{ "metadata": { "analysis_of_arguments": "The Appellants maintain that their membership-based time-sharing model does not provide returns akin to an investment scheme and that prior interactions with SEBI suggested no regulatory breach. They contend that abruptly halting operations caused undue harm and that an ex parte order was unwarranted absent compelling urgency. SEBI asserts that complaints indicated the arrangement might be a collective investment scheme and that swift, protective measures are authorized to safeguard public investors. SEBI argues that it is not estopped from revisiting its position if new complaints or evidence emerge, emphasizing statutory powers to intervene when potential risks to investor interests are identified.", "bench": [ "The Hon\u0027ble Mr. Justice Jog Singh", "The Hon\u0027ble Mr. Justice J.P. Devadhar", "The Hon\u0027ble Mr. Justice A.S. Lamba" ], "case_number": [ "APL No. 254 of 2014", "MA No. 104 of 2014", "APL No. 255 of 2014", "MA No. 105 of 2014" ], "cases_referred": [ "PGF Ltd. (12th March, 2013)", "Commissioner of Customs vs. National Shipping Agency 2008(226) E.L.T. (Bom)", "Babaji Shivram Clearing \u0026 Carriers Pvt. Ltd. vs. Union of India 2011 (269) E.L.T. 222 (Bom)", "Commissioner of Customs (General) vs. Burigih International 2008 (226) E.L.T. (Bom)", "Commissioner of Customs (General) vs. S.D. Dalal \u0026 Co. 2008 (221) E.L.T. 488 (Bom)", "Cosmic Radio vs. Union of India \u0026 Another 1983 (12) E.L.T. 84 (Bom)", "Mohindhr Singh Gill \u0026 Another vs. Chief Election Commissioner of New Delhi and Others (1978) 1 SCC 405", "Zenith Infotech Limited vs. Securities and Exchange Board of India (23.7.2013, Securities Appellate Tribunal, Mumbai)", "Securities and Exchange Board of India vs. Zenith Infotech Ltd. \u0026 Ors (19.8.2014, Supreme Court of India)", "SBQ Steels Ltd vs. Commissioner of Cus. C. Ex and S.T. Guntur 2014 (300) E.L.T. 185 (A.P.)", "Oryx Fishers Private Ltd. vs. Union of India 2011 (266) E.L.T. 422 (S.C.)", "Siemens Ltd. vs. State of Maharashtra 2007(207) E.L.T. 168 (S.C.)", "Commissioner of Customs, Mumbai vs. Toyo Engineering India Limited 2006 (201) E.L.T. 513 (S.C.)", "SACI Allied Products Ltd. vs. Commissioner of C. Ex Meerut 2005 (183) E.L.T. 225 (S.C.)", "Institute of Chartered Accountant of India vs. L.K. Ratna \u0026 Others (1986) 4 Supreme Court Cases 537", "Krishna Shipping Agency vs. Commissioner of Cus (Airport \u0026 Admn) 2014 (306) E.L.T. 352", "Order of SEBI in the case of M/s. Rose Valley dated July 10, 2013", "Interim order dated August 1, 2013 and November 6, 2013 passed by Hon\u0027ble Gauhati High Court in Writ Petition (C) No. 4298 of 2013 in the case of M/s. Rose Valley", "SEBI vs. Rose Valley in SLP (C) No. 3725 of 2014, Supreme Court order dated April 15, 2014", "SEBI vs. Rose Valley (SLP (C) No. 3725 of 2014)", "Babaji Shivram, WP (LOD) No. 694 of 2011 (Bombay HC)", "Zenith Infotech (Appeal No. 59 of 2013 decided on July 23, 2013)", "Karnataka Public Service Commission and Others (KPSC) vs. B.M. Vijaya Shankar and Others (1992) SCC 206", "Ajit Kumar Nag vs. General Manager (PJ) Indian Oil Corporation Ltd., Haldia and Others (2005) 7 SCC 764", "Maharshi Dayanand University vs. Surjeet Kaur (2010) 11 SCC PG.159", "M.I. Builders P. Ltd. vs. Radhey Shyam Sahu and Others (1999) 6 SCC 464", "Union Of India vs. Tulsi Ram Patel (1985) 3 SCC 398" ], "chunkwise_data": { "chunk_1": { "analysis_of_arguments": "The appellants contend they have been conducting a legitimate time-sharing arrangement for many years and that abruptly halting their operations causes substantial harm. They argue that SEBI should have completed a more detailed inquiry before imposing any interim restrictions. SEBI, on the other hand, maintains that it identified sufficient indications to warrant an immediate order to protect public investors until the final determination of the company\u2019s activities.", "cases_referred": [ "PGF Ltd. (12th March, 2013)" ], "facts": "Pancard Clubs Limited and its six Directors filed two separate appeals (Appeal Nos. 254 and 255 of 2014) before the Securities Appellate Tribunal against an ex parte interim order issued by the Securities and Exchange Board of India on July 31, 2014. SEBI\u2019s order stemmed from allegations that the company\u2019s time-sharing business in hotels and resorts might be a Collective Investment Scheme. The dispute arose after a Member of Parliament lodged a complaint and SEBI initiated inquiries. Prior to the appeals, the parties exchanged letters over several years regarding the nature of the company\u2019s holiday-related offerings, but no conclusive determination was made. Ultimately, the company challenged SEBI\u2019s interim directions that effectively restricted its operations. Both appeals were heard together and disposed of by a common order, taking Appeal No. 254 of 2014 as the lead case.", "final_status": "Disposed", "formatted_summary": "These appeals were brought by Pancard Clubs Limited and its Directors to challenge an ex parte interim order issued by SEBI, which sought to restrict the company\u2019s ongoing business operations amid concerns that its time-sharing activities constituted a collective investment scheme. The appeals detail the company\u2019s long-standing holiday and resort membership model and emphasize previous correspondence with SEBI, during which no conclusive determination was made regarding its status under collective investment regulations. The Securities Appellate Tribunal heard both appeals concurrently and disposed of them via a single order, though the text provided does not detail the ultimate ruling on the substance of whether the schemes are collectively regulated.", "held": "By a common order, the Tribunal disposed of both appeals after considering the preliminary question of whether the time-sharing schemes fall within the scope of collective investments. The text provided does not elaborate on the precise ruling but confirms that both appeals were addressed together.", "latin_principles": {}, "legal_issues": "Whether the time-sharing business operated by Pancard Clubs Limited qualifies as a Collective Investment Scheme and whether SEBI was justified in issuing the ex parte interim order without first providing an opportunity to be heard.", "statutes": { "CIS Regulations, 1999": "3. The Appellant primarily submits that the time / room sharing business in hotels, resorts etc. carried on by the Appellant does not fall within the ambit of CIS as defined by Section 11AA(1) and 11AA(2) of the SEBI Act read with Regulation 65 of the CIS Regulations, 1999. Therefore, unless the issue of CIS was decided on merit by a detailed enquiry as per procedure established by law, the Respondent should not have passed such an order without hearing Appellant. Moreover, on their own showing, the Respondent has taken a conscious decision to revisit its earlier view on the issue of time sharing business after the judgment of Hon\u2019ble Supreme Court in PGF Ltd. (12th March, 2013) and the letter dated 2nd July, 2013 of one Member of Parliament Mr. Patil. It clearly means that the Appellant was carrying on business since 2001 or so under a bona fide belief that the business of time sharing was not covered by CIS. Under these circumstances, if the Appellant had continued the business for another six months or so, no prejudice would have been caused to the case of the Respondent in holding a full and proper enquiry. Therefore, the Impugned Order needs to be interfered with by this Tribunal in appeal.", "Companies Act, 1956": "4. Brief facts leading to the present dispute are that the Appellant is an unlisted public limited company registered under the Companies Act, 1956. Its shares are, thus, not listed on any of the Stock Exchanges. The Appellant is in the time sharing business i.e. selling of rooms for a fixed duration of nights / days depending upon the scheme opted by its customers who are termed as Members. Accordingly, the Appellant owns, develops and operates hotels and resorts all over India and even abroad, along with offering time (room) sharing options to those who wish to avail of holidays and hospitality services. The Appellant has been engaged in this business for the last one and a half decades.", "Securities and Exchange Board of India Act, 1992": "1. These two appeals have been filed against an ex parte interim order dated July 31, 2014 passed by Securities and Exchange Board of India (hereinafter referred to as Respondent) under Sections 11(1), 11B and 11(4) of the Securities and Exchange Board of India Act, 1992 (SEBI Act) read with Regulation 65 of the CIS Regulations. The Appeal No. 254 of 2014 has been filed by Pancard Clubs Ltd. (hereinafter referred to as Appellant) and Appeal No. 255 of 2014 has been filed by its six Directors. Since both these appeals involve a common question of law and fact, with the consent of the parties, we have heard these appeals together and are disposing them off by this common order by taking Appeal No. 254 of 2014 as the lead case." } }, "chunk_2": { "analysis_of_arguments": "The Appellant contends there was no urgency to justify an ex parte order and that it has been transparent and communicative with SEBI over many years without objection. The Respondent maintains it received complaints indicating the arrangement might be a collective investment scheme, necessitating quick intervention to protect investors.", "cases_referred": [ "Commissioner of Customs vs. National Shipping Agency 2008(226) E.L.T. (Bom)", "Babaji Shivram Clearing \u0026 Carriers Pvt. Ltd. vs. Union of India 2011 (269) E.L.T. 222 (Bom)", "Commissioner of Customs (General) vs. Burigih International 2008 (226) E.L.T. (Bom)", "Commissioner of Customs (General) vs. S.D. Dalal \u0026 Co. 2008 (221) E.L.T. 488 (Bom)", "Cosmic Radio vs. Union of India \u0026 Another 1983 (12) E.L.T. 84 (Bom)", "Mohindhr Singh Gill \u0026 Another vs. Chief Election Commissioner of New Delhi and Others (1978) 1 Supreme Court Cases 405", "Zenith Infotech Limited vs. Securities and Exchange Board of India (23.7.2013, Securities Appellate Tribunal, Mumbai)", "Securities and Exchange Board of India vs. Zenith Infotech Ltd. \u0026 Ors (19.8.2014, Supreme Court of India)", "SBQ Steels Ltd vs. Commissioner of Cus. C. Ex and S.T. Guntur 2014 (300) E.L.T. 185 (A.P.)", "Oryx Fishers Private Ltd. vs. Union of India 2011 (266) E.L.T. 422 (S.C.)", "Siemens Ltd. vs. State of Maharashtra 2007(207) E.L.T. 168 (S.C.)", "Commissioner of Customs, Mumbai vs. Toyo Engineering India Limited 2006 (201) E.L.T. 513 (S.C.)", "SACI Allied Products Ltd. vs. Commissioner of C. Ex Meerut 2005 (183) E.L.T. 225 (S.C.)", "Institute of Chartered Accountant of India vs. L.K. Ratna \u0026 Others (1986) 4 Supreme Court Cases 537", "Krishna Shipping Agency vs. Commissioner of Cus (Airport \u0026 Admn) 2014 (306) E.L.T. 352", "Order of SEBI in the case of