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TMI Blog2016 (7) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... dents, we are satisfied, that the quashing of the proceedings initiated by ‘the Board’, against respondent nos. 1 and 2, calls for no interference, for the simple reason, that they relate to an alleged breach by M/s. Gaurav Agrigenetics Ltd., of the Collective Investment Regulations, by treating them as existing collective investment undertaking. Those belonging to the proviso category, could only be proceeded against for having continued their activities relating to collective investment, without obtaining registration, after the notification of the Collective Investment Regulations (see paragraph 29 above). The said regulations came into existence with effect from 15.10.1999. By the time the Collective Investment Regulations were notified, respondent nos. 1 and 2 – Gaurav Varshney and Vinod Kumar Varshney, had already severed their relationship with M/s. Gaurav Agrigenetics Ltd. In view of the uncontroverted factual position expressed by learned counsel for the respondents, we find no difficulty in concluding, that proceedings which were initiated against respondent nos. 1 and 2, and were quashed by the High Court, call for no interference. Ordered accordingly. X X X X Extracts X X X X X X X X Extracts X X X X ..... ereunder:- "The matter relating to regulating entities which issue instruments such as agro bonds, plantation bonds etc. has been receiving Government's attention. While the instruments may be funding agro based investment activity, it is observed that they often offer very high rates of return not consistent with normal returns in such activities. There is, therefore, a high element of risk associated with such schemes. In order to ensure that investors make investment decisions with the full knowledge of the risks involved in such schemes, Government has felt it necessary to put in place an appropriate regulatory framework for such schemes. Government after detailed consultation with the regulatory authorities concerned has decided to treat such schemes as "Collective Investment Schemes" coming under the provisions of the Section 11(2)(c) of the SEBI Act. In order to regulate such Collective Investment Schemes, both from the aspect of investor protection as well as allowing legitimate investment activity to take place, SEBI would first formulate draft regulations for this purpose. These draft regulations would be made available for public discussion. The investors who have inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 21 days from today containing details such as:- - Terms and conditions of the schemes launched - Funds raised through all the schemes - Promises or assurances or assured returns made in the scheme - Copies of offer document of the scheme - Names, details and background of promoters/sponsors All collective investment schemes which want to take benefit of the proviso of Section 12(1B) are also directed to make an advertisement only in accordance with the advertisement code already prescribed by SEBI under the Disclosure and investors protection guidelines." In addition to the above, 'the Board' also issued a public notice, on 18.12.1997. The instant public notice also related to, the implications of Section 12(1B). The contents of the public notice, are reproduced below:- "The Central Government has by a press release dated 18.11.1997 decided that an appropriate regulatory framework for regulating entities which issued instruments such as agro bonds, plantation bonds, etc. has to be put in place. The Government has decided that schemes through which such instruments are issued would be treated as collective investment schemes coming under the provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 2, it is essential to point out, that in consonance with Section 12(1B) of the SEBI Act, and in furtherance of the power vested with 'the Board', under Section 30 of the SEBI Act, 'the Board' framed regulations - the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999 (hereinafter referred to as, the Collective Investment Regulations). The Collective Investment Regulations, were to come into force, on the date of their publication in the official gazette. It is not a matter of dispute, that the same were brought into force, on 15.10.1999. 4. Respondent nos. 1 and 2 - Gaurav Varshney and Vinod Kumar Varshney, were aggrieved by the criminal proceedings initiated against them, on the basis of a complaint filed by 'the Board', under Section 200 of the Code of Criminal Procedure, 1973 (hereinafter referred to as, the Cr.P.C.), read with Sections 24(1) and 27 of the SEBI Act, alleging, that they had breached the bar created by Section 12(1B), which had forbidden the sponsoring or carrying on of a collective investment initiative, without obtaining a certificate of registration from 'the Board'. Respondent nos. 1 and 2 approached the High Court o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of respondent no. 1 - Gaurav Varshney from the directorship of M/s. Gaurav Agrigenetics Ltd. is taken as 30.7.1998, and that of respondent no. 2 - Vinod Kumar Varshney, is taken as 23.12.1998, both of them had admittedly resigned from the directorship of M/s. Gaurav Agrigenetics Ltd., prior to the coming into existence of the Collective Investment Regulations (with effect from 15.10.1999). The High Court, by its impugned order dated 13.5.2010, had agreed with the proposition canvassed on behalf of respondent nos. 1 and 2, and had quashed Complaint Case no. 1241 of 2003 (pending in the Court of Chief Metropolitan Magistrate, Tis Hazari Courts, Delhi), as well as, the order dated 15.12.2003 issued by the said Chief Metropolitan Magistrate, summoning respondent nos. 1 and 2 in the above noted complaint case. 7. Dissatisfied with the determination rendered by the High Court (vide the impugned order dated 13.5.2010), 'the Board' approached this Court, through Criminal Appeal nos. 827-830 of 2012, to raise a challenge to the order passed by the High Court. 8. The primary contention advanced on behalf of 'the Board' was, that the High Court misunderstood and misconstrued the bar c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd for consent within the period prescribed for the purpose. Section 22 provides as under: "22. Persons carrying on industry etc. not to allow emission of air pollutants in excess of the standards laid down by State Board.-No person operating any industrial plant in any air pollution control area shall discharge or cause or permit to be discharged the emission of any air pollutant in excess of the standards laid down by the State Board under clause (g) of sub-section (1) of Section 17." Section 19 empowers the State Government to declare an area as air pollution control area. The relevant part of Section 19 reads as follows: "19. Power to declare air pollution control areas.-(1) The State Government may, after consultation with the State Board, by notification in the Official Gazette, declare in such manner as may be prescribed, any area or areas within the State as air pollution control area or areas for the purposes of this Act. (2) The State Government may, after consultation with the State Board, by notification in the Official Gazette,- (a) alter any air pollution control area whether by way of extension or reduction; (b) declare a new air pollution control area in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... say, something to happen in a manner, if such a manner is in being or exists, if it does not, it may not happen in that manner. Therefore, the reading of the provision under consideration makes it clear that manner of declaration is to be followed "as may be prescribed" i.e. "if any" prescribed. 