SAT allows investor to be part of Osian art fund case

The Securities Appellate Tribunal has allowed an investor in Osian Art Fund to be part of the case being heard by the tribunal in connection with alleged illicit investment schemes carried out by Osian's Connoisseurs.
The tribunal in an order dated June 16 has asked Osian's Connoisseurs of Art to make one AK Muthuswamy "as party respondent to the appeal by amending the memo of appeal and also serve upon the applicant (Muthuswamy) amended copy of memo of appeal together with affidavit-in-reply/rejoinder, if any, within a period of one week from today".
The matter is related to an unauthorised 'Collective Investment Schemes' carried out by Osian's Connoisseurs, a sponsor and asset management company for Osian Art Fund.

The Securities and Exchange Board of India (Sebi) through an order in April, last year, had directed Osian's Connoisseurs to refund the investors, among others.
Subsequently, Osian Connoisseurs had filed an appeal with the tribunal against Sebi's rulings.
The latest order by SAT comes upon an application by Muthuswamy, an investor in the art fund, seeking to be a respondent in the appeal filed by Osian's Connoisseurs with the tribunal.

Muthuswamy had submitted with the tribunal that Osian's Connoisseurs "ought to have impleaded" him "as party respondent to the appeal" because Sebi's order was passed on the show cause notice issued by the regulator as well as on the complaint filed by him.

"Applicant (Muthuswamy) is a necessary and proper party to the appeal filed by the appellant (Osian's Connoisseurs) against the impugned order dated April 15, 2013 which is a common passed by Sebi on its show cause notices and also on complaint filed by the applicant," the SAT said.
According to the SAT, "if the impugned order is modified by this tribunal in the appeal filed by the appellant without making the applicant as party respondent, then it would amount to modifying the order which is in favour of the applicant without hearing the applicant".
"Fact that, all the investors need not be made party respondents to the appeal cannot be a ground to reject the application of the applicant for being impleaded as party respondent especially when the impugned order is also an order passed on the complaint filed by the applicant," it added.

The Sebi through show cause notices dated June 18, 2007 and October 12, 2007 had initiated action against Osian on the ground that the entity was carrying on 'Collective Investment Scheme' without obtaining a certificate of registration.
Before the show cause notices could be adjudicated, Muthuswamy had filed a complaint before Sebi on January 18, 2011 against the Osian Art Fund which was first rejected by Sebi but the regulator had subsequently on SAT's directions considered it while passing the order in April 2013.