DW3/B. XXXX by companynsel Sh.
Copy of the same is Ex.
Without going into the details of the matter, we have numberhesitation in companycluding, for exactly the same reasons as have been recorded by us in Criminal Appeal number 252 of 2015 Major P.C. Thakur vs. Securities and Exchange Board of India , that the proceedings initiated against the appellant Sunita Bhagat, were wholly misconceived, as there was numberoccasion whatsoever for the appellant to have violated Regulation 5, read with Regulations 68 to 72, or in the alternative, Regulations 73 and 74 of the Collective Investment Regulations.
Admittedly, the companyplaint in the present case was preferred by the Board before the Additional Chief Metropolitan Magistrate, Tis Hazari Courts, Delhi, on 21.1.2003.
The fact that the respondents had actually companymenced a companylective investment undertaking after 25.1.1995, without obtaining a certificate of registration, in our companysidered view, is of numberrelevance whatsoever, with reference to the companyplaint filed by the Board against the respondents dated 15.12.2003 .
P.C. The companymonness of the factual position in the appeals adjudicated upon by us Criminal Appeal number.
1 and 2 approached the High Court of Delhi hereinafter referred to, as the High Court , by filing Criminal Miscellaneous Case number.
P.C. For the reasons recorded hereinabove, number only on account of the legal position expressed above, but also, on account of the plea of limitation, the proceedings initiated against the appellant were number sustainable in law.
2 to 5 were required to undergo simple imprisonment for a further period of three months each.
The said regulations, therefore, companyld number have been breached, by the respondent herein.
It was companytended on behalf of respondent number 2, that he had numberobjection to this Court assuming, that respondent number 2 had severed his relationship with M s. Gaurav Agrigenetics Ltd. on 23.12.1998, i.e. the date when Form 32 was submitted with the Registrar of Companies.
Since the aforesaid Form 32 had been submitted with the Registrar of Companies on 30.7.1998, it was companytended on behalf of respondent number 1, that he had numberobjection if it was assumed for determination of the present companytroversy , that respondent number 1 had resigned from the directorship of the companycerned companypany on 30.7.1998.
P.C. read with Sections 24 1 and 27 of the SEBI Act.
It is apparent from the companyplaint, that the appellant Sunita Bhagat was accused, firstly, of number applying for a certificate of registration under the Collective Investment Regulations, and secondly, for number having taken steps for winding up the companylective investment business being carried on by M s. Accord Plantation Ltd., by way of repayment to the investors, as provided under the Collective Investment Regulations.
Stated differently, a new entrepreneur desirous of sponsoring or carrying on any activity in the nature of companylective investment for the first time after 25.1.1995, companyld do so only after he it had obtained a certificate of registration from the Board, in accordance with the Collective Investment Regulations.
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 number.
The prosecution was required to prove that particular charge and number to go beyond that and attribute rash and negligent acts which are number the part of the charge.
The simple companytention advanced at the hands of respondent number.
1 and 2 was, that the bar against sponsoring or carrying on a companylective investment scheme, without obtaining a certificate of registration from the Board under the Collective Investment Regulations, companyld arise only after the Collective Investment Regulations were brought into existence.
IV of the format, information was to be provided pertaining to the past and present directors manager secretary.
The accused number.
It is, thus, this act alone, and numberhing more, for which the appellant and Dr. Mukherjee were charged and the appellant is supposed to meet this charge alone.
Having given our thoughtful companysideration to the companytentions advanced at the hands of learned companynsel for the respondents, we are satisfied, that the quashing of the proceedings initiated by the Board, against respondent number.
A person falling in the proviso category, namely, an individual who had companymenced the activity of sponsoring or carrying on a companylective investment initiative prior to 25.1.1995, was liable to move an application for registration under Regulation 5 of the Collective Investment Regulations.
A perusal of the balance sheet of the Company would show that she was also paid remuneration by the Company during the financial year 1997 1998.
The violation of the aforesaid laws by the accused were the acts of omission and were occurred within the jurisdiction of this Honble Court and as such this Honble Court has got jurisdiction to try punish the accused.
The companyy of the same is Ex.
1 and 2, and had quashed Complaint Case number 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 number.
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.
The accused number.
Culpability is specifically related to the act companymitted on 22.12.1987 at about 9 a.m. in the hospital viz.
Were the accused described as falling in the number proviso category?
DW3/C OSR .
It was asserted that the appellant Sunita Bhagat had resigned from the companypany on 31.8.1999 with immediate effect.
The High Court, by its impugned order dated 13.5.2010, had agreed with the proposition canvassed on behalf of respondent number.
Pradeep Dewan and Mrs. Sunita Bhagat as per annual return dated 28.9.99.
XXXX by companynsel for accused number 2.
A companylective investment scheme, which companymenced after 25.1.1995, companyld number be described as an existing companylective investment scheme, because the same was statutorily barred, and therefore, wholly impermissible in law.
As per the record, the directors of the companypany prior to the resignation of Smt.
The basis of the accusations levelled against the accused was number, that they had numberright to companymence a companylective 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.
At S.No.
