GNLU MOOT ON SECURITIES & INVESTMENT LAW

Team code - 128

BEFORE THE HON’BLE SECURITY APPELLATE TRIBUNAL OF MUMBAI

APPEAL.NO.________/2023
UNDER section 15T by the petitioner IN
REFERENCE WITH Order Passed By SEBI
under sections 11(1),11(4), 11(4A), 11B(1), 11B(2)

IN THE CASE OF

Aglow. co(APPELEANT)
Mr.Pulkit sharma (APPELLANT)
Ms. Anjali arora (APPELLANT)
Mr. Sameer amal (APPELLANT)
TABLE OF
CONTENTS
versus

Securities and exchange board of india (RESPONDENT)

INDEX

INDEX
WRITTEN SUBMISSIONS ON BEHALF OF THE RESPONDENT
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

TABLE OF CONTENTS

LIST OF ABBREVIATIONS 4

INDEX OF AUTHORITIES 6

STATEMET OF FACTS 8

STATEMENT OF JURISDICTION 10

ISSUES RAISED 11

SUMMARY OF ARGUEMENTS 12

ARGUMENTS ADVANCED 14

1) ISSUE -1 : WHETHER THE FAR

BY MR. PAWAN IS VALID AND IF
SUNDARYA IS STILL A
SUBSIDIARY EVEN AFTER
APPOINTMENT OF TWO ID’S IN
ITS BOARD OF DIRECTORS
1.1 FAR submitted by pawan gupta is valid
1.2 Aglow’s Control/Power Over the
Composition of the Board of Directors of
saundrya.
2) ISSUE-2: WHETHER AGLOW HAS
ABILITY TO DIRECT THE
RELEVANT ACTIVITIES OF
SUNDARYA AND WHETHER IT
HAS FOLLOWED FAIR
ACCOUNTING TREATMENT BY
DERECOGNIZING SUNDARYA’S
ASSETS AND LIABILITIES
[3.1] THE INVOLVEMENT OF PULKIT
SHARMA AND ANJALI ARORA IN
MANIPULATION OF CONSOLIDATED
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

FINANCIAL STATEMENT
[2.2] MAJORITY OF ACTIVITIES OF
SUNDARYA ARE CONTROLLED BY
AGLOW
[2.3] UNFAIR ACCOUNTING
TREATMENT BY AGLOW LIMITED

3) ISSUE-3: WHETHER BOARD OF

DIRECTORS OF AGLOW
IMPLEMENTED A PLAN, DEVICE
AND ARTIFICE TO DEFRAUD
THE INVESTORS BY
MANIPULATING/
MISREPRESENTING THE
FINANCIAL STATEMENTS FOR
PERSONAL GAINS.
[3.1] THE INVOLVEMENT OF PULKIT
SHARMA AND ANJALI ARORA IN
MANIPULATION OF CONSOLIDATED
FINANCIAL STATEMENT
[3.2] BOARD OF DIRECTORS
DEFRAUDING THE INVESTORS OF
AGLOW

[3.3] THE COLLUSION AND FAILED

LIABILITY OF MR. SAMEER ALAM TO
PERFORM HIS DUTY RESULTED IN
MISSTATED FINANCIAL STATEMENT
OF AGLOW..

PRAYER 29

ABBREVATIONS
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

% PERCENTAGE

& AND

(P) PRIVATE

P. PAGE

V. VERSUS

AIR ALL INDIA REPORTER

BOM BOMBAY

CO. COMPANY

COMP. COMPANY

ED. EDITION

ILR INDIAN LAW REPORT

M&A MERGERS AND

ACQUISITION
REG. REGULATION

SAT SECURITIES APPELLATE

 GNLU MOOT ON SECURITIES & INVESTMENT LAW

TRIBUNAL
SC SUPREME COURT

SCC SUPREME COURT

REPORTS
SCJ SUPREME COURT
JOURNAL
SCR SUPREME COURT
REPORTER
SEBI SECURITIES EXCHANGE
BOARD OF INDIA
SEC. SECTION

U/S UNDER SECTION

VOL. VOLUME

INDEX OF AUTHORITIES
1) Jai beverage pvt vs State of Jammu and Kashmir
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

2) Pancard Clubs Limited Revisionist v. Mayank Joshi and Another 2015 SCC ONLINE
UTT 2269)
3) Jai Beverages Pvt. Ltd. v. State of Jammu and Kashmir and Ors(2006) 5 SCC 77
4) State of Uttar Pradesh v. Tipper Chand(1980) 2 SCC 341
5) J.K Industries and Another v. Union of India and Others(2007) SCC 13 673, 2007
AIR SC 7443
6) Padinjarekkara Agencies Pvt. Ltd, Kottayam v. The ACIT Kottayam(Income tax
appellate tribunal Case no. ITA 375/COCH/2014)
7) Arcelormittal India Private Limited v. Satish Kumar Gupta and Ors(2019) 2 SCC 1
8) M/s Subhkam Ventures (I) Private Limited v. The Securities and Exchange Board of
India (SAT- appeal no. 8 of 2009 decided on 15.01.2010)
9) Walnut Packing Pvt. Ltd. v. Sirpur Paper Mills Ltd. and Another 2008 SCC ONLINE
AP 840
10) The Bombay Dyeing and Manufacturing Company Limited and Anr v. Securities and
Exchange Board of India (WTM/AB/CFID/CFID_1/20686/2022-23)
11) Vanraj Suppliers Private Limited v. Williamson Financial Services Limited
NCLTCase no.= C.P.(CAA)- 4/2021
12) Esso Standard Inc v. Udharam B Japanwalla 1975 (45) Co. cases 16 (Bom)
13) Osians Connoisseurs of Art (P) Ltd. v. SEBI, (2020) 16 SCC 745
14) BPL Limited v. Securities & Exchange Board of India , 2002 SCC OnLine SAT 15
15) Basic Clothing Pvt. Ltd. … Appellant v. SEBI 2019 SCC Online SAT 150
16) J.K. Industries Ltd. & Ors. v. Chief Inspector of Factories and Boilers Ors., (1996) 6
SCC:
17) Mr. Bhuwneshwar Mishra v. SEBI (Appeal no. 7 of 2014 — Date of decision — July
31, 2014)
18) Ramrakh R. Bohra v. SEBI [(1999) 33 CLA 243 (Bom)]
19) the Hon'ble Supreme Court in the matter of RBI v. Peerless General Finance &
Investment Co. Ltd. [(1996) 20 CLA 195/(1996) 1 SCC 642 : AIR 1996 SC 646].
ARTICLES REFERRED
20) Critical Analysis : Literal Rule of Interpretation, 1.2 JCLJ (2021) 13