13. Thus, in case manner is not prescribed under the rules, there is no obligation or requirement to follow any, except whatever the provision itself provides viz. Section 19 in the instant case which is also complete in itself even without any manner being prescribed as indicated shortly before to read the provision omitting this part "in such manner as may be prescribed". Merely by absence of rules, the State would not be divested of its powers to notify in the Official Gazette any area declaring it to be an air pollution control area. In case, however, the rules have been framed prescribing the manner, undoubtedly, the declaration must be in accordance with such rules. 14. On the proposition indicated above, a decision reported in T. Cajee v. U. Jormanik Siem, AIR 1961 SC 276, would be relevant. The matter pertained to removal of Seim from the office, namely, the Chief Headman of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s undoubtedly, the declaration of the area has to be only in accordance with the manner prescribed but absence of rules will not render the Act inoperative. The power vested under Section 19 of the Act, would still be exercisable as provided under the provision i.e. by declaring an area as air pollution control area by publication of notification in the Official Gazette. Non-framing of rules does not curtail the power of the State Government to declare any area as air pollution control area by means of a notification published in the Official Gazette. The part of the provision "in such manner as may be prescribed" would spring into operation only after such manner is prescribed by framing the rules under Section 54(2)(k) of the Act. This view as indicated earlier, is amply supported by the decision of this Court referred to above in the case of T. Cajee, AIR 1961 SC 276, which is a decision by a Constitution Bench of this Court. It has been followed in a subsequent decision of this Court reported in Surinder Singh v.Central Govt., (1986) 4 SCC 667. The Central Government had not framed rules in respect of disposal of property forming part of the compensation pool as contemplated un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory only for the reason of absence of the rules prescribing the manner declaring an air pollution control area which otherwise is provided to be notified by publication in an Official Gazette which has been done in this case." Reliance was also placed on U.P. State Electricity Board, Lucknow vs. City Board, Mussoorie, (1985) 2 SCC 16, wherefrom, emphasis was placed on the observations extracted hereunder:- 6. The material part of Section 46 of the Act reads thus: "46. (1) A tariff to be known as the Grid Tariff shall, in accordance with any regulations made in this behalf, be fixed from time to time by the Board in respect of each area for which a scheme is in force, and tariffs fixed under this section may, if the Board thinks fit, differ for different areas. (2) Without prejudice to the provisions of Section 47, the Grid Tariff shall apply to sales of electricity by the Board to licensees were so required under any of the First, Second and Third Schedules, and shall, subject as hereinafter provided, also be applicable to sales of electricity by the Board to licensees in other cases: Provided that if in any such other case it appears to the Board that, having regard to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve interpretation of Section 12(1B), learned counsel placed reliance on Union of India vs. A.K. Pandey, (2009) 10 SCC 552, and the Court's attention was drawn to the following observations recorded therein:- 8. Rule 34 of the Army Rules, 1954 with which we are concerned reads as follows: "34. Warning of accused for trial.-(1) The accused before he is arraigned shall be informed by an officer of every charge for which he is to be tried and also that, on his giving the names of witnesses whom he desires to call in his defence, reasonable steps will be taken for procuring their attendance, and those steps shall be taken accordingly. The interval between his being so informed and his arraignment shall not be less than ninety-six hours or where the accused person is on active service less than twenty-four hours. (2) The officer at the time of so informing the accused shall give him a copy of the charge-sheet and shall, if necessary, read and explain to him the charges brought against him. If the accused desires to have it in a language which he understands, a translation thereof shall also be given to him. (3) The officer shall also deliver to the accused a list of the names, ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes, 11th Edn., pp. 362 et seq.; Crawford: Statutory Construction, Interpretation of Laws, p. 523 and Bhikraj Jaipuria v. Union of India, AIR 1962 SC 113. 18. The High Court said that the provisions contained in Section 108 of the Act are directory because non-compliance with Section 108 of the Act is not declared an offence. The reason given by the High Court is that when the law does not prescribe the consequences or does not lay down penalty for non-compliance with the provision contained in Section 108 of the Act the provision is to be considered as directory. The High Court failed to consider the provision contained in Section 629(a) of the Act. Section 629(a) of the Act prescribes the penalty where no specific penalty is provided elsewhere in the Act. It is a question of construction in each case whether the legislature intended to prohibit the doing of the act altogether, or merely to make the person who did it liable to pay the penalty. 19. Where a contract, express or implied, is expressly or by implication forbidden by statute, no court will lend its assistance to give it effect. (See Melliss v. Shirley Local Board, [(1885) 16 QBD 446]. A contract is void if prohibite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nting something from being done on some ground of public policy, the thing prohibited, if done, will be treated as void, even though the penalty if imposed is not enforceable. 23. The provisions contained in Section 108 of the Act are for the reasons indicated earlier mandatory. The High Court erred in holding that the provisions are directory." 15. The principle seems to be fairly well settled that prohibitive or negative words are ordinarily indicative of mandatory nature of the provision; although not conclusive. The Court has to examine carefully the purpose of such provision and the consequences that may follow from non-observance thereof. If the context does not show nor demands otherwise, the text of a statutory provision couched in a negative form ordinarily has to be read in the form of command. When the word "shall" is followed by prohibitive or negative words, the legislative intention of making the provision absolute, peremptory and imperative becomes loud and clear and ordinarily has to be inferred as such. There being nothing in the context otherwise, in our judgment, there has to be clear ninety-six hours' interval between the accused being charged for which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon by learned counsel for the respondents, to contend that in the understanding of the Government of India, as also, 'the Board' itself, there was no bar on sponsoring or commencing or carrying on a collective investment scheme, even after the insertion of Section 12(1B) into the SEBI