SEBI SHOULD EXTEND THE SEBI SETTLEMENT SCHEME 2020 FROM OCTOBER 31 2020 ...

What is SEBI Settlement Scheme 2020 ?

 

Hence , SEBI has decided to come out with Settlement Scheme (“the Scheme”) in the  the SEBI Settlement Scheme – 2020,

 

The Hon’ble SAT vide its Order dated October 14, 2019 in the matter of R S Ispat Ltd Vs SEBI, has inter alia directed as follows: “…We are adjourning this matter today, so that SEBI may consider holding a LokAdalat or adopting any other alternative dispute resolution process with regard to the Illiquid Stock Options.

 

SEBI Settlement Scheme 2020 – One time Settlement scheme Securities Exchange Board of India (SEBI) vide Public notice dated 27th July, 2020 has issued Public notice in respect of SEBI-Settlement Scheme 2020 to provide one time settlement opportunity to the entities that have executed trade reversals in the stock options segment of BSE during the period from April 1, 2014 to September 30, 2015 against whom any proceedings are pending.

 

There should be wide spread awareness of SEBI Settlement Scheme 2020. The Settlement amount proposed in the Scheme is very high and this Scheme has not evoked good response from more than 14000 entities who had traded in illiquid stock option segment of BSE during 01.04.2014 to 30.09.2015 against whom proceedings are deemed to have been initiated by SEBI.

 

S. No.	Particular	No. of Entities
1	Total entities executed trades on BSE Stock Options Segment	21,652
2	Entities involved in generation of artificial volume by executing non-genuine/reversal trades	14,720
3	No of Companies against which SEBI has initiated  SEBI adjudication proceedings	567

 

 

 

 

The Supreme Court of India ruled in Adjudicating Officer, SEBI v. Bhavesh Pabari (Bhavesh Pabari) granting back the discretionary power to Adjudicating Officer (AO) under supervision and scrutiny of the court.

 

 Supreme Court  overruled its previous decision in Roofit Industries v. SEBI ( Roofit Industries). The highlight of the case is that it provided with controlled discretionary power to the AO, granting them the authority to determine the quantum of the penalty when there is non-compliance of any rules mentioned in the SEBI Act or SCR Act.

 

Criteria for Indicative Settlement Amount for SEBI

1. artificial volume

2. number of non-genuine trades and

 3. number of contracts resulting in creation of artificial volume/ non-genuine trades

4. 0.55 in all cases wherein the entities had executed reversal trades, would be applicable while arriving at the Indicative Settlement Amounts.

 

FAQs on SEBI Settlement Scheme

 

1.What are the Eligibility Criteria?

 the entities who have executed trade reversals on the stock options segment of BSE during the period from April 1, 2014 to September 30, 2015 against whom any proceedings are pending are eligible to avail the one time settlement opportunity.

2. Validity of the Scheme?

Shall commence on August 01, 2020 and end on October 31, 2020 (both days inclusive).

 3. Settlement Application details?

Submit a Settlement application along with an application fee of Rs. 15,000 in case of individuals and Rs. 25,000 in case of body corporates in the specified format, available on the SEBI website and also on the BSE website.

4. Mode of Payment ?

Via online platform as available on the website of SEBI

SEBI'S ROLE IN FRANKLIN TEMPLETON CRISIS DRAWS IRE OF KARNATAKA HC @R V ...

WILL THE WATCH DOG AMEND THE MUTUAL FUND REGULATIONS TO CURTAIL THE POWER OF THE TRUSTEES TO WOUND UP THE MF SCHEMES

 

SEBI has drawn flak from the Karnataka High Court (HC) for its handling of the Franklin Templeton (FT) crisis that led the asset manager to shut six of its debt schemes.

 

SEBI did not possess a copy of the resolution dated April 23 passed by the board of directors of FT trustees providing for winding up and did not respond to the email of April 14 sent by the asset management company (AMC), the court observed in its judgment

 

SEBI also failed to reply to the letter dated April 20 addressed by the trustees, in which permission and guidance of the regulator was sought for winding up the schemes.