BOOKS REFERRED
21) CR datta on the company law 6th edition 2008
22) Sethna Indian company law (practice and procedure)
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

23) Principles of Indian company law by paul L. davis and sarah Worthington
24) K.M. GHOSH and DR.KP chandratres company law (with secretarial practices)
25) K.shekar guide to SEBI
26) MANUAL OF SEBI (ACT,RULES,REGULATIONS AND GUIDELINES)
STATUTES AND REGULATIONS REFERRED
27) INDIAN CONTRACT ACT, 1872
28) INDIAN COMPANIES ACT, 2013
29) SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992
30) SEBI (SUBSTANTIAL ACQUISITION AND SHARES TAKEOVER)
REGULATIONS, 1997
31) SEBI (SUBSTANTIAL ACQUISITION AND SHARES TAKEOVER)
REGULATIONS, 2011
32) SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND
DISCLOSURE REQUIREMENTS) REGULATIONS, 2009
33) SECURITIES AND EXCHANGE BOARD OF INDIA (PROHIBITION OF
FRAUDULENT AND UNFAIR TRADE PRACTICES RELATING TO
SECURITIES MARKET) REGULATIONS, 2003

STATEMENT OF FACTS

1. Aglow is a company engaged in business of beauty salons and providing other

services. It is listed on NSE and BSE since 2007. On September 4, 2008 , a
memorandum of understanding was executed amongst aglow, sundarya private
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

limited and Agarwal group to build and operate three salon-cum-spas centres under
aglow brand in Mumbai , Maharashtra.
2. Both Agarwal and aglow each hold 50% of the total shareholding in sundarya which
is a private unlisted company incorporated in 2001.
3. On January 10,2022 , aglow received a notice of EGM meeting from sundarya
regarding proposal for appointment of two independent directors for meeting on jan
29, 2022.
4. On January 31, 2022, by way of a notice to the stock exchanges, Aglow inter alia
announced, after market closing hours, that Sundarya was no longer a subsidiary of
Aglow and was classified as a joint venture/associate company.
5. Pursuant to the above announcement, Aglow considered Sundarya as an associate
company w.e.f. January 29, 2022 and accordingly prepared and published its
consolidated financial statements for Financial Year (“FY”) 2021-22, excluding the
financials of Sundarya as a subsidiary from its financial statements.
6. Securities and Exchange Board of India (“SEBI”) received a complaint dated June 30,
2022 (“Complaint”) against Aglow wherein it was inter alia alleged that Aglow,
despite having control over Sundarya, did not include Sundarya as a subsidiary
company in its consolidated financial statements for the FY 2021-22, and by doing so,
Aglow had overstated its profit for the said FY.
7. SEBI directed BSE to appoint an independent audit firm to conduct forensic audit in
light of the Complaint received and appointment of Pawan LLP (“Forensic
Auditor/Pawan”) as forensic auditor to conduct forensic audit of Aglow for the period
between April 01, 2021, to March 31, 2022 was done.
8. During the audit , aglow gave submissions regarding the complaint and concluded
that Sundarya would cease to be a subsidiary of Aglow and be treated as an associate
company under joint venture category w.e.f. January 29, 2022. The stock exchanges
were, accordingly, intimated vide notice dated January 31, 2022.
9. The Forensic Audit Report (“FAR”) was received by SEBI on October 22, 2022, the
findings of which had the conclusion that Sundarya should have been consolidated by
Aglow in FY 2021-22.
10. A First Information Report (“FIR”), was filed against Mr. Pawan Gupta (lead auditor
in the present matter), along with two other auditors as accused for allegations of
corruption relating to the audit made for some other company. In November 2022, the
two other accused got arrested in Mumbai for certain allegations against them. Mr.
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

Pawan Gupta also applied for an anticipatory bail in respect of which the Bombay
High Court vide its order dated February 01, 2023, passed an interim direction
wherein the authorities have been directed not to arrest him till next date.
11. SEBI initiated its investigation for the period FY 2021-22, the focus of which was to
ascertain if Aglow had misrepresented its consolidated financial statements while
accounting for one of its subsidiary companies (i.e., Sundarya) for FY 2021- 22 and
whether the said misrepresentation/misstatement, if any, was in violation of the
provisions of Securities and Exchange Board of India Act, 1992 (“SEBI Act”), SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR
Regulations”), SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to
Securities Market) Regulations, 2003 (“PFUTP Regulations”). Thereafter, a Show
Cause Notice (“SCN”) was issued by Mr. Amit Shyamlal, Deputy General Manager,
SEBI on November 01, 2022, against Aglow and its directors/KMP.
12. It was observed that Sundarya’s operations are significantly in the hands of Aglow as
decisions/rights on critical and significant portion of the activities viz. operations,
management, services, repair, maintenance, etc. are taken by Aglow. Thus, Aglow
being the operator of the Saloons was evidently capable to direct the relevant
activities of Sundarya. Hence, Aglow has existing rights that give it ability to direct
the relevant activities, i.e., activities that significantly affect Sundarya’s returns.
13. Thus, pursuant to the announcement made by Aglow on January 31, 2022, of not
considering Sundarya as its subsidiary, Aglow de-recognized all the assets and
liabilities of Sundarya from the date of loss of control i.e., January 29, 2022. It is
observed that for FY 2020-21, Aglow had consolidated losses after tax of Rs. 27.47
crores. However, for FY 2021-22, it declared a net profit after tax of Rs. 18.05 crore.
This significant improvement, i.e., 165.72% rise in the net profit was majorly
attributable to re-measurement gain of Rs. 17.77 crore on account of treating
Sundarya as an associate company instead of a subsidiary.

STATEMENT OF JURISDICTION
The appellants have approached the hon’ble security appellate court of Mumbai in the matter
of aglow limited & ors. V. securities and exchange board of india, under section 15T of the
securities and exchange board of india.
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

15T. [(1) Save as provided in sub-section (2), any person aggrieved,— (a) by an order of
the Board made, on and after the commencement of the Securities Laws (Second
Amendment) Act, 1999, under this Act, or the rules or regulations made thereunder; or
(b) by an order made by an adjudicating officer under this Act133[; or], 134[“(c) by an
order of the Insurance Regulatory and Development Authority or the Pension Fund
Regulatory and Development Authority,] may prefer an appeal to a Securities Appellate
Tribunal having jurisdiction in the matter.

