Case: Securities And Exchange Board Of India Vs. Pan Asia Advisors Ltd.

3. When the order of SEBI dated 20.06.2013 was challenged by the respondents before the Securities Appellate Tribunal, Mumbai in Appeal No.126 of 2013, the Chairman of the Tribunal in his minority view upheld the order of the SEBI while the members of the Tribunal by way of their majority view set aside the order of SEBI debarring the respondents. It was in the above stated background SEBI has come forward with this appeal before us.

Court's reasoning:
12. At this juncture, we want to make it very clear that we are not expressing any opinion as to the correctness or otherwise of the stand of SEBI at this momentA reading of Regulation 5 read along with paragraphs (4) & (6) of Schedule I of 2000 Regulations, as rightly pointed out by Mr.Shyam Divan gives a statutory recognition to the 1993 Scheme which came into force w.e.f 01.04.1992. It is needless to state that the said Scheme came to be issued by the Central Government in exercise of its executive powers under Article 73 of the Constitution of India. Paragraph 4 (1), (2) & (3) and paragraph 6 of Schedule I of the 2000 Regulations in effect authorises the issuance of GDRs and the Statutory requirements to be fulfilled for the issuance of such GDRs to have a valid sanction under law of the Indian origin52. A combined reading of paragraphs 2(a), (c), (d) and (e) shows that the Global Depository Receipts are issued by a company in India based on the ordinary shares deposited with the domestic custodian bank and issued by the corresponding overseas depository bank depending upon the extent of ordinary shares held by the Domestic Custodian Bank. Once such Global Depository Receipts are issued by the Overseas Depositary Bank, which has the approval of the appropriate authorities of the Indian origin as well as appropriate regulatory authority of registered agencies at the global level, the GDR becomes an approved registered authenticated instrument over which any non-resident can make an investment for possessing it as a valid holder of GDR56. As far as applicable law is concerned, it must be stated that the underlying ordinary shares of a GDR which is held by the Domestic Custodian Bank prior to such shares being created in the form of GDR have to necessarily undergo a procedure to be followed by the issuing company and for certain purposes in consultation with the Lead Manager and before the GDRs are actually created by the corresponding Overseas Depository Bank, necessary prior permission of the Department of Economic Affairs, Ministry of Finance, Government of India have to be obtained. It is based on such statutory sanction granted by the statutory authorities of Indian origin, a legally enforceable right for the purpose of creation of GDR comes into existence and based on such validity for issuance of GDRs, the Overseas Depository Bank will have the power to issue such GDR by way of negotiable form for the value to be determined by prescribing number of underlying shares that would be covered by each of the GDR. Once the GDR is thus created and issued by the overseas depository bank, again in consultation with the Lead Manager arrangements are made for being listed in the public or private listing of overseas Stock Exchanges. Thereafter the creation, existence and subsequent dealing with the GDRs outside the country of India would be governed by the relevant laws applicable to such Receipts57. Though it may appear that on the one hand underlying ordinary shares would be governed by the laws prevailing in India and the GDRs would be governed by the laws of the country in which such receipts are issued, the most relevant fact which is to be borne in mind is that the existence of GDRs is always dependent upon the extent of underlying ordinary shares lying with the Domestic Custodian Bank58. In this context, it will also be worthwhile to refer to Master Circular on Foreign Investment in India issued by the RBI, which gives detailed description about creation of GDRs which are negotiable securities issued outside India by a depository bank on behalf of an Indian company which represent the local rupee denominated equity shares of the company held as deposit by a Custodian Bank in India. The Master circular reiterates that GDRs are issued on the basis of the ratio worked out by the Indian company in consultation with the Lead Manager to the issuing company. It also highlights as to how such of those Indian listed companies which have been restrained from accessing the securities market by SEBI will be ineligible to issue GDRs59. The Master Circular also explains as to how under the two way fungibility scheme which was put in place by the Government of India for GDRs under which a stock broker in India registered with the SEBI can purchase shares of an Indian company from the market for conversion into GDRs based on instructions issued from overseas investors and also re-issuance of GDRs to be permitted to the extent of GDRs which are redeemed into underlying shares and sold in the Indian market60. On a consideration of the 2000 Regulations, the 1993 Scheme and the Master Circular issued by RBI periodically one can discern that for