M/s. Rose Valley dated July 10, 2013", "Interim order dated August 1, 2013 and November 6, 2013 passed by Hon\u2019ble Gauhati High Court in Writ Petition (C) No. 4298 of 2013 in the case of M/s. Rose Valley", "SEBI vs. Rose Valley in SLP (C) No. 3725 of 2014, Supreme Court order dated April 15, 2014" ], "facts": "The Appellant stated in its promotional material that it was \u0027approved by SEBI,\u0027 leading the Respondent to refute such approval and caution the public. Correspondence ensued, with no decisive stance from the Respondent on whether the Appellant\u2019s activities constituted a collective investment scheme. A complaint was subsequently filed by a Member of Parliament, prompting the Respondent to re-examine the Appellant\u2019s business practices and issue a Show Cause Notice, which the Appellant challenged by filing a Writ Petition before the Bombay High Court. During the pendency of that Show Cause Notice, an ex parte interim order was passed by a Whole Time Member of SEBI, resulting in the present appeal.", "final_status": "The matter is pending final adjudication before the Tribunal.", "formatted_summary": "The Appellant was challenged by SEBI over statements that it was \u0027SEBI approved,\u0027 prompting a series of communications. A Member of Parliament\u2019s complaint led to renewed scrutiny of whether the Appellant operated a collective investment scheme, culminating in a Show Cause Notice and an ex parte interim order. The Appellant contends that the order was passed without urgency or due process. The case is now pending before the Tribunal without a final decision.", "held": "No final determination or holding is provided in the excerpt; the decision on the validity of the ex parte interim order remains pending.", "latin_principles": { "bona fide": "Paragraph 11: \u0027The Appellant was under a bonafide belief that the Respondent did not have any problems...\u0027", "ex parte": "Paragraph 9: \u0027The Impugned Order should not have been passed ex parte particularly in view of the fact that the Appellant had not only been in constant communication...\u0027", "inter alia": "Paragraph 11: \u0027...and, inter alia, on the basis of this belief the Appellant grew its business...\u0027" }, "legal_issues": "Whether the Appellant\u2019s time-sharing (or membership) business falls under the ambit of a collective investment scheme requiring registration with SEBI, and whether the ex parte interim order passed without a hearing is justified.", "statutes": { "the CIS Regulations": "8. Finally, on October 21, 2013, the Respondent sent a letter to said Member of Parliament, and surprisingly not to the Appellant, stating that on examining the Appellant\u2019s matter in 2010-11, the Respondent had concluded that the company\u2019s activities did not attract CIS Regulations. Said MP was also informed that in light of recent complaints received by it, the Respondent was re-examining the matter to determine whether or not the Appellant\u2019s activities fall within the ambit of CIS Regulations. On June 26, 2014, having ostensibly completed its re-examination, the Respondent issued a Show Cause Notice (SCN) dated June 26, 2014 accusing the Appellant of carrying on activities in the nature of a CIS without obtaining a certificate from the Respondent as required by the CIS Regulations.", "the Customs House Agents Licensing Regulations, 2004": "15. Judgments at serial nos. (a) to (d) have been cited by the Ld. Senior Counsel for the Appellant Mr. Pradeep Sancheti to bring home the point that discretion / powers conferred by Sections 11(1), 11B and 11(4) ought to be used only in appropriate cases where due to a prevailing emergency, time cannot be wasted even by offering the right of being heard to the affected party against whom such an ex parte interim order can be made. Mr. Sancheti submits that although these judgments are passed by the Hon\u2019ble High Court of Bombay in the context of suspension of license of Custom House Agents as per the powers and discretion conferred by the Regulations 20 and 22 of Customs House Agents Licensing Regulations, 2004, the ratio laid down in these judgments is clear that it is only when prompt action is required that such powers of suspension are to be invoked at once. Mr. Sancheti also submits delay of even one to two months in suspending a CHA under Regulation 22 of the said CHAL Regulations, 2004 has been condemned by the High Court and considered fatal and such arbitrary decisions have been consistently quashed by the Hon\u2019ble High Court. Mr. Sancheti, pertinently, has drawn our attention towards paragraph 9 of Babaji Shivram (supra) at serial no. (b) decided by the Division Bench of Hon\u2019ble Bombay High Court in WP (LOD) No. 694 of 2011 on 21st April, 2011 which reads as under:- \u201c\u2026\u2026\u2026\u2026 9. Apart from the above, suspension of a CHA license under Regulation 20(2) of the 2004 Regulations can be ordered where immediate action is necessary. In the present case, the Customs Authority in the middle of January, 2011 were aware of the fact that the documents submitted by the \u2026\u201d", "the SEBI Act, 1992": "9. The Appellant in the present appeal, preferred under section 15T of the SEBI Act, 1992, submits that the Impugned ex parte interim order dated 31st July, 2014 fails to set out any reason for the urgency with which it was passed. The Impugned Order is in complete breach of the principles of natural justice and should be treated as void. The Impugned Order should not have been passed ex parte particularly in view of the fact that the Appellant had not only been in constant communication with SEBI since 2001, but also initiated it and was co-operating with the Respondent all along." } }, "chunk_3": { "analysis_of_arguments": "The Appellant contends that SEBI\u2019s ex parte interim order was unwarranted because no urgent circumstances existed and because SEBI had previously concluded that the scheme was not a CIS. The Appellant also highlights lengthy delays before SEBI took action, suggesting an absence of any real emergency. In response, SEBI submits that there was no binding assurance on record absolving the Appellant from regulatory oversight and argues that the nature of the scheme may indeed necessitate protective measures for investors. SEBI defends its authority to invoke interim powers in the interest of safeguarding public funds.", "cases_referred": [ "Krishna Shipping Agency vs. Commissioner of Cus (Airport \u0026 Admn) (2014 (306) E.L.T. 352)", "SEBI vs. Rose Valley (SLP (C) No. 3725 of 2014)", "Babaji Shivram, WP (LOD) No. 694 of 2011 (Bombay HC)", "Zenith Infotech (Appeal No. 59 of 2013 decided on July 23, 2013)", "Cosmic Radio (supra)", "Mohindhr Singh Gill (supra)", "Rose Valley, WP (C) No. 4298 of 2013 (Gauhati HC)" ], "facts": "The Appellant conducts a room/time sharing business, which the Securities and Exchange Board of India (SEBI) later treated as a possible Collective Investment Scheme (CIS). Although SEBI had apparently indicated earlier that the scheme did not fall under CIS, it subsequently issued an ex parte interim order invoking its powers under Sections 11(1), 11B, and 11(4) of the SEBI Act. The Appellant challenged this measure on grounds of delayed and non-emergent circumstances. References were made to similar proceedings against M/s. Rose Valley and Zenith Infotech, as well as various High Court and Tribunal orders. The matter is presently under consideration, following multiple interim directions and appeals.", "final_status": "The matter appears to be pending and not yet finally decided in the provided excerpt.", "formatted_summary": "In this section, the Tribunal reviews arguments surrounding SEBI\u2019s ex parte interim powers under the SEBI Act. The Appellant challenges the timing and necessity of SEBI\u2019s actions, insisting that its unaltered time sharing business was previously deemed outside CIS regulations. The text cites parallel instances (e.g., Rose Valley and Zenith Infotech) where similar orders were challenged based on delay and lack of emergent circumstances. SEBI counters that no formal assurance was ever given and that investor interests demand regulatory intervention. Multiple judicial orders and references show that the matter is still being litigated, with no final determination reached.", "held": "No definitive holding is provided in the excerpt. The Tribunal and courts have issued interim orders, and final resolution remains pending.", "latin_principles": { "ex parte": "\u201c... SEBI was duly empowered to pass an ex parte interim order in urgent cases but this power was to be exercised sparingly ...\u201d (Paragraph 15)", "prima facie": "\u201cWe are also of the view that the petitioners have prima facie shown that their scheme of time share ...\u201d (Paragraph 18)" }, "legal_issues": "1) Whether the Appellant\u2019s time sharing arrangement qualifies as a Collective Investment Scheme under the SEBI Act. 2) Whether SEBI was justified in issuing an ex parte interim order without granting a hearing, particularly given the alleged delay. 3) Whether a previously indicated position by SEBI regarding non-applicability of CIS can be changed absent new factual developments.", "statutes": { "CIS Regulations, 1999": "\u201c16. ... This submission is made to emphasize the point that the Respondent had ... decided quite some time ago on file to the effect that the time sharing scheme business of the Appellant did not fall within the purview of the definition of CIS as mentioned in the Section 11AA of the SEBI Act read with the one given in the CIS Regulations of 1999.\u201d", "Customs House Agents Licensing Regulations, 2004": "\u201c15. ... these judgments are passed by the Hon\u2019ble High Court of Bombay in the context of suspension of license of Custom House Agents as per the powers and discretion conferred by the Regulations 20 and 22 of Customs House Agents Licensing Regulations, 2004, the ratio laid down is clear that it is only when prompt action is required that such powers of suspension are to be invoked at once.\u201d", "Securities and Exchange Board of India Act, 1992 (Section 11AA)": "\u201c16. Similarly, on the strength of the judgement ... This submission is made to emphasize the point that the Respondent had already taken a decision ... on file to the effect that the time sharing scheme business of the Appellant did not fall within the purview of the definition of CIS as mentioned in the Section 11AA of the SEBI Act read with the one given in the CIS Regulations of 1999.\u201d", "Securities and Exchange Board of India Act, 1992 (Sections 11(1), 11B, and 11(4))": "\u201c15. Judgments at serial nos. (a) to (d) have been cited ... to bring home the point that discretion / powers conferred by Sections 11(1), 11B and 11(4) ought to be used only in appropriate cases where due to a prevailing emergency, time cannot be wasted even by offering the right of being heard ... Mr. Sancheti submits ... the ratio laid down ... it is only when prompt action is required that such powers ... are to be invoked at once.