9911796707
TMI Blog2008 (2) TMI 974X X X X Extracts X X X X X X X X Extracts X X X X ..... early 1990s, a large number of plantation companies came to be incorporated. Each of them promised attractive returns to persons prepared to invest their monies in what were known as collective investment schemes . When it transpired that many of these schemes were in fact non-starters, and the investors were not getting back their monies, the SEBI stepped in to formulate certain regulations. The corrective action received impetus from orders passed by this Court in writ petitions that were filed by the investors seeking redress. Among the directions issued by a Division Bench of this Court were those contained in an order passed on 22nd January 2002 in C.W. No.3352 of 1998 (S.D. Bhattacharya v. SEBI Ors.), the relevant portion of which reads as follows: Having regard to the affidavit of the SEBI affirming that the aforesaid companies have not complied with the orders, and for securing the interests of the investors we are of the view that their bank accounts ought to be frozen. We are also of the opinion that not only the bank accounts of the aforesaid companies should be frozen but the bank accounts of their Directors and Promoters should also be frozen with immediate effect. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejected. In the case of the complaint filed against Hind Forests India Ltd., and three others including the Petitioner herein in Crl.MC 4915/2006 (Raj Kumar) and the complaint filed against HBN Agro Tech. Ltd. and four others which include the Petitioner in Crl MC 4954/2006 (Jeet Singh). The allegation is that the company neither applied for registration under the said regulations nor took any steps for winding up the schemes and repayment to investors. Thereafter the paragraph concerning the company and its directors having violated the provisions of the Act are more or less similar. In the complaint filed against Janaraksha Green Forests Ltd., the said paragraph reads thus: In view of the above, it is charged that the Accused No.1 has committed the violation of Sec.11B, 12 (1B) of Securities and Exchange Board of India Act, 1992 read with Reg.5(1) read with Reg.68(1), 68(2), 73 and 74 of the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999 which is punishable under Sec. 24 (1) of Securities and Exchange Board of India Act, 1992. The Accused No.2 to 5 are the directors and/or persons in charge of and responsible to the Accused No. 1 for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Judicial Magistrate AIR 1998 SC 128, S.M.S. Pharmaceuticals v. Neeta Bhalla AIR 2005 SC 3512, G.S. Rajgarhia v. Air Force Naval Housing Board 2004 (3) JCC (NI) 236, Everest Advertising Pvt. Ltd. v. State 2005 (4) LRC 95 (Del) and Mahender Prasad Singh Ratra v. N.K. Metals 75 (1998) DLT 155. 9. In addition, in Crl. MC 2747/2006, it is stated that the complaint case was transferred to the Court of the Additional Sessions Judge (ASJ) without following the procedure prescribed under Section 193 CrPC. In other words, it is submitted that the case never committed to the Court of Sessions and, therefore, the procedure followed is illegal which is fatal to the complaint itself. Reliance is placed on the judgment of a Division Bench of this Court in A.S. Implex Ltd. v. Delhi High Court, 2003 VIII AD(Del) 189. 10. Counsel for the Respondent SEBI, on the other hand points out that the latest position of law has been explained by the Supreme Court in N. Rangachari v. Bharat Sanchar Nigam Ltd. AIR 2007 SC 1682, where it has been pointed out as long as there are averments to the effect that the persons named in the complaint, are in charge of the affairs of the company and responsible to it for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company and responsible to it for the conduct of its business at the time of commission of the offence. 13. In N. Rangachari, which was a case arising under the NI Act, the averment in the complaint read as under: That accused No. 1 is a company incorporated under the Companies Act. Accused Nos. 2 and 3 are its Directors. They are incharge of and responsible to accused No. 1 for conduct of business of accused No. 1 Company. They are jointly and severally liable for the acts of accused No. 1. After referring to the earlier judgments in S.M.S. Pharmaceuticals v. Neeta Bhalla AIR 2005 SC 3512, Saroj Kumar Poddar v. State (NCT of Delhi) AIR 2007 SC 912, Monaben Ketanbhai Shah v. State of Gujarat AIR 2004 SC 4274, Rajesh Bajaj v. State of NCT of Delhi AIR 1999 SC 1216, Bilakchand Gyanchand Co. v. A. Chinnaswami AIR 1999 SC 2182 and Rajneesh Aggarwal v. Amit J. Bhalla AIR 2001 SC 518, the Supreme Court concluded in N. Rangachari as under (AIR p. 1682): 18. In the case on hand, reading the complaint as a whole, it is clear that the allegations in the complaint are that at the time at which the two dishonoured cheques were issued by the company, the appellant and another were the Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich follows the judgment of the Supreme Court in N.Rangachari, the inevitable conclusion is that the complaints in question do make out a prima facie case against the petitioners for the offences complained of under the SEBI Act. 16. It is possible that in individual cases, a person might be able to, in his or her defence, show that such person had ceased to be the Director at the time of the commission of the offence or that he or she was not associated with the company at all. But that would essentially be a matter for evidence. 17. It may be noticed at this stage that there have been instances where petitioners have, along with their petitions under Section 482 CrPC, filed in this Court certified copies of the Form 32 filed by them in terms of the Companies Act, 1956 to show that they have ceased to be the Directors of the company at the time of commission of the offence. The document being a public document which can be easily verified even on an inspection of the records of the company with the Registrar of Companies does not require elaborate evidence at the trial. One such instance was a complaint filed by SEBI which was quashed by this Court by an order dated 30th January, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