creation of GDRs which can be traded only at the global level, the issuing company should have developed a reputation at a level where the marketability of its investment creation potential will have a demand at the hands of the foreign investors. Simultaneously, having regard to the development of the issuing company in the market and the confidence built up with the investors both internally as well as at global level, the issuing company?s desire to raise foreign funds by creating GDRs should have the appreciation of investors for them to develop a keen interest to invest in such GDRs. Mere desire to raise foreign investments without any scope for the issuing company to develop a market demand for its GDRs by increasing the share capital for that purpose is not the underlying basis for creation of GDRs. In fact for creating of GDRs apart from the desire of the issuing company to raise foreign funds, the marketability of such shares in the form of GDRs should have an applicable potential at the global level. To put it differently, by artificial creation of global level investment operation, either the issuing company on its own or with the aid of its Lead Manager cannot attempt to make it appear as though there is scope for trading GDRs at the global level while in reality there is none. The above fact has to be kept in mind when dealing with an issue relating to creation of GDRs, in as much as, when the GDRs gets fully subscribed at the global level providing scope for huge foreign investment, the same will have a serious impact at the internal investment market in the form of high appreciation of share value whereby the issuing company and the investor will be greatly benefited mutually. Such a real growth structurally and financially is the underlying principle in the creation and trading of GDRs at the global levelThe above definition is exhaustive and includes not only shares, scripts, stocks, bonds, debentures, debenture stocks or other marketable securities of a like nature in or any incorporated company. The further definition under sub-clause (iia) covers such other instruments as may be declared by the Central Government as Securities and under sub-clause (iii) rights or interest in securities are also to be construed as securitiesTherefore reading Section 2(h)(i) and 2(h) (iii) together and apply the same to GDRs, having regard to the fact that the issuance of GDRs are always based on the underlying Indian shares deposited with the Domestic Custodian Bank and thereby the GDRs possess in it right, as well as, interest in the shares, scripts etc., it will have to be straight away held that all GDRs would fall within the definition of ‘securities? as defined under Section 2(h) of the 1956 ActThe above definition makes it clear that a ‘stock exchange? as formed under Section (2)(j)(a) & (b) are for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities. It is true that GDRs have no time limit and can be possessed as GDRs for any number of years. However, when the holder of the GDR apart from trading with the same as GDR in the global market at any point of time wish to redeem the same or go in for fungibility of the redeemed shares back into GDRs, necessarily the holder of a GDR will have to fall back upon the stock exchanges as per the definition under Section 2(j) of the SCR Act, 1956, who alone can assist, regulate or control the business of buying, selling or dealing with securities66. Having examined the above statutory provisions, we find that a GDR is one form of ‘security? as defined under Section 2(h) of SCR Act, 1956, which is created by the issuing company of Indian origin based on underlying shares deposited with the Domestic Custodian Bank and created by the Overseas Depository Bank. Such creation is at the instance of the issuing company in India with a desire to earn foreign investments. Such investments made by the investors in the GDRs is facilitated by the Lead Manager at the time of its creation as well as its investment. Thereafter, the investors hold the GDRs either for further trading on it in the global market through the stock exchanges at global level and in the event of such investors interested in liquidating the GDR are entitled to liquidate the same through the Overseas Depository Bank, in which event the extent of underlying shares of the GDRs get transferred in the name of the investors themselves and thereby enabling such investors to trade on underlying shares in the Indian stock market or if so wish under the fungibility scheme once again get it redeemed in the form of GDR themselves67. Therefore, the creation of the GDR by the issuing company and after its creation in the fixation of price, value, marketing in the global market, the support of Lead Manager is involved and while dealing with such GDRs, the same is regulated in so far as it related to underlying shares deposited with the Domestic Custodian Bank by the laws regulating the same and prevalent in India and so far as the corresponding GDRs created based on such underlying shares are concerned, the same are governed by the laws prevailing in the respective market where such GDRs are being traded. Post cancellation of GDRs, the underlying shares