\u201d" } }, "chunk_4": { "analysis_of_arguments": "The petitioners argue that time share schemes do not constitute an investment yielding returns, contending that SEBI has no authority to regulate them as a CIS. They maintain that SEBI\u2019s directions are overreaching and constrain lawful business operations. The respondent (SEBI) asserts that the petitioners\u2019 scheme meets the conditions required to be classified as a CIS and that government authorities are not estopped from re-examining earlier viewpoints. SEBI also alleges fabrication of a letter by the petitioners, insisting that it justifies rejecting their claims.", "cases_referred": [ "Karnataka Public Service Commission and Others (KPSC) vs. B.M. Vijaya Shankar and Others (1992) SCC 206", "Ajit Kumar Nag vs. General Manager (PJ) Indian Oil Corporation Ltd., Haldia and Others (2005) 7 SCC 764", "Maharshi Dayanand University vs. Surjeet Kaur (2010) 11 SCC PG.159", "M.I. Builders P. Ltd. vs. Radhey Shyam Sahu and Others (1999) 6 SCC 464", "M/s. P.G.F. Ltd. \u0026 Ors. vs. Union of India and Anr. AIR 2013 Supreme Court 3702" ], "facts": "The petitioners introduced a time share scheme which the Securities and Exchange Board of India (SEBI) contends may qualify as a Collective Investment Scheme (CIS). The petitioners dispute SEBI\u2019s jurisdiction, arguing that their scheme does not come under CIS regulations. SEBI issued directions restraining the petitioners from collecting funds, prompting the filing of a writ petition. An interim order partly suspended SEBI\u2019s directions, allowing the petitioners to continue day-to-day operations under strict record-keeping obligations. Allegations of a fabricated document arose during the proceedings, but no final determination on this has yet been made. The matter remains ongoing before the court.", "final_status": "The matter remains pending, with interim relief granted to the petitioners.", "formatted_summary": "These excerpts concern a dispute over whether the petitioners\u2019 time share scheme is regulated by SEBI as a Collective Investment Scheme. The court granted interim relief by suspending some of SEBI\u2019s directions, requiring the petitioners to maintain detailed records of new collections. Allegations of document fabrication also arose. The case remains pending for a final decision.", "held": "The court provisionally concluded that, on the present record, the time share scheme may not definitively qualify as a Collective Investment Scheme and partially stayed SEBI\u2019s directions. The petitioners are allowed to operate while keeping distinct records of incoming funds, pending a final determination. This temporary relief may be revisited if further evidence shows SEBI\u2019s authority applies.", "latin_principles": { "prima facie": "Paragraph 13: \u0027We are also of the view that the petitioners have prima facie shown that their scheme of time share...\u0027" }, "legal_issues": "Whether the petitioners\u2019 time share scheme falls within the scope of a Collective Investment Scheme under SEBI\u2019s jurisdiction; whether SEBI validly exercised its power by issuing ex parte interim orders; and whether the petitioners\u2019 reliance on the allegedly fabricated letter affects the legal proceedings.", "statutes": { "SEBI Act 1992 - Section 11AA(1)": "13\ningredients, which have been mentioned in Section 11AA(1), are required to be satisfied before treating a scheme as Collective Investment Scheme, has considerable force. We are also of the view that the petitioners have prima facie shown that their scheme of time share, which is the subject matter of controversy in the present writ petition, does not fall within the meaning of the expression of Collective Investment Scheme and that the SEBI does not have, unless can be shown otherwise, the jurisdiction to take any action in the affairs of the business of the petitioners. Situated thus, we are of the view, though tentative, that in the facts and attending circumstances of the present case and taking into account, more particularly, the fact that the State of Assam has not been able to present before this Court, at this stage, any clear material to show that the SEBI has jurisdiction to interfere with the affairs of the petitioners\u2019 business and the SEBI, having not concluded till date that the business of the petitioners falls within the meaning of the expression Collective Investment Scheme as defined in Section 11AA(1), the nature of directions, which the SEBI has passed by the impugned order, need to be suitably interfered with so that the SEBI\u2019s directions do not completely restrain the petitioners from carrying out their day to day business.", "SEBI Act 1992 - Sections 11(1), 11B, 11(4)": "24. Mr. Shyam Mehta, Ld. Senior Counsel for the Respondent also produced an order dated July 10, 2013 passed by the Ld. WTM of SEBI under Sections 11(1), 11B and 11(4) of the SEBI Act, 1992 in a similar case of time sharing scheme in the case of Rose Valley to emphasize that the Appellant is not being discriminated against and similarly placed other such companies are also being investigated." } }, "chunk_5": { "analysis_of_arguments": "The Respondent contends the Appellant relied on a fabricated letter, arguing it was only for internal correspondence and not meant for the Appellant. The Respondent further insists the Appellant\u2019s business activities are subject to regulatory scrutiny. The Appellant refutes the fabrication charge, explaining minor typographical variations, and submits that it had previously sought SEBI\u2019s guidance to clarify its time-sharing scheme\u2019s status, thus questioning the urgency of the ex parte measure. Both sides debate whether the scheme truly falls under collective investment regulations.", "cases_referred": [ "PGF Ltd. (Hon\u2019ble Supreme Court, 12th March 2013)", "Zenith Infotech Ltd. vs. SEBI \u0026 Ors." ], "facts": "The Appellant was alleged to have annexed a fabricated letter dated October 21, 2013 from SEBI to a Member of Parliament (Mr. Patil) in its appeal. The Respondent claimed that the letter was never issued to the Appellant and was substantially different from the original record. Upon production of the Respondent\u2019s file, the Tribunal concluded that the letter\u2019s content was essentially the same, apart from typographical corrections, and accepted the Appellant\u2019s apology. The broader dispute concerns whether the Appellant\u2019s time-sharing membership scheme constitutes a collective investment scheme, for which SEBI initially took no conclusive position for many years. The Respondent later issued an ex parte interim order barring the Appellant\u2019s activities without a pre-decisional hearing, leading to the present appeal.", "final_status": "Not concluded in the provided excerpt", "formatted_summary": "In this portion of the proceedings, the Tribunal considered an allegation of document fabrication by the Appellant, concluding it was a typographical reformatting rather than a genuine forgery. It also addressed the ex parte interim order passed by SEBI, questioning the urgency behind it and its fairness in light of natural justice. The broader question of whether the Appellant\u2019s time-sharing scheme constitutes a collective investment scheme remains pending for final determination.", "held": "The Tribunal accepted the Appellant\u2019s explanation regarding the alleged document fabrication and found no intention to mislead. It observed that SEBI\u2019s ex parte action lacked clear urgency, emphasized the requirement of natural justice, and indicated that any conclusive determination on the collective investment scheme aspect awaits further inquiry.", "latin_principles": { "ex parte": "30. One of the issues before us today is whether there were any emergent circumstances justifying an ex parte interim order against the Appellant by invocation of process under Sections 11(1), 11(4) and 11B of the SEBI Act, 1992. Before analysing the nature of powers conferred\u2026", "prima facie": "29. Turning to the merit of the case, we note that the present appeal is an offshoot of a larger issue pending before SEBI which relates to the applicability or non-applicability of Section 11AA to the activities of the Appellant. However, since SEBI itself has only come to a prima facie conclusion in the Impugned Order regarding the matter, we too shall refrain ourselves from making any comment regarding the same\u2026" }, "legal_issues": "Whether the ex parte interim order was justified under emergent circumstances, and whether the Appellant\u2019s time-sharing scheme falls within the definition of a collective investment scheme requiring regulatory oversight by SEBI.", "statutes": { "SEBI (Collective Investment Schemes) Regulations, 1999": "31. We have examined Sections 11(1), 11(4) and 11B read with Sections 11AA(1), 11AA(2) of the SEBI Act along with Regulation 65 of the CIS Regulations of 1999, under which the Respondent has passed the Impugned Order to protect the interest of investors.", "SEBI Act, 1992": "31. We have examined Sections 11(1), 11(4) and 11B read with Sections 11AA(1), 11AA(2) of the SEBI Act along with Regulation 65 of the CIS Regulations of 1999, under which the Respondent has passed the Impugned Order to protect the interest of investors." } }, "chunk_6": { "analysis_of_arguments": "SEBI argues that it exercised permissible urgency powers, emphasizing the need to protect investors expeditiously. The Appellant contends that no immediate danger required bypassing a hearing and that post-decisional relief offers scant remedy vis-\u00e0-vis the damages already incurred. SEBI references precedents allowing swift measures in extraordinary cases, while the Appellant distinguishes those cases as involving far more compelling facts than the present scenario.", "cases_referred": [ "Zenith Infotech Ltd. vs. SEBI \u0026 Ors.", "Karnataka Public Service Commission and Others (KPSC) vs. B.M. Vijaya Shankar and Others", "Ajit Kumar Nag vs. General Manager (PJ) Indian Oil Corporation Ltd., Haldia and Others (2005) 7 SCC 764", "Union Of India vs. Tulsi Ram Patel (1985) 3 SCC 398", "Maharshi Dayanand University", "M.I. Builders P. Ltd." ], "facts": "The Appellant, engaged in time-share holiday schemes, was subjected to an ex parte interim order by SEBI halting its activities amid concerns that the enterprise fell under Collective Investment Schemes. SEBI had formed only a prima facie view and did not provide the Appellant a pre-decisional hearing. The Appellant claims that no extraordinary urgency existed and that this abrupt restriction caused irreparable harm to its business and customers. The matter came before this Tribunal after the Appellant challenged the interim order, citing the lack of proper notice and hearing.", "final_status": "Impugned order set aside.", "formatted_summary": "The Tribunal reviewed SEBI\u2019s ex parte interim order against a time-share scheme operator and found that SEBI had not shown the requisite urgency to justify dispensing with a pre-decisional hearing. Noting that post-decisional relief could not mitigate the harm caused, the Tribunal set aside the impugned order. Citing several precedents, the Tribunal emphasized that marginalizing natural justice is permissible only in extraordinary circumstances and reaffirmed that fair hearing is an essential safeguard in quasi-judicial proceedings.", "held": "The Tribunal concluded that there was no demonstrable urgency justifying dispensation of a pre-decisional hearing, rendering the ex parte order unsustainable. It reiterated that bypassing natural justice principles is permissible only under exceptional circumstances, thus reinforcing the necessity of fair procedures in similar future matters.", "latin_principles": { "audi alteram partem": "Mentioned in paragraph 41: \u0027This is the fundamental rule of audi alteram partem and its exclusion is an exception.