 

The court further observed that SEBI was not aware whether compliance of sub-clauses (a) and (b) clause (3) of Regulation 39 of Mutual Fund Regulations was made by the trustees. This clause deals with the trustees giving notice disclosing the circumstances leading to the closure the scheme to the board and in two daily newspapers and a vernacular one

SEBI did not bother to even enquire about the compliance with clause (3) of Regulation 39 by the trustees of MF .

SEBI did not bother to ascertain whether redemptions and borrowings ceased, assuming that compliance of clause (3) of Regulation 39 was made,” the court 

The court also criticized SEBI for not placing on record a copy of an order appointing a forensic auditor, and producing it before the court on September 2, even though the hearing had commenced on August 12.

 

As a watchdog, SEBI was expected to play a very proactive role by questioning the AMC, trustees, and sponsor about the compliances with the provisions of the MF regulations. The investors/unitholders of the said schemes will be justified in their criticism that Sebi was a silent spectator,” the court observed.

 

HC’s observation may lead SEBI to review the regulations governing the cessation of MFs, which give power to the trustees to conclude schemes after taking unitholders’ consent without requiring any approval from SEBI.

 

As per Regulation 39 (2)(a), whereby 75 per cent of unitholders may require a scheme to be wound up. 

While upholding the validity of Regulations 39 to 40 of the MF regulations, the court has observed that when the trustees decide to wind up a scheme by taking recourse to sub-clause (a) of clause (2) of Regulation 39, the trustee company is bound by its statutory obligation under sub-clause (c) of clause (15) of Regulation 18 to obtain the consent of unitholders.

 

SEBI now has the option of challenging the judgment by filing a special leave petition before the Supreme Court (SC). “SEBI may not immediately change the regulation pertaining to winding-up of schemes, but will appeal to the SC on the observation that it didn’t act proactively

COMPANY OBJECTS THE REVIVAL OF NAME OF THE COMPANY BY NCLT AND NCLAT ORD...

COMPANY OBJECTS THE RESTORATION OF NAME OF THE COMPANY BY NCLT AND NCLAT QUASHED THE ORDER OF NCLT MUMBAI TO REVIVE THE COMPANY

 

NCLAT ORDERED THAT RESTORATION OF NAME OF THE COMPANY WIHTOUT GIVING NOTICE TO THE COMPANY IS VOID

 

Mr. Pankaj Kumar Mishra (Appellant) vs. Registrar of Companies, Mumbai & Ors. (Respondents)

Decided by NCLAT on 30 September 2020

 NCLT SHOULD GIVE a reasonable opportunity TO THE COMPANY

 

The Tribunal must give a reasonable opportunity of making representations and of being heard before passing an order, to the Registrar, the Company and all the persons concerned under Section 252 (1) of the Companies Act, 2013.

Fact of the case

 The name of the Company (Viking Ship Mangers Pvt. Ltd.) was struck off by ROC Mumbai from the Register of Companies. The Principal Commissioner of Income Tax-15, Mumbai (Respondent No. 2 herein) challenged the order of ROC before the NCLT, Mumbai bench (Tribunal) under Section 252 of the Companies Act, 2013. It is stated before the Tribunal that the Company has certain Financial transactions that have been entered into by the Company for the Assessment year 2011-12 and information regarding this were received from the office of ITO Income Tax Officer 15 (3) (2) Mumbai. However, no return of income has been filed.

 Therefore, notice under Section 148 of the IT Act, 1961 has been issued for Assessment year 2011-12 proposing to assess/ reassess the income. The Company has been struck off from the Register of Companies. Therefore, it is difficult to assess the defunct Company and it will cause huge loss of revenue to the Government of India. Hence, it was prayed that the name of the Company be restore in the Register of Companies. The Authorized representative for the Registrar of Companies submitted before the Tribunal that they do not have any objection to restore the name of the Company in the Register of Companies.