deposited with the Domestic Custodian Bank is made available for trading in India depending upon the wish of the holder of GDR in the local market or for holding it as such i.e as mere shares of the issuing company or by virtue of the fungibility scheme can once again be converted as GDRs for being traded in the global marketOn a reading of the above statutory provisions, we find under Section 11(1) of the SEBI Act, 1992, a duty has been cast on the SEBI to protect the interest of investors in securities and also to promote the development of the securities market as well as for regulating the same by taking such measures as it thinks fit. The paramount purpose has been shown as protection of interest of investors on the one hand and also simultaneously for promoting the development as well as orderly regulation of the security market. By way of elaboration under Section 11(2)(a) to (e) it is stipulated that the duty of SEBI would include regulating the business in the stock exchanges and any other securities market which would include the working of stock brokers, share transfer agents and similarly placed other functionaries associated with securities market in any manner, registering and regulating the working of the depositories, participants of securities including foreign institutional investors in particular to ensure that fraudulent and unfair trade practices relating to securities markets are prohibited and also prohibiting insider trading in securitiesOn a careful reading of Section 11(4)(b), we find that the power invested with SEBI for passing such orders of restraint, the same can even be exercised against ?any person?. Under Section 11B, SEBI has been invested with powers in the interest of investors or orderly development of the securities market or to prevent the affairs of any intermediary or other persons referred to in Section 11 in themselves conducting in a manner detrimental to the interest of investors of securities market and also to secure proper management of any such intermediary or person. It can issue directions to any person or class of persons referred to in Section 11 or associated with securities market or to any company in respect of matters specified in Section 11B in the interest of investors in the securities and the securities market. The paramount duty cast upon the Board, as stated earlier, is protection of interests of investors in securities and securities market. In exercise of its powers, it can pass orders of restraint to carry out the said purpose by restraining any person. Section 12A of the SEBI Act, 1992 creates a clear prohibition of manipulating and deceptive devices, insider trading and acquisition of securities. Section 12A(a), (b) and (c) are relevant, wherein, it is stipulated that no person should directly or indirectly indulge in such manipulative and deceptive devices either directly or indirectly in connection with the issue, purchase or sale of any securities, listed or proposed to be listed wherein manipulative or deceptive device or contravention of the Act, Rules or Regulations are made or employ any device or scheme or artifice to defraud in connection with any issue or dealing in securities or engage in any act, practice or course of business which would operate as fraud or deceit on any person in connection with any issue dealing with security which are prohibited. By virtue of such clear cut prohibition set out in Section 12A of the Act, in exercise of powers under Section 11 referred to above, as well as 11B of the SEBI Act, it must be stated that the Board is fully empowered to pass appropriate orders to protect the interest of investors in securities and securities market and such orders can be passed by means of interim measure or final order as against all those specified in the above referred to provisions, as well as against any person. The purport of the statuary provision is protection of interests of investors in securities and the securities market73. Along with the Section 12A, when we read Regulation 2(1)(c) of 2003 Regulations, the act of fraud has been elaborately defined to include any kind of activity which would work against the interest of the investors in securities. Further, such interest of investors can be better ascertained by making reference to Section 2(h)(iii) of the SCR Act, 1956 which defines the ‘security? to mean the right or interest in securities. A conspectus reference to Section 12A(a) (b) and (c) read along with Regulation 2(1)(b) and (c), as well as Section 2(h)(iii) of the SCR Act, 1956 sufficiently disclose that it would cover any act which will have relevance in protecting the interest of the investors in securities and security market with any person however remotely the same are connected with such securities, in the event of such an act working against the interest of investors in securities and securities market by way of fraud which has been elaborately defined under Regulation 2(i)(c) of 2003 Regulations74. Having thus noted the statutory prescription relating to the issuance of GDR based on the underlying shares of the issuing company, the manner in which such GDRs were being traded in the global market with the support and assistance