[(2) ********]

(3) Every appeal under sub-section (1) shall be filed within a period of forty-five days from
the date on which a copy of the order made by the 136[Board or the Adjudicating Officer
137[or the Insurance Regulatory and Development Authority or the Pension Fund
Regulatory and Development Authority], as the case may be,]is received by him and it shall
be in such form and be accompanied by such fee as may be prescribed :

Provided that the Securities Appellate Tribunal may entertain an appeal after the expiry of
the said period of forty-five days if it is satisfied that there was sufficientcause for not filing it
within that period.(4) On receipt of an appeal under sub-section (1), the Securities Appellate
Tribunal may, after giving the parties to the appeal, an opportunity of being heard, pass such
orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed
against. (5) The Securities Appellate Tribunal shall send a copy of every order made by it to
the 138[Board, 139[or the Insurance Regulatory and Development Authority or the Pension
Fund Regulatory and Development Authority, as the case may be] the] parties to the appeal
and to the concerned Adjudicating Officer. (6) The appeal filed before the Securities
Appellate Tribunal under sub-section (1) shall be dealt with by it as expeditiously as possible
and endeavour shall be made by it to dispose of the appeal finally within six months from the
date of receipt of the appeal.

ISSUES RAISED
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

4) WHETHER THE FAR BY MR. PAWAN IS VALID AND IF SUNDARYA IS STILL A

SUBSIDIARY EVEN AFTER APPOINTMENT OF TWO ID’S IN ITS BOARD OF
DIRECTORS

5) WHETHER AGLOW HAS ABILITY TO DIRECT THE RELEVANT ACTIVITIES

OF SUNDARYA AND WHETHER IT HAS FOLLOWED FAIR ACCOUNTING
TREATMENT BY DERECOGNIZING SUNDARYA’S ASSETS
AND LIABILITIES?

6) WHETHER BOARD OF DIRECTORS OF AGLOW IMPLEMENTED A PLAN,

DEVICE AND ARTIFICE TO DEFRAUD THE INVESTORS BY MANIPULATING/
MISREPRESENTING THE FINANCIAL STATEMENTS FOR PERSONAL GAINS.

SUMMARY OF ARGUMENTS
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

1) WHETHER THE FAR BY MR. PAWAN IS VALID AND IF SUNDARYA IS

STILL A SUBSIDIARY EVEN AFTER APPOINTMENT OF TWO ID’S IN ITS
BOARD OF DIRECTORS

The Respondent humbly submits to the hon’ble security appellate tribunal that firstly, the
submissions made by the forensic auditor mr.pawan gupta atre totally valid. Secondly,
aglow still has control over the composition of board of directors and still has voting
rights in the board of directors of saundrya.

2) WHETHER AGLOW HAS ABILITY TO DIRECT THE RELEVANT

ACTIVITIES OF SUNDARYA AND WHETHER AGLOW HAS FOLLOWED
A FAIR ACCOUNTING TREATMENT BY DERECOGNIZING SUNDARYA’S
ASSETS AND LIABILITIES?

The Respondent humbly submits that as per the Memorandum of Understanding [hereinafter
referred to as- MoU] it can be clearly seen that Aglow Limited has full ability to direct the
relevant activities of Sundarya. It is also submitted that Aglow Limited has failed to make proper
and fair accounting treatment by derecognizing Sundarya’s assets and liabilities and recording
net re-measurement gain on the loss of control over Sundarya as subsidiary. The Respondent
humbly submits his arguments in the following sub issues viz. [2.1] Aglow’s ability to control the
Management and Policy decisions of Sundarya [2.2] Majority of activities of Sundarya are
controlled by Aglow [2.3] Unfair accounting treatment by Aglow Limited

3) WHETHER BOARD OF DIRECTORS OF AGLOW IMPLEMENTED A

PLAN, DEVICE AND ARTIFICE TO DEFRAUD THE INVESTORS BY
MANIPULATING/ MISREPRESENTING THE FINANCIAL STATEMENTS
FOR PERSONAL GAINS.

The Respondent humbly submits that Mr. Pulkit and Ms. Anjali (both being promoter &
director of Aglow)offloaded their shares at a price which benefited because of Aglow’s
announcement made on January 31, 2022, by not treating Sundarya as a subsidiary and
resulted in misrepresented/misstated financial statements (of Aglow) for FY 2021-22.
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

Aglow’s promoters offloaded their shares on steep prices, thus revealing that they
knowingly misrepresented/manipulated the financial statements to implement a scheme to
derive personal benefit, thereby impacting the investors at large and shaking the integrity
of the securities market.The Respondent humbly submits his arguments in the following
sub issues viz. [3.1] Involvement of pulkit sharma and Anjali arora in manipulation of
consolidated financial statement and defrauding the investors. [3.2] Majority of activities
of Sundarya are controlled by Aglow [3.3] The collusion and failed Liability of Mr. sameer
alam to perform his duty resulted in misstated financial statement of aglow.

ARGUMENTS ADVANCED
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

ISSUE I

WHETHER THE FAR BY MR. PAWAN IS VALID AND IF SUNDARYA IS STILL A

SUBSIDIARY EVEN AFTER APPOINTMENT OF TWO ID’S IN ITS BOARD OF
DIRECTORS

1.1 FAR submitted by pawan gupta is valid

Mr. pawan gupta was appointed as the forensic auditor by BSE on the direction of SEBI. Mr.
pawan gupta was eligible to conduct the forensic audit as per the notice issued by SEBI for
Empanelment of forensic auditors for conducting forensic audit of listed companies, states
that ‘Application shall not be considered where disciplinary action / proceedings have been
initiated against the applicant, its partners / directors, by any regulatory body or court of law.’
The FIR lodged against pawan gupta was filed after the FAR was submitted. Moreover, the
investigation further carried by SEBI on its own was found out to be in line with the report
submitted by mr. pawan gupta. It would be arbitrary to consider that the findings of the FAR
submitted by pawan gupta The allegations mentioned in the FAR are further explained in the
document.