 The NCLT, Mumbai Bench by the impugned order allowed the Appeal and directed to restore the name of the Company in the Register of Companies. However, before passing of impugned order no notice has been served on the Company, but the Company was arrayed as the Respondent. Being aggrieved with this order, the Appellant Ex-Director and Majority Shareholder and Power of Attorney Holder of the Company has filed this Appeal.

 Appellant submitted that Section 252 (1) of the Companies Act, 2013, provides that before passing any order under this Section, the Tribunal must give a reasonable opportunity of making representations and of being heard to the Registrar, the Company and all the persons concerned. Rule 37 of the NCLT Rules, 2016 also provides that the Tribunal shall issue notice to the Respondent to show cause against the Application or Petition on date of hearing to be specified in the notice.

ISSUE

The main contention of Appellant was: Whether the order given by the Tribunal of restoring the name of the company in Register of Companies is sustainable in Law, as it has been passed without giving any reasonable opportunity of making representations or of being heard to the Appellant? Judgement The NCLAT held that without giving any opportunity of being heard, the order has been passed by the NCLT.

NCLAT’S ORDER

Hence, the order is not sustainable in law. Therefore, it is set aside, and the matter is remitted back to the NCLT, Mumbai bench with the direction that after hearing the parties decide the said appeal under Section 252 of the Companies Act, 2013, as per law without influence by its earlier Order.

 

FACTS LEARNED FROM THIS CASE

 

•     Restoration of name of the company was filed by the Income-Tax Authorities.

•     NCLT , Mumbai before passing of impugned order no notice has been served on the Company, but the Company was arrayed as the Respondent.

•     Appellant submitted that Section 252 (1) of the Companies Act, 2013, provides that before passing any order under this Section, the Tribunal must give a reasonable opportunity of making representations and of being heard to the Registrar, the Company and all the persons concerned.

•     Rule 37 of the NCLT Rules, 2016 also provides that the Tribunal shall issue notice to the Respondent to show cause against the Application or Petition on date of hearing to be specified in the notice.

•     The main contention of Appellant was: Whether the order given by the Tribunal of restoring the name of the company in Register of Companies is sustainable in Law, as it has been passed without giving any reasonable opportunity of making representations or of being heard to the Appellant? 

HOW TO REGISTER ONLINE NGO UNDER FCRA & RECEIPT OF FOREIGN FUNDS THROUG...

HOW TO REGISTER ONLINE NGO/ TRUSTS UNDER FCRA OR TO TAKE PRIOR PERMISSION OR TO RENEW THE NGO/TRUST UNDER FCRA

 

For seeking FCRA services [Registration, Prior Permission and Renewal], the applicant must:-

·       Obtain DARPAN ID from Darpan portal of NITI AYOG

·       Upload documents electronically online

·       Pay application Fee electronically online  Have a definite cultural, economic, educational, religious or social programme

·       Have undertaken reasonable activity in its chosen field for the benefit of the society for which the foreign contribution is proposed to be utilized

·       Open a dedicated Foreign Contribution Bank Account

·       Intimate opening of additional dedicated Foreign Contribution Utilization Bank Account(s)

·       Place the audited statement of accounts electronically online on receipts and utilization of the foreign contribution, including income and expenditure statement, receipt and payment account and balance sheet for every financial year beginning on the first day of April within nine months of the closure of the Financial year in case of receipt of foreign funds.

·       Maintain a separate set of accounts and records, exclusively, for the foreign contribution received and utilized and for which the registration is sought

·       Apply to the Central Government six months before the date of expiry of certificate of registration, for its renewal

·       To intimate any change in the designated bank account / utilization bank account / name / address / aims / objectives / key members in respect of association granted registration / prior permission under the FCRA, 2010.