\u0027" }, "legal_issues": "Whether SEBI was justified in invoking its power to issue an ex parte interim order without a pre-decisional hearing; and whether the Appellant\u2019s holiday schemes are subject to collective investment regulations.", "statutes": { "Article 311(2) of the Constitution of India": "41. Ajit Kumar Nag vs. General Manage r (PJ) Indian Oil Corporation \nLtd., Haldia and Others (2005) 7 SCC 764 the Hon\u2019ble Supreme Court was \nconcerned with the dismissal of one of the most recalcitran t employees of the \nIndian Oil Corporation without holding regular enquiry against him and thus \nwithout affording a ny opportunity of hearing bein g given before passing the \nimpugned dismissal order against him. Th e Single Bench as well as Division \nBench of the High Court upheld the dismissal order, so also the Hon\u2019ble \nSupreme Court, in view of the exceptio nal situation contemplated by clause \n(VI) of standing order 20 of Certified Standing Order of the Corporation, i.e., \non satisfaction of the General Manager th at immediate action was required, he \ncould dismiss or remove an employee without giving him an opportunity of \nbeing heard. A similar provis ion is to be found in the second proviso of Article \n3(11) (2) of the Constitutio n of India which has been interpreted by Hon\u2019ble \nSupreme Court in several cases, partic ularly from Union Of India vs. Tulsi \nRam Patel (1985) 3 SCC 398 onwards that such a power of dismissal/removal \nof a delinquent employee has to be invoked in grave and extraordinary \nsituations alone. Otherwise the normal ru le is to hold an enquiry against the \nemployee concerned and take approp riate action only after giving him \nreasonable opportunity of being heard in the said enquir y. This is the \nfundamental rule of audi alteram partem and its exclusion is an exception. ", "CIS Regulations": "37. SEBI has even today only managed to form a prima facie opinion \nregarding the applicability of CIS Regulati ons to the Appellant\u2019s business. In \nsuch a situation, if the Re spondent, after conducting an in-depth analysis of the \nscheme of the Appellant comes to the c onclusion that the schemes in fact do \nnot fall within the ambit of CIS, the Appellant would already have suffered \nirreparable loss due to its Members not be ing able to avail themselves of the \nservices offered by the Appellant. In such an eventuality, as stated \nhereinabove, even the customers, would be put to a loss. Strictly speaking, the \nImpugned Order may not be stigmatic in nature but it has the potential to lower \nthe image and reputation of the Appellant in the field of time share business, \nparticularly when other companies, like Rose Valley etc., are continuing with \ntheir business." } }, "chunk_7": { "analysis_of_arguments": "The Appellant maintains that it was denied a proper hearing and that its membership-based scheme does not constitute a collective investment scheme. The Appellant further argues that SEBI\u2019s abrupt change of position without demonstrating urgency violates fairness. SEBI contends that it is empowered to act swiftly to protect investors and is not barred by estoppel when an action is purportedly contrary to law. SEBI also maintains that it has discretion to reassess the legality of such schemes if it believes they fall within its regulatory ambit.", "cases_referred": [ "Maharshi Dayanand University", "M.I. Builders P. Ltd.", "Rose Valley", "PGF Ltd." ], "facts": "The Respondent contended that the Appellant\u2019s time sharing arrangement constituted a collective investment scheme requiring registration. An ex parte interim order was issued, directing the Appellant to halt its operations and return funds to members, without first granting an opportunity to be heard. The Appellant asserts that its scheme is not a collective investment scheme and that the interim order was unjustified. A show cause notice was meanwhile served on the Appellant to determine whether the business model came within SEBI\u2019s purview. The Appellant also cited a similar matter involving Rose Valley, in which a comparable order was stayed by the Gauhati High Court.", "final_status": "The impugned ex parte interim order was set aside by the Tribunal.", "formatted_summary": "In these proceedings, SEBI alleged that the Appellant\u2019s time sharing business was effectively a collective investment scheme requiring registration. SEBI passed an ex parte interim order halting the Appellant\u2019s operations, but the Appellant objected, arguing that no urgent necessity was demonstrated and that the order breached principles of natural justice. The Tribunal concluded that SEBI could adapt its stance on the classification of such schemes but must grant a fair hearing. It set aside the impugned order and held that whether the Appellant\u2019s time sharing arrangement truly constitutes a collective investment scheme remains an open question for a more detailed adjudication.", "held": "The Tribunal held that SEBI\u2019s ex parte order could not be sustained without providing the Appellant an opportunity to respond. While SEBI is not barred from reviewing its stance on potential collective investment schemes, any measure with severe repercussions must adhere to principles of natural justice. The matter of whether the scheme qualifies as a collective investment scheme remains open for determination by the adjudicating authority.", "latin_principles": { "ex parte": "Paragraph 47: \"...unless necessity or emergency of a grave nature is shown by SEBI to justly take ex parte interim action...\"", "prima facie": "Paragraph 48: \"...the Hon\u2019ble High Court arrived at a prima facie view that the company\u2019s activities were not in the nature of CIS...\"" }, "legal_issues": "1) Whether the Appellant\u2019s time sharing scheme falls under the definition of a collective investment scheme. 2) Whether SEBI\u2019s ex parte interim order, passed without a hearing, was valid. 3) Whether principles of natural justice and procedural fairness were upheld. 4) Whether SEBI could change its stand after a period of inaction without invoking estoppel.", "statutes": { "CIS Regulations, 1999": "50. The SCN dated June 26, 2014, in a nut shell, mentions / alleges that an examination of the affairs of the Appellant was undertaken by the Respondent for \u201cpossible violation\u201d of the provisions of the SEBI Act, 1992 read with connected Rules and Regulations. On the basis of such an examination, the Respondent has leveled an allegation that the Appellant is carrying out a CIS in the name of time share business without obtaining a certificate of registration as required by the provisions of CIS Regulations, 1999.", "SEBI (Procedure for Holding Enquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995": "49. In the case in hand also, therefore, considering the situation that no material has been brought on record to show that SEBI has any justification to interfere with the Appellant\u2019s time share business, especially in light of the fact that SEBI has not yet conclusively determined whether or not the provisions of CIS are attracted to the Appellant\u2019s business, we are of the view that the impugned order cannot be sustained particularly when SEBI has itself issued SCN dated June 26, 2014 to the Appellant under Ru le 4 of SEBI (Procedure for Holding Enquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 read with S ection 15I of the SEBI Act, 1992.", "SEBI Act, 1992 (Sections 11(1), 11(4), 11B)": "47. As held hereinabove, the answer to this has to be in the negative. SEBI may not be bound by estoppel in a given case to change its stand due to changed circumstances or change in policy or law. But Respondent cannot do the same without following principles of natural justice unless necessity or emergency of a grave nature is shown by SEBI to justly take ex parte interim action in the form of extreme directions under sections 11 (1), 11(4), 11B of SEBI Act to halt the business of Appellant in question. No such urgency or dire need has been brought on record by SEBI which could justify the passing of the Impugned Order in question. It is seen from the records of SEBI and the pleadings that there are some queries by some prospective investors who intend to be Members of the Appellant\u2019s club by investing some money. Even if there are some complaints against the Appellants, as stated by SEBI, they should have been forwarded by SEBI to the Appellant, and only on failure of the Appellant to redress such grievances should the Respondent have taken appropriate action against the Appellant as per law. The Respondent cannot call upon the Appellant to close its business and refund the amount received to its Members without first deciding the issue whether the Appellant\u2019s business of time sharing is covered by the definition of CIS.", "SEBI Act, 1992 (Sections 11AA(1) and 11AA(2))": "51. It is, therefore, evident that an enquiry as per procedure established by law through an Adjudicating Officer (AO ), who is a quasi-judicial authority, into the vital issue as to whether Appellant\u2019s business activities amount a CIS within the meaning of Sections 11AA(1 ) and 11AA(2) of the SEBI Act, has just commenced and this main issue is yet to be decided by the Ld. AO. Documents in support of their case have not been filed and exchanged by the parties before the Ld. AO. Issues have not been framed by the Ld. AO and witnesses, if any, have not been examined and cross-examined by the parties before the Ld. AO. At this stage, it is, therefore, too premature to halt the business activities of the Appellant on the basis of a tentative