1.2 Aglow’s Control/Power Over the Composition of the Board of Directors of saundrya.

Aglow limited owns and operates beauty salons and provide other related at 50 salons-cum-
spa centres across 37 locations across the country. Both aglow and Aggarwal group each hold
50% shares of saundrya and had signed a memorandum of understanding for construction and
operation of 3 salon cum spa centres which will be operated under the name of aglow. As per
clause 9 of MOU and clause 39 of AOA [annexure B] it is stated that chairman of saundrya
will be appointed by aglow, whom shall be entitled to a second or casting vote .Further, it is
observed that Aglow appointed its CFO (i.e., Mr. Sameer Amal) as the Chairman of the
Sundarya. Notably, he is still designated as Chairman even after Aglow had ceased to
consider Sundarya as its subsidiary. Similarly in the case of Jai beverage pvt vs State of
Jammu and Keshmir1 held in the well that an MoU can be regarded as a legally enforceable
contract if it is in a formal way and the parties profit from functioning in compliance with the
provision specified in the MoU. Therefore , in addition of 50% voting rights, Aglow also

1
Jai Beverages Pvt. Ltd. v. State of Jammu and Kashmir and Ors
(2006) 5 SCC 772
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

holds second or casting vote through its CFO, Thus, aglow has more decisive power over
Aggarwal group in respect of sundarya. Moreover the aglow has the power to alter the
composition of Sundarya's board of directors and the power to remove a director through
Clause 65 of Sundarya's (AoA) which permits changes in the board's composition through the
means of an ordinary resolution. An ordinary resolution, And in Section 114(1) of the
Companies Act, 2013, provides the criteria for ordinary and special resolutions. An ordinary
resolution is passed by the votes cast in favor of the resolution, including the casting vote. If
any, of the Chairman, by members who, being entitled so to do, vote in person, or where
proxies are allowed, by proxy or by postal ballot, exceed the votes, if any, cast against the
resolution by members, so entitled and voting, are required to be not less than three times the
number of the votes Thirdly, the procedure for the removal of directors is regulated by
Section 169(1) of the Companies Act, 2013, which allows for such removal to occur through
the passage of an ordinary resolution. Consequently, in light of the provisions set forth in
Clause 9 of the Memorandum of Understanding (MoU) and Clause 39 of Sundarya's AoA, in
conjunction with the statutory mandates outlined in Section 114(1) and Section 169(1) of the
Companies Act, 2013, it becomes unmistakably clear that Aglow, by virtue of the Chairman's
casting vote, possesses the requisite legal authority to enact an ordinary resolution for the
removal of a director from Sundarya's boar. Further it is observed that two independent
directors were appointed through ordinary resolutions in the EGM. In this regard, it is
important to note that two independent directors were neither re-appointed for a second term
under section 149 of companies act,2013, nor is saundrya a listed entity. So, a special
resolution is not required for removal of these directors. Unless, the independent directors
were not re appointed for the second term under section 149 of the companies act,2013. Thus,
they can be removed through an ordinary resolution.

Further, aglow claimed that the composition of board of directors of saundrya was formed on
the basis of section 2(87) of companies act,2013, which states that the composition of board
of directors shall be deemed to be controlled by another company if that other company by
exercise of some power exercisable by it at its discretion can appoint or remove all or a
majority of the directors. Hence, the contention of aglow that the composition of saundrya
Board was the basis for the Holding-Subsidiary relationship instead of the control on the
composition of saundrya Board is also
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

ISSUE 2

WHETHER AGLOW HAS ABILITY TO DIRECT THE RELEVANT ACTIVITIES OF

SUNDARYA AND WHETHER AGLOW HAS FOLLOWED A FAIR ACCOUNTING
TREATMENT BY DERECOGNIZING SUNDARYA’S ASSETS AND LIABILITIES?

2.1] AGLOW’S ABILITY TO CONTROL THE MANAGEMENT AND POLICY

DECISIONS OF SUNDARYA

B. The Respondent humbly submits that the expression ‘control’ is defined in Section 2(27)
of the Companies Act, 2013 as follows -: “control shall include the right to appoint majority
of the directors or to control the management or policy decisions exercisable by a person or
persons acting individually or in concert, directly or indirectly, including by virtue of their
shareholding or management rights or shareholders agreements or voting agreements or in
any other manner.” The Respondent contends to the wisdom of the court that as per the
aforementioned definition of control, Aglow Limited had full ability to control the
management and policy decisions of Sundarya Private Limited as it is clear from the MoU
that majority of the activities and policy decisions of Sundarya Private Limited were in
control of Aglow Limited.

C. The Respondent further brings to the notice of the court that in the landmark judgement of
Arcelormittal India Private Limited v. Satish Kumar Gupta and Ors, the Supreme Court of
India gave a broad meaning to the expression ‘control’ and explained its true meaning which
reads as follows: “The expression “control” is therefore defined in two parts. The first part
refers to de jure control, which includes the right to appoint a majority of the directors of a
company. The second part refers to de facto control. So long as a person or persons acting in
concert, directly or indirectly, can positively influence, in any manner, management or policy
decisions, they could be said to be “in control”. A management decision is a decision to be
taken as to how the corporate body is to be run in its day to day affairs. A policy decision
would be a decision that would be beyond running day to day affairs, i.e., long term
decisions. So long as management or policy decisions can be, or are in fact, taken by virtue of
shareholding, management rights, shareholders agreements, voting agreements or otherwise,
control can be said to exist.”

D. In the matter of M/s Subhkam Ventures (I) Private Limited v. The Securities and
Exchange Board of India,2 the Securities Appellate Tribunal made the following
2
M/s Subhkam Ventures (I) Private Limited v. The Securities and
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

observations qua “control” under the SEBI (Substantial Acquisition of Shares and takeover)
Regulations, 1997, wherein control is defined in Regulation 2(1)(e) in similar terms as in
Section 2(27) of The Companies Act, 2013. The Securities Appellate Tribunal held that: “The
term control has been defined in Regulation 2(1)(c) of the takeover code to "include the right
to appoint majority of the directors or to control the management or policy decisions
exercisable by a person or persons acting individually or in concert, directly or indirectly,
including by virtue of their shareholding or management rights or shareholders agreements or
voting agreements or in any other manner." This definition is an inclusive one and not
exhaustive and it has two distinct and separate features: i) the right to appoint majority of
directors or, ii) the ability to control the management or policy decisions by various means
referred to in the definition. This control of management or policy decisions could be by
virtue of shareholding or management rights or shareholders agreement or voting agreements
or in any other manner. This definition appears to be similar to the one as given in Black's
Law Dictionary (Eighth Edition) at page 353 where this term has been defined as under:
“Control - The direct or indirect power to direct the management and policies of a person or
entity, whether through ownership of voting securities, by contract, or otherwise; the power
or authority to manage, direct, or oversee.” Control, according to the definition, is a proactive
and not a reactive power. It is a power by which an acquirer can command the target
company to do what he wants it to do. Control really means creating or controlling a situation
by taking the initiative. Power by which an acquirer can only prevent a company from doing
what the latter wants to do is by itself not control. In that event, the acquirer is only reacting
rather than taking the initiative. It is a positive power and not a negative power. In a board-
managed company, it is the board of directors that is in control. If an acquirer were to have
power to appoint majority of directors, it is obvious that he would be in control of the
company but that is not the only way to be in control. If an acquirer were to control the
management or policy decisions of a company, he would be in control. This could happen by
virtue of his shareholding or management rights or by reason of shareholders agreements or
voting agreements or in any other manner. The test really is whether the acquirer is in the
driving seat. To extend the metaphor further, the question would be whether he controls the
steering, accelerator, the gears and the brakes. If the answer to these questions is in the
affirmative, then alone would he be in control of the company. In other words, the question to
be asked in each case would be whether the acquirer is the driving force behind the company