 

DEADLINE FOR OPENING THE DEDICATED BANK ACCOUNT OF NGO / TRUST WITH SBI PARLIMIENT STREET BRANCH

 

One of the queries is, if NGOs can receive funds in their present FCRA Designated Account (let’s call it ‘existing designated account’) from a foreign donor. Answer is unequivocal YES, that is the basic reason govt has allowed to open A/c by 31^st March 2021. Govt realized that it may take time to open bank a/c, and if no time slot is given, the whole Sector would come to stand still, since it would take time for thousands of NGOs to open bank account in SBI, Parliament Street.

 

RECEIPT OF FOREIGN FUNDS ONLY THROUGH SBI PARLIAMENT STREE BRANCH

 

Till the time bank account is opened, NGOs can receive funds in their existing designated account. However the day designated account is opened in SBI Parliament Street, from that day itself, no funds can be received in ‘existing designated account’. Also please note last day being 31^st March, all must open the bank account in SBI Parliament Street Branch before 31^st March 2021.

 

WHETHER ONE HAS TO TRANSFER THE FUNDS LYING IN THE EXISTING BANK ACCOUNT OF NGO/ TRUST TO SBI PARLIAMENTARY STREE BRANCH NEW DELHI?

There is some confusion relating to what will happen to funds lying in the ‘existing designated account’ once SBI Parliament street account is opened. Is it to be transferred to SBI Parliament Street Branch? Answer is NO, the money lying in present account should remain there and can be ‘utilized’ from there itself. S.17(1) second para clearly states that another bank account can be opened wherever NGO wants to ‘keep or utilise’ funds. Thus money lying in your earlier designated bank account need not be transferred to SBI Parliament Street Branch. In any case money to be rec’d in SBI Parliament Street should be only ‘for the purposes of remittances of Foreign Contribution’. SBI Parliament Street Branch is not likely to accept any funds which are not coming from outside India.

 

NCLT JUDGEMENT RESERVED- Justice delayed - justice denied - NCLT final ...

The heavy backlog of cases and delays in the Indian judicial system are once again the topic of much discussion, with everything from government callousness to over-litigiousness to judicial activism being blamed for the 35 million cases pending in the courts at all levels.

A recent survey of litigants showed that more than 60% of the respondents believed that the delay in their own cases was due to the judge not passing orders quickly enough.

 

From the statistical data given here , we can come to understand the following information:

 

·       In 12% of the cases, judgement were not delivered even after 120 days after judgement has been reserved by the court.

·       In civil cases , there is higher incidence of judgement being delayed for more than 120 days after the judgement is being reserved

Case Name	No of days delay after judgement is being reserved
Deposit Insurance & Credit Guarantee Corporation vs Ragupathi Ragavan	566 days
Commissioner of Central Excise , Goa vs Cosme Farms Laboratories Ltd	510
ILFS vs BPL Ltd	484
Ramesh Chandra vs University of Delhi	442
Narayan Laxman Patil vs Gala Construction Company P Ltd	422
Avenue Supermarket v Nschint Bala	415
Chebrolu Enterprises vs Andhra Pradesh Backward Class Corporation	414
Ram Bahal vs Deputy Director of Consolidation , Azamgarh	385
Rajastan Road Transport Corporation vs Axeis Sonier	378

 

In nine cases, the judgement was delivered more than one year after being reserved, with the maximum time taken being 566 days.

In Deposit Insurance Case , it took nearly one and half years for the court for delivering the final judgement after reserving the order.

 

When a case is heard in depth and arguments are advanced by both parties, more often than not, the judge “reserves judgement"—to examine the arguments, do research and write the judgement before delivering it in an open court.

While the Code of Civil Procedure1908, applicable to civil courts, states that judgements should be delivered within 30 days of arguments being closed, no such time restriction is found in NCLT Rules and regulations.

The need for a time limit for delivering the judgement is not just to avoid delay, but also to prevent a miscarriage of justice.

