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TMI Blog2010 (10) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... . Regulation 74 further provided that existing collective scheme which was not desirous of obtaining provisional registration from the Board was legally bound to formulate a scheme of repayment and make such repayment to the existing investors in the manner specified in regulation 73. Nothing has been placed on record to suggest that petitioners had taken any step to get registered with the Board or wound up the collective investment scheme and made the payment to the investors. The amount still continues to be retained by the petitioners, thus, infringement of regulations 73 and 74 is continuing in nature and limitation envisaged under section 468 of Cr. P.C. would not be attracted. Appeal dismissed. - CRL. M.C. NO. 969 OF 2010 - - - Dated:- 25-10-2010 - A.K. PATHAK, J. Shaad Anwar for the Petitioner. Sanjay Mann and R.K. Pillai for the Respondent. JUDGMENT 1. Short question which needs to be answered in this petition is "whether violation of regulations 73 and 74 of the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999, (for short hereinafter referred to as "Regulations") punishable under section 24 of the Securit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Board for the registration of collective investment schemes in terms of regulation 68 or to wind up its affairs in terms of regulation 73, nor it formulated a scheme of repayment and repay the money to the existing investors in terms of regulation 74. Thus, petitioner no. 1 was liable to be punished under section 24 of the Act for having infringed the provisions of section 12(1B) of the Act and regulation 5(1), read with regulations 68(1), 68(2), 73 and 74 of the SEBI Regulations. So far as petitioner nos. 2 to 5 are concerned, that they being directors were responsible for the conduct of day-to-day business of petitioner no. 1 and were liable to be punished in terms of section 27 of the Act. 3. Petitioner no. 2 filed an application under section 468 of Cr.P.C. praying therein that the complaint be dismissed being barred by time. It was contended that the offence under section 24(1) of the Act was punishable with imprisonment for a period extending up to one year or fine or both. As per the averments made in the complaint, petitioner no. 1 had failed to submit information to Board pursuant to their letter dated 7th December, 2000; meaning thereby offence had been committed w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Board may specify such other disclosures to be made in the information memorandum, as it deems fit. (5) The information memorandum shall be sent to the investors within one week from the date of the information memorandum. (6) The information memorandum shall explicitly state that investors desirous of continuing with the scheme shall have to give a positive consent within one month from the date of the information memorandum to continue with the scheme. (7) The investors who give positive consent under sub-regulation (6) shall continue with the scheme at their risk and responsibility. (8) The payment to the investors, shall be made within three months of the date of the information memorandum. (9) On completion of the winding up, the existing collective investment scheme shall file with the Board such reports, as may be specified by the Board. Regulation 74. An existing Collective Investment Scheme which is not desirous of obtaining provisional registration from the Board shall formulate a scheme of repayment and make such repayment to the existing investors in the manner specified in regulation 73." 6. Section 24 of the Act prior to its amendment by virtue of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the time during which the offence continues. 10. In State of Bihar v. Deokaran Nenshi AIR 1973 SC 908, issue before the Supreme Court was whether failure to submit returns within the prescribed time under the Mines Act is a continuing offence or not. The Supreme Court after considering various judicial pronouncements summarized "continuing offence" as under: "A continuing offence is one which is susceptible of continuance and is distinguishable from the one which is committed once and for all. It is one of those offences which arises out of a failure to obey or comply with a rule or its requirement and which involves a penalty, the liability for which continues until the rule or its requirement is obeyed or complied with. On every occasion that such disobedience or non-compliance occurs and recurs, there is the offence committed. The distinction between the two kinds of offences is between an act or omission which constitutes an offence once and for all and an act or omission which continues and therefore, constitutes a fresh offence every time or occasion on which it continues. In the case of a continuing offence, there is thus the ingredient of continuance of the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1901 provided that every fly-wheel directly connected with steam, water or other mechanical power must be securely fenced. Section 135 provided the penalty for non-compliance with section 10(1), while section 146 provided that information of the offence shall be laid within three months after the date on which the offence comes to the knowledge of the Inspector. It was held that the breach of section 10(1) was a continuing breach and therefore, the information was in time. Every day that the fly-wheel remained unfenced, the factory was run otherwise than in conformity with the Act of 1901 and, therefore, the offence defined in section 10 was a continuing offence. 14. The third English case referred to is The London County Council v. Worley [1894] 2 Q.B. 826, in which section 85 of the Metropolis Management Amendment Act, 1852 prohibited the erection of a building on the side of a new street in certain circumstances, without the consent of the London County Council. The Court construed section 85 as creating two offences : building to a prohibited height and, continuing such a structure already built after receiving a notice from the County Council. The Court held that the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cr. P.C. would not be attracted. 14. In Vishnu Prakash Bajpai v. SEBI [2010] 98 SCL 258 (Delhi) a Single Judge of this Court has also taken similar view. It was held as under: "The Company N.R. Plantations (India) Limited contravened the provisions of SEBI Act by not refunding the money collected by it from the persons who had invested money in its Collective Investment Schemes and this offence is a continuing offence till the time the Company complies with the regulations and directions issued by SEBI by refunding the money to the investors." 15. The view taken by the Madras High Court in Rhodanthe Agro Ltd. s case ( supra ) is no different. It was held as under: "23. In the above said circumstances, I am of the opinion that the non-compliance of regulations 73 and 74 for winding up the company is continuing in nature. Hence, the trial court is correct in coming to the conclusion that the offence is continuing in nature. Section 24 of the SEBI Act is amended by SEBI Act (Act No. 59 of 2002) with effect from 29-10-2002 and the offence under the Act was punishable with imprisonment for a term which may extend to ten years or with fine which may extend to Rs. ..... 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