sebi:WTM/PS/53/NRO/JUN/2016

SEBI · SEBI · 2013-07-23 · Prashant Saran, Whole Time Member

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Facts / Headnote

Application dated January 22, 2015 for extension of time by 24 months rejected; request to circulate information memorandum under regulation 73 of CIS Regulations rejected; SEBI directed to initiate attachment and recovery proceedings and further proceedings for contraventions

Provisions invoked

• s. 11
• s. 24
• s. 12
• s. 73

Regulations

• Reg. 68
• Reg. 73(1)
• Reg. 71
• Reg. 73
• Reg. 73(2)
• Reg. 65
• Reg. 3

Parties

• Alchemist Infra Realty Limited
• Mr. Brij Mohan Mahajan
• Mr. Narayan Madhav Kumar
• Mr. Balvir Singh
• Mr. Chandra Shekhar Chauhan
• Mr. Sunil Kanti Kar

Holding

SEBI rejected Alchemist Infra Realty Limited's application for a 24-month extension of time to refund investors and its request to circulate an information memorandum under regulation 73 of the CIS Regulations, holding that regulation 73 does not apply to collective investment schemes launched after the CIS Regulations came into force. SEBI directed initiation of attachment and recovery proceedings against the Company and its directors, and further proceedings for contraventions and non-compliance.

Full text

Page 2 of 32 (i) SEBI would initiate prosecution proceedings under section 24 and adjudication proceedings under Chapter VI of the Securities and Exchange Board of India Act, 1992 against Alchemist Infra Realty and its directors ; (ii) SEBI would make a reference to the State Government/Local Police to register a civil/criminal case against Alchemist Infra Realty Limited and its directors and its managers/persons in- charge of the business and its schemes for offences of fraud, cheating, criminal breach of trust and misappropriation of public funds ; and (iii) SEBI would make a reference to the Ministry of Corporate Affairs, to initiate the process of winding up of the company, Alchemist Infra Realty Limited.

Page 3 of 32 the Appellants shall submit a report to SEBI every six months giving accurate details regarding the progress made while executing the scheme of repayment in question. In case any eventuality arises in future for the Appellants to seek further extension of time to implement SEBI’s order in question, the Appellants may approach SEBI for extension of time and SEBI will consider the same and pass appropriate order depending upon progress made by Appellants in respect of implementation of impugned order. To this extent, the impugned order dated June 21, 2013 stands modified. With the aforesaid directions the Appeal is, accordingly, dismissed. Misc. Application No. 67 of 2013 preferred by the Appellants also, therefore, stands disposed of. No costs". {Emphasis supplied}

Page 4 of 32 company has to follow the procedure as prescribed thereunder and the Respondent has not restrained the Appellant Company from issuing any information memorandum". d. In these circumstances, upon hearing the Company's submissions, the Hon'ble Supreme Court by its Order dated September 05, 2014 was pleased to permit withdrawal of the appeals with liberty to the Company to work out its remedy elsewhere, in as much as SEBI contended that the Company was not restrained from issuing any Information memorandum and take steps as contemplated under regulation 73 of the CIS Regulations. e. It is pertinent to note that SEBI contended that regulation 73 is applicable to the business of the Company and has in fact relied on the same from time to time in the aforesaid proceedings including in the Order dated June 21, 2013. f. It is also pertinent to note that in its counter affidavit filed before the Hon'ble Supreme Court, SEBI inter alia stated that regulation 73 of the CIS Regulations was required to be followed by the Company and was free to do so inasmuch as SEBI has not stopped it from doing so. g. Although, subsequent to September 05, 2014, the Company was desirous of sending the Information memorandum to the investors as contemplated under regulation 73 of the CIS Regulations, no such Memorandum could be sent as no intimation was received from SEBI as provided under regulation 73(2) of the CIS Regulations. The Company was further advised that such Information Memorandum

Source: SecMarx — sebi:WTM/PS/53/NRO/JUN/2016. 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.