 

A judge who takes too long to deliver judgements after hearing arguments may have forgotten some of the arguments or remembered them incorrectly to the detriment of the parties.

 

Supreme Court in Anil Rai vs State of Bihar

 

For this reason, even though no procedural law prescribes so, the Supreme Court has held in Anil Rai vs State of Bihar case that parties can file an application in the high court seeking an early judgement if it’s not delivered within three months of it being reserved. If it’s not delivered more than six months after being reserved, parties have a right to have it re-heard before a different bench of the high court.

 

There is no similar provision available in NCLT regulation . NCLT regulation should be amended to introduce any delay more than

30 days for reserving a judgement , the parties can file in the NCLT seeking an early judgement.

Subramanian Swamy 2G spectrum case

When Subramanian Swamy sought a direction from the court to the then prime minister, Manmohan Singh, to grant sanction to prosecute telecom minister A. Raja for corruption in the 2G spectrum case, the court took 433 days to deliver its judgement after having reserved it.

Naz Foundation case

In the Naz Foundation case concerning the validity of Section 377 of the Indian Penal Code, the judgement was delivered 624 days later, or more than 20 months after being reserved.

The relatively large number of cases where the judgement is delivered more than 90 days after being reserved by the bench suggest the absence of a system to keep track of how long a case has been reserved for judgement.

 

There is no provision in the NCLT regulation that within what time the judgements have to be pronounced after being kept it as reserved as in the Code of Civil Procedure, 1908, applicable to civil courts, states that judgements should be delivered within 30 days of arguments being closed,

 

Similar provision has to be introduced in the NCLT regulations so that judgment on reserved cases have to be delivered on time bound bases and to avoid denial of justice due to delay of justice .

 

CHENNAI HIGH COURT DIRECTS ROC CHENNAI TO REACTIVATE DINS OF DISQUALIFI...

CHENNAI HIGH COURT
QUASHED THE PUBLICATION OF THE LIST OF DISQUALIFIED DIRECTORS BY THE ROC,
CHENNAI  AND THE DEACTIVATION OF THE DIN
OF THE APPELLANTS

Meethelaveetil
Kaitheri Muralidharan & Others Vs Union of India

The two main grounds on which the disqualification and deactivation
were challenged are : (i) prior notice was not issued to the Appellant
concerned calling upon him to show cause as to why he should not be
disqualified as a director; and (ii) the ROC is not entitled to deactivate the
DIN of these directors as per CA 2013 and the rules framed thereunder

Plaintiff
advocate advanced his first contention, namely,that the requirement of prior
notice is implicit in Section 164(2). He pointed out that the ROC disqualified
about 3,09,614 directors under Section164(2)(a) of CA 2013 by order dated
08.09.2017. Subsequently, another listof disqualified directors aggregating to
about 45657 was published on 01.11.2017.

in Bhagavan Das Dhananjaya Das v. Union of India [(2018) 6 MLJ 704] (Bhagavan
Das), the said
disqualifications were set aside. In the said judgment, the Court held that the
principles of natural justice should have been adhered to by issuing a proper
notice to all the directors concerned and that this position is fortified by
the fact that the default in filing the financial statements or annual returns
is a compoundable offence. On that basis, Section 164(2)(a) was construed such
that such disqualification cannot be effected without a prior notice.

The defaulter’s list was uploaded on the MCA website
on 18.12.2018 and was challenged on the ground that it is in contravention of
the law laid down in
Bhagavan Das with regard to the requirement of prior notice.

Advocate for petitioner  relied upon the judgment of the Gujarat High
Court dated 18.12.2018 in Gaurang Balvantlal Shah v. Union of India, 214
Com.Cas. 199 (2019) (Gaurang Balvantlal Shah) wherein the Court concluded that
the disqualification under 164 (2) would take place automatically on the occurrence
of any of the eventualities mentioned therein but the action of the ROC in
publishing the list of disqualified directors is not justified and is not in
consonance with the provisions of Section 164(2) of CA 2013.