view formed by the Respondent. This apart, the potential nature of findings in the Impugned Order is likely to affect a fair trial of the main issue pending before the Ld. AO." } }, "chunk_8": { "analysis_of_arguments": "The Respondent contends that the Appellant did not fully cooperate with information requests and that its time share business is effectively a collective investment scheme. The Appellant maintains that it submitted the required documents, points to SEBI\u2019s prior stance that the time share business was not a CIS, and argues that the interim order was unjustly imposed before a full inquiry could be carried out.", "cases_referred": [ "PGF Ltd. (Supreme Court, 2013)" ], "facts": "The Appellant has been operating a time share business, and the Respondent (SEBI) initiated an enquiry to determine whether these activities amount to a collective investment scheme. SEBI previously believed the time share business did not fall under CIS but later changed its view after receiving communications, including one from a Member of Parliament. An ex parte interim order was passed against the Appellant, halting its operations. The Appellant had also approached the Gauhati High Court, which held a prima facie view that time share business was not a CIS. Prior to this appeal, the Appellant provided documents in a phased manner, and the inquiry by SEBI had not been completed when the ex parte order was issued.", "final_status": "Both appeals stand disposed of.", "formatted_summary": "In these appeals, the Tribunal examined whether the Appellant\u2019s time share business qualifies as a collective investment scheme and whether the ex parte interim order restraining its operations was valid. Citing the prior stance that the business was not a CIS and the Gauhati High Court\u2019s prima facie view, the Tribunal set aside the interim order and remanded the matter for a fresh decision by SEBI\u2019s Whole Time Member, with conditions on the Appellant not to launch new schemes or dispose of assets.", "held": "The ex parte interim order was set aside, and SEBI\u2019s Whole Time Member was directed to decide the matter on merits after hearing the Appellant. The Appellant is barred from launching new schemes or disposing of assets until a final order is passed. This decision underscores that regulatory authorities should complete a proper inquiry before imposing wide-ranging restrictions.", "latin_principles": { "prima facie": "55. To sum up, in the present case, Appellant has been knocking on the doors of SEBI since 2001 by seeking its decision on the question as to whether the time sharing business carried on by the Appellant is covered under CIS or not. Although no formal order was issued in the year 2001, it is now admitted by counsel for SEBI that since the very beginning SEBI was of the opinion that time sharing business is not covered under CIS. In fact, in the year 2010, SEBI once again scrutinized the documents relating to the business carried on by the Appellant and it is evident from the letter addressed by SEBI to a Member of Parliament (MP) on October 21, 2013 that even after scrutiny of documents furnished by Appellant in the year 2010 SEBI was of the opinion that the time sharing business carried on by the Appellant was not covered under CIS. However, on the basis of letter addressed by the said MP, SEBI decided to reconsider the issue. From the impugned ex parte interim order it is seen that the basis for such order, is the letter addressed by a Member of Parliament, the Economic Offences Wing etc. Since the dispute relates to the schemes that were floated by the Appellant during the period when SEBI had considered that the time sharing business was not covered under CIS, WTM of SEBI ought to have appreciated that it would be improper to pass any adverse ex parte order against the Appellant on the basis of his prima facie opinion derived from the letters addressed by a Member of Parliament and certain agencies, especially when prima facie opinion of the Gauhati High Court is to the effect that time sharing business is not covered under CIS. In other words, even though it is open to SEBI to change its stand on new facts coming to light, in the facts of present case, having taken a stand for more than a decade, the Whole Time Member of SEBI could not have changed that stand by way of an ex parte decision based on his prima facie view, especially when prima facie view of Gauhati High Court to the effect that time sharing business is not covered under CIS, is holding the field since August, 2013. It is relevant to note that the Apex Court while disposing of the appeal filed by SEBI has not interfered with the prima facie view of the Gauhati High Court on ground that the matter is listed for final hearing before the Gauhati High Court. Admittedly, the prima facie view of the Gauhati High Court continues to be in force till date. Neither the Whole Time Member in the impugned order has referred to the order passed by Gauhati High Court, nor counsel for SEBI was aware of the order passed by the Gauhati High Court against which SEBI had filed an appeal before the Apex court. In fact, the order of the Gauhati High Court as also order of the Apex Court on the appeal filed by SEBI against the decision of the Gauhati High Court were brought to our notice by the counsel for Appellant. In these circumstances, since the prima facie view of the Whole Time Member of SEBI being contrary to the prima facie view of the Gauhati High Court, we have no option but to set aside the ex parte interim order which is impugned in the present appeal." }, "legal_issues": "Whether the Appellant\u2019s time share business constitutes a collective investment scheme and whether the ex parte interim order was justified given SEBI\u2019s earlier views and the pending inquiry.", "statutes": { "CIS Regulations, 1999": "29 connected Rules and Regulations. On the basis of such an examination, the Respondent has leveled an allegation that the Appellant is carrying out a CIS in the name of time share business without obtaining a certificate of registration as required by the provisions of CIS Regulations, 1999.", "SEBI Act - sections 11(1), 11B and 11(4)": "52. Furthermore, Ld. Senior Counsel Mr. Mehta contends that the sudden spurt in activities of the Respondent is the result of the judgment of Hon\u2019ble Supreme Court in PGF Ltd. It is difficult for us to reconcile with this submission because the PGF order was passed by the Hon\u2019ble Supreme Court on March 12, 2013 whereas the Impugned ex parte interim order has been issued after about 16 months of the PGF judgment i.e. on July 31, 2014. The Respondent should have, therefore, exercised restraint in exercising discretion conferred upon him under Sections 11(1), 11B and 11(4) of the SEBI Act in the peculiar facts and circumstances of the present case, particularly in view of the fact that the SCN had already been issued for holding regular enquiry in the whole mater.", "SEBI Act - sections 11AA(1) and 11AA(2)": "51. It is, therefore, evident that an enquiry as per procedure established by law through an Adjudicating Officer (AO), who is a quasi-judicial authority, into the vital issue as to whether Appellant\u2019s business activities amount a CIS within the meaning of Sections 11AA(1) and 11AA(2) of the SEBI Act, has just commenced and this main issue is yet to be decided by the Ld. AO. Documents in support of their case have not been filed and exchanged by the parties before the Ld. AO. Issues have not been framed by the Ld. AO and witnesses, if any, have not been examined and cross-examined by the parties before the Ld. AO. At this stage, it is, therefore, too premature to halt the business activities of the Appellant on the basis of a tentative view formed by the Respondent. This apart, the potential nature of findings in the Impugned Order is likely to affect a fair trial of the main issue pending before the Ld. AO." } }, "chunk_9": { "analysis_of_arguments": "The Appellants contended that they should be permitted to continue their operations while they supplied the information requested by SEBI. SEBI maintained that no further schemes should be launched until the necessary documents were furnished, and the Appellants\u2019 activities were properly assessed.", "cases_referred": [], "facts": "The Appellants launched certain collective investment schemes and were required by SEBI to furnish specific documents and particulars. The Appellants took over a year to comply, prompting the filing of appeals. An earlier order of the High Court of Gauhati directed the Appellants to maintain a separate account of incoming funds. Before the current stage, the matter was brought through these appeals, requiring the Appellants to produce the outstanding documents and refrain from launching any new schemes or disposing of assets until SEBI\u2019s final order.", "final_status": "disposed", "formatted_summary": "The tribunal disposed of the appeals with directives for the Appellants to provide all pending information to SEBI. Until SEBI\u2019s final decision, the Appellants are barred from launching new schemes or altering their assets. The earlier High Court directive to maintain a separate account remains in force.", "held": "The tribunal disposed of both appeals, directing the Appellants to promptly submit all required documents and refrain from opening new schemes or transferring assets until SEBI\u2019s examination is complete. This decision underscores the requirement that entities must comply fully with regulatory inquiries before proceeding with similar ventures in the future.", "latin_principles": {}, "legal_issues": "Whether the Appellants could continue operating or launching new collective investment schemes before providing the necessary documents to SEBI and whether SEBI had sufficient grounds to impose restrictions pending compliance.", "statutes": {} } }, "counsels": [ "Mr. Pradeep Sancheti, Senior Advocate (for Appellants in Appeal Nos. 254 and 255 of 2014)", "Mr. Prakash Shah, Advocate (for Appellants in Appeal Nos. 254 and 255 of 2014)", "Mr. Sanjay Agarwal, Advocate (for Appellants in Appeal Nos. 254 and 255 of 2014)", "Mr. Shyam Mehta, Senior Advocate (for Respondent in Appeal Nos. 254 and 255 of 2014)", "Mr. Mihir Mody, Advocate (for Respondent in Appeal Nos. 254 and 255 of 2014)" ], "delivered_date": "17.09.2014", "facts": "Pancard Clubs Limited and its Directors operated a time-sharing or holiday membership scheme, prompting concerns from the Securities and Exchange Board of India (SEBI) that this arrangement might be a collective investment scheme requiring registration. A complaint lodged by a Member of Parliament initiated renewed scrutiny, leading to show cause notices and an ex parte interim order restricting the company\u2019s operations. The Appellants filed writ petitions and appeals, contending that earlier