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2013 (7) TMI 279 - HC - Companies LawRegulation 2(1)(s) of SEBI Regulations, 1999 - Collective Investment Schemes - Computation of net worth - whether Article 14 ultra vires insofar as it excludes the funds created for revaluation while determining the 'net worth' of the company and other reliefs - Held that:- Contentions put forth on Article 14 are unacceptable. The Regulations are made in exercise of the powers conferred under Section 30, read with Sections 11 and 19 of the Securities and Exchange Board of India Act, 1992. It is in pursuance of the objects sought to be achieved, that the regulations prescribe, the conditions for eligibility for a certificate, wherein the applicant should have a 'net worth' of not less than Rs.5 crores. The exclusion of funds created out of revaluation in terms of the definition of Regulation 2(1)(s), cannot be said to be arbitrary or an artificial definition. The object sought to be achieved in defining 'net worth' to exclude the funds created out of revaluation, is to protect the interest of the investors. The protection of the interests of the investors is sought to be achieved by defining 'net worth', which means the aggregate capital and free reserves and excluding the funds created out of revaluation. The funds created on revaluation would at times amount to an artificial valuation and not the true value. That the interest of the investors would necessarily be affected if 'net worth' includes such revaluation. Therefore, 'net worth' has been defined to exclude such a revaluation. Hence, the contention of arbitrariness by offending Article 14 or the right to do business under Article-19(l)(g) is unsustainable. Appeal dismissed.
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