TMI Blog2021 (11) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... tempted to short circuit the process of filing a statutory appeal by taking recourse to an IA in this Court. SEBI has been entrusted with a specific mandate under the directions of this Court. It was duty bound to and has brought the order of this Court to the notice of SAT. The stay on the order of the attachment would effectively obstruct the implementation of the directions of this Court. The entertaining of the appeals by SAT and its interim order are contrary to the directions issued by this Court dated 2 May 2016 in terms of prayer (a) of IA 5 of 2016. As a matter of fact, it was inappropriate for SAT to entertain the appeals. Deference to the order of this Court required that the parties should be permitted to move this Court for appropriate directions. In the above view, we are not, at this stage, expressing any opinion on the merits of the defense which has been raised by DDPL and Unicorn to the order of attachment since that would preclude a hearing before, and a report by Shri R S Virk. ORDER -The order passed by SAT shall stand vacated - DDPL and Unicorn shall be at liberty to submit their objections to the order of attachment dated 1 March 2021 issued by SEBI bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Adv., Mr. Gokul Holani, Adv., Mr. Vinod Sharma, AOR, Mr. Ritesh Agrawal, AOR, Mrs. Anil Katiyar, AOR, Mrs. Rachana Joshi Issar, AOR, Mr. Amit Kumar, AOR, Mr. Sanveer Mehlwal, Adv., Mr. Dhiraj Kumar, Adv., Ms. Geetanjali Mehlwal, Adv., Ms. Kamakshi S. Mehlwal, AOR, Mr. Somiran Sharma, AOR, Mr. Aditya Singh, AOR, Mr. Prashant Bhushan, AOR, Mr. P.S. Patwalia, Sr. Adv., Mr. Gagan Gupta, AOR, Mr. Suren Uppal, Adv., Mr. Aviral Kashyap, AOR, Ms. Samiksha Gupta, Adv., Mr. Arvind Kumar Tripathi, Adv., Mr. Rajiv Ranjan Dwivedi, AOR, Mr. Pratap Shanker, Adv., Mr. Rakesh Kumar Singh, Adv., Ms. Nupur Prasad, Adv., Ms. Shilpi Shrivastava, Adv., Mr. Ankit Kumar, Adv., Mr. Swetank Shantanu, AOR, Mr. Shantanu Kumar, AOR, Mr. Darpan KM, Adv., Ms. Amrita Sharma, Adv., Mr. Rajat Jonathan Shaw, Adv., Mr. Hetu Arora Sethi, AOR, Ms. Shalu Sharma, AOR, Mr. R.S.Hegde, Advocate, Mr. Girish Aneja Advocate, Mr. Farhat Jahan Rehmani, AOR, Ms. Manju Jetley, AOR, Ms. Manisha Ambwani, AOR, Mr. Shree Pal Singh, AOR, Mr. Ronak Karanpuria, AOR, Mr. Rajeev Kumar Bansal, AOR, Mr. Girish Patel, Adv., Ms. Madhusmita Bora, AOR, Mr. Balaji Subramanian Advocate, Mr. A. Lakshminarayanan, AOR, Mr. Ajay Jain, Adv., Mr. Neera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Abhinav Agrawal, AOR, Mr. Aditya Sinha, Adv., Mr. Aman Mishra, Adv., Ms. Swati Bhardwaj, Adv., Mr. Mohit Paul, AOR, Mr. Kedar Nath Tripathy, AOR, Mr. Ratnesh Kumar Shukla, AOR, Ms. Garima Bajaj, AOR, M/s. KSN Co., Mr. Shivendra Singh, AOR, Mr. Gp. Capt. Karan Singh Bhati, AOR, Ms. Chitrangda Rastravara, Adv., Mr. Manvendra Singh Rathore, Adv., Ms. Ameya Thanvi,Adv., Mr. Dashrath Singh, Adv., Ms. Gunjan Negi, Adv., Dr. Joseph Aristotle, Sr. Adv., Ms. Priya Aristotle, AOR, Mr. Pradeep Rai, Sr. Adv., Mr. Sandeep Bajaj, Adv, Mr. Soayib Qureshi, AOR, Ms. Aakanksha Nehra, Adv, Mr. Parag Rai, Adv, Mr. Akarsh Sharma, Adv, Mr. Mohnish Nirwan, Adv, Ms. Ritika Gaur, Adv, Ms. Uttara Babbar, AOR, Mr. Manan Bansal, Adv., Mr. Rameshwar Prasad Goyal, AOR, Mr. Joel, AOR, Mr. Parag P Tripathi, Sr. Adv., Mr. Avishkar Singhvi, Adv., Mr. Amit P Shahi, Adv., Mr. Shashibhushan P. Adgaonkar, AOR, Mr. Nipun Katyal, Adv., Ms. Anjani Kumar Mishra AOR, Ms. Hardeep Kaur Mishra, Adv., Mr. Shiv Ram Pandey, Adv, Ms. Sandhya Pandey, Adv, Mr. Praveen Mishra, Advocate, Mr. Aman Vachher, Adv., Mr. Ashutosh Dubey,Adv., Mr. Dhiraj,Adv., Mr. Abhishek Chauhan,Adv., Mrs. Anshu Vachher, Adv., Mrs. Rajshri Dubey, Adv., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odha, former Chief Justice of India was constituted for disposing of the land parcels of PACL in order that the sale proceedings could be utilized for the payment of investors. Without dwelling in detail on the factual background, it would suffice to note that SEBI, by an order dated 22 August 2014, concluded that PACL had mobilized an amount of ₹ 49,100 crores from investors under a collective investment scheme without registration and in violation of the SEBI (Collective Investment Schemes) Regulations 1999. The order passed by SEBI on 22 August 2014 was affirmed by SAT on 12 August 2015 following which multiple appeals were filed before this Court, resulting in the order dated 2 February 2016. 