Petioner Advocate referred to
the definition of DIN under Rule 2 of the AQD Rules, and to Rule 11 thereof. By
drawing the attention of this Court to Rule 11, he pointed out that Rule 11
deals with the cancellation or surrender or deactivation of DIN and enables
such deactivation or cancellation only in the situations specified therein.

Those situations are if the DIN
is found to be a duplicate or obtained in a wrongful manner or by
fraudulent means. 

In
addition, the DIN may be cancelled or surrendered or deactivated only in the
following four individual director-specific situations, namely, if the
individual concerned: dies; or has been declared to be unsound mind; or has
been adjudicated an insolvent; or if the holder of the DIN applies to surrender
the DIN on the basis that he/she has never been appointed as a director in any
company and the said DIN was never used for filing a document with any
authority.

In Gourang Balvantlal Shah, the
Gujarat High Court concluded that the DIN could not be cancelled or deactivated
merely because one of the companies in which such person was a director had
been struck off from the Registrar of Companies under Section 248 of CA 2013.
In Yashodhara Shroff and Others v. Union of India, order dated 12.06.2019
(Yashodara Shroff), the Karnataka High Court concluded that Section 164(2) of
CA 2013 applies prospectively and not retrospectively and, on that basis,
directed restoration of the DIN where the disqualification of directors
was not valid.

Similarly, the Delhi High Court in
Mukut Pathak v. Union of India W.P.(C) No.9088 of 2018 (MukutPathak), by order
dated 04.11.2019, concluded that there is no provision supporting the
respondent's action of cancelling the DIN and the Digital Signature Certificate
(DSC) and that the said action is unsustainable. He concluded his submissions
by contending that Section 167(1) (a), which is set out below, should be read
down so as to apply only to disqualification under Section 164(1) and not under
Section 164(2):

Attorney General argued that the
judgment in S.Subramania Aiyar v. United India Life Insurance Co. Ltd., AIR
1928 Mad. 1215, he contended that the directors of a company, who are
responsible for filing financial statements and annual returns and are
responsible for the default in doing so, cannot absolve themselves of
liability.

He also relied on a few judgments,
such as S.L. Kapoor v. Jagmohan (1980) 4 SCC 379; KSRTC  v. S.G. Kotturappa (2005) 3 SCC 409; and
Board of Directors, HPTC v. K.C. Rahi (2008) 11 SCC 502 for the proposition
that compliance with natural justice is situation-specific and cannot be put in
a straight-jacket.

Aravind Pandian argued that By drawing reference to
the celebrated judgment in the case of Life Insurance Corporation v. Escorts Ltd.
(1986) 1 SCC 264, he contended that a statutory provision cannot be interpreted
by drawing reference to the form prescribed for its implementation. He further
submitted that this is not a case of suspending the DIN but of deactivation
thereof.

In light of the above analysis, we concur with the
views of the Delhi High Court in Mukut Pathak, the Allahabad High Court in Jai Shankar
Agrahari and the Gujarat High Court in Gaurang Balvantlal Shah to the effect
that the ROC is not empowered to deactivate the DIN under the relevant rules.

In Yashodhara Shroff, the Karnataka High Court upheld
the constitutionality of Section 164(2) and proceeded to hold that a prior or
post decisional hearing is not necessary. For reasons detailed in preceding
paragraphs, we disagree with the view of the Karnataka High Court that prior
notice is not required under Section 164(2) of CA 2013.

In the result, these appeals are allowed by setting
aside the impugned order dated 27.01.2020. Consequently, the publication of the
list of disqualified directors by the ROC and the deactivation of the DIN of
the Appellants is hereby quashed. As a corollary to our conclusion on the deactivation
of DIN, the DIN of the respective directors shall be reactivated within 30 days
of the date of receipt of a copy of this order.