Exchange Board of India

(SAT- appeal no. 8 of 2009 decided on 15.01.2010)
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

and whether he is the one providing motion to the organization. If yes, he is in control but not
otherwise. In short control means effective control.”

[2.2] MAJORITY OF ACTIVITIES OF SUNDARYA ARE CONTROLLED BY

AGLOW

E. The Respondent humbly submits that as per the Memorandum of Understanding

[hereinafter referred to as-MoU] which was signed between Aglow Limited, Agarwal Group
and Sundarya Private Limited, the majority of rights/controls in respect of the various
activities/aspects of the three salons are operated by Aglow Limited and significant portion of
the activities viz. operations, management, services, repair, maintenance, etc are taken by
Aglow.

F. The Respondent further brings to the notice of the court that as per the MoU, following are
the activities which are in control of Aglow Limited:  Aglow will do construction in
consultation with Agarwal Group. In the case difference of opinion, final decision would be
taken by Aglow  Decision of the Architect  Completing the construction of saloons in all
aspects and enabling commencement of operations  Technical fee of 0.9% of project cost,
excluding the cost of land  Appointment of Chairman  After completion of saloons,
management will be with Aglow  Management Fee 0.9% of Turnover and 5% of Gross
Profit to be earned by  Operations and management of the saloons  Repairs and
maintenance As it can be clearly seen that the majority of the activities in respect of the three
salons are in control of Aglow Limited. Moreover, Aglow Limited is getting 0.9% of the
turnover of the salons as management fee and also getting 5% of the Gross Profit of the
saloons.

G. In the matter of Walnut Packing Pvt. Ltd. v. Sirpur Paper Mills Ltd. and Another,
the Andhra Pradesh High Court 3stated that, “Thus if a company controls managerial and
financial aspects of another company, it is a holding company…..A holding company also
controls various activities of subsidiary company indirectly through its officers who are
appointed as directors of subsidiary company . Though a holding company and subsidiary
company are two separate entities incorporated separately and remain different and distinct
juristic persons, still for all purposes it is holding company, which ordinarily controls affairs
of subsidiary company notwithstanding the corporate autonomy every company enjoys.”

3
Walnut Packing Pvt. Ltd. v. Sirpur Paper Mills Ltd. and Another
2008 SCC ONLINE AP 840
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

[2.3] UNFAIR ACCOUNTING TREATMENT BY AGLOW LIMITED

H. The Respondent humbly submits that Aglow Limited failed to make a proper and fair
accounting treatment by derecognizing the assets and liabilities of Sundarya and recording
net re-measurement gain on the loss of control over Sundarya as subsidiary. It is further
submitted that due this improper accounting treatment by Aglow, it has fraudulently made a
profit of Rs 18.05 Crore for FY 2021-22 as compared to loss of Rs 27.47 Crore in the
previous financial year i.e. FY 2020-21. I. The Respondent further brings to the notice of he
court that as per Section 129(3) of Companies Act, 2013, “Where a company has one or more
subsidiaries, it shall, in addition to financial statements provided under sub-section (2),
prepare a consolidated financial statement of the company and of all the subsidiaries in the
same form and manner as that of its own which shall also be laid before the annual general
meeting of the company along with the laying of its financial statement under sub-section
(2)”. It is further submitted that the Explanation of Section 129(3) reads as follows: “For the
purposes of this sub-section, the word ―subsidiary‖ shall include associate company and
joint venture.” For the purposes of this sub-section, definition of an associate company is
mentioned under section 2(6) of Companies Act 2013 which reads as follows: “associate
company, in relation to another company, means a company in which that other company has
a significant influence, but which is not a subsidiary company of the company having such
influence and includes a joint venture company. Explanation: For the purposes of this clause,
―significant influence means control of at least twenty per cent. of total share capital, or of
business decisions under an agreement.”

J. The Respondent contends to the wisdom of the court that Aglow Limited had a hold of
50% of the total share capital as per the MoU. Therefore as per Section 2(6), if Sundarya was
not a subsidiary to Aglow as contended by Aglow, it was atleast and associate company as it
had more than 20% of the share capital. Therefore it is submitted that as per Section 129(3)
read with Section 2(6) of the Companies Act, 2013, Aglow Limited was bound to recognize
the assets and liabilities of Sundarya Private Limited in the Consolidated Financial
Statements for FY 2021-22.

K. The Respondent humbly submits that as per paragraph 11 of IND AS 21, there are only
two exceptions in which subsidiaries should be excluded from the Consolidated Financial
Statements. Exceptions are as follows:  control is intended to be temporary because the
subsidiary is acquired and held exclusively with a view to its subsequent disposal in the near
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

future; or  it operates under severe long-term restrictions which significantly impair its
ability to transfer funds to the parent. Therefore it is submitted that Aglow did not follow
proper set of rules and accounting standards while making of Consolidated Financial
Statements for FY 2021-22

. L. In the matter of The Bombay Dyeing and Manufacturing Company Limited and
Anr v. Securities and Exchange Board of India 4, it was held in the final order of the SEBI
that, “I note that the SCN has alleged that the direct shareholding of BDMCL in SCAL was
deliberately kept at 19% in order to avoid classification of SCAL as an Associate’. I find
merit in this allegation. I note that had BDMCL been holding 1% more in SCAL, then it
would have been required to recognize SCAL as ‘an Associate’ in terms of Section 2(6) of the
Companies Act, 2013 and consequently it would have been required to consolidate the
financial statements of SCAL with its own financials due to the mandate in Section 129(3) of
the Companies Act, 2013. However, since BDMCL held its shareholding in SCAL at 19%, no
such requirement for consolidation was triggered.” In the same matter, the Securities
Appellate Tribunal stated that, “We find that admittedly Bombay Dyeing had 19% of the
share capital of SCAL and this was continuing since the financial year 2011-12 whereas
Section 129 of the Companies Act, 2013 came into effect from 01.04.2014. Further in the
absence of any inducement, prima facie case of fraud is not made out especially when there
was no bar for consolidation of financials.”

