Morgan Stanley Mutual Fund vs Kartick Das on 20 May, 1994 https://indiankanoon.org/doc/1120137/
3. The draft scheme of the appellant was approved by the Board of Trustees by Circular Resolution dated 8-1 1-1993. This was forwarded to SEBI for its approval on 10- 11- 1993. The scheme was duly scrutinised and examined by the SEBI and SEBI gave its approval and certain amendments were suggested. Upon receipt of such approval for the scheme, the appellant and the Investment Manager took necessary steps to begin marketing the scheme by issue of advertisements. All advertisements and publicity material were approved by SEBI in writing before publication as required by the Regulations. Pursuant to such approval tile appellant commenced advertising the public issue.
6. The following order was passed on 4-1-1994 by the Calcutta District Consumer Disputes Redressal Forum :
"Petitioner files the complaint today. Register. Issue notice of show cause against OPs.
Considering the utmost urgency of the case as cited by the learned lawyer for the petitioner we are inclined to pass an interim order otherwise the application would be frustrated. Accordingly we direct OP 1 and OP 2 and its men, agents, collecting banks not to proceed any further with the issue of 30 crores Morgan Stanley Growth Fund Units due to be opened on 6-1-1994 till proper clarification is made in its prospectus and with the leave of this learned Forum. OP 3 i.e. SEBI is also directed not to issue clearances until Regulation 28 of Schedule V of SEBI Regulations is complied with by the OP 1 and OP 2.
18. Mutual funds in India are regulated by SEBI pursuant to the Securities and Exchange Board of India (Mutual Funds) Regulations, 1993 Under the said Regulations, all mutual funds in India as also the asset management companies and the custodians of the mutual funds assets are required to be registered with the SEBI. No mutual fund in India can approach the market with a scheme unless scheme has been fully approved by SEBI which is the sole authority for granting approval to such funds. The SEBI examines the scheme and suggests modifications, if any, and allows the scheme to be advertised and published.
21. Regulation 27 of the said Regulations provides that no mutual fund shall announce the scheme unless such scheme has been approved by the Trustees of the Mutual Fund and by SEBI. On 8-11-1993, the Board of Trustees by a circular Resolution approved the draft scheme, the same was forwarded to SEBI on 10-11-1993. The scheme was duly scrutinised and examined by the SEBI. By its letter dated 23-11-1993, addressed to Enam Financial Consultants Pvt. Ltd., one of the joint Lead Managers, SEBI gave its approval. It is stated that the scheme has been examined by them in terms of the provisions of the Regulations. It suggested certain amendments as detailed in enclosures thereto. SEBI also advised the said Enam Financial Consultants Pvt. Ltd. to submit three copies of the printed Offering Circular and the abridged Offering Circular of the scheme and the new schemes return in the prescribed format. This requirement of SEBI was complies with. It is after this the appellant took the necessary steps and began marketing the scheme by issuing advertisements in the press, holding presentations with brokers etc. All advertisements and publicity material have been approved by SEBI as under:
22. It has to be carefully noted that the disclaimer clause required to be incorporated at the beginning of offering circular by SEBI while approving the scheme is a standard requirement and nothing peculiar to the present case. The object of this is to bring to the notice of the investors that they should take the firm decision on the basis of the disclosures made in the documents. It is meant for the investors' protection. In fact by such a course the SEBI informs the investors that they have approved the scheme but they did not recommend to the investors whether such investment is good or not and leave it to their discretion. In view of this, it will be clear that the allegations of respondents that the SEBI has not approved the other documents is totally baseless.
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