4 The order dated 2 February 2016 makes it abundant clear that SEBI was entrusted with certain functions in pursuance of the directions issued by this Court under Article 142 of the Constitution. This was in order to protect the interests of the investors impacted by collective acts of defrauding them by PACL and its Directors, promoters, group companies and related persons and entities. . The functions which SEBI has been called upon to perform emanate from the directions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found, upon examination, that an amount of ₹ 19.04 crores had been repaid directly by Systematix to twenty five front/associate entities and recommended the initiation of recovery proceedings. SEBI issued an attachment notice dated 30 April 2019 with respect to twenty five entities. A further investigation was conducted and placed before the Committee by SEBI to examine broadly all fund transfers of Systematix. The result of the examination is elaborated in paragraph 17 of the IA filed by SEBI, which, inter alia, records that: 17. The examination also revealed Systematix has just launched one scheme i.e. Scheme I since its inception. Also, out of total 26 investors in Scheme I of Systematix, 25 were admitted associate entities of PACL as per information provided by PACL itself. They invested ₹ 110.95 crores in the scheme. This money came from PACL as per the bank account statements of these entities. The money was routed to these 25 associates companies through a set of another 5 admitted associate companies of PACL. 6 Moreover, it has been stated that Gurmeet Singh, a Director of PACL was a director of DDPL since 1 June 2011, much before investments were m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred around ₹ 1500 Crores to Mr. Prateek Kumar and Prateek Kumar had entered a Definitive Agreement for Settlement with PACL on 2nd October, 2013. As per statement of one of the Directors of PACL, Mr. Prateek Kumar used to procure land for PACL. 27. The Investigation Report gave a finding that Mr. Prateek Kumar was front of PACL. PACL held 51 % stake in DDPL and 67% in Unicorn, directly and also indirectly through Mr. Prateek Kumar and NSB, at the time of investment by Systematix. 28. In 2015, Systematix subscribed to rights issue of DDPL and Unicorn bringing up its shareholding to 58.02 percent in DDPL and 59.92 percent in Unicorn. 7 After considering the above material, the Justice Lodha Committee has taken note of the following facts: a. PACL had transferred ₹ 110.95 crores to 5 companies (as noted in para 5 of the Impugned Notice of Demand). b. The said 5 companies had further transferred the entire amount of ₹ 110.95 crores to 25 entities, who were associates of PACL. c. These 25 entities had invested the entire amount of ₹ 110.95 crores in Scheme I of Systematix. The total corpus of the Scheme-I was ₹ 113 45 cror ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to operate their accounts in the ordinary course of business. 10 Mr Pratap Venugopal, learned counsel appearing on behalf of SEBI, has navigated the Court through the contents of the IA and the underlying annexures while explaining the object and purpose of the orders passed by this Court from time to time. It has been urged that SEBI s action is in the implementation of the directions of this Court under Article 142 of the Constitution and that, in consequence, the assumption of jurisdiction by SAT as well as the order dated 26 March 2021 would virtually negate the directions which have been issued by this Court. 