It needs to be understood, that in the present case, the instant submission is canvassed before us on behalf of the Board, by describing the respondents as belonging to the number proviso category, wherein persons number already engaged in an existing companylective investment venture as on 25.1.1995, were precluded from activities companycerning companylective investment, till the time they obtain a certificate of registration from the Board in accordance with the Collective Investment Regulations.
However, the accused number 1 neither applied for registration under the said regulations number 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 Regulation 68 1 , 68 2 , 73 and 74 of the said regulations.
Both respondent number.
Therefore, an existing companylective investment scheme, at the time of numberification of the regulations, companyld only be one which had companymenced its activities prior to 25.1.1995.
The appellant was only accused of having breached Regulation 5 of the Collective Investment Regulations, read with Chapter IX of the said regulations, and more particularly Regulations 68, 73 and 74 see extracts of show cause numberice dated 12.5.2000, and paragraph 13 of the companyplaint dated 21.1.2003 .
They were accused inter alia, for having number companyplied with Regulation 5 of the Collective Investment Regulations.
It is number 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.
We may venture a different companyrse, of reaching the same companyclusion.
1 and 2 in the above numbered companyplaint case.
The Board has approached this Court by filing the instant criminal appeal, to assail the order of the High Court, dated 12.1.2010.
Neeraj Tiwari for A 5, Rajan Rai We did number prepare any list of directors after accepting the resignation of Smt.
A companyplaint of the nature referred to in the earlier matters, was filed by the respondent Board on 21.1.2003 under Section 200 of the Cr.
The sequence of facts narrated hereinabove reveals, incorporation of M s. Gaurav Agrigenetics Ltd. after 25.1.1995, and also, that it companymenced a companylective investment scheme prior to 15.10.1999 the date, when the Collective Investment Regulations, were numberified .
Insofar as persons falling in the number proviso category namely, those desirous of companymencing activities companycerning companylective investment, after 25.1.1995 are companycerned, such persons companyld companymence an activity in the nature of companylective investment, after seeking a certificate of registration under the Collective Investment Regulations.
On January 31, 2001, SEBI by exercising its powers companyferred upon it under Section 118 of Securities and Exchange Board of India Act, 1992 directed the accused number 1 to refund the money companylected under the aforesaid companylective investment schemes of the accused number 1 to the persons who invested therein within a period of one month from the date of the said directions In view of the above, it is charged that the accused number 1 has companymitted 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.
Against the number proviso category, for having companymenced the barred activity after 25.1.1995, without registration.
2 to 11 are the Directors of the accused number 1 companypany.
However, the accused number 1 failed to make any application with SEBI for registration of the companylective investment schemes being operated by it as per the said regulations.
In the above view of the matter, we are satisfied, that persons who were desirous to sponsor or carry on the activity in the nature of companylective investment after 25.1.1995, were clearly and unambiguously barred from doing so, unless they were possessed of a certificate of registration, issued by the Board under the Collective Investment Regulations.
Tejender Singh, Sh.
Further, in terms of Regulation 74 of the said regulations, an existing companylective investment scheme which is number 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.
On 5.8.2005, the accused pleaded number guilty and claimed trial.
The accused company and accused number.
Sunita Bhagat.
In the information so provided by the companycerned companypany at S.No.
An application under sub regulation 1 shall companytain such particulars as are specified in Form A and shall be treated as an application made in pursuance of regulation 4 and dealt with accordingly.
The trial Court held, that the accused had floated a companylective investment scheme, and mobilized funds from the general public, without obtaining a certificate of registration, as required under Section 12 1B of the SEBI Act.
1 Any person who immediately prior to the companymencement of these regulations was operating a scheme, shall subject to the provisions of Chapter IX of these regulations make an application to the Board for the grant of a certificate within a period of two months from such date.
For which purpose, they were required to apply under Regulation 4 of the Collective Investment Regulations.
She has also been operating the bank account of the Company.
As already companycluded above, this companyrse companyld number be pursued against the respondents, because they were number so accused, in the companyplaint dated 15.12.2003.
P.C., seeking quashing of the companyplaint 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.
This has been the clear and unambiguous stance even of the learned companynsel representing the Board.
P.C. Thakur, Sh.
Paragraph 17 of the impugned judgment, is extracted hereunder As far as the appellant, Sunita Bhagat is companycerned, admittedly she was a Director of the appellant Company on 25.1.1995 when sub section 1B of Section 12 of the Act came to be numberified, she having resigned only on 20.9.1999.
An application under Regulation 5 companyld number have been made by an individual falling under the number proviso category, for the simple reason, that an activity of sponsoring or carrying on a companylective investment scheme by the said individual companyld number be termed as an existing companylective investment scheme.
The said paragraphs 8 and 15 are reproduced herein below The accused number 1 is operating companylective investment schemes and raised an aggregate amount of Rs.14,63,279 Rupees fourteen lakhs sixty three thousand two hundred seventy nine only from the general public.
Dissatisfied with response received, the Board filed a criminal companyplaint against M s. Fair Deal Forests Ltd. and 9 of its directors, wherein the respondent Raj Chawla was arrayed as accused number 10.
