sebi:EAD/KS/VB/AO/183-188/2018-19
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Facts / Headnote
Noticees found in violation of Section 12(1B) of the SEBI Act and Regulation 3 of CIS Regulations; penalty imposed under Section 15D(a) (amount not specified in extract)
Provisions invoked
- s. 11A
- s. 11
- s. 15A
- s. 15
- s. 19
- s. 12
- s. 15J
- s. 15F
- s. 15D
- s. 291
- s. 179
Regulations
- Reg. 3
Parties
- Noticee-1 (KREL)
- Noticee-2
- Noticee-3
- Noticee-4
- Noticee-5
- Noticee-6
Holding
The Noticees, including KREL and its directors (Noticee-2 to Noticee-6), were held to have violated Section 12(1B) of the SEBI Act and Regulation 3 of the CIS Regulations by floating/sponsoring/launching collective investment schemes without obtaining registration from SEBI, and a monetary penalty was imposed under Section 15D(a) of the SEBI Act.
Full text
Page 2 of 22 of Section 12 (1B) of the SEBI Act and Regulation 3 of the SEBI (Collective Investment Schemes) Regulations, 1999 (hereinafter referred to as ‘CIS Regulations’).
Page 3 of 22 SHOW CAUSE NOTICE, REPLY AND HEARING 5. A common Show Cause Notice (hereinafter referred to as ‘SCN’) dated October 10, 2017 was issued to the Noticees under the provisions of Rule 4(1) of the Adjudication Rules to show cause as to why an inquiry should not be initiated against the Noticees and penalty, if any, be not imposed on them under the provisions of Section 15D(a) of the SEBI Act for the alleged violation by the Noticees. From the records, it is observed that since some of the SCNs could not be delivered through RPAD, the SCNs were either affixed at the last known address or hand delivered to Noticees except Noticee-4 which remained undelivered.
Page 4 of 22 The business activity of the Noticee No. 1 Company are not in any i manner collective investment schemes. Virtually every builder in the country is doing the business in the similar manner as the noticee No.1 Company. The SEBI is doing pick and choose and with some strange mechanical mindset have come to conclusion that the business activities are in the nature of collective investment schemes whereas the truth is the business of the Noticee No. 1 Company is absolutely contrary to what is defined as Collective Investment Schemes under section 11AA of the SEBI Act. It is also pertinent to mention that none of the four precondition are compiled as per business of the Noticee company is concerned. The notice under reply is silent in what manner and how the business of the Noticee Company is within the ambit of section 11AAor Section 12(1 B) of the SEBI Act. It is also respectfully submitted that the balance sheet of the company relied upon by your esteemed office to arrive at a figure Rs.13.61 Crores as advance from customers is absolutely contrary to records. The balance sheet under current liabilities is "other current liabilities" and not advance raised from the customers. Moreover the latest balance sheet of the Noticee No.1 Company reflect that the true picture. The orders passed by the SEBI dated 3.12.2015 already stand dismissed vide orders of the Hon'ble SAT dated 21.11.2017 and thus there is no jurisdiction and justification in continuing the present procee
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Source: SecMarx — sebi:EAD/KS/VB/AO/183-188/2018-19. 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.