2011 (7) TMI 1006 - HC - Companies Law

SEBI - Collective Instrument Schemes - accused company M/s Janraksha Green Forests Ltd., submitted an application with SEBI for registration of the Collective Investment Schemes run by it - Since the company did not fulfil certain requirements for the grant of registration, its application was rejected - accused company was required to send an information memorandum to the investors who had subscribed to its schemes, accused company, however, failed to comply with the said provisions of the Regulations - It is alleged that the petitioner was one of the Directors and person-in-charge of and responsible to the accused No. 1 company for conduct of its business, as such, he is also liable for the offence in view of section 27 of the SEBI Act, 1992 Held that - plea of the petitioner is that he was neither a Director nor he had any association with the accused company, namely, M/s. Janraksha Green Forests Limited. Since parties are at dispute in this regard, it is apparent that the plea raised by the petitioner is a question of fact, which can be determined only on the basis of evidence, which is the subject-matter of trial. no reason to invoke section 482 CrPC to quash the impugned summoning order or the complaint qua the petitioner. Petition is accordingly dismissed

Summary

Issues:
Petition under section 482 of the Code of Criminal Procedure for quashing of criminal complaint filed by SEBI against the petitioner under SEBI Act, 1992.

Analysis:
1. The petition sought quashing of the criminal complaint on the grounds that the petitioner had no connection with the company accused by SEBI. The company had raised funds from the public under Collective Investment Schemes but failed to comply with SEBI regulations after its application for registration was rejected. SEBI directed the company to refund the money to investors, which was not done, leading to the complaint against the company and its Directors, including the petitioner, under SEBI Act, 1992.

2. The petitioner argued mistaken identity, presenting evidence that he was not a Director of the accused company. However, SEBI contended that the petitioner operated under different names and provided documents suggesting his directorship in the company. The court noted the dispute regarding the petitioner's association with the company as a question of fact requiring evidence, which would be determined during trial. Therefore, the court found no basis to quash the summoning order or the complaint against the petitioner under section 482 of CrPC.

3. The respondent presented letters and documents indicating the petitioner's directorship and association with the accused company, contradicting the petitioner's claim of no involvement. Despite the petitioner's plea of non-association with the company, the court found the conflicting evidence necessitated a trial to establish the facts conclusively. As a result, the court dismissed the petition, emphasizing the need for a trial to resolve the factual dispute regarding the petitioner's role in the company accused by SEBI.

In conclusion, the court's decision to dismiss the petition was based on the conflicting evidence regarding the petitioner's association with the accused company, highlighting the need for a trial to determine the factual circumstances conclusively. The judgment underscores the importance of resolving such disputes through evidentiary proceedings rather than invoking section 482 of CrPC for quashing the complaint without a thorough examination of the facts.