M/S. P.G.F. LIMITED & ORS. versus UNION OF INDIA & ANOTHER

M/S. P.G.F. LIMITED & ORS. versus UNION OF INDIA & ANOTHER

Section 11AA of the SEBI Act is constitutionally valid and does not intrude into subjects under Entry 18 List II of the Constitution. The appellant's activities of sale and development of agricultural land amounted to a Collective Investment Scheme as defined under Section 2(ba) read with Section 11AA(2) of the Act....

Source-derived case information.

Parties
Appellant: M/S. P.G.F. Limited & Ors.; Respondent: Union of India & Another
Jurisdiction
India
Judgment Date
12 March 2013
Procedural Posture
Civil Appeal / Supreme Court Final Decision
Outcome
Appeal dismissed with exemplary costs imposed on appellant.
Legal Topics
Collective Investment Schemes, Legislative Competence, Constitutionality of Statutes, Regulatory Jurisdiction
Securities Law Constitutional Law Collective Investment Schemes Legislative Competence Constitutionality of Statutes Regulatory Jurisdiction

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Parties

M/S. P.G.F. Limited & Ors.

Appellant

Union of India & Another

Respondent

Procedural Posture

Civil Appeal / Supreme Court Final Decision

Legal Issues

  1. 1 Whether Section 11AA of the Securities and Exchange Board of India Act, 1992 is constitutionally valid.
  2. 2 Whether the business activity of sale and development of agricultural land by the appellant-company falls within the definition of Collective Investment Scheme under Section 2(ba) read with Section 11AA of the SEBI Act.

Ratio Decidendi

Section 11AA of the SEBI Act is constitutionally valid and does not intrude into subjects under Entry 18 List II of the Constitution. The appellant's activities of sale and development of agricultural land amounted to a Collective Investment Scheme as defined under Section 2(ba) read with Section 11AA(2) of the Act. Parliament had competence to enact the provision, which serves to regulate such schemes to protect investors from fraud.

Court Disposition

Appeal dismissed with exemplary costs imposed on appellant.

Orders

  • Appellant directed to comply with second respondent’s order dated 06.12.2002 and refund monies to investors.
  • CBI and Income Tax Department directed to conduct inquiry and investigation, in addition to inquiry by the second respondent (SEBI).