sebi:CO/187/IMD/12/2003

SEBI · SEBI · 2003-08-05 · G.N. Bajpai, Chairman, Securities and Exchange Board of India

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Facts / Headnote

Debarred the company/its promoters/its directors/its managers/persons in charge of business of its schemes from dealing in and accessing the securities market for five years

Provisions invoked

• s. 11B
• s. 4(3)

Regulations

• Reg. 69
• Reg. 71
• Reg. 73
• Reg. 73(2)
• Reg. 65
• Reg. 10
• Reg. 73(8)

Parties

• PPL

Holding

PPL failed to comply with the order dated October 8, 2003 and violated Regulation 73, and therefore the company, its promoters, directors, managers and persons in charge are debarred from dealing in and accessing the securities market for five years.

Full text

there is no provision in the said Regulations to grant extension of its provisional registration, and as the company had failed to comply with the requirements of Regulation 71 of the said Regulations, in terms of Regulation 73(2), SEBI issued an intimation dated February 19, 2003 to PPL advising it to wind up its existing schemes in accordance with the aforesaid Regulations and to make repayment to its investors. PPL was also directed to send the Information Memorandum (IM) to the investors, who had subscribed to the scheme(s) within two months from the date of receipt of the aforesaid intimation from SEBI in terms of Regulation 73(2). Further, in terms of Regulation 73, PPL was advised to submit "winding up and repayment report" in the SEBI’s specified format so that the said report reaches SEBI within 3½ months of the date of Information Memorandum.

8. I do not find any merit in the contentions of the PPL in issuing post-dated cheques to the investors, since the same cannot be considered as repayment to the investors in terms of regulation 73(8) of the said regulations which says that payment shall be made to the investors within three months of the date of the information memorandum. I find that PPL has failed to comply with the Order dated 8.10.2003 passed by SEBI. Therefore, I find that the request of PPL to SEBI to consider the issuance of post-dated cheques as the redressal of investor complaints is untenable. Regarding the contention of PPL of having submitted interim status report regarding compliance of the requirements of Regulation 71, it is noted that PPL did not submit any report regarding compliance with the requirements of Regulation 71 such as getting its existing schemes rated, appraised, formation of trust, etc. I also note that, instead of complying with the requirements, PPL sought one year extension of the provisional registration granted to it for which there is no provision in the said Regulations. I also note that winding up report was not signed by all the directors of PPL as required in terms of the format prescribed by SEBI and the contentions of PPL in this regard are evasive in nature and not convincing.

5. However, the report submitted by PPL vide letter dated 5.8.2003 was not found to be in conformity with the format specified by SEBI. It was inter alia, noted from the said letter that : i) it was not in the format specified by SEBI vide its letter dated 19.02.2003. ii) the said report was not signed by all the directors and not certified by PPL’s statutory auditors. iii) the repayment was not made to all the investors. Since PPL failed to comply with the requirements of SEBI Act, 1992 and SEBI (Collective Investment Schemes) Regulations, 1999 and violated the specific provisions of Regulation 73 of the SEBI (Collective Investment Schemes ) Regulations, 1999 and also in view of the non- redressal of investor complaints (763 complaints - as on August 31, 2003,) by PPL, SEBI vide its order dated 8.10.03 directed PPL to refund the money collected under its Collective Investment Schemes with returns which is due to the investors as per the terms of the offer within a period of one month from the date of the order.

Source: SecMarx — sebi:CO/187/IMD/12/2003. 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.