communications from SEBI indicated the business was not a collective investment scheme. Various courts and tribunals examined the dispute, sometimes granting interim relief while directing the Appellants to maintain separate accounts, refrain from launching new schemes, and submit required documents. SEBI, citing investor protection, defended its power to issue interim measures, but was repeatedly questioned on whether genuine urgency existed. The appeals were eventually disposed of by setting aside the ex parte orders in several instances and remanding the matter for a full inquiry to determine conclusively whether the business model truly falls under collective investment regulations.", "final_status": "Appeals disposed, ex parte interim orders set aside, final determination pending.", "first_party": [ "1. Pancard Clubs Limited, 111/113, Kalyandas Udyog Bhawan, Near Century Bhavan, Prabhadevi, Mumbai \u2013 400 025", "2. Ms. Shobha Ratnakar Barde, Residing at A6/19-50, Jeevan Beema Nagar, Borivali (West), Mumbai \u2013 400 103", "3. Mr. Manish Kalidas Gandhi, Residing at B/8, Jay Kunj Apartment, Agashi Cross Road, Above Dalvi Hospital, Virar (West), Vasai, Thane \u2013 401 303", "4. Mr. Ramachandran Ramakrisshnan, Residing at 601/Bldg. No. 1A, Shree Amimsadham CHS Ltd., Off New Link Road, Malad (West), Mumbai \u2013 400 064", "5. Mr. Sudhir Shankar Moravekar, Residing at 9/10, Utkarsh Co-op. Hsg. Soc., Plot No. 1035, J.A. Raul Marg, Botadkarwadi, Prabhadevi, Mumbai \u2013 25", "6. Ms. Usha Arun Tari, Residing at A-3, Prakash Nagar, Mogul Lane, Mahim, Mumbai \u2013 400 016", "7. Mr. Chandrasen Ganpatrao Bhise, Residing at Gopal Niwas, Plot No. 14, Room No. 4, 1st Floor, Sion (West), Mumbai \u2013 400 022" ], "grouped_statutes": { "Article 311(2) of the Constitution of India": [ "41. Ajit Kumar Nag vs. General Manage r (PJ) Indian Oil Corporation \nLtd., Haldia and Others (2005) 7 SCC 764 the Hon\u2019ble Supreme Court was \nconcerned with the dismissal of one of the most recalcitran t employees of the \nIndian Oil Corporation without holding regular enquiry against him and thus \nwithout affording a ny opportunity of hearing bein g given before passing the \nimpugned dismissal order against him. Th e Single Bench as well as Division \nBench of the High Court upheld the dismissal order, so also the Hon\u2019ble \nSupreme Court, in view of the exceptio nal situation contemplated by clause \n(VI) of standing order 20 of Certified Standing Order of the Corporation, i.e., \non satisfaction of the General Manager th at immediate action was required, he \ncould dismiss or remove an employee without giving him an opportunity of \nbeing heard. A similar provis ion is to be found in the second proviso of Article \n3(11) (2) of the Constitutio n of India which has been interpreted by Hon\u2019ble \nSupreme Court in several cases, partic ularly from Union Of India vs. Tulsi \nRam Patel (1985) 3 SCC 398 onwards that such a power of dismissal/removal \nof a delinquent employee has to be invoked in grave and extraordinary \nsituations alone. Otherwise the normal ru le is to hold an enquiry against the \nemployee concerned and take approp riate action only after giving him \nreasonable opportunity of being heard in the said enquir y. This is the \nfundamental rule of audi alteram partem and its exclusion is an exception." ], "CIS Regulations, 1999": [ "3. The Appellant primarily submits that the time / room sharing business in hotels, resorts etc. carried on by the Appellant does not fall within the ambit of CIS as defined by Section 11AA(1) and 11AA(2) of the SEBI Act read with Regulation 65 of the CIS Regulations, 1999. Therefore, unless the issue of CIS was decided on merit by a detailed enquiry as per procedure established by law, the Respondent should not have passed such an order without hearing Appellant. Moreover, on their own showing, the Respondent has taken a conscious decision to revisit its earlier view on the issue of time sharing business after the judgment of Hon\u2019ble Supreme Court in PGF Ltd. (12th March, 2013) and the letter dated 2nd July, 2013 of one Member of Parliament Mr. Patil. It clearly means that the Appellant was carrying on business since 2001 or so under a bona fide belief that the business of time sharing was not covered by CIS. Under these circumstances, if the Appellant had continued the business for another six months or so, no prejudice would have been caused to the case of the Respondent in holding a full and proper enquiry. Therefore, the Impugned Order needs to be interfered with by this Tribunal in appeal.", "8. Finally, on October 21, 2013, the Respondent sent a letter to said Member of Parliament, and surprisingly not to the Appellant, stating that on examining the Appellant\u2019s matter in 2010-11, the Respondent had concluded that the company\u2019s activities did not attract CIS Regulations. Said MP was also informed that in light of recent complaints received by it, the Respondent was re-examining the matter to determine whether or not the Appellant\u2019s activities fall within the ambit of CIS Regulations. On June 26, 2014, having ostensibly completed its re-examination, the Respondent issued a Show Cause Notice (SCN) dated June 26, 2014 accusing the Appellant of carrying on activities in the nature of a CIS without obtaining a certificate from the Respondent as required by the CIS Regulations.", "16. ... This submission is made to emphasize the point that the Respondent had ... decided quite some time ago on file to the effect that the time sharing scheme business of the Appellant did not fall within the purview of the definition of CIS as mentioned in the Section 11AA of the SEBI Act read with the one given in the CIS Regulations of 1999.\u201d", "31. We have examined Sections 11(1), 11(4) and 11B read with Sections 11AA(1), 11AA(2) of the SEBI Act along with Regulation 65 of the CIS Regulations of 1999, under which the Respondent has passed the Impugned Order to protect the interest of investors.", "37. SEBI has even today only managed to form a prima facie opinion regarding the applicability of CIS Regulations to the Appellant\u2019s business. In such a situation, if the Respondent, after conducting an in-depth analysis of the scheme of the Appellant comes to the conclusion that the schemes in fact do not fall within the ambit of CIS, the Appellant would already have suffered irreparable loss due to its Members not being able to avail themselves of the services offered by the Appellant. In such an eventuality, as stated hereinabove, even the customers, would be put to a loss. Strictly speaking, the Impugned Order may not be stigmatic in nature but it has the potential to lower the image and reputation of the Appellant in the field of time share business, particularly when other companies, like Rose Valley etc., are continuing with their business.", "50. The SCN dated June 26, 2014, in a nut shell, mentions / alleges that an examination of the affairs of the Appellant was undertaken by the Respondent for \u201cpossible violation\u201d of the provisions of the SEBI Act, 1992 read with connected Rules and Regulations. On the basis of such an examination, the Respondent has leveled an allegation that the Appellant is carrying out a CIS in the name of time share business without obtaining a certificate of registration as required by the provisions of CIS Regulations, 1999.", "29 connected Rules and Regulations. On the basis of such an examination, the Respondent has leveled an allegation that the Appellant is carrying out a CIS in the name of time share business without obtaining a certificate of registration as required by the provisions of CIS Regulations, 1999." ], "Companies Act, 1956": [ "4. Brief facts leading to the present dispute are that the Appellant is an unlisted public limited company registered under the Companies Act, 1956. Its shares are, thus, not listed on any of the Stock Exchanges. The Appellant is in the time sharing business i.e. selling of rooms for a fixed duration of nights / days depending upon the scheme opted by its customers who are termed as Members. Accordingly, the Appellant owns, develops and operates hotels and resorts all over India and even abroad, along with offering time (room) sharing options to those who wish to avail of holidays and hospitality services. The Appellant has been engaged in this business for the last one and a half decades." ], "Customs House Agents Licensing Regulations, 2004": [ "15. Judgments at serial nos. (a) to (d) have been cited by the Ld. Senior Counsel for the Appellant Mr. Pradeep Sancheti to bring home the point that discretion / powers conferred by Sections 11(1), 11B and 11(4) ought to be used only in appropriate cases where due to a prevailing emergency, time cannot be wasted even by offering the right of being heard to the affected party against whom such an ex parte interim order can be made. Mr. Sancheti submits that although these judgments are passed by the Hon\u2019ble High Court of Bombay in the context of suspension of license of Custom House Agents as per the powers and discretion conferred by the Regulations 20 and 22 of Customs House Agents Licensing Regulations, 2004, the ratio laid down in these judgments is clear that it is only when prompt action is required that such powers of suspension are to be invoked at once. Mr. Sancheti also submits delay of even one to two months in suspending a CHA under Regulation 22 of the said CHAL Regulations, 2004 has been condemned by the High Court and considered fatal and such arbitrary decisions have been consistently quashed by the Hon\u2019ble High Court. Mr. Sancheti, pertinently, has drawn our attention towards paragraph 9 of Babaji Shivram (supra) at serial no. (b) decided by the Division Bench of Hon\u2019ble Bombay High Court in WP (LOD) No. 694 of 2011 on 21st April, 2011 which reads as under:- \u201c\u2026\u2026\u2026\u2026 9. Apart from the above, suspension of a CHA license under Regulation 20(2) of the 2004 Regulations can be ordered where immediate action is necessary. In the present case, the Customs Authority in the middle of January, 2011 were aware of the fact that the documents submitted by the \u2026\u201d", "15. ... these judgments are passed by the Hon\u2019ble High Court of Bombay in the context of suspension of license of Custom House Agents as per the powers and discretion conferred by the Regulations 20 and 22 of Customs House Agents Licensing Regulations, 2004, the ratio laid down is clear that it is only when prompt action is required that such powers of suspension are to be invoked at once.