Act. It was submitted, that the aforementioned press releases and public notice merely highlighted the requirement of obtaining a certificate of registration from 'the Board', consequent upon the framing of the Collective Investment Regulations, contemplated under Section 12(1B) of the SEBI Act. It was, therefore the submission of learned counsel for the respondents, that the action of the respondents, in merely commencing the activity of sponsoring or carrying on a collective investment scheme, should not be treated as a violation of Section 12(1B), at their hands. It was also contended on behalf of the respondents, that a breach of Section 12(1B) could have arisen, only if M/s. Gaurav Agrigenetics Ltd., could be blamed of having carried on activities concerning collective investment, without obtaining a certificate of registration from 'the Board', in accordance with the Collective Investment Reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legislation should be brought into force. The taking effect of a legislation, therefore, is made dependent upon the determination of such fact or condition by the executive organ of the Government. Delegated legislation, however, involves delegation of rule-making power of legislation and authorises an executive authority to bring in force such an area by reason thereof. The discretion conferred on the executive by way of delegated legislation is much wider. Such power to make rules or regulations, however, must be exercised within the four corners of the Act. Delegated legislation, thus, is a device which has been fashioned by the legislature to be exercised in the manner laid down in the legislation itself. By reason of Section 3 of the Act, the Administrator, however, has been empowered to issue a notification whereby and whereunder, an exemption is granted for application of the Act itself. 17. In Hamdard Dawakhana v. Union of India, AIR 1960 SC 554, this Court stated: (AIR p. 566, para 29) "The distinction between conditional legislation and delegated legislation is this that in the former the delegate's power is that of determining when a legislative declared rule of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive Investment Regulations. On the framing of the Collective Investment Regulations, the said persons covered by the proviso category, were required to obtain a certificate of registration, which would enable them to continue to operate their existing collective investment scheme(s). 17. Insofar as the non-proviso category is concerned, the same was barred from sponsoring or carrying on a collective investment initiative, without first obtaining a certificate of registration from 'the Board', in accordance with the Collective Investment Regulations. The non-proviso category, comprised of persons who had not commenced any activity in the nature of a collective investment, prior to 25.1.1995. In other words, Section 12(1B) introduced a clear bar, prohibiting any action of sponsoring or initiating a collective investment scheme after 25.1.1995, without obtaining a certificate of registration from 'the Board', under the Collective Investment Regulations. Stated differently, a new entrepreneur desirous of sponsoring or carrying on any activity in the nature of collective investment for the first time after 25.1.1995, could do so only after he/it had obtained a certificate of registrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaning of Section 12(1B) read with the Collective Investment Regulations, could only be one which had commenced prior to 25.1.1995, i.e. prior to the insertion of Section 12(1B) in the SEBI Act. A collective investment scheme, which commenced after 25.1.1995, could not be described as an "existing" collective investment scheme, because the same was statutorily barred, and therefore, wholly impermissible in law. This has been the clear and unambiguous stance even of the learned counsel representing 'the Board'. We may venture a different course, of reaching the same conclusion. What a statute bars, cannot be authorized through regulations. Any person/entity not falling in the proviso category (an "existing" operator, of a collective investment scheme) was barred from commencing to sponsor or carry on any collective investment activity, after the insertion of Section 12(1B) into the SEBI Act, till such time as he/it had obtained a certificate of registration from 'the Board', in accordance with the Collective Investment Regulations. Therefore, an "existing" collective investment scheme, at the time of notification of the regulations, could only be one which had commenced its activiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificate of registration from 'the Board' under Regulation 4 of the Collective Investment Regulations, before he could legally commence activities concerning collective investment operations. Our inevitable conclusion is, that sponsoring or carrying on any collective investment activity, for the first time, on or after 25.1.1995, was a complete bar, in the absence of a certificate of registration from 'the Board'. It accordingly follows, that if a person/entity had commenced to sponsor or carry on a collective investment scheme after 25.1.1995, without obtaining a certificate of registration from 'the Board', it would tantamount to breaching the express mandate contained in Section 12(1B) of the SEBI Act. 22. In our considered view, there can be no doubt, that the date when the Collective Investment Regulations came into force (-15.10.1999), has no relevance, insofar as the breach of Section 12(1B) of the SEBI Act, with reference to such new entrepreneurs, is concerned. The bar to sponsor or cause to be sponsored, or carry on or cause to be carried on any collective investment activity by a new entrepreneur (-who had not commenced the concerned activities, before 25.1.1995) und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "shall", further makes the legislative intent absolutely clear, and also, mandatory, with reference to those not already engaged in collective investment operations. And fifthly because, contravention of Section 12(1B) entails penal consequences, and therefore, cannot be construed as directory. We therefore hereby accept the submission advanced on behalf of learned counsel for 'the Board', and hold, that the bar created for new operators, of a collective investment initiative, was absolute and mandatory. The bar under Section 12(1B), restrained persons (who were not engaged in any collective investment venture upto 25.1.1995), from commencing activities concerning collective investment, till they had obtained a certificate of registration, in consonance with the Collective Investment Regulations. 24. We are also of the view, that the judgments relied upon by learned counsel for the appellant, namely, Orient Papers Mills, U.P. State Electricity Board, Lucknow, and A.K. Pandey (supra), have no relevance to the controversy in hand. In the above cases, the question which came up for consideration was, whether the authority concerned could have acted in the manner provided under the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of the said Chapter IX. Further, in terms of the said Chapter IX any person who immediately prior to the commencement of the said regulations was operating a collective investment scheme shall make an application to SEBI for grant of registration within a period of two months from the date of notification of the said regulations. 