of Lead Manager, the scope of construing GDRs as ‘securities? falling under the definition of ‘securities? as defined under Section 2(h) of the SCR Act, 1956 requires to be noted. The extent of duties and powers vested with SEBI, namely, the protection of the interest of investors in securities and securities market and also the prohibitive measures as well as penal action that can be taken by SEBI whenever it comes across any fraud committed by any person relating to the interest of the investors in securities and securities market are very wideIn the light of the above features noted and alleged by SEBI as against the respondents, relating to GDRs issued by the six entities for whom the respondents acted as Lead Manager, with particular reference to the extent of the involvement of the respondents even while acting as Lead Managers, while facilitating the issuing companies in the fixation of price of the GDRs and its trading in the global market, according to SEBI, by virtue of such fraudulent nature of involvement of the respondents along with the issuing company, SEBI is entitled to invoke its jurisdiction under Section 11, 11B, 11C, 12 and 12A of the SEBI Act, 1992 read along with its 2003 Regulations and consequently its order dated 20th June 2013 debarring the respondents from rendering services in connection with the instruments which are defined as ‘securities? under Section 2(h) of the SCR Act, 1956 in the Indian market or dealing with them either directly or indirectly for a period of ten years from the date of its orders and also prohibiting them from getting access to the capital market directly or indirectly for the said period of ten years was justified. It was, therefore, contended that the majority view of the impugned order in holding that SEBI lacked jurisdiction to proceed against the respondents is liable to be set aside76. On the other hand according to the respondents, since cradle to grave GDRs are dealt with outside the country in the global market, SEBI lacks jurisdiction in proceeding against the respondents. When we consider the above respective submissions, we are convinced that the stand of the appellant that having regard to the statutory prescription under the SEBI Act, 1992, SCR Act, 1956, 2000 Regulations, 1993 Scheme as well as 2003 Regulations is well justified. Having regard to the nature of the allegations against the respondents, it possess every jurisdiction to proceed against the respondents. At the risk of repetition we wish to make it very clear that whatever factual matters we have noted, as well as those allegations levelled against the respondents by SEBI we have not expressed any opinion as to the correctness or otherwise of those factors or allegations. Those factors and allegations have been taken note of only for the purpose of deciding the question as to the jurisdiction claimed by SEBI for proceeding against the respondents. In fact, by the majority view of the impugned order, the order dated 20.06.2013 of SEBI in having debarred the respondents for a period of ten years came to be set aside on the sole ground that SEBI lacked jurisdiction. The Tribunal has not gone into the merits of the allegations levelled against the respondents. Therefore, in the event of the impugned order being set aside and thereby providing scope for the Tribunal to consider the correctness of the order dated 20.06.2013 of SEBI on merits, it will be open for the respondents to take the stand as Lead Managers that they have not committed anything wrong in order to justify the appellant to pass its order dated 20.06.201378. When we examine the said submissions of the learned senior counsel for the respondents, we find that the said submissions raised the following issues viz., that issuance of GDRs requires as many as 14 steps such as authorization by the Board of Directors, Notification to the Stock Exchange, Issuer share holders approval, appointment of a Lead Manager and other intermediaries viz., the custodian who physically hold the shares of the issuer on behalf of the depository and the overseas bankers, receiving all information, certification for due diligence and other documents, commencement and completion of due diligence for GDR issue, opening of bank account outside India, appointment of intermediaries, offer document and prospectus, decision to open the issue and price fixation, opening and closing of the issue, allotment of underlying equity shares, listing of GDRs with foreign stock exchanges and application to Indian stock exchanges for listing of underling equity shares79. The definition of ‘securities? under Section 2(h) in particular sub-clause (iii) of Section 2(h)(a) of SCR Act, 1956 makes it clear that rights and interests in securities are also to be construed as securities as defined in Section 2(h). Therefore even if GDR as such is not specifically referred to under the definition of ‘securities? under Section 2(h) by virtue of sub-clause (iii) of the said section, any rights or interests in securities would also fall within the definition of securities. Viewed in that respect, every issue of GDR is based on the underlying shares of the issuing company deposited with the Domestic Custodian Bank