\u201d" ], "SEBI (Procedure for Holding Enquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995": [ "49. In the case in hand also, therefore, considering the situation that no material has been brought on record to show that SEBI has any justification to interfere with the Appellant\u2019s time share business, especially in light of the fact that SEBI has not yet conclusively determined whether or not the provisions of CIS are attracted to the Appellant\u2019s business, we are of the view that the impugned order cannot be sustained particularly when SEBI has itself issued SCN dated June 26, 2014 to the Appellant under Ru le 4 of SEBI (Procedure for Holding Enquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 read with S ection 15I of the SEBI Act, 1992." ], "Securities and Exchange Board of India Act, 1992": [ "1. These two appeals have been filed against an ex parte interim order dated July 31, 2014 passed by Securities and Exchange Board of India (hereinafter referred to as Respondent) under Sections 11(1), 11B and 11(4) of the Securities and Exchange Board of India Act, 1992 (SEBI Act) read with Regulation 65 of the CIS Regulations. The Appeal No. 254 of 2014 has been filed by Pancard Clubs Ltd. (hereinafter referred to as Appellant) and Appeal No. 255 of 2014 has been filed by its six Directors. Since both these appeals involve a common question of law and fact, with the consent of the parties, we have heard these appeals together and are disposing them off by this common order by taking Appeal No. 254 of 2014 as the lead case.", "9. The Appellant in the present appeal, preferred under section 15T of the SEBI Act, 1992, submits that the Impugned ex parte interim order dated 31st July, 2014 fails to set out any reason for the urgency with which it was passed. The Impugned Order is in complete breach of the principles of natural justice and should be treated as void. The Impugned Order should not have been passed ex parte particularly in view of the fact that the Appellant had not only been in constant communication with SEBI since 2001, but also initiated it and was co-operating with the Respondent all along.", "15. Judgments at serial nos. (a) to (d) have been cited ... to bring home the point that discretion / powers conferred by Sections 11(1), 11B and 11(4) ought to be used only in appropriate cases where due to a prevailing emergency, time cannot be wasted even by offering the right of being heard to the affected party against whom such an ex parte interim order can be made. Mr. Sancheti submits that although these judgments are passed by the Hon\u2019ble High Court of Bombay in the context of suspension of license of Custom House Agents as per the powers and discretion conferred by the Regulations 20 and 22 of Customs House Agents Licensing Regulations, 2004, the ratio laid down in these judgments is clear that it is only when prompt action is required that such powers of suspension are to be invoked at once. Mr. Sancheti also submits delay of even one to two months in suspending a CHA under Regulation 22 of the said CHAL Regulations, 2004 has been condemned by the High Court and considered fatal and such arbitrary decisions have been consistently quashed by the Hon\u2019ble High Court. Mr. Sancheti, pertinently, has drawn our attention towards paragraph 9 of Babaji Shivram (supra) at serial no. (b) decided by the Division Bench of Hon\u2019ble Bombay High Court in WP (LOD) No. 694 of 2011 on 21st April, 2011 which reads as under:- \u201c\u2026\u2026\u2026\u2026 9. Apart from the above, suspension of a CHA license under Regulation 20(2) of the 2004 Regulations can be ordered where immediate action is necessary. In the present case, the Customs Authority in the middle of January, 2011 were aware of the fact that the documents submitted by the \u2026\u201d", "16. Similarly, on the strength of the judgement ... This submission is made to emphasize the point that the Respondent had already taken a decision ... on file to the effect that the time sharing scheme business of the Appellant did not fall within the purview of the definition of CIS as mentioned in the Section 11AA of the SEBI Act read with the one given in the CIS Regulations of 1999.\u201d", "13\ningredients, which have been mentioned in Section 11AA(1), are required to be satisfied before treating a scheme as Collective Investment Scheme, has considerable force. We are also of the view that the petitioners have prima facie shown that their scheme of time share, which is the subject matter of controversy in the present writ petition, does not fall within the meaning of the expression of Collective Investment Scheme and that the SEBI does not have, unless can be shown otherwise, the jurisdiction to take any action in the affairs of the business of the petitioners. Situated thus, we are of the view, though tentative, that in the facts and attending circumstances of the present case and taking into account, more particularly, the fact that the State of Assam has not been able to present before this Court, at this stage, any clear material to show that the SEBI has jurisdiction to interfere with the affairs of the petitioners\u2019 business and the SEBI, having not concluded till date that the business of the petitioners falls within the meaning of the expression Collective Investment Scheme as defined in Section 11AA(1), the nature of directions, which the SEBI has passed by the impugned order, need to be suitably interfered with so that the SEBI\u2019s directions do not completely restrain the petitioners from carrying out their day to day business.", "24. Mr. Shyam Mehta, Ld. Senior Counsel for the Respondent also produced an order dated July 10, 2013 passed by the Ld. WTM of SEBI under Sections 11(1), 11B and 11(4) of the SEBI Act, 1992 in a similar case of time sharing scheme in the case of Rose Valley to emphasize that the Appellant is not being discriminated against and similarly placed other such companies are also being investigated.", "31. We have examined Sections 11(1), 11(4) and 11B read with Sections 11AA(1), 11AA(2) of the SEBI Act along with Regulation 65 of the CIS Regulations of 1999, under which the Respondent has passed the Impugned Order to protect the interest of investors.", "47. As held hereinabove, the answer to this has to be in the negative. SEBI may not be bound by estoppel in a given case to change its stand due to changed circumstances or change in policy or law. But Respondent cannot do the same without following principles of natural justice unless necessity or emergency of a grave nature is shown by SEBI to justly take ex parte interim action in the form of extreme directions under sections 11 (1), 11(4), 11B of SEBI Act to halt the business of Appellant in question. No such urgency or dire need has been brought on record by SEBI which could justify the passing of the Impugned Order in question. It is seen from the records of SEBI and the pleadings that there are some queries by some prospective investors who intend to be Members of the Appellant\u2019s club by investing some money. Even if there are some complaints against the Appellants, as stated by SEBI, they should have been forwarded by SEBI to the Appellant, and only on failure of the Appellant to redress such grievances should the Respondent have taken appropriate action against the Appellant as per law. The Respondent cannot call upon the Appellant to close its business and refund the amount received to its Members without first deciding the issue whether the Appellant\u2019s business of time sharing is covered by the definition of CIS.", "51. It is, therefore, evident that an enquiry as per procedure established by law through an Adjudicating Officer (AO ), who is a quasi-judicial authority, into the vital issue as to whether Appellant\u2019s business activities amount a CIS within the meaning of Sections 11AA(1 ) and 11AA(2) of the SEBI Act, has just commenced and this main issue is yet to be decided by the Ld. AO. Documents in support of their case have not been filed and exchanged by the parties before the Ld. AO. Issues have not been framed by the Ld. AO and witnesses, if any, have not been examined and cross-examined by the parties before the Ld. AO. At this stage, it is, therefore, too premature to halt the business activities of the Appellant on the basis of a tentative view formed by the Respondent. This apart, the potential nature of findings in the Impugned Order is likely to affect a fair trial of the main issue pending before the Ld. AO.", "51. It is, therefore, evident that an enquiry as per procedure established by law through an Adjudicating Officer (AO ), who is a quasi-judicial authority, into the vital issue as to whether Appellant\u2019s business activities amount a CIS within the meaning of Sections 11AA(1) and 11AA(2) of the SEBI Act, has just commenced and this main issue is yet to be decided by the Ld. AO. Documents in support of their case have not been filed and exchanged by the parties before the Ld. AO. Issues have not been framed by the Ld. AO and witnesses, if any, have not been examined and cross-examined by the parties before the Ld. AO. At this stage, it is, therefore, too premature to halt the business activities of the Appellant on the basis of a tentative view formed by the Respondent. This apart, the potential nature of findings in the Impugned Order is likely to affect a fair trial of the main issue pending before the Ld. AO.", "52. Furthermore, Ld. Senior Counsel Mr. Mehta contends that the sudden spurt in activities of the Respondent is the result of the judgment of Hon\u2019ble Supreme Court in PGF Ltd. It is difficult for us to reconcile with this submission because the PGF order was passed by the Hon\u2019ble Supreme Court on March 12, 2013 whereas the Impugned ex parte interim order has been issued after about 16 months of the PGF judgment i.e. on July 31, 2014. The Respondent should have, therefore, exercised restraint in exercising discretion conferred upon him under Sections 11(1), 11B and 11(4) of the SEBI Act in the peculiar facts and circumstances of the present case, particularly in view of the fact that the SCN had already been issued for holding regular enquiry in the whole mater." ] }, "held": "Tribunals and courts repeatedly concluded that the ex parte orders lacked a demonstrated urgency, setting them aside and directing a full inquiry. They refrained from conclusively classifying the time-sharing business as a collective investment scheme until further factual examination. The Appellants were instructed to maintain separate accounts, submit required documents, and refrain from new schemes or asset transfers until a final decision is rendered.", "latin_principles": { "audi alteram partem": [ "Paragraph 41: \u0027This is the fundamental rule of audi alteram partem and its exclusion is an exception.\u0027" ], "bona fide": [ "Paragraph 11: \u0027The Appellant was under a bonafide belief that the Respondent did not have any problems...\u0027" ], "ex parte": [ "Paragraph 9: \u0027The Impugned Order should not have been passed ex parte particularly in view of the fact that the Appellant had not only been in constant communication...