11. SEBI vide its letters dated December 15, 1999/December 29, 1999 and also by way of a public notice dated December 10, 1999 gave intimation to the accused no. 1 directing it to send an information memorandum to all the investors detailing the state of affairs of the schemes, the amount repayable to each investor and the manner in which such amount is determined. As per the aforesaid letters of SEBI, the information memorandum to the investors was required to be sent latest by February 28, 2000. 12. SEBI having regard to the interest of investors and request received from various persons operating collective investment schemes extended the last date of submitting the application by existing entities upto March 31, 2000 and the same was declared by SEBI vide a press release and a public notice. 13. However, the accused no. 1 failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xchange Board of India (Collective Investment Schemes) Regulations, 1999 which is punished under Section 24(1) of Securities and Exchange Board of India Act, 1992. 20. The accused nos. 2 to 11 are the Directors of the accused no. 1, and as such persons in charge of and responsible to the accused no. 1 for the conduct of its business and are liable for the violations of the accused no. 1, as provided under Section 27 of Securities and Exchange Board of India Act, 1992. 21. The violation of the aforesaid laws by the accused were the acts of omission and were occurred within the jurisdiction of this Hon'ble Court and as such this Hon'ble Court has got jurisdiction to try punish the accused. This complaint is within the limitation. The complainant craves the leave of this Hon'ble Court to produce the documents referred to hereinabove as and when required. PRAYER It is, therefore, most respectfully prayed to this Hon'ble Court to summon the accused and punish them in strictest terms as provided by law in the interest of justice." 26. Having given our thoughtful consideration to the accusations levelled by 'the Board' against the respondents (in the complaint dated 15.12.2003), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive investment undertaking prior to insertion of Section 12(1B) into the SEBI Act (-on 25.1.1995). It was, therefore submitted, that the respondents could not be proceeded against by treating them as belonging to the non-proviso category (-who had not commenced any activity associated with collective investment, before 25.1.1995) of Section 12(1B), by considering them as new entrepreneurs, who have commenced operating a collective investment scheme after 25.1.1995. 28. We express our complete agreement, with the stance adopted at the hands of learned counsel for the private respondents. The respondents were only accused of having not complied with, the provisions of the Collective Investment Regulations, pertaining to "existing" collective investment operators (those who had commenced the activity before 25.1.1995). Thus viewed, the fact that the respondents commenced the activity of collective investment after the insertion of sub-Section (1B) of Section 12 of the SEBI Act (-25.1.1995), cannot be gone into, to determine whether or not the said activity was in breach of the bar contemplated under Section 12(1B) of the SEBI Act. Having so concluded it emerges, that the continuatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment, till the time they obtain a certificate of registration from 'the Board' in accordance with the Collective Investment Regulations. As already concluded above, this course could not be pursued against the respondents, because they were not so accused, in the complaint dated 15.12.2003. The question posed, is answered accordingly. 30. The sequence of facts narrated hereinabove reveals, incorporation of M/s. Gaurav Agrigenetics Ltd. after 25.1.1995, and also, that it commenced a collective investment scheme prior to 15.10.1999 (the date, when the Collective Investment Regulations, were notified). Undoubtedly, M/s. Gaurav Agrigenetics Ltd., could have been proceeded against, for having violated Section 12(1B). And it would have been fully justified for 'the Board', to proceed against M/s. Gaurav Agrigenetics Ltd., for having violated the said provision. The issue which has emerged for consideration is, whether the complaint filed by 'the Board' against the company under reference, as also, its directors, factually accused M/s. Gaurav Agrigenetics Ltd. and its directors, of having violated Section 12(1B) of the SEBI Act? Were the accused described as falling in the non-pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s levelled against the accused was not, that they had no right to commence a collective investment venture, during the period between 25.1.1995 when Section 12(1B) of the SEBI Act came to be inserted, till the requisite certificate of registration was sought. The complaint did not include any direct or indirect insinuation, that the accused had unauthorisedly commenced operations of a collective investment scheme, after 25.1.1995. Even the date of commencement of the collective investment operations, by the accused, was not expressed in the complaint. It was imperative for 'the Board', to lay the above charge, through express assertions, for proceeding against the accused, for violation of the non-proviso mandate, under Section 12(1B). 33. We are mindful of the fact that, paragraph 15 of the complaint relied upon by the learned senior counsel, does make a reference to the violation of Section 12(1B), but the violation alleged is on account of having not applied for registration, for carrying on the collective investment scheme, and alternatively, for not having taken steps to wind up the collective investment undertaking by making refunds to the investors, as provided for under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g on a collective investment scheme. If such date fell within the period when the initiation of a new collective investment endeavour stood barred under Section 12(1B), the accused had to be accosted of the same. And only thereupon, the accused would have understood, what charge was being levelled against him. Merely mention of the statutory provision, namely, Section 12(1B) of the SEBI Act, would not amount to disclosing to the accused, the particulars of the offence of which they were accused. One cannot lose sight of the fact, that implications for the proviso category (-those who commenced operations before 25.1.1995) and the non-proviso category (-those who commenced operations after 25.1.1995) are different. A perusal of the chargesheet reveals, that the respondents herein were being treated as belonging to the proviso category. But learned counsel for 'the Board' desires us to treat them as belonging to the non-proviso category, and to proceed against them for having engaged themselves in activities concerning collective investment, on the basis of the material available on the record of the case. This, in our considered view is clearly impermissible. We are also of the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iolation of Section 12(1B), since an existing collective investment scheme, which came into existence prior to 25.1.1995, could legitimately continue its operations under the proviso to Section 12(1B), without a certificate of registration, till the framing of the Collective Investment Regulations. Therefore, merely the fact that the company under consideration was incorporated after 25.1.1995, in our view, would not be sufficient to demonstrate the culpability of the accused, insofar as, the restraint against fresh commencement of collective investment activities under Section 12(1B) of the SEBI Act is concerned. In the above view of the matter, we find no merit even in the third submission advanced on behalf of 'the Board'. 