M. In the case of Vanraj Suppliers Private Limited v. Williamson Financial Services

Limited, 5it was contented by the petitioners that “the company has taken stand that the
shares in the said company were held exclusively with a view to subsequently dispose it in
the near future. Accordingly, in terms of para 11 of Accounting Standard 21, which deals with
consolidated financial statements, it was felt that the said company stands excluded for the
purpose of consolidation. Hence the companies are not required to file consolidated financial
statements of the company and its associates.” It was held by the National Company Law
Tribunal that, “This contention of the Petitioners is not tenable. Since the substantial
percentage of the shares are held for longtime by the Petitioner Company it is required to file
4
The Bombay Dyeing and Manufacturing Company Limited and Anr
v. Securities and Exchange Board of India
(WTM/AB/CFID/CFID_1/20686/2022-23)

5
Vanraj Suppliers Private Limited v. Williamson Financial Services
Limited
NCLT
Case no.= C.P.(CAA)- 4/2021
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

consolidated financial statements of the company & its associates and attach with its financial
statements under the provision of Section 129(3) of the Companies Act , 2013 read with Rule
5 of the Companies (Account) Rules.

ISSUE 3
WHETHER BOARD OF DIRECTORS OF AGLOW IMPLEMENTED A PLAN,
DEVICE AND ARTIFICE TO DEFRAUD THE INVESTORS BY
MANIPULATING/ MISREPRESENTING THE FINANCIAL STATEMENTS FOR
PERSONAL GAINS.

[3.1] THE INVOLVEMENT OF PULKIT SHARMA AND ANJALI ARORA IN

MANIPULATION OF CONSOLIDATED FINANCIAL STATEMENT

A.Mr.Pulkit being the promoter and MD of aglow since 2012 and ms. Anjali being the
promoter and non-executive director of aglow since 2019 attended all the board meeting
since IP. Notably both of them are signatories to the consolidated financial statements for
FY2021-22. The charge of market manipulation implies an improper motive or intention
that when such a charge is levelled against an artificial person or body corporate, it is
necessary for the party making the charge to establish that the controlling/directing
mind of the artificial person, that is, the Board of Directors or a committee of directors or
the shareholders in general meeting
As explained in the case of Esso Standard Inc v. Udharam B Japanwalla 1975 (45) Co.
cases 16 (Bom)6- That in the passage of Viscount Haldane, Lord Chancellor, in Lennard's
Carrying Company Ltd.vs Asiatic Petroleum Co. Ltd. (1915) AC 705) referred to by Lord
Diplock, is as follows:

“My Lords, a corporation is an abstraction. It has no mind of its own any more than it had
a body of its own; its active and directing will must consequently be sought in the
person of somebody who for some purposes may be called an agent, but who is really the
directing mind and will of the corporation, the very ego and centre of the personality of the
corporation. That person may be under the direction of the shareholders in general
meeting; that person may be the board of directors itself, or it may be, and in some

6
Esso Standard Inc v. Udharam B Japanwalla 1975 (45) Co. cases 16 (Bom)
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

companies it is so, that person has an authority co-ordinate with the board of directors
given to him under the articles of association, and is appointed by the general
meeting of the company, and can only be removed by the general meeting of the company.”

Moreover it is clear that prohibition is against market manipulations stated in clauses (a) to
(e) therein. indulged in the type of market manipulation referred To regulation 4(1), 4(2)(e),
4(2)(f), 4(2)(k), 4(2)(r) of SEBI (PFUTP) Regulations, 2003

(i) a person should have effected, taken part in, or entered into either directly or
indirectly, transactions in securities
(ii) the transactions must be with an intention
(iii) such transaction must after to artificially raise or depress the prices of securities
(iv) the result of the action must be to induce the sales or purchase of securities by any
person for and monetary gains .
and as discussed in Osians Connoisseurs of Art (P) Ltd. v. SEBI, (2020) 16 SCC 745
7
rejecting the contention that since S. 11-AA of the SEBI Act uses the word "company" and
not "person", SEBI Act would not apply to business in the form of a Trust, held, the
statutory scheme was that if a collective investment scheme, is to be floated by a person, it
could only be done in the form of a collective investment management company and in no
other form and this is the reason why S. 11-AA of the SEBI Act uses the expression
"company" in sub-section (2) and not the word "person" - Therefore, the collective
investment scheme that was being carried on by the appellants in the form of a private Trust
would be in the teeth of the statute read with the CIS Regulations and would thus be illegal

thus in the present scenario the aglow manipulated and misrepresented FY is due to the
fraudulent activities of its board of director and promoter Mr. Pulkit and MS. Anjali

Similarly in the case of BPL Limited v. Securities & Exchange Board of India , 2002
SCC OnLine SAT 158 held volumes coupled with abnormal price movements were
reportedly observed in the stock exchanges in respect of the shares of the Appellant
company Suspecting price manipulation, after issued show cause notices to the Appellant
company and not to access the capital market for a period of four years”. It has been
further ordered that prosecution proceedings under section 24 of the Securities and

7
Osians Connoisseurs of Art (P) Ltd. v. SEBI, (2020) 16 SCC 745
8
BPL Limited v. Securities & Exchange Board of India , 2002 SCC OnLine SAT 15
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

Exchange Board of India Act, 1992 (the Act) for violation of regulation 4 of the Securities
and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices
Relating to Securities Markets) Regulations, 1995

Thus as per 15I of the SEBI Act read with Rule 5 of the Securities And Exchange Board Of
India (Procedure For Holding Inquiry And Imposing Penalties By Adjudicating Officer)
Rules, 1995 (“AO Rules”), the Impugned Order against the Aglow, Pulkit, Anjali and
Sameer Amal should be upheld(para 43 and 44 of proposition).

[3.2] BOARD OF DIRECTORS DEFRAUDING THE INVESTORS OF AGLOW.

