Life Fund vs Securities And Exchange Board Of India

Tarun Agarwala, Presiding Officer

The present appeal has been filed against the order dated September 3, 2019 passed by the Whole Time Member (hereinafter referred to as

‘WTM’) of Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) prohibiting the appellant from taking up new

clients and new contracts and cancelling the certificate of registration as an Alternate Investment Fund.

The facts leading to the filing of the present appeal is, that SEBI found that the funds raising activity of Neesa Technologies Ltd. by offering Non-

Convertible Debentures (NCDs) in the financial year 2013-14 was in violation of Securities and Exchange Board of India Act, 1992 and the

Companies Act, 1956. Accordingly, SEBI passed an order dated June 2, 2016 issuing various directions to Neesa Technologies Ltd. and to its

promoters and directors directing refund of the money collected by the company through the issuance of the NCDs and further restrained them from

accessing the securities market and from buying, selling or otherwise dealing in the securities market.

One such director of Neesa Technologies Ltd. was Mr. Sanjay Gupta who was also a sponsor in the appellant and was a director of Manager of

Life Fund, namely, M/s. Global Life Investment and Advisory Services Pvt. Ltd.

SEBI, accordingly initiated proceedings against the appellant under the Securities and Exchange Board of India (Intermediaries) Regulations, 2008

in order to determine whether the appellant continues to satisfy the criteria of “fit and proper personâ€. The designated authority submitted a report

dated November 10, 2017 recommending cancellation of the certificate of registration granted to the appellant on the ground that the appellant failed to

satisfy the criteria of fit and proper person.

Based on the report, SEBI issued a show cause notice and pursuant to the reply submitted, the impugned order was passed.

We have heard the learned counsel for the parties at some length.

We find that against the order dated June 2, 2016 passed by SEBI against Neesa Technologies Ltd. and its directors, Mr. Sanjay Gupta filed an

appeal No. 156 of 2017 before Securities Appellate Tribunal (SAT) which was dismissed by the Tribunal by an order dated April 16, 2019. We find

that initially the appellant took a stand that it was essential for the appellant that Mr. Sanjay Gupta continued as the sponsor of the appellant.

Subsequently, they took a stand that the resignation of Mr. Sanjay Gupta would be taken and, therefore, some time may be allowed to process the

resignation of Mr. Sanjay Gupta. We, however, find that the said request was made as far as long back on December 24, 2017 but till the date of

passing of the order on September 3, 2019 and even as on date there is nothing to indicate that the appellant had taken any concrete steps to obtain the

resignation of Mr. Sanjay Gupta. In the absence of any evidence to show that Mr. Sanjay Gupta was no longer the sponsor of the appellant or a

shareholder / director or the manager of the appellant, we are of the opinion that the finding of the WTM that the appellant failed to satisfy the criteria

of “fit and proper person†in terms of Regulation 4(f) of Securities and Exchange Board of India (Alternative Investment Funds) Regulations,

2012 (hereinafter referred to as ‘AIF Regulations’) cannot be faulted with.

In the light of the aforesaid, the appeal lacks merit and is dismissed summarily at the admission stage itself.