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TMI Blog2020 (9) TMI 1209X X X X Extracts X X X X X X X X Extracts X X X X ..... he alleged violation being committed by the applicant Company. After providing vital information and inputs to the SEBI Court, the matter would have been looked into by SEBI Board only and appropriate complaint could have been filed by SEBI Board before the competent Special Court - instead of doing so, the police has embarked upon registration of FIR in such a case and by doing so, has travelled beyond the scope of its competence and jurisdiction. Application allowed. - Case No. M.Cr.C.No.23883/2020 - - - Dated:- 22-9-2020 - JUSTICE SHRI SHAILENDRA SHUKLA For the Petitioner: Shri Manish Gupta, Advocate for Shri Bhaskar Agrawal, Public Prosecutor for State. ORDER 1. This order seeks to dispose of the petition filed under Section 482 of Cr.P.C for quashment of FIR and subsequent proceedings. 2. The facts as narrated in the petition succinctly are that on 4.3.2020, a team of police officers from Crime Branch, Indore raided the office of Money Secure Investor Investment Adviser on complaint filed by a broker also involved in investment consultancy. They seized documents, equipment etc. placed in the Office. Subsequently, an FIR was registered against the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin the jurisdiction of Vijay Nagar police station. Lastly, it has been mentioned that the petitioner is a mother of infant breast feeding child and was on maternity leave at the time when said raid took place and therefore, she was not present in the office and join the investigation. On these grounds the FIR has been sought to be quashed. 4. In reply to the petition on behalf of the respondent/State, it has been submitted that the crime branch was well within its right to raid the officer of petitioner upon receipt of a credible secret information to the effect that the petitioner company has cheated and received many individuals causing financial losses to them by running the aforesaid investment adviser business. When the crime branch raided the office, no documents pertaining to registration with SEBI KYC and other such documents were available. The petitioner was absconding and hence, investigation was initiated in the matter. The statements of various employees were obtained who gave out the statements that such employees were directed to change their names and talk to various customers encouraging them to invest in shares. These employees were only under graduates who ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y when investigation is completed. Regarding submission that compliance of Section 6(2) of PID Act has not been made, the respondent has referred to Annexure R-1/4 in which the Superintendent of Police has expressly permitted to carry out the investigation in the present matter. It has been submitted that investigation of cognizable offence is a right and investigation agency and investigation is still under process and hence, this petition seeking quashment of FIR and subsequent proceedings is premature. 7. Both the parties to the petition have submitted the documents in support of their cause. The question before this court is whether in view of the submissions made on behalf of the petitioner, the FIR registered against the petitioner deserves to be quashed. 8. The petitioner has pointed out to the certificate issued by SEBI, which is dated 24.9.2018, wherein Alka Shrivastava (petitioner) has been granted certificate of registration as an investment adviser, running her trade named as Money Secure Investor Investment Adviser . The petitioner has annexed NISM certificate (National Institute of Securities Markets) issued by National Institute of Securities Markets. KYC docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of FIR, Police Officer concerned cannot embark upon as to whether the information revealed by the informant is reliable and genuine or not. It has further been stated that the Police Officer cannot refuse to register a case on the ground that the information is not relevant or credible. Thus, one can see that once an information as to the occurrence of cognizable offence has been brought to the notice of police, the Police Officer is bound to register the same as FIR and carry out his investigation. However, there is one impediment, which would surface when there is staturory prohibition for the Court to take cognizance. 12. In view of the fact that the aforesaid establishment namely Money Secure Investor Investment Adviser was registered with SEBI, if the establishment was being run in breach of SEBI Regulations, Rules or Provisions of SEBI Act, 1992, only SEBI Board was authorized to file a complaint before a competent Court and without there being such step taken, no Court could take cognizance in such cases. The relevant portion of SEBI Act, 1992 is as under :- 26. (1) No court shall take cognizance of any offence punishable under this Act or any rules or regulations m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y person who at the time the offence was committed, was Incharge 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 and shall be liable to be proceeded against the punished accordingly. 15. As far as the present case is concerned, the complaint has not been lodged by any complainant who has been cheated by the Company. The complaint has been lodged by a broker who also indulges in similar activities. Thus, offence of cheating and breach of trust is not made out. Further the provisions of PID Act , it is imperative to show that the aforesaid company had taken deposits from the customers with a promise to give huge returns in lieu of such deposits. However, the company has been charging fees for rendering advise and the fees cannot be termed to be 'deposits' unless some victim so alleges. We have already seen that police is bound to register an FIR when information is received regarding commission of cognizable offence and credibility or otherwise of such information cannot be looked into at the time of registration of an FIR, but it is also been seen that police would no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as observed as under :- I am not unmindful of the fact that SEBI was set up for all such purposes and SEBI Act, 1992, came into force w.e.f. 30.1.1992 and the preamble of the Act explains the objective which is an Act to provide for establishment of a Board to protect the interest of investors in securities and to promote the development of and to regulate the security market and for matters connected therewith or incidental thereto. 20. Further in para 51 the final conclusion was made which reads as under :- 51. In the result, the First Information Reports and the investigations impugned in all the six cases are hereby quashed. 21. Learned Public Prosecutor for the State has filed a citation of State of Tamil Nadu vs. S. Martin Ors., (2018) 5 SCC 718 in which pursuant to an information received by police that several crores of rupees of unaccounted money was stashed in the house of A/1, a raid was conducted and cash amounting to ₹ 7,20,05,000/- stored in 3 bags was found. It was further found that accused A/1 had admitted that he and his associates had illegally printed lottery tickets of 3 States and sold the same without obtaining any permission and in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the provisions of the Code or the concerned Act (under which a criminal proceedings is instituted) to the institution and continuance of the proceedings and/or where there is a specific provisions in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party. 25. The aforesaid guidelines would be resorted in the present case as well. 26. Learned Public Prosecutor for the State submits that in the raid it was found that there were number of undergraduate employees working on computers giving their advise to the customers regarding the shares in which they should invest their money and prima facie it was clear that the company was being run by unqualified employees, which would amount to cheating the customers. 27. However, the aforesaid state of affairs would again attract violation of provision of SEBI (Investment Advisers) Regulations, 2013, as also breach of provision of SEBI Act, 1992 and once these provisions are attracted, only SEBI Board can lodge a complaint before the competent Court. 28. Learned counsel for the applicant also submits that investment in share market does not guarantee only profits and there are mark ..... X X X X Extracts X X X X X X X X Extracts X X X X
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