Basic Clothing Pvt. Ltd. … Appellant v. SEBI 2019 SCC Online SAT 150 9that In fact,
the stand taken by the appellant before the AO was that petitioner was trapped by M/s. R. K.
Stockholding Pvt. Ltd. who was their stockbroker and who gave a rosy picture of high
volatility with high rate of return in securities market and succeeded to gain
confidence of the appellant by opening a trading account after signing the account opening
booklet the trades were performed in the account of the appellant under supervision of the
stockbroker. Thus, it is clear that the appellant was doing trades which amounted to
violation of Regulations 3 and 4 of the PFUTP Regulations.

In addition pulkit and Anjali also signed the certificate under regulation 17(8) of
SEBI(LODR) regulations 2015, stating that financial statements presents true and fair view
in compliance with the existing accounting standards, applicable law and regulations. Thus,
misleading financial statements and violating sections 3(b), 3(c), 3(d), 4(1), 4(2)(e), 4(2)(f),
4(2)(k), 4(2)(r) of SEBI (PFUTP) Regulations, 2003, Section 12A(a),(b),(c) of SEBI Act,
1992 and Regulations 4(2)(f)(i)(2), 4(2)(f)(ii)(2),4(2)(f)(ii)(6),4(2)(f)(ii)(7),4(2)(f)(iii)(7)
and 17(8) of the SEBI (LODR) Regulations 2015 r/w Section 27 of SEBI Act, 1992 and
Regulations 4(1), 33(1)(a),33(1)(c), 33(3)(b), 34(2)(b), 34(3) and 48 of SEBI (LODR)
Regulations, 2015.

After observation of 1.4 of moot memo the share price of aglow increased from rs 40- rs100
(150%) in a short period of 11 months [jan 31, 2022 to 31 dec,2022]. Mr. pulkit and Anjali,
both promoters and directors of aglow offloaded their shares from feb 2022- dec 2022. [as

9
Basic Clothing Pvt. Ltd. … Appellant v. SEBI 2019 SCC Online SAT 150
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

per point 32 of prop sheet]. They made a total gain of Rs 5.84 crores by selling their shares
at prices which were impacted/influenced by misstating financials of aglow Thus, both Mr.
Pulkit and MS. Anjali implemented a plan, device and artifice to defraud the investors

It is necessary to take note of certain statutory provisions. Section 11 of the Act enumerates
the functions of the SEBI and empowers it to take measures for protecting the interests of
investors in securities. Section 11B empowers SEBI to issue necessary directions. In
exercise of its powers under Section 30 the SEBI made the PFUTP Regulations, of which,
we are concerned with Regulations 3(a), (b), (c), (d) and Regulations 4(1), 4(2)(k) and 4(2)
(r).

SEBI v. Kanaiyalal Baldevbhai Patel, (2017) 15 SCC 1 10held Meaning of the

expression

"fraud" as used in the 2003 Regulations and how it differs from the meaning assigned under
the Contract Act. And include many situations which may not be a "fraud" under the
Contract Act or the 1995 Regulations, but nevertheless amount to a "fraud" under the 2003
Regulations - Further, once a conclusion that fraud has been committed while dealing in
securities is arrived at, all the provisions of Reigns. 3(a), (b), (c), (d) and 4(1) get attracted,
without the necessity of identifying as to which particular provision of the 2003 FUTP
Regulations is violated. Moreover held (fraud) which is an inclusive definition has to be
understood to be broad and expansive, and it contemplates even an action or omission, as
May

Thus as per the above judgment the both Mr. Pulkit and MS. Anjali signed the certificate
under regulation 17(8) of SEBI(LODR) regulations 2015, stating that financial statements
presents true and fair view in compliance with the existing accounting standards and failed
to perform there due diligence and this omission leads to fraud,

In the matter of SEBI v. Pan Asia Advisors Ltd. 4 2014 SCC Online SEBI 191

That Misappropriation , no person can be allowed unjust enrichment by way of

wrongful gain made on account of fraudulent, manipulative and unfair activities
and/or insider trading as found hereinabove I, therefore, in exercise of the powers
conferred under section 11 and 11B of the SEBI Act, 1992 read with Securities Laws
(Amendment) Ordinance, 2014 direct the notices to disgorge the wrongful gain made

10
Basic Clothing Pvt. Ltd. … Appellant v. SEBI 2019 SCC Online SAT 150
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

by them from their contraventions, as described in Para 140 of this order, with
simple interest @ 12% per annum from January 07, 2009 till the date of payment.
They shall pay the said amounts within 45 (forty five) days from the date of this
order by way of demand draft drawn in favour of “Securities and Exchange Board of
India”

In the case of J.K. Industries Ltd. & Ors. v. Chief Inspector of Factories and Boilers
Ors., (1996) 6 SCC:11
The offences under the Act are not a part of general penal law but arise from the breach of a
duty provided in a special beneficial social defense legislation, which creates absolute or
strict liability without proof of any mens rea. The offences are strict statutory offences for
which establishment of the offence. Similar type of offences based on the principle of strict
liability, which means liability without fault or mens rea, exist in many statutes relating to
economic crimes as well as in laws concerning the industry, food adulteration, prevention of
pollution etc. in India and abroad.
"Absolute offences" are not criminal offences in any real sense but acts which are prohibited
in the interest of welfare of the public and the prohibition is backed by sanction of penalty

[3.3] THE COLLUSION AND FAILED LIABILITY OF MR. SAMEER ALAM TO

PERFORM HIS DUTY RESULTED IN MISSTATED FINANCIAL STATEMENT OF
AGLOW..

Similarly, Mr. Sameer alam , the CFO of aglow and chairman of sundarya, was one of the
signatories of the financial statements of aglow and and is duty bound to present a true and
fair view of company’s affair under section 17(8) of LODR regulations. Moreover he was the
chairman of sundarya he holds second/casting/decisive vote that shows Mr. Sameer Amal
was well aware of the fact that Aglow has control and influence over decision and profits
Sundarya (As explained in issue 1 and 2). Thus, Mr. Sameer Amal failed to perform his
duties and obligations diligently which resulted in publication of misstated and misleading
financial statements of Aglow.As Fraud has a broad and expansive definition, because it even
include action or omission of a set duty which as result the investor at large.

