The Regulation came into force on October 15, 1999. As per regulation 5(1) any person who immediately prior to the commencement of the Regulation was operating a collective investment scheme, shall subject to provisions of Chapter IX of the Regulation, make an application to the Respondent for the grant of certificate of Registration within a period of two months from the date of notification (i.e. October 15, 1999). Thus all existing collective investment scheme entities are subject to the provisions of Chapter IX and required to apply for registration by December 14, 1999. As per regulation 74 an existing scheme not desirous of obtaining registration is required to repay the investors in the manner specified in regulation 73. As per regulation 73(1) an existing collective investment scheme which has failed to make an application for registration or has not been granted provisional registration, or having obtained provisional registration fails to comply with the provisions of regulation 71, is required to wind up the scheme and repay the investors. As per regulation 73(2) an existing collective investment scheme is required to send an information memorandum to all the investors who have subscribed to the schemes, within two months from the stipulated date. The information memorandum should contain the details of the state of affairs of the scheme, the amount payable to each investor and the manner in which such amount is determined. The Respondent had issued public notices and also specific notice to the Appellant pointing out the requirement of the regulation. But the Appellant did not apply for registration. It also did not take steps to wind up the schemes in terms of the regulation. In the said context the Respondent felt that the Appellant had failed to comply with the requisite statutory requirements and issued directions under 11B of the Act, read with regulation 65,73 and 74 of the Regulation, debarring it and its promoters, directors and managers and persons in charge of its schemes from operating in the capital market for a period of 5 years. The said direction was issued on July 2, 2001. The applicability of the said direction/order to the Appellant is under challenge in the present appeal. Shri S.K.Jegdish, learned Counsel appearing for the Appellant submitted that the impugned order dated July 2, 2001, forwarded by the Respondent vide its letter dated July 10, 2001 reached the Appellant only on July 20, 2001 and the Appellant filed the appeal within the stipulated time The Respondent has not disputed the factual position of sending the order on July 10, 2001 or receipt of the same by the Appellant on July 20, 2001. Therefore, there appears to be no delay involved in filing the appeal , requiring condonation as sought by the Appellant vide application No.13/2001 dated August 31, 2001.
(3.) AS the Appellant had interalia prayed that an interim order be issued staying (a) the operation of the impugned order pending disposal of the appeal and (b) publication of Appellant's name in the 'black list' in the news papers, the matter was posted for hearing on September 26, 2001.When the matter was taken up on September 26, 2001 Ms Anita Anoop, who represented the Respondent, submitted that the Respondent would be filing its reply by October 5, 2001 and as such the appeal can be disposed of expeditiously obviating the need for any interim order.;