sebi:8125/24/9

SEBI · SEBI · 2002-02-04 · G. Anantharaman, Whole Time Member

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Facts / Headnote

Directed the company to wind up its existing collective investment scheme(s) and refund money collected with returns within one month, failing which prosecution, debarring from capital market for 5 years, criminal referral, and winding up of the company would follow

Provisions invoked

• s. 11
• s. 24
• s. 11B
• s. 12

Regulations

• Reg. 4
• Reg. 68
• Reg. 74
• Reg. 73
• Reg. 65
• Reg. 3
• Reg. 5(1)
• Reg. 68(1)

Parties

• M/s Highway Users' Centres (India) Limited

Holding

The company was directed to wind up its existing collective investment scheme(s) and refund investors within one month for failure to register with SEBI or wind up under the CIS Regulations. Failure to comply would trigger prosecution, 5-year debarring from capital market, criminal referral, and winding up proceedings.

Full text

Date of Final Hearing: November 21, 2006 Appearances : For noticee : Shri Surendhra Khandhar, Director For Securities and Exchange Board of India: Shri Santosh Sharma, Dy. General Manager. 1.0

any information with SEBI nor did it apply for registration for carrying on a collective investment scheme. As the Company had not obtained a certificate of registration from SEBI to launch a Collective Investment Scheme, a notice dated July 18, 2002, was issued to the company asking it to show cause as to why the action mentioned therein should not be initiated against it and its promoters/ directors/persons in charge of the scheme(s) in terms of the provisions of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as the Act) and the CIS Regulations made thereunder. 1.3 The company vide its reply dated August 30, 2002 inter alia contended that as it was not operating any collective investment scheme, the provisions of the CIS Regulations were not applicable to it. It was further claimed that no money was mobilized from the investors or the public under the collective investment schemes and therefore, it was not required to file any information with SEBI. 1.4 SEBI had also provided various opportunities of hearing and finally the matter was heard on February 12, 2003. Shri Burzin Somandy, Advocate represented the company before SEBI on the said date of hearing and made submissions on its behalf on the lines of the reply filed by the company. As requested by the company, an opportunity of inspection of documents was also granted by SEBI, pursuant to the said hearing and the same was availed by the company on February 14, 2003. Copies of investor comp

1.5 In the facts and circumstances, SEBI vide order dated April 24, 2003, in exercise of powers conferred under Section 11 B of the Act read with Regulation 65 of the CIS Regulations, inter alia directed the company to wind up its existing scheme(s) and refund the money collected under the scheme(s) with returns which were due to the investors as per the terms of offer within a period of one month from the date of the said order. It was also ordered that, if the company failed to comply with the said directions, the following actions would follow: a. Initiation of prosecution proceedings, under Section 24 of the SEBI Act, 1992, against the company I its promoters I directors I managers I persons in charge of the business of its scheme( s), b. Debarring the company I its promoters/ directors I managers I persons in charge of the business of its schemes (s) from operating in the capital market and accessing the capital market for a period of 5 years c. Writing to the State Government I local police to register civil/ criminal cases against the company and its promoters I directors for apparent offences of fraud, cheating, criminal breach of trust and misappropriation of public funds, and d. Writing to the department of company affairs, to initiate the process of winding up of the company. 1.6 The aforesaid order of SEBI was challenged by the company before the Hon’ble Securities Appellate Tribunal (hereinafter referred to as SAT). SAT vide order dated September 01, 2004 dispose

Source: SecMarx — sebi:8125/24/9. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.