which clearly falls under the definition of securities of Section 2(h), the Global Deposit Receipts which create rights and interests in those securities, the Global Deposit Receipts would automatically fall and come within the definition of Section 2(h) viz., ‘securities?. Once when the said legal position is insurmountable, any argument based on the said submission should be rejectedIt is true that the creation of GDR and its trading in the global market are governed by the respective laws of the country in which they are dealt with. But one special feature to be borne in mind is that in the case on hand, the allegations levelled against the issuing company in connivance with the respondents are that a make believe affair was created, as though there was genuine creation of GDRs and its investments by the foreign investors on the very date when the GDRs were issued and thereby the global performance of the issuing company in the local market of the issuing company had a boost in the commercial sector, which lured the local investors to develop their keen interest to make the investments on a higher share value by virtue of the investment made by the foreign investors and in that process it is alleged that the issuing company itself provided every scope for the foreign investments to be financed and in reality the ultimate investment was made by Indian investors viz., the ordinary share holders. The said fact would certainly call for a probe at the hands of SEBI on whom a duty is cast under Section 11(1) to protect the interest of investors in securities and the security market81. Therefore, it is for the respondents as well as the Indian issuing company to demonstrate that any of the allegations made by the appellant in relation to the so called fraud or fictitious creation of GDRs at the global level to mislead the local investors was totally baseless and that therefore no action was called for. It will be appropriate at this stage to note that under the 2000 Regulations as well as the 1993 Scheme, one of the main reasons for creating GDRs by the issuing company is in fulfilment of its desire to gain foreign investments. It is common knowledge that in the commercial sector, companies which are in the field of manufacturing or any other business activity are able to gain the confidence of the investors by virtue of their appreciable performance in the respective manufacturing or other business activities and while controlling and developing the growth in their respective field of business, aspire to make further excellence by drawing the attention of foreign investors to make investments and thereby broad base their business venture also endeavour to sustain their development in the concerned business in which they are involved. Any such initiative taken by any entrepreneur would develop an appreciable trend in the share market which would draw the attention of the local investors to stake their claim in such well established, well grown business ventures with a view to earn better profits on whatever investments they wish to make. Therefore, if there is going to be a false pretext or misleading information circulated with a view to lure both the foreign investors as well as Indian investors and in that process the very purpose of creation and trading in GDRs are found to be not true or bona fide, it cannot be said that simply because creation of such GDRs and its trading is in global market, SEBI should keep its mouth shut on the ground that it cannot extend its long statutory arm beyond Indian territory to control any such misdeeds deliberately committed with a view to defraud the Indian investors and thereby their interest in the investment of securities and its protection is at great stake82. We are therefore convinced that having regard to the nature of allegations in the interests of investors in securities as well as the statutory obligation/duty cast upon SEBI to protect their interests, SEBI has got every jurisdiction to proceed against the respondents as well as the issuing company. The contention made on behalf of the respondents that the only authority which can proceed against the issuing company can be only for violation of the FEMA Act or the RBI Act is therefore not appealing to us. It may be that the 1993 Scheme was acknowledged under the 2000 Regulations, but on that score it cannot be held that the said Scheme or Regulations will have no application when it comes to the question of any action being initiated under the provisions of SEBI Act, 1992 read along with SCR Act, 1956. There is no statutory prohibition either under FEMA or RBI Act preventing SEBI from taking action in exercise of its powers under Section 11, 11B and 12A of the SEBI Act, 1992. That apart under Section 11(3) it is provided that SEBI can exercise its powers under sub-section 2(i) or (ia) or sub-section 2A notwithstanding anything contained in any other law for the time being in force, meaning thereby, the action that can be taken for any of the violation under FEMA or RBI Act, SEBI can validly exercise its powers under SEBI Act, 1992. Even under the 1993 Scheme as well as the 2000 Regulations, there are provisions which make specific reference to the role of