38. The last submission advanced at the hands of the learned senior counsel for 'the Board', was based on Section 465 of the Cr.P.C. The said provision is extracted hereunder:- "465. Finding or sentence when reversible by reason of error, omission or irregularity.- (1) Subject to the provisions hereinbefore contained, no finding, sentence or order passed by a Court of competent jurisdiction shall be reversed or altered by a Court of appeal, confirmation or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d., was also undisputed. Neither the company concerned nor the accused, had contested the fact, that they had sponsored or had been carrying on a collective investment scheme, which was initiated after 25.1.1995. Based on the undisputed and clear factual position narrated above, it was asserted, that no one could arrive at the conclusion, in the facts and circumstances of the case, that the findings recorded by the trial Court, had occasioned a "failure of justice". 40. In order to support the above contention, the learned senior counsel for 'the Board', placed reliance on State of M.P. vs. Bhooraji, (2001) 7 SCC 679, wherefrom the Court's attention was drawn to the following observations:- "8. The real question is whether the High Court necessarily should have quashed the trial proceedings to be repeated again only on account of the declaration of the legal position made by the Supreme Court concerning the procedural aspect about the cases involving offences under the SC/ST Act. A de novo trial should be the last resort and that too only when such a course becomes so desperately indispensable. It should be limited to the extreme exigency to avert "a failure of justice". Any omi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be set at naught merely on that ground. However, an exception is provided in that section that if the court is satisfied that proceedings conducted erroneously in a wrong sessions division "has in fact occasioned a failure of justice" it is open to the higher court to interfere. While it is provided that all the instances enumerated in Section 461 would render the proceedings void, no other proceedings would get vitiated ipso facto merely on the ground that the proceedings were erroneous. The court of appeal or revision has to examine specifically whether such erroneous steps had in fact occasioned a failure of justice. Then alone the proceedings can be set aside. Thus the entire purport of the provisions subsumed in Chapter XXXV is to save the proceedings linked with such erroneous steps, unless the error is of such a nature that it had occasioned a failure of justice. 14. We have to examine Section 465(1) of the Code in the above context. It is extracted below: "465. (1) Subject to the provisions hereinbefore contained, no finding, sentence or order passed by a court of competent jurisdiction shall be reversed or altered by a court of appeal, confirmation or revision on acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said course, we set aside the judgment of the High Court impugned in this appeal. We remit the case back to the High Court for disposal of the appeal afresh on merits in accordance with law and subject to the observations made above." 41. We have given our thoughtful consideration to the last submission advanced at the hands of the learned senior counsel for 'the Board'. It is, however, not possible for us to accept the same. We are of the considered view, which clearly emerges from the observations rendered in Bhooraji's case (supra), that Section 465 of the Cr.P.C. pertains to omissions or irregularities in matters of procedure. It is, therefore, that both the sub-Sections of Section 465, pointedly refer to proceedings under the Cr.P.C. Added to the above it is of some significance, that Chapter XXXV of the Cr.P.C. include Sections 460 to 466. The heading of the instant Chapter is "Irregular Proceedings". Not only that, each one of the Sections in Chapter XXXV of the Cr.P.C. make pointed reference only to matters of procedure. There can be no doubt, therefore, that omissions and/or irregularities in matters of procedure can be overlooked, subject to the condition, that such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th M/s. Gaurav Agrigenetics Ltd., well before 15.10.1999 (when the Collective Investment Regulations were enforced). It was, therefore contended on behalf of the respondents, that this Court should not interfere with the impugned order passed by the High Court dated 13.5.2010, quashing the complaint preferred by 'the Board', as there were legally valid reasons for doing so. 44. Having given our thoughtful consideration to the contentions advanced at the hands of learned counsel for the respondents, we are satisfied, that the quashing of the proceedings initiated by 'the Board', against respondent nos. 1 and 2, calls for no interference, for the simple reason, that they relate to an alleged breach by M/s. Gaurav Agrigenetics Ltd., of the Collective Investment Regulations, by treating them as existing collective investment undertaking. Those belonging to the proviso category, could only be proceeded against for having continued their activities relating to collective investment, without obtaining registration, after the notification of the Collective Investment Regulations (see paragraph 29 above). The said regulations came into existence with effect from 15.10.1999. By the time the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, Delhi, wherein she was arrayed as accused no. 6. The High Court by its judgment and order dated 12.8.2010, had quashed the complaint filed against the respondent herein, in exercise of its jurisdiction under Section 482 of the Cr.P.C. 48. The commonness of the factual position in the appeals adjudicated upon by us (Criminal Appeal nos. 827-830 of 2012), and the present criminal appeals is, that whilst Gaurav Varshney - accused no. 5, had tendered his resignation from the position of director of M/s. Gaurav Agrigenetics Ltd. on 30.7.1998, and Vinod Kumar Varshney - accused no. 8, had tendered his resignation from the above company on 23.12.1998, the respondent herein - Mrs. Parvesh Varshney - accused no. 6, had tendered her resignation from the position of director of M/s. Gaurav Agrigenetics Ltd. with effect from 6.4.1998. The resignation of the respondent herein, had taken effect before the Collective Investment Regulations were notified - on 15.10.1999. The said regulations, therefore, could not have been breached, by the respondent herein. Therefore, for exactly the same consideration and reasons as have weighed with us, for not accepting the pleas raised by 'the Board' in C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. Explanation.