Lens on fund-rais­ing and whether cos op­er­ate within the con­tours of the law

The Economic Times - - Front Page -

Su­gata Ghosh & Reena Zachariah

Mumbai: An­gel net­works which serve as vi­tal link be­tween star­tups scroung­ing for funds and face­less in­vestors, are be­ing scowled at by the fi­nan­cial mar­ket reg­u­la­tor.

The Se­cu­ri­ties & Ex­change Board of In­dia has shot off notices to at least half a dozen an­gel firms in the past one-and-a-half months, ask­ing them to spell out de­tails of their fund-rais­ing busi­ness and ex­plain whether they op­er­ate within the con­tours of the se­cu­ri­ties mar­ket law. Though an­gel net­works help star­tups raise seed money, Sebi, be­sides be­ing wor­ried about

small in­vestors, fears that these lit­tle-known elec­tronic plat­forms are tread­ing in a reg­u­la­tory twi­light zone — by play­ing match­mak­ers in eq­uity or debt mar­ket, they are act­ing like stock ex­changes which they are not au­tho­rised to do. And, by fa­cil­i­tat­ing is­suance of se­cu­ri­ties to more than 200 in­vestors, some net­works may be vi­o­lat­ing the rules of pri­vate place­ment. A stern view by Sebi could throt­tle the source of fi­nance to many fledg­ing star­tups which are un­touched by high­street banks.

Since pro­ce­dural and ma­te­rial costs of a Supreme Court ap­peal are quite high, the num­ber of ap­peals to be filed in the top court af­ter a ver­dict from court of ap­peals is ex­pected to be low. Judges for these new courts will be re­cruited from among the “brighter mem­bers” of the cadre of dis­trict court judges as well as from the Bar.

A num­ber of courts of ap­peal is lik­ley to be formed un­der the ju- ris­dic­tion of each high court, and case dis­posal norms or tar­gets may be set for these courts. Set­ting up the courts of ap­peal will be a big ad­min­is­tra­tive ex­er­cise and may re­quire changes in some rules gov­ern­ing the present sys­tem.

The idea that an al­ter­na­tive mech­a­nism was needed to hear all statu­tory ap­peals and there­fore, de­con­gest the le­gal sys­tem was firmed up at a re­cent top-level meet­ing at­tended by se­nior of­fi­cials from the Prime Min­is­ter’s Of­fice, the cab­i­net sec­re­tary, and

sec­re­taries from min­istries of fi­nance, depart­ment of per­son­nel and train­ing, law and Niti Aayog. Two Supreme Court judges rep­re­sented the top court at the meet­ing. ET has re­viewed the min­utes of the meet­ing.

Crim­i­nal and civil ap­peals ac­count for most pend­ing cases — many cases lin­ger­ing on for years or even decades. At the meet­ing, both judges and of­fi­cials noted the need for speedy de­liv­ery of jus­tice and un­bur­den­ing higher courts. The meet­ing also took note of data that showed the huge bur­den on high courts.

The min­utes of the meet­ing noted: “De­lay in de­ci­sion of

crim­i­nal cases, par­tic­u­larly in cat­e­gory of se­ri­ous cases where grant­ing bail was not safe, was not a sat­is­fac­tory sit­u­a­tion.. search for struc­tural al­ter­na­tive was the im­per­a­tive need of the hour”.

The meet­ing also noted that other ar­eas of ap­pel­late ju­ris­dic­tion in high courts, for ex­am­ple, sec­ond ap­peals, mat­ri­mo­nial mat­ters, ac­ci­den­tal claim cases, land ac­qui­si­tion cases, also call for prompt dis­posal but get de­layed be­cause of high pen­dency.

As many as 16.29 lakh cases in high courts are more than five years’ old, and 7.43 lakh cases are pend­ing for 10 years, the meet­ing noted.

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