9911796707
TMI Blog2025 (5) TMI 1622X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 17.04.2023 lodged by the appellant on SCORES platform of SEBI. 2. Brief facts of the case are as under:- (i) The Appellant has invested in a mutual fund scheme in Motilal Oswal Ultra Short Term Fund - Direct Growth Scheme (herein after referred to as "the Scheme"), floated and managed by the 2nd Respondent Motilal Oswal Asset Management Company Ltd. The Appellant, as on November 2, 2017 had invested an aggregate amount of Rs. 18 lakhs. One of the investments of the scheme was in the commercial papers issued by IL & FS Ltd. (ii) From mid-September, 2018 to January 2019, IL & FS group committed defaults of approximately Rs. 75 crores in repayment of amount due towards the redemption of commercial papers issued for the scheme. The 2nd Respondent suspended the scheme for new investors in or about mid-September, 2018 with an intent to protect the interests of the then existing unit holders/investors. Later in the month of October, 2018, NCLAT (NCLAT - National Company Law Appellate Tribunal), New Delhi imposed moratorium thereby directing a stay on all creditor's actions against IL & FS group of companies. Around January, 2021 the 2nd Respondent reopened the scheme for new inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not feasible as prevailing practice in the market (i.e. distribution of proceeds after realization to all investors as available on the date of realization of proceeds) prior to the effectiveness of the circular had to be adhered to. On May 27, 2023, the 1st Respondent disposed off the Appellant's complaint by stating that the 2nd Respondent had provided requisite information to Appellant vide its reply dated May 25, 2023. (vi) Thereafter, the appellant filed a review application before the regional / divisional office of the 1st Respondent. The review application was disposed off reiterating that aforesaid SEBI circulars shall be applicable only to the credit events which occurred post the circulars coming into effect and thus retrospective treatment for disbursal of recovery proceeds was not feasible. The 2nd Respondent had taken necessary approvals and made public disclosures. Thus, on July 31, 2023, the said regional /divisional office of the 2nd Respondent disposed off the Appellant's Complaint, which is now challenged by way of this appeal. 3. We have heard Ms. Payoja Gandhi, learned Advocate for the Appellant, Shri Vishal Kanade, learned Advocate for Respondent No. 1 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Advocate for the Appellant pleaded that the order passed by the 1st Respondent be set aside and Hon'ble Tribunal may review the mala fide act of reopening of scheme and pass necessary directions to distribute the recoveries made from IL & FS group to old and existing investors as on the date of suspension and still continuing with the said scheme. 8. Shri Vishal Kanade, learned Advocate appearing for the 1st Respondent submitted that the appellant had filed a complaint through SCORES portal about the legality and fairness of reopening the scheme and its impact on existing investors rights particularly in the light of IL & FS default preceding relevant SEBI Circulars on segregated portfolios. The complaint was promptly taken up by 1st Respondent with 2nd Respondent for filing ATR and 2nd Respondent submitted their ATR to 1st Respondent which was duly examined. The reopening of the scheme was supported by necessary board approvals and public disclosures. The review application was disposed off after due consideration. 9. He contended that the SEBI Circulars under reference can't be applied retrospectively. The Appellant's assertion for retrospective application of SEBI Circulars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SEBI Circulars to be applicable only prospectively and not based on past defaults like IL & FS. In consonance to said industry practice and as per the existing law, realization of proceeds from IL&FS in the future will accrue to the scheme NAV and to the investors existing as on the date of such realization of cash flow. 13. Having heard the learned counsel for the Appellant and Respondents and based on the material on record, we note that the Appellant has made the following prayers in his appeal - (a) That the impugned order dated July 31, 2023 passed by the Respondent No. 1 be set aside; (b) That the mala fide act of Respondent No. 2 in reopening of the scheme be reviewed by issuing instructions to Respondent No. 2 to distribute the recoveries made from IL & FS group to old and existing investors as on the date of suspension of the scheme and who are still continuing with the scheme, in order to protect the interests of old investors. 14. On the first prayer, we note that the impugned order is a response of Respondent No. 1 to a review filed by the Appellant on June 1, 2023. The Appellant had originally filed a complaint on April 17, 2023 on the SCORES platform of SEBI aga ..... X X X X Extracts X X X X X X X X Extracts X X X X
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