- For the purposes of this section, - (a) "company" means any body corporate and includes a firm or other association of individuals; and (b) "director", in relation to a firm, means a partner in the firm." Based on Section 27 of the SEBI Act, it was contended, that besides a bald statement made by 'the Board', in the show-cause notice dated 12.5.2000, and the complaint dated 21.1.2003, there was no material on the record of the case to demonstrate, that the appellant was in any manner "…in charge of, and was responsible to…" the company for the conduct of its business. It was, therefore submitted, that it was not open to 'the Board' to proceed against the appellant. In ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is committed by a company. The key words which occur in the section are "every person". These are general words and take every person connected with a company within their sweep. Therefore, these words have been rightly qualified by use of the words: "Who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence, etc." What is required is that the persons who are sought to be made criminally liable under Section 141 should be, at the time the offence was committed, in charge of and responsible to the company for the conduct of the business of the company. Every person connected with the company shall not fall within the ambit of the provision. It is only those persons who were in charge of and responsible for the conduct of business of the company at the time of commission of an offence, who will be liable for criminal action. It follows from this that if a director of a company who was not in charge of and was not responsible for the conduct of the business of the company at the relevant time, will not be liable under the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noticed that under Section 482 of the Criminal Procedure Code in a complaint, the order of a Magistrate issuing process against the accused can be quashed or set aside in a case where the allegation made in the complaint or the statements of the witnesses recorded in support of the same taken at their face value make out absolutely no case against the accused or the complaint does not disclose the essential ingredients of an offence which are arrived at against the accused. This emphasises the need for proper averments in a complaint before a person can be tried for the offence alleged in the complaint. 16. In State of Haryana v. Brij Lal Mittal, (1998) 5 SCC 343, it was held that vicarious liability of a person for being prosecuted for an offence committed under the Act by a company arises if at the material time he was in charge of and was also responsible to the company for the conduct of its business. Simply because a person is a director of a company, it does not necessarily mean that he fulfils both the above requirements so as to make him liable. Conversely, without being a director a person can be in charge of and responsible to the company for the conduct of its business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith Section 141, the averment as to the role of the Directors concerned should be specific. The description should be clear and there should be some unambiguous allegations as to how the Directors concerned were alleged to be in charge of and were responsible for the conduct and affairs of the company." Last of all, learned counsel invited our attention to Gunmala Sales Private Limited vs. Anu Mehta, (2015) 1 SCC 103, wherefrom reliance was placed on the following observations:- "22. In National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal, (2010) 3 SCC 330, this Court was dealing with the same question. After referring to S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla (1), (2005) 8 SCC 89, S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla (2), (2007) 4 SCC 70, Saroj Kumar Poddar v. State (NCT of Delhi), (2007) 3 SCC 693, N.K. Wahi v. Shekhar Singh, (2007) 9 SCC 481, N. Rangachari v. BSNL, (2007) 5 SCC 108, Paresh P. Rajda v. State of Maharashtra, (2008) 7 SCC 442, K.K. Ahuja v. V.K. Vora, (2009) 10 SCC 48, and other relevant judgments, this Court laid down the following principles: (National Small Industries Corpn. Ltd. case (supra), SCC pp. 345-46, para 39) "(i) The prima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d liability of such Directors. This averment assumes importance because it is the basic and essential averment which persuades the Magistrate to issue process against the Director. That is why this Court in SMS Pharma (1) (supra), observed that the question of requirement of averments in a complaint has to be considered on the basis of provisions contained in Sections 138 and 141 of the NI Act read in the light of the powers of a Magistrate referred to in Sections 200 to 204 of the Code which recognise the Magistrate's discretion to reject the complaint at the threshold if he finds that there is no sufficient ground for proceeding….." *** *** *** 34. We may summarise our conclusions as follows: 34.1. Once in a complaint filed under Section 138 read with Section 141 of the NI Act the basic averment is made that the Director was in charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed, the Magistrate can issue process against such Director. 34.2. If a petition is filed under Section 482 of the Code for quashing of such a complaint by the Director, the High Court may, in the facts of a particular ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were with reference to Section 138 of the Negotiable Instruments Act, yet Section 141 thereof is exactly similar to Section 27 of the SEBI Act. And, therefore, insofar as the present issue is concerned, the cited judgments would be fully applicable to interpret and construe Section 27 of the SEBI Act. It was therefore asserted, that in the absence of any clear and firm assertion or material on the record of the case, to establish that the appellant was "… in charge of, and was responsible to…" the company for the conduct of its business, he could not be proceeded against. 53. It is not necessary for us to deal with the pointed issue at hand, on account of the clear findings recorded by the High Court in the impugned order dated 29.1.2014, depicting the role and involvement of the appellant in the activities of M/s. Accord Plantation Ltd. The conclusions drawn by the High Court in the impugned order, are extracted hereunder:- "18. … As would be evident from the balance sheet of the company, remuneration was being paid by it to Mr. P.C. Thakur. It has also come in the deposition of DW2, an official from Punjab and Sind Bank that an authority letter from the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was intimated by SEBI by a Press Release and Public Notice. Thus, you as an existing Collective Investment Scheme entity, subject to the provisions of Chapter IX of these Regulations, were required to apply for registration by March 31, 2000. As per Regulation 73(1) an existing Collective Investment Scheme (CIS) which has failed to make an application for registration to SEBI, shall wind up the existing scheme and repay the investors. Further, as per Regulation 74, an existing CIS which is not desirous of obtaining provisional registration from SEBI shall formulate a scheme of repayment and make such repayment to the existing investors in the manner specified in Regulation 73(2). The existing Collective Investment Scheme to be wound up shall send an information memorandum to the investors who have subscribed to the schemes, within two months from the date of receipt of intimation from SEBI. Vide our letter dated December 15/29, 1999 and also by way of a public notice dated December 10, 1999 all the existing Collective Investment Schemes, including you, which were not desirous of obtaining provisional registration from SEBI or had failed to make an application for registration f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulations. 11. It is submitted that in terms of regulation 73(1) of the said regulations an existing collective investment scheme which failed to make an application for registration with SEBI, shall wind up the existing collective investment schemes and repay the amounts collected from the investors. Further, in terms of regulation 74 of the said regulations, an existing collective investment scheme which is not desirous of obtaining provisional registration from SEBI shall formulate a scheme of repayment and make such repayment to the existing investors in the manner specified in regulation 73. 