\u0027", "Paragraph 15: \u0027One of the issues before us today is whether there were any emergent circumstances justifying an ex parte interim order...\u0027", "Paragraph 30: \u0027One of the issues before us today is whether there were any emergent circumstances justifying an ex parte interim order in urgent cases...\u0027", "Paragraph 47: \u0027...unless necessity or emergency of a grave nature is shown by SEBI to justly take ex parte interim action...\u0027" ], "inter alia": [ "Paragraph 11: \u0027...and, inter alia, on the basis of this belief the Appellant grew its business...\u0027" ], "prima facie": [ "Paragraph 18: \u0027We are also of the view that the petitioners have prima facie shown that their scheme of time share...\u0027", "Paragraph 13: \u0027We are also of the view that the petitioners have prima facie shown that their scheme of time share...\u0027", "Paragraph 29: \u0027Turning to the merit of the case... SEBI itself has only come to a prima facie conclusion...\u0027", "Paragraph 48: \u0027...the Hon\u2019ble High Court arrived at a prima facie view...\u0027", "Paragraph 55: \u0027To sum up, in the present case, Appellant has been knocking on the doors... the Gauhati High Court has a prima facie view...\u0027" ] }, "legal_issues": [ "Whether the time-sharing or membership offerings constituted a collective investment scheme requiring registration with SEBI", "Whether SEBI was justified in issuing ex parte interim orders without a pre-decisional hearing", "Whether SEBI could revisit its earlier stance on the scheme\u0027s regulatory status absent new factual developments", "Whether the principles of natural justice and procedural fairness were upheld." ], "prayer": "", "reserved_date": "04.09.2014", "second_party": [ "1. Securities and Exchange Board of India, SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai \u2013 400 051" ], "statutes": { "Article 311(2) of the Constitution of India": "41. Ajit Kumar Nag vs. General Manager (PJ) Indian Oil Corporation Ltd\u2026 This is the fundamental rule of audi alteram partem\u2026 (Dictionary #6)", "CIS Regulations, 1999": "3. The Appellant primarily submits that the time / room sharing business in hotels, resorts etc. carried on by the Appellant does not fall within the ambit of CIS as defined by Section 11AA(1) and 11AA(2) of the SEBI Act read with Regulation 65 of the CIS Regulations, 1999\u2026 (Dictionary #1)\n\n8. Finally, on October 21, 2013, the Respondent sent a letter\u2026 stating that on examining the Appellant\u2019s matter in 2010-11, the Respondent had concluded that the company\u2019s activities did not attract CIS Regulations\u2026 (Dictionary #2)\n\n16. Similarly, on the strength of the judgement\u2026 the Respondent had already taken a decision\u2026 that the time sharing scheme business of the Appellant did not fall within the purview of CIS as mentioned\u2026 (Dictionary #3)\n\n50. The SCN dated June 26, 2014\u2026 the Respondent has leveled an allegation that the Appellant is carrying out a CIS in the name of time share business without obtaining a certificate\u2026 (Dictionary #7)\n\n29 connected Rules and Regulations. On the basis of such an examination, the Respondent has leveled an allegation\u2026 (Dictionary #8)", "Companies Act, 1956": "4. Brief facts leading to the present dispute are that the Appellant is an unlisted public limited company registered under the Companies Act, 1956\u2026 (Dictionary #1)", "SEBI (Collective Investment Schemes) Regulations, 1999": "31. We have examined Sections 11(1), 11(4) and 11B read with Sections 11AA(1), 11AA(2) of the SEBI Act along with Regulation 65 of the CIS Regulations of 1999\u2026 (Dictionary #5)", "SEBI (Procedure for Holding Enquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995": "49. In the case in hand also, therefore\u2026 The Respondent has itself issued SCN dated June 26, 2014\u2026 (Dictionary #7)", "SEBI Act - sections 11(1), 11B and 11(4)": "52. Furthermore, Ld. Senior Counsel Mr. Mehta contends\u2026 the PGF order was passed by the Hon\u2019ble Supreme Court on March 12, 2013 whereas the Impugned ex parte interim order has been issued after about 16 months\u2026 (Dictionary #8)", "SEBI Act - sections 11AA(1) and 11AA(2)": "51. It is, therefore, evident that an enquiry\u2026 has just commenced and this main issue is yet to be decided\u2026 (Dictionary #8)", "SEBI Act 1992 - Section 11AA(1)": "13 ingredients, which have been mentioned in Section 11AA(1), are required to be satisfied before treating a scheme as Collective Investment Scheme\u2026 (Dictionary #4)", "SEBI Act 1992 - Sections 11(1), 11B, 11(4)": "24. Mr. Shyam Mehta, Ld. Senior Counsel for the Respondent\u2026 ex parte interim order dated 31st July, 2014\u2026 (Dictionary #4)", "SEBI Act, 1992 (Sections 11(1), 11(4), 11B)": "47. As held hereinabove\u2026 The Respondent cannot call upon the Appellant to close its business\u2026 (Dictionary #7)", "SEBI Act, 1992 (Sections 11AA(1) and 11AA(2))": "51. It is, therefore, evident that an enquiry as per procedure established by law\u2026 whether Appellant\u2019s business activities amount a CIS\u2026 (Dictionary #7)", "Securities and Exchange Board of India Act, 1992": "1. These two appeals have been filed against an ex parte interim order dated July 31, 2014 passed by Securities and Exchange Board of India (hereinafter referred to as Respondent) under Sections 11(1), 11B and 11(4) of the Securities and Exchange Board of India Act, 1992 (SEBI Act) read with Regulation 65 of the CIS Regulations\u2026 (Dictionary #1)\n\n9. The Appellant in the present appeal, preferred under section 15T of the SEBI Act, 1992, submits that the Impugned ex parte interim order dated 31st July, 2014 fails to set out any reason for the urgency with which it was passed\u2026 (Dictionary #2)\n\n15. Judgments at serial nos. (a) to (d) have been cited by the Ld. Senior Counsel\u2026 powers conferred by Sections 11(1), 11B and 11(4) ought to be used only in appropriate cases\u2026 (Dictionary #3)\n\n24. Mr. Shyam Mehta, Ld. Senior Counsel for the Respondent also produced an order dated July 10, 2013 passed by the Ld. WTM of SEBI under Sections 11(1), 11B and 11(4) of the SEBI Act, 1992 in a similar case of time sharing scheme\u2026 (Dictionary #4)\n\n31. We have examined Sections 11(1), 11(4) and 11B read with Sections 11AA(1), 11AA(2) of the SEBI Act\u2026 (Dictionary #5)\n\n47. As held hereinabove, the answer to this has to be in the negative. SEBI may not be bound by estoppel in a given case to change its stand\u2026 sections 11 (1), 11(4), 11B of SEBI Act to halt the business\u2026 (Dictionary #7)\n\n52. Furthermore, Ld. Senior Counsel Mr. Mehta contends that the sudden spurt in activities of the Respondent is the result of the judgment of Hon\u2019ble Supreme Court in PGF Ltd\u2026 (Dictionary #8)", "the Customs House Agents Licensing Regulations, 2004": "15. Judgments at serial nos. (a) to (d) have been cited by the Ld. Senior Counsel\u2026 in the context of suspension of license of Custom House Agents as per\u2026 (Dictionary #2)\n\n15. \u2026 these judgments are passed by the Hon\u2019ble High Court of Bombay in the context of suspension of license of Custom House Agents\u2026 (Dictionary #3)" }, "statutes_headnotes": { "Article 311(2) of the Constitution of India": "\u2014 Dismissal or removal without inquiry \u2014 Normally hearing is mandatory \u2014 Clause (VI) of Standing Orders and second proviso to Article 311(2) permit immediate dismissal in exceptional circumstances \u2014 Ajit Kumar Nag upheld dismissal in extraordinary conditions \u2014 Tulsi Ram Patel reaffirmed the exception to audi alteram partem only in grave and urgent situations.", "CIS Regulations, 1999": "\u2014 Collective Investment Scheme \u2014 Time-share membership scheme uncertain under Section 11AA(1), 11AA(2) read with Regulation 65 \u2014 Ex parte interim orders passed without pre-decisional hearing \u2014 Allegations triggered by MP\u2019s complaint \u2014 Earlier no CIS violation, changed after PGF Ltd. \u2014 Interim orders set aside for lack of urgency \u2014 Matter remanded for full inquiry \u2014 Appellant to maintain separate accounts and refrain from new schemes or asset transfers.", "Companies Act, 1956": "\u2014 Time-sharing membership scheme \u2014 Whether it amounts to Collective Investment Scheme \u2014 Ex parte orders set aside for lack of urgency \u2014 Full inquiry directed \u2014 Appellants to maintain separate accounts, refrain from new schemes, and cooperate with SEBI until final decision.", "Customs House Agents Licensing Regulations, 2004": "\u2014 Suspension of CHA license \u2014 Necessity of Prompt Action \u2014 Regulations 20 and 22 invoked only when urgent action is warranted \u2014 Delay of even a month in issuing suspension is fatal \u2014 Ex parte interim orders require pressing need \u2014 Arbitrary or belated suspensions consistently quashed.", "SEBI (Procedure for Holding Enquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995": "\u2014 Ex parte interim order \u2014 Necessity of proven urgency \u2014 Time-sharing arrangement suspected as CIS \u2014 Courts repeatedly set aside ex parte orders lacking urgency \u2014 Tribunal directed thorough inquiry under Rule 4 read with Section 15I of SEBI Act \u2014 Appellants to maintain separate accounts, refrain from new schemes or asset transfers \u2014 Final classification pending further examination \u2014 Interim orders undervalued procedural fairness, set aside.", "Securities and Exchange Board of India Act, 1992": "\u2014 Collective Investment Scheme \u2014 Time-sharing membership program \u2014 Ex parte interim order under Sections 11(1), 11B, 11(4) questioned \u2014 Urgency for issuing order without hearing or whether it violated natural justice \u2014 SEBI may alter earlier position but must follow due process \u2014 Whether scheme falls under Section 11AA not concluded \u2014 Ex parte order set aside; matter remanded for inquiry." } }, "summary": { "formatted_summary": "These proceedings address whether a time-sharing membership program, operated by the Appellants, falls under the collective investment scheme framework regulated by SEBI. SEBI issued ex parte interim orders restricting operations, citing potential investor risks and allegations raised by a Member of Parliament. The Appellants dispute the scheme\u2019s classification as an investment arrangement, pointing to earlier correspondence in which SEBI had not classified it as a collective investment scheme. Multiple courts and tribunals considered the matter, often setting aside ex parte restrictions for lack of demonstrated urgency. Final classification of the scheme remains pending after directions for thorough inquiry, with the Appellants required to maintain separate accounts, refrain from launching new projects, and cooperate with SEBI\u2019s ongoing investigation." } }