SEBI in dealing with the securities. Therefore it is too late in the day for the respondents to contend that action can only be taken for any violation under the FEMA and there is no scope for invoking the provision of SEBI Act, 1992. The said submission therefore is also liable to be rejected83. In support of the contention based on applicable jurisdiction of SEBI, reliance was placed upon the opinion rendered by a law firm of United Kingdom, dated 25.07.2013. In the first place, the Courts in India cannot even be persuaded to rely upon any such opinion as opinion may differ from person to person depending upon the law which one may feel validly applies. In any event, the opinion rendered in the said document only pertains to the transactions contemplated by the documents placed before the said firm which related to the loan agreement and other connected documents. The opinion was that the documents and the performance of the transactions contemplated by the said documents were in accordance with the applicable Austrian laws and do not constitute any violation of any law or regulations of general application in Austria. There can be no conflict with the said opinion if in the consideration of the said law firm, the documents were in conformity with the laws of Austria within whose jurisdiction, the documents came to be executed and to be operated upon. In fact the action of SEBI initiated against the respondents are not on the footing that any of the documents are contrary to the laws of Austria. The initiation of proceedings by SEBI as against the respondents are entirely on a different footing which was solely based on the alleged violation of the Indian laws vis., the SEBI Act read along with the SCR Act, 1956 the provisions of 2000 Regulations and the 1993 Scheme as well as 2003 Regulations. In fact in that opinion itself it is stated that the said opinion was not to be taken to imply that any provision of the document would necessarily be capable of enforcement or be enforced in all circumstances in accordance with its terms and that it should be understood that the law firm which gave the opinion should be understood to have not been responsible for investigating or confirming the accuracy of the facts including statements of foreign law or the reasonableness of any statements or opinion contained in any of the documents. Therefore, the said document is of no use to support the stand of the respondents84. As far as the opinion rendered by solicitors firm called Singhania and Co having its office at London, dated 17.07.2013, it only states that the second respondent was the sole shareholder of Pan Asia which is now known as M/s. Global Finance Capital Limited. It only stated that in its opinion from the aspect of laws applicable and enforceable in UK, the documents and transactions pertaining to those documents relating to the respondents were in the normal course of business under the applicable laws in UK and they do not, in any manner, constitute any violation of any applicable laws of UK. It is stated that the documents and transactions were standard documents and transactions commonly executed by entities as part of mode of the lawful business activities. Here again we do not find any need to be guided by such an opinion of a law firm which only refer to the documents placed before it, which according to the said firm is in conformity with the laws of UKIt is clarified that any use, intended or otherwise, of depository receipts or market of depository receipt in a manner, which has potential to cause or has caused abuse of securities market in India, is ?market abuse? and shall be dealt with accordingly. According to Clause 10(2) for the purpose of this paragraph, ?market abuse? means any activity prohibited under Chapter V-A of the SEBI Act, 1992. Under paragraph 11 of the 2014 Scheme, the 1993 Scheme stood repealed except to the extent relating to foreign currency convertible bonds and sub-para (2) of Section 11 contains a non-obstante clause that notwithstanding such repeal, anything done or any action taken under the 1993 Scheme shall be deemed to have been done or taken under the corresponding provision of the present scheme. Under Schedule-I, the permissible jurisdiction have been listed out as on the date of the notification in which Austria is also included apart from United Kingdom and United States. The 2014 Scheme having thus explained what is ?market abuse?, it must be stated that now after the 2014 Scheme any act done under the 1993 Scheme has also been validated. The definition of ?market abuse? would squarely cover the allegation presently made by the appellant as against the respondents. Simply because ?market abuse? has been now codified under the 2014 Scheme, it cannot be held that there is no scope for proceeding against any person for indulgence in such a ?market abuse? prior to the introduction of the 2014 Scheme. As the nature of allegation which has now been explained under the caption ?market abuse? in the 2014 Scheme and having regard to the violation complained of by the appellant as against the respondents with particular reference to the substantive provision of the SEBI Act, 1992 and SCR Act, 1956, read along