12. SEBI vide its letter dated December 10, 1999 and December 29, 1999 and also by way of a public notice dated December 10, 1999 gave intimation in terms of regulation 73(2) to the accused no. 1 which casts an obligation on the accused no. 1 to send an information memorandum to all the investors detailing the state of affairs of the schemes, the amount repayable to each investor and the manner in which such amount is determined. As per the aforesaid letters of SEBI, the information memorandum to the investors was required to be sent latest by February 28, 2000. SEBI vide another public ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igned from the directorship of M/s. Accord Plantation Ltd., with effect from 20.2.2000. Premised on the above factual position, it was submitted, that the appellant cannot be implicated for not having complied with the Collective Investment Regulations, because he had already resigned (-on 20.2.2000), before the cause of disobedience could have arisen (-on 31.3.2000, the extended last date for submitting applications for registration, by "existing" entities). We find merit in the contention advanced by learned counsel for the appellant, that since it has been effectively established, that the appellant ceased to be a director on 20.2.2000, and culpability, if at all, would arise only on 31.3.2000, the proceedings initiated against the appellant were not sustainable, and would be liable to be quashed. 57. Learned counsel for 'the Board' however seriously contested, that the appellant - Major P.C. Thakur had resigned from M/s. Accord Plantation Ltd. on 20.2.2000. In this behalf, he placed reliance on the statement of DW6 - Vikram, Senior Dealing Assistant of the office of the Registrar of Companies, Jalandhar. Even though in his examination-in-chief, DW6 - Vikram had clearly affirme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted, that annual returns filed by a company are submitted on a prescribed proforma, and as such, the same being a statutory requirement, will have to be accepted as correct, unless it was shown otherwise. 58. It was also submitted, that the aforesaid statutory requirement is akin to the statutory requirement under Section 303 of the Companies Act, 1956, inter alia, pertaining to the details of the existing directors and/or any change among the directors, managing directors, managers or secretaries of a company. Insofar as the instant aspect of the matter is concerned, section 303(2) of the Companies Act, 1956, which was also relied upon, is extracted hereunder:- "303. Register of directors etc.- (1) *** *** *** (2) The company shall, within the periods respectively mentioned in this sub-section, send to the Registrar a return in the prescribed form containing the particulars specified in the said register and a notification in the prescribed form of any change among its directors managing directors, managers or secretaries, specifying the date of the change. The period within which the said return is to be sent shall be a period of thirty days from the appointment of the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed", occurring in Section 141(1) of the NI Act are not without significance and these words indicate that criminal liability of a Director must be determined on the date the offence is alleged to have been committed." Based on the above, it was submitted, that no one could be permitted to dispute the fact that the appellant - Major P.C. Thakur, had resigned from M/s. Accord Plantation Ltd. with effect from 20.2.2000. 61. We have given our thoughtful consideration to the afore-stated contention, pertaining to the date when Major P.C. Thakur severed his relationship with M/s. Accord Plantation Ltd., by tendering his resignation and submitting the same with the Registrar of Companies in Form-32. Based on the judgment rendered by this Court in the Harshendra Kumar D's case (supra), there can be no doubt, that the submissions advanced on behalf of the appellant have to be accepted, unless the same can be effectively repudiated. The mere mention of the name of Major P.C. Thakur in the annual return filed on 30.9.2002, in our considered view, cannot per se lead to the inference, that Major P.C. Thakur, was still on the Board of directors of M/s. Accord Plantation Ltd.. We say so because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the directorship of M/s. Accord Plantation Ltd. on 20.2.2000. 63. On the issue of liability of the appellant - Major P.C. Thakur, we also consider it appropriate to make a reference to Section 27 of the SEBI Act. The above provision has already been extracted above, and the debate with reference thereto, and its conclusion, have also been recorded by us. The reference which we wish to make to Section 27 at the instant juncture, is for a different purpose. Section 27 makes every person, who at the time when the offence was committed, was in charge of, and responsible for, the conduct of the company's business, guilty of the offence allegedly committed by the company. There can be no dispute about the fact, that a director of a company, may well be in charge of, and responsible for the conduct of the business of the company (though the above position would not emerge ipso facto, by holding the position of a director). Yet, after the concerned individual has resigned from the position of director, in our view, he cannot be considered to be responsible to the company, for the conduct of its business. Any action of omission or commission of the company, after the date on which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eunder:- "ACCORD PLANTATION LTD. HO Blue Peak Office Complex (Near Gainda Mull Stairs) The Mall Shimla 171 001 Corp Office 19A Swastik Vihar Panchkula HR Phone No. 172-552962 Ref. No. HO/101/775/00 Date Feb 07, 2000 Shri Suresh Gupta Division Chief SEBI Earnest House, 194, Nariman Point Mumbai 400 021 Kind Attn.: Mr. Suresh Gupta, Divisional Chief Dear Sir, This is with reference to plantation schemes of the Company and its registration with SEBI as per latest guidelines on registration. We wish to inform you that we are no more interested in operating this scheme due to stringent guidelines of SEBI. However, the company intends to pay all the deposits from sale of tree on due date for year wise detail of income and payment of maturities is enclosed. We are ready to provide any other information required at your end. Thanking you. Yours faithfully, Sd/- Managing Director" Based on the aforesaid letter dated 7.2.2000, it was contended, that M/s. Accord Plantation Ltd. had decided to wind up its operations on account of the fact, that it was not possible for it to continue its erstwhile activities, because of the stringent conditions impose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e scheme at their risk and responsibility : Provided that if the positive consent to continue with the scheme, is received from only twenty-five per cent or less of the total number of existing investors, the scheme shall be wound up. (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. Existing scheme not desirous of obtaining registration to repay 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." It was submitted, that intimation as was required to be furnished by 'the Board' under Regulation 73(2), was never furnished by the respondent-Board, either to M/s. Accord Plantation Ltd. or to the appellant herein, and as