11 On the other hand, Dr Abhishek Manu Singhvi, learned Senior Counsel appearing on behalf of DDPL and Unicorn, objected to the IA instituted by SEBI on the following grounds: (i) SEBI, instead of instituting an appeal under Section 15Z of the SEBI Act, has chosen to move an IA in the pending proceedings; (ii) An objection was raised before SEBI, when it issued its direction on 26 March 2021; (iii) SEBI has not followed the provisions of Section 28A of the SEBI Act and Section 222 of the Income Tax Act 1961 inasmuch as (i) Section 28A applies whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt. The entertaining of the appeals by SAT and its interim order are contrary to the directions issued by this Court dated 2 May 2016 in terms of prayer (a) of IA 5 of 2016. As a matter of fact, it was inappropriate for SAT to entertain the appeals. Deference to the order of this Court required that the parties should be permitted to move this Court for appropriate directions. In the above view, we are not, at this stage, expressing any opinion on the merits of the defense which has been raised by DDPL and Unicorn to the order of attachment since that would preclude a hearing before, and a report by Shri R S Virk. 13 We accordingly allow the IA on the following terms: (i) The order dated 26 March 2021 passed by SAT in Appeal Nos 161 and 162 of 2021 shall stand vacated; (ii) Further proceedings before SAT in Appeals Nos 161 and 162 of 2021 shall remain stayed; (iii) DDPL and Unicorn shall be at liberty to submit their objections to the order of attachment dated 1 March 2021 issued by SEBI before Shri R S Virk, former District Judge, who has been appointed pursuant to the orders of this Court; (iv) Shri R S Virk shall, upon examination of the objections urg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court. Learned counsel states that the property in question was a rented property which was in the occupation of the company in liquidation. The Delhi High Court, this Court is informed, has directed the Official Liquidator to hand over the property to the rightful owner. Learned counsel submits that the Official Liquidator will hand over possession to the Justice R M Lodha Committee provided requisite title documents are produced. 3 At this stage, Mr Pratap Venugopal, learned counsel appearing on behalf of SEBI states that SEBI is in possession of copies of such documents as were handed over to it by the Central Bureaus of Investigation in pursuance of the order of this Court dated 2 February 2016. Hence, it has been submitted that the Official Liquidator may be directed to hand over possession to the authorized representative of SEBI. The Committee, it has been stated, would duly publish a notice so that if any person has a claim in respect of the property, an opportunity would be given to have it adjudicated before Shri R S Virk, former Additional District Judge who has been appointed by this Court for the purpose. 4 It appears from the record that there was a claim i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns Allow the present application with an appropriate order confirming the Order dated 06.07.2018 passed by Shr. R.S. Virk Judge (Retd.) in File No.471 having MR Nos.12085/16, 12081/16 and 18704/16 so that land in question could be removed from the list of properties attached by the Committee 4 198795/2019 Directions Allow the present application with an appropriate order confirming the Orders dated 06.07.2018 and 31.07.2018 passed by Shr. R.S. Virk Judge (Retd.) in File No.472 having MR Nos.18710/16, 12079/16, 12077/16 so that land in question could be removed from the list of properties attached by the Committee 5 56536/2021 Appropriate orders/directions (a) Accept the recommendation of District Judge (Retd.) Mr. R.S.Virk, made in orders in file No.730 and 730A dated 11.03.2020 and 28.08.2020. (b) Direct the Hon ble Justice (Retd.) Mr. R.M. Lodha Committee or concerned department to delete the detail of property from the auction website www.sebipaclproperties.com of plot 6 No. 139, Plot admeasuring 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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