with the 2000 Regulations and the 1993 Scheme, the power of the appellant to proceed against the respondents based on such allegations cannot be deprived86. To support the contention that the SEBI Act, 1992 operates only within Indian territory, reference was made to the provisions contained in other Acts viz., IPC, FERA, FEMA, Companies Act, the Information Technology Act and the Income Tax Act. In the first place, the said reliance placed on the provisions of those enactments providing for extra territorial jurisdiction can have no impact on the action initiated by the appellant, for the simple reason that the violation complained of by the appellant is with reference to such of those provisions contained in SEBI Act, 1992 vis-à-vis the underlying shares of GDRs. Therefore, we are unable to see any violation of exercise of its jurisdiction since the underlying shares of GDR were created and dealt with as well as traded in the stock market of Indian Territory. Any act which caused any infringement in such trading of those underlying shares by virtue of any malfeasance or misfeasance or misdeeds committed by any person under the Act which worked against the interests of the investors in securities and the securities market, the SEBI was entitled to proceed against such persons who are involved in any of those allegations. Therefore, the reference to those provisions contained in other enactments in our considered opinion does not cause any impediment for SEBI to proceed against the respondents in exercise of its jurisdiction under the SEBI Act, 199287. In this context, it is also necessary to refer to certain compliance to be reported by the issuing company of GDR/ADR. As per paragraph 4(2) and (3) of Schedule I of 2000 Regulations, the Indian company issuing shares for the purpose of issuing GDRs should furnish to the Reserve Bank the full details of such issue in the prescribed form DR within 30 days from the date of closing of the issue. Similarly under paragraph 4(3) issuing company against GDR should furnish a quarterly return in the prescribed form DR-Quarterly to RBI within 15 days of the close of the calendar quarter. When we refer to Form DR and Form DR-quarterly, some of the details which are to be furnished are name and address of the depository abroad, name and address of the Lead Manager, name and address of the Indian custodians, details of the equity capital before issue after issue, number of GDRs issued, ratio of GDRs vis-à-vis the underlying shares, whether funds are kept abroad, if yes, name and address of the bank, amount raised in USD, amount repatriated in USD, the date of launching of GDR, total number of GDRs, total interest earned till the end of the quarter, the amount repatriated, number of GDRs still outstanding, company share price at the end of the quarter, the GDR price quoted on overseas stock exchange as at the end of the quarter and in the quarterly return, it should be certified by the authorized signatory of the company that the funds raised through GDRs/ADRs were not invested in stock market or real estate88. A perusal of the above details which are required to be furnished statutorily, shows that in the event of any wrong statement furnished in the above referred to forms, it provides scope for proceeding against the issuing company as well as any person connected with such violation and it would certainly empower the authority viz., SEBI to initiate action under the SEBI Act, 1992 in order to protect the interests of Indian investors in securities and the security marketIt is true that if in the discharge of its functions as Lead Managers, the respondents had confined to their activities to any of the procedures set out in the said paragraph, it will be for the respondents to demonstrate before the appellant and come out unscathed. However, if under the guise of performing those functions as Lead Managers, if as pointed out by the appellant, the respondents had indulged in any activities which were contrary to the provisions of SEBI Act, 1992 read along with SCR Act, 1956, which provided scope for proceeding against them for having acted against the interests of the Indian investors in securities and the security market or were involved in collusion with any alleged act of the issuing company in violation of the statutory prescriptions of SEBI Act, 1992, SCR Act, 1956, 2000 Regulations read along with 1993 Scheme, it is the bounden duty of the respondents to demonstrate before the appellant and now before the Tribunal that no such involvement by the respondents is made out in order to proceed against them as has been decided and orders passed by the appellant in its order dated 20.06.201391. As far as the stand of the second respondent that he is a non-resident Indian residing in Dubai till September, 2011 and was the Managing Director of the first respondent and that the first respondent is a distinct and separate legal entity from the second respondent and therefore the first respondent cannot be made liable or responsible for the action of the second respondent, it must be stated that even as per the legal opinion of M/s. Singhania and Co the Solicitors and Indian Advocates based at London who have stated