TaxTMI 
TaxTMI 
2011 (3) TMI 1476
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....ion 65 of CIS Regulations, hereby direct the company : (a)not to collect any money from investors or to launch any scheme; (b )not to dispose of any of the properties or delineate assets of the scheme; (c)not to divert any fund raised from public at large kept in bank account and/or at the custody of the company." 3. By a letter dated 8-1-2010 (at p. 51) the Board informed the second petitioner (the chairman of the company) as follows : "It has been brought to our notice that you are mobilizing deposits from the public. In this regard, please note that in terms of section 12(1B) of the SEBI Act, 1992 and the provisions of SEBI (Collective Investment Schemes) Regulations, 1999 (said Regulations), no entity can carry on or sponsor or launch a Collective Investment Scheme without obtaining a certificate of registration under the said Regulations. Also in terms of Chapter IX of the said Regulations, no existing Collective Investment Scheme shall launch any new scheme or raise money from investors even under the existing schemes, unless a certificate of registration is granted to it under the said Regulations." 4. By the letter dated 8-1-2010 the Board directed the company to supp....
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.... letter dated 3-3-2010 (at p. 56) the Board asked the company to supply the following information and documents pertaining to its "Ashirbad Scheme" : "(a)Copies of offer documents, application form/pamphlets/brochures of the scheme; (b)Terms and conditions of the scheme; (c )Options available with the investor if he does not want to possess land; (d)Whether any instrument is issued to the investors after receipt of fund; (e )If such instruments are issued whether they are transferable; (f )Total amount of fund raised through the scheme from the public along with period of scheme." 8. The company replied to the Board's letter by a letter dated 18-3-2010 (at p. 57), the last two paras, whereof are quoted below : "(f )We have not raised any fund from the public, nor the scheme has any validity period. We receive the earnest money for the transaction in equated monthly instalments. Once the entire earnest money is paid, we offer the intending purchaser to take delivery of land upon payment of balance consideration amount. We however provide benefit to the intending purchaser of the earnest money so deposited by them together with credit value thereof, which are adjusted against....
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.... a purchaser, pools and fund so mobilized and uses it to develop the land, and thereafter provides return at the option of the investor on the amount invested at the end of the scheme in the form of credit value. This credit value can then be utilized by the investor to either adjust partly against the cost of land or to get refund for the investments made from the company. These activities of the company are akin to the features of a CIS, specified under section 11AA of the SEBI Act read with regulation 3 of the CIS regulations." 12. On the basis of the findings, the whole-time member of the Board came to the following conclusion : "13. In view of the foregoing, it prima facie appears that the company is running CIS schemes without obtaining a certificate of registration on SEBI. Thus M/s. Rose Valley Real Estate & Construction Ltd., has prima facie violated regulation 3 of CIS Regulations read with section 11AA of the SEBI Act, 1992." 13. And the whole-time member of the Board giving the company an opportunity of filing objections, if any, within 15 days from the date of the order and hearing on a date to be fixed on the basis of its request decided to make the order stating a....
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....urmej Singh v. State of Punjab AIR 2009 SC 2699; Godrej Sara Lee Ltd. v. Asstt. Commissioner [2009] 14 SCC 338; and SEBI v. Ajay Agarwal [2010] 3 SCC 7653. 17. He has also cited an interlocutory order of a Division Bench of the Allahabad High Court in Sahara India Real Estate Corpn. Ltd. v. Union of India [Misc. Bench No. 11702 of 2010, dated 13-12-2010]; and an order of the Supreme Court in SEBI v. Sahara India Real Estate Corpn. Ltd. [SLP to Appeal (Civil) No. 36445 of 2010, dated 4-1-2011], from the Division Bench order of the Allahabad High Court. 18. Mr. Mitra appearing for the Board has submitted that since the remedy of appeal under section 15T of the Act was the only remedy and not an alternative remedy, the company, neither raising the question of jurisdiction before the Board nor pressing the issue in its first article 226 petition, is not entitled to question the impugned order under article 226 on the grounds that the Board had no jurisdiction to pass it; and that, in any case, in view of the provisions of the Act, the Securities Contracts (Regulation) Act, 1956 and the regulations, there is no reason to say that the Board did not have jurisdiction to pass the order. ....
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....medy, in my opinion, depends entirely on the nature of the former remedy. 24. Between two remedies the one is alternative to the other when the person concerned is free to choose either one or the other. The expression "alternative remedy" should mean a remedy that is available instead of some other remedy. The other remedy is an alternative to the article 226 remedy when the aggrieved person is free to choose between the two remedies either one or the other. In such case he cannot seek the article 226 remedy after exhausting the other remedy. A few, first to hand, pairs of such remedies are article 32 and article 226, article 227 and article 226, section 482 Cr. PC and article 226, suit and article 226. And when an alternative remedy, except the one under article 32, is available, the article 226 remedy cannot be denied unless the alternative remedy is as cheap, speedy and efficacious as the article 226 remedy. 25. When the other remedy is a statutory remedy, e.g., a remedy of appeal, and after exhausting which the aggrieved person is entitled to seek the article 226 remedy, it cannot be said that it is an alternative to the article 226 remedy. A statutory remedy denotes one par....
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....r the previous one with effect from 29-10-2002; and under the previous section 15Z of the Act any person aggrieved by any decision or order of the Tribunal could appeal to the High Court concerned on any question of fact or law arising out of such order. Elimination of this forum resulting in tapering of the judicial examination of the decisions or orders of the Board and Tribunal is very significant. 29. In view of the provisions of section 4(5) of the Act the Chairman and the other members of the Board shall be persons who have shown capacity in dealing with problems related to securities market or have special knowledge of or experience in law, finance, economics, accountancy, administration or in any other discipline which, in the opinion of the Central Government, shall be useful to the Board. The Board has been enjoined by section 11 of the Act to take such measures as it thinks fit for protecting the investors in securities and promoting the development of, and regulating the securities market. It is evident that it is an expert regulatory body. 30. As provided in section 15M of the Act, only a sitting or retired Judge of the Supreme Court or a sitting or retired Chief Jus....
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....venting a miscarriage of justice, e.g., when the aggrieved person is unable to appeal under section 15T or section 15Z for absence of decision or order of the Board or the Tribunal. 34. In this case there is no extraordinary situation that can be treated as a warrant for holding that it is necessary to exercise the power under article 226 in the interest of justice or for preventing a miscarriage of justice. From the order of the Board the petitioners were entitled to appeal to the Tribunal that has been functioning and is competent to decide all the questions including the questions of jurisdiction of the Board to pass the order and violation of the principles of natural justice. I am, therefore, of the view that this Court should not exercise the power under article 226 to review the order of the Board judicially. 35. The decisions in Baburam Prakash Chandra Maheshwari's case (supra), Whirlpool Corpn.'s case (supra), Kalpana Bhandari's case (supra), Godrej Sara Lee Ltd.'s case (supra), Sahara India Real Estate Corpn. Ltd.'s case (supra), SEBI v. Sahara India Real Estate Corpn. Ltd.'s case (supra) - all relied on by Mr. Sen - in my opinion, do not help in resolving the question ....