such, no question of repayment of the deposits made by the investors arose, by the time the appellant relinquished his position as director of the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1992 and Regulation 5(1) r/w Regulations 68(1), 68(2), 73 and 74 of the said regulations. *** *** *** 15. On January 31, 2001, SEBI by exercising its powers conferred upon it under Section 118 of Securities and Exchange Board of India Act, 1992 directed the accused no. 1 to refund the money collected under the aforesaid collective investment schemes of the accused no. 1 to the persons who invested therein within a period of one month from the date of the said directions… *** *** *** 18. In view of the above, it is charged that the accused no. 1 has committed the violations of Section 11B, 12(1B) of Securities and Exchange Board of India Act, 1992 r/w Regulation 5(1) r/w Regulations 68(1), 68(2), 73 and 74 of the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999 which is punishable under Section 24(1) of Securities and Exchange Board of India Act, 1992. The accused nos. 2 to 5 are the directors and/or persons in charge of and responsible to the accused no. 1 for the conduct of its business and are liable for the violations of the accused no. 1, in terms of Section 27 of Securities and Exchange Board of India Act, 1992." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of three months each. 73. Dissatisfied with the orders of conviction and sentence, dated 25.3.2010 and 26.3.2010 respectively, the present appellant - Sunita Bhagat filed Criminal Appeal no. 442 of 2010 before the High Court. The appeal preferred by the appellant - Sunita Bhagat alongwith the appeal preferred by Major P.C. Thakur (Criminal Appeal no. 464 of 2010) and the other appeals filed on behalf of the directors of M/s. Accord Plantation Ltd., were dismissed by the High Court on 29.1.2014. The instant criminal appeal arises from the said common judgment and order of the High Court, dated 29.1.2014. 74. During the course of hearing it was submitted, that M/s. Accord Plantation Ltd. was incorporated under the Companies Act, 1956, on 16.10.1996. The appellant herein - Sunita Bhagat was admittedly one of the promoter-directors of the said company. It was asserted that the appellant - Sunita Bhagat had resigned from the company on 31.8.1999 with immediate effect. It is not a matter of dispute, that Form-32, depicting the resignation of the appellant, was submitted and received in the office of the Registrar of Companies on 20.9.1999. The above factual position stands affir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation letter Ex. DW3/B. On receipt of the resignation letter we have placed it on the record, being accepted. XXXX by counsel Sh. Neeraj Tiwari for A-5, Rajan Rai We did not prepare any list of directors after accepting the resignation of Smt. Sunita Bhagat. However, the modified list of directors would have been furnished by the company alongwith the annual returns filed by the company. As per the record, the directors of the company prior to the resignation of Smt. Sunita Bhagat were Sh. Ajay Vora, Sh. Tejender Singh, Sh. P.C. Thakur, Sh. Pradeep Dewan and Mrs. Sunita Bhagat as per annual return dated 28.9.99. The copy of the same is Ex. DW3/C (OSR). XXXX by counsel for accused no. 2. It is correct that fees have to be deposited by the person applying for change in Board of Directors on the basis of resignation and the receipt No. 21181 dated 20.9.99. The copy of the receipt is Ex. DW3/D (OSR)….." Learned counsel for the appellant reiterated the legal submissions advanced before this Court in the connected appeals, and submitted, that for exactly the reasons mentioned by a co-accused - Major P.C. Thakur, the proceedings initiated against the appellant herein, were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be - (a) six months, if the offence is punishable with fine only; (b) one year, if the offence is punishable with imprisonment for a term not exceeding one year; (c) three years, if the offence is punishable with imprisonment for a term exceeding one year but not exceeding three years." 79. For invoking the plea of limitation, learned counsel also pointed out, that under Section 24 of the SEBI Act, before its amendment on 29.10.2002, a punishment of imprisonment of one year or fine or both, was postulated. Since the punishment contemplated under Section 24 of the SEBI Act was not in excess of one year, for the violation alleged against the appellant, it was submitted, that the competence to taking cognizance, would lapse after a period of one year, on account of the bar created by Section 468(2)(b) of the Cr.P.C (extracted above). 80. Referring to the factual position in the present controversy, it was asserted, that the appellant had ceased to be a director of M/s. Accord Plantation Ltd., with effect from 20.9.1999, and as such, her liability for any alleged act of omission or commission, with reference to M/s. Accord Plantation Ltd., could not legally extended beyo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stands dismissed. Criminal Appeal no. 832 of 2012 83. The position stands reversed again. 'The Board' is the appellant in this matter and Raj Chawla, accused no. 10 before the trial Court, is the respondent. 84. The instant appeal has been preferred by 'the Board' against the respondent - Raj Chawla, who had approached the High Court by filing Criminal Miscellaneous Case 3937 of 2009, under Section 482 of the Cr.P.C., seeking quashing of the complaint filed by 'the Board', dated 15.12.2003 in the Court of Chief Metropolitan Magistrate, Tis Hazari Court, Delhi, under Section 200 of the Cr.P.C. read with Sections 24(1) and 27 of the SEBI Act. On the receipt of the above complaint, the Chief Judicial Magistrate had summoned the accused on 15.12.2003 for 21.2.2004. The High Court, through the impugned order dated 12.1.2010, quashed the criminal complaint filed by 'the Board' against Raj Chawla. 'The Board' has approached this Court by filing the instant criminal appeal, to assail the order of the High Court, dated 12.1.2010. 85. In order to effectively adjudicate upon the cause which has arisen with reference to the respondent - Raj Chawla, it would be essential to notice that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting collective investment scheme which failed to make an application for registration with SEBI, shall wind up the existing collective investment scheme and repay the amounts collected from the investors. Further, in terms of Regulation 74 of the said regulations, an existing collective investment scheme which is not desirous of obtaining provisional registration from SEBI shall formulate a scheme of repayment and make such repayment to the existing investors in the manner specified in Regulation 73. 15. However, the accused no. 1 neither applied for registration under the said regulations nor took any steps for winding up of the schemes and repayment to the investors as provided under the regulations and as such had violated the provisions of Section 12(1B) of Securities and Exchange Board of India Act, 1992, and Regulation 5(1) read with Regulations 68(2), 73 and 74 of the said regulations. *** *** *** 18. The accused no. 1 raised a total amount of nearly ₹ 5,20,000/- by its own admission and its failure to refund the amounts to the general public who invested hard-earned money in the schemes operated by the accused no. 1, caused pecuniary damage to them. 19. In vi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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