apparently on the instructions of the second respondent, that he was the sole shareholder of the first respondent who is a non-resident Indian residing at Dubai. Therefore, it is too late in the day for the respondents in attempting to get themselves excluded from the alleged violations as against the issuing companies along with the respondents, which resulted in the passing of the order of debarment dated 20.06.201392. For the very same reasons, the stand of the second respondent that he is not an intermediary and his role in relation to GDR was limited to advising for the listing of GDRs etc., would not absolve the second respondent from facing the action initiated by the appellant93. As far as the contention raised by the second respondent in paragraph M, N etc., we do not wish to go into the said stand so made by the second respondent, as it is for the second respondent to convince the appellant and now before the Tribunal that he cannot be proceeded against for any of the alleged violations. Similarly, the stand of the respondents by making reference to the core features of the GDR issues, to contend that there was no requirement to bring GDR proceeds into India and that there was no allegation that its funds were used for prohibited activities i.e. stock exchange transaction or real estate transaction as prescribed in 1993 Scheme and that the subscription of the GDR issued in USD become available to the issuing company were all matters the respondents can validly explain and substantiate the same before the Tribunal while challenging the merits of the order passed by the appellant in the order dated 20.06.2013A reading of the above judgment makes it clear that a law enacted by Parliament if shows that for proceeding against in exercise of any extra territorial aspect, which has got a cause and something in India or related to India and Indians in terms of impact, effect or consequence would be a mixed matter of facts and of law, then the Courts have to enforce such a requirement in the operation of law as a matter of law itself. The Constitution Bench, however, held that Parliament has no power to legislate for any territory other than the territory of India or other part of India with respect to aspects or causes which have no impact or nexus with India as was explained in question No.1. Keeping the said principle thus pronounced by this Court in mind, when we examine the SEBI Act, 1992 read along with SCR Act, 1956 as well as the 1993 Scheme, we find that the Act itself provides for proceeding against any person in order to protect the interests of investors and the stock market in India with reference to any fraud played against such interest of the investors in India. Therefore, the answer to the first question as pronounced by the Constitution Bench applies in all force to the case on handWe fully concur with the said view expressed by the learned Judge and applying the said principle, even if the law applies to persons who are not corporally present within the territory of India, even if they are citizens abroad when such persons commit acts which affects the legitimate interest of this country which would include such legitimate interest in the case on hand of the investors in India at the stock market, it must be held that the appellant would be fully empowered to proceed against such persons as provided under the provisions of SEBI Act, 1992Therefore, when we apply the above principles set down in the said judgment to the case on hand, we are convinced that the principle of ?effects doctrine? will apply to the case on hand since we have found that in the event of the allegations noted in paragraph 74 of this judgment levelled against the respondents by the appellant being established, it will have a far reaching consequence on the Indian investors on securities as well as the stock market and consequently the duty of the SEBI to protect their interests would automatically come into play as stipulated under Sections 11B, 11C, 12 and 12(A) of the SEBI Act, 1992. Therefore, the said judgment when applied carefully we find that the same supports the case of the appellant rather than the respondentsWe do not find any scope for applying the said decision to the facts of this case as we have found that the specific provisions of SEBI Act, 1992 provided for necessary powers with the SEBI casting a duty on it to protect the interests of the Indian investors as well as the stock market in India whenever it finds any fraud or other such misdeeds committed by any person which worked against the interests of Indian investors in securities. What is fraud has been sufficiently defined under Regulation 2(1)(c) of the 2003 Regulations as well as under Section 12(A) of the SEBI Act, 1992. Therefore, when such express provisions are contained in the SEBI Act and its regulations apart from specific provisions relating to issuance of GDR based on the underlying shares deposited with the Domestic Custodian Bank under the 1993 Scheme which got a statutory backing under the 2000 Regulations, we are convinced that the exercise of jurisdiction by SEBI against the respondents, having regard to the nature of allegations, listed out in paragraph 74 is well founded.