11
J.K. Industries Ltd. & Ors. v. Chief Inspector of Factories and Boilers Ors., (1996) 6 SCC:
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

Being the only person present in board of directors of aglow and sundarya makes him a link
for collusion with the Aglow’s promoters/directors’ scheme for wrong classification of
Sundarya as an associate company and the consequent inflation of the consolidated profit of
Aglow. Hence the allegation of violation of Regulations 3(b),3(c),3(d),4(1),4(2)(e),4(2)(f),
4(2)(k), 4(2)(r) of SEBI (PFUTP) Regulations, 2003, Section 12A(a),(b),(c) of SEBI Act and
Regulation 17(8) of SEBI (LODR) Regulations 2015 r/w Section 27 of SEBI Act, 1992 and
Regulations 4(1), 33(1)(a), 33(1)(c), 33(3)(b), 34(2)(b), 34(3) and 48 of SEBI (LODR)
Regulations is reasonable and necessary.

Thus respondent would like to draw from the findings of the Hon'ble SAT in the
matter of V Natarajan v. SEBI in the matter of Pyramid Saimira Ltd12.— (Appeal no.
104/2011 — date of decision June 29, 2011) wherein the Hon'ble Tribunal held
“It has been found that the financial results as disclosed to the public through the stock
exchanges were false and inaccurate and the finding in this regard is not being challenged
before us. It is also not in issue that the appellant being the chairman and whole-time
director was a part of the board of directors which approved the financial results. This
being so, we are satisfied that the provisions of Regulations 3 and 4 of the Securities and
Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to
Securities Market) Regulations, 2003 were violated. These regulations, among others,
prohibit any person from employing any device, scheme or artifice to defraud in connection
with dealing in or issue of securities which are listed or proposed to be listed on an
exchange. They also prohibit persons from engaging in any act, practice, course of business
which operates or would operate as fraud or deceit upon any person in connection with any
dealing in or issue of securities that are listed on stock exchanges. These regulations also
prohibit persons from indulging in a fraudulent or unfair trade practice in securities which
includes publishing any information which is not true or which he does not believe to be
true. Any advertisement that is misleading or contains information in a distorted manner
which may influence the decision of the investors is also an unfair trade practice in
securities which is prohibited. The regulations also make it clear that planting false or
misleading news which may induce the public for selling or purchasing securities would
also come within the ambit of unfair trade practice in securities. It is by now well
understood that unaudited financial results that are required to be published by every listed
company on a quarterly basis do form the basis for the investing public to take informed
12
V Natarajan v. SEBI in the matter of Pyramid Saimira Ltd .— (Appeal no. 104/2011 — date of decision June 29,
2011)
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

decisions. Any false information or false accounts depicting inflated revenues and profits by
fictitious entries in accounts is, indeed, a very serious wrong doing which directly impacts
the securities market and the investors. Since the appellant was a part of the board of
directors which approved the financial results of the company which were actually false and
untrue, we are satisfied that the appellant is guilty of the charges levelled against him.”

Respondent would like to draw attention to the findings of the Hon'ble Tribunal in the matter
of Mr. Bhuwneshwar Mishra v. SEBI (Appeal no. 7 of 2014 — Date of decision — July
31, 2014) 13which are as under:

“19. Therefore, the company, the Company Secretary and the Chairman of the company have
a greater responsibility on their shoulders to ensure, in a free and fearless manner, that the
promoters make timely and absolutely true disclosures as regards their respective
shareholding in the company in consonance with various regulations prescribed by SEBI and
the Listing Agreement. In fact, the companies are required to maintain a register in this
respect and if a vast variation is noted by the company, the Company Secretary and the
Chairman, in the shareholding pattern of the promoters they are duty bound to inform to the
stock exchange or even to SEBI accordingly. Such acts of wrong disclosures are condemned
as fraudulent and unfair trade practices.

the regulations made under SEBI act are pre-eminently a social welfare legislation seeking
to protect the interests of common men who are small investors. In a disclosure-based
regime, it is the right of the common investor to have access to timely and fair disclosures
and it is the duty of a listed company, its promoters and directors, and officers of the
company entrusted with such responsibility to facilitate such disclosures to be made to the
public in a fair and transparent manner. It is also a well-known canon of construction that
when Court is called upon to interpret provisions of a social welfare legislation, the
paramount duty of the court is to adopt such an interpretation so as to further the purposes of
law and, if possible, eschew the one which frustrates it. This principle has been upheld by
the courts in the matter of Ramrakh R. Bohra v. SEBI [(1999) 33 CLA 243 (Bom)] 14and
the Hon'ble Supreme Court in the matter of RBI v. Peerless General Finance &
Investment Co. Ltd. [(1996) 20 CLA 195/(1996) 1 SCC 642 : AIR 1996 SC 646].15

13
Mr. Bhuwneshwar Mishra v. SEBI (Appeal no. 7 of 2014 — Date of decision — July 31, 2014)
14
Ramrakh R. Bohra v. SEBI [(1999) 33 CLA 243 (Bom)]
15
the Hon'ble Supreme Court in the matter of RBI v. Peerless General Finance & Investment Co. Ltd. [(1996) 20
CLA 195/(1996) 1 SCC 642 : AIR 1996 SC 646].
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

PRAYER

Wherefore, may it please the international court of jutice, in the light of facts and
circumstances of the case, issues raised, arguments advanced and authorities cited, the
 GNLU MOOT ON SECURITIES & INVESTMENT LAW

petitioner prays that this Hon’ble Court may be pleased to adjudge, rule upon, and
determine the following:

1) WHETHER THE FAR BY MR. PAWAN IS VALID AND IF SUNDARYA IS STILL

A SUBSIDIARY EVEN AFTER APPOINTMENT OF TWO ID’S IN ITS BOARD OF
DIRECTORS

2) WHETHER AGLOW HAS ABILITY TO DIRECT THE RELEVANT ACTIVITIES

OF SUNDARYA AND WHETHER IT HAS FOLLOWED FAIR ACCOUNTING
TREATMENT BY DERECOGNIZING SUNDARYA’S ASSETS AND LIABILITIES?

3) WHETHER BOARD OF DIRECTORS OF AGLOW IMPLEMENTED A PLAN,

DEVICE AND ARTIFICE TO DEFRAUD THE INVESTORS BY MANIPULATING/
MISREPRESENTING THE FINANCIAL STATEMENTS FOR PERSONAL GAINS.

AND

Pass any other order it may deem fit in the interest of Justice, Equity, and Good Conscience.

All of which is most respectfully prayed and humbly submitted.

(Signed)
Place:

Date Counsel for

respondent
GNLU MOOT ON SECURITIES & INVESTMENT LAW