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2019 (11) TMI 845 - AT - SEBICollective Investment Scheme (‘CIS’) without SEBI registration - violating Section 12(1B) of the SEBI Act, 1992 and Regulation 3 of the SEBI (Collective Investment Scheme) Regulations, 1999 (‘CIS Regulations, 1999’) - Non obtaining certificate of registration for running such a scheme under SEBI Act and CIS Regulations - HELD THAT:- The appellants are in fact running a CIS. It is also an admitted fact that the appellants did not obtain a certificate of registration for running such a scheme under SEBI Act and CIS Regulations, 1999. Accordingly, the penalty imposed on the appellants cannot be faulted. The penalty imposable under Section 15(D)(a) of SEBI Act at the relevant time was ₹ 1 lakh for each day during which an entity carries on any collective investment scheme or ₹ 1 crore whichever is less. In the instant case, the appellant Company was set up in 2010 and the money collected in the form of investment in joint venture project / scheme during 2012-13 and for periods ranging from 4 to 7 years. Therefore, the Company and the scheme came into existence many years after notification of the CIS Regulations, 1999 and the schemes were flouted despite the fact that Regulations notified in the year 1999 makes it mandatory for obtaining registration from SEBI for hoisting any such a scheme. Accordingly, we do not find any anomaly in the direction to pay a penalty of ₹ 25 lakh jointly and severally by the appellants which takes into account the mitigating factors under Section 15J of SEBI Act - Appeal is dismissed.
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