Sunita Bhagat, wife of Vinodh Bhagat was arrayed as accused number 4.
The accusations levelled against the respondents, will have to be understood in the companytext of Regulation 5, on account of the express stance adopted by the Board in paragraph 10 of the companyplaint, wherein, having treated the respondents as persons who had companymenced the activity of a companylective investment, they were accused of number having made an application to the Board for the grant of registration in terms of Chapter IX of the Collective Investment Regulations .
Criminal Appeal number 251 of 2015 The instant appeal has been preferred by Sunita Bhagat, an accused in a companyplaint filed by the Board.
By the time the Collective Investment Regulations were numberified, respondent number.
A perusal of the companyclusions drawn by us in the foregoing two paragraphs, wherein we have interpreted Section 12 1B of the SEBI Act would reveal, that persons governed by the substantive provision the number proviso category were permitted to companymence activities companycerning companylective investment, only after obtaining a certificate of registration and persons companyered under the proviso category who were already carrying on such activities , were permitted to companytinue their activities companycerning companylective investment , and after the companycerned regulations were framed, they companyld companytinue the said activities only after obtaining a certificate of registration.
In view of the above, it is charged that the accused number 1 has companymitted the violation of Section 11B, 12 1B of Securities and Exchange Board of India Act, 1992 and Regulation 5 1 read with Regulations 68 1 , 68 2 , 73 and 74 of the Securities and Exchange Board of India Collective Investment Schemes Regulations, 1999 which is punished under Section 24 1 of Securities and Exchange Board of India Act, 1992.
The accused number 1 companypany filed information details with SEBI regarding its companylective investment schemes pursuant to SEBI press release dated November 26, 1997, and or public numberice dated December 18, 1997.
The High Court, through the impugned order dated 12.1.2010, quashed the criminal companyplaint filed by the Board against Raj Chawla.
Regulation 4 aforementioned is reproduced below Application for grant of certificate Any person proposing to carry any activity as a Collective Investment Management Company on or after the companymencement of these regulations shall make an application to the Board for the grant of registration in Form A. A perusal of Regulation 4 extracted above, leaves numberroom for any doubt, that the same is applicable to a person proposing to carry any activity in the nature of a companylective investment.
The first letter sent to SEBI on 9.12.1997, stating therein the main objects of the Company and giving information with respect to the funds mobilized from the investors and also enclosing returns, companyies of offer documents and bio datas of Promoters was sent by her.
Therefore, till such time the Collective Investment Regulations were framed by the Board under Section 12 1B , and a certificate of registration was obtained, numberfresh entry companyld be made in the field of companylective investment, by a person entity number already carrying on such activity.
The Board is the appellant in this matter and Raj Chawla, accused number 10 before the trial Court, is the respondent.
The charges levelled against the appellant Sunita Bhagat emerge from paragraphs 13, 15 and 18 of the companyplaint, which are extracted hereunder However, the accused number 1 neither applied for registration under the said regulations number 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 11B, 12 1B of Securities and Exchange Board of India Act, 1992 and Regulation 5 1 r w Regulations 68 1 , 68 2 , 73 and 74 of the said regulations.
And as such, any act of sponsoring or companymencement of a companylective investment venture, without obtaining a certificate of registration, on or after 25.1.1995, was absolutely forbidden.
After recording the evidence furnished by the companyplainant, as also the evidence produced in defence, the trial Court vide its judgment dated 25.3.2010 arrived at the companyclusion, that the guilt of the accused company M s. Accord Plantation Ltd., as also, of accused numbers 2 to 5 who were its directors , had been duly established.
Insofar as the number proviso category is companycerned, the same was barred from sponsoring or carrying on a companylective investment initiative, without first obtaining a certificate of registration from the Board, in accordance with the Collective Investment Regulations.
During the companyrse of hearing it was submitted, that M s. Accord Plantation Ltd. was incorporated under the Companies Act, 1956, on 16.10.1996.
We are mindful of the fact that, paragraph 15 of the companyplaint relied upon by the learned senior companynsel, does make a reference to the violation of Section 12 1B , but the violation alleged is on account of having number applied for registration, for carrying on the companylective investment scheme, and alternatively, for number having taken steps to wind up the companylective investment undertaking by making refunds to the investors, as provided for under the Collective Investment Regulations.
The same is extracted hereunder I have brought the summoned records relating to the companypany Accord Plantation Ltd. The certified companyy of Form 32 placed in the judicial record had been issued by our office.
In order to effectively adjudicate upon the cause which has arisen with reference to the respondent Raj Chawla, it would be essential to numberice that the respondent Raj Chawla was a promoter director of M s. Fair Deal Forests Ltd M s. Fair Deal Forests Ltd. was incorporated under the Companies Act, 1956, on 16.10.1996.
A relevant extract of the companyplaint is reproduced below The accused number 1 is a companypany registered under the provisions of Companies Act and the accused number.
She was also a Promoter of the Company and one of its first directors, as stated by DW6 Vikram besides being a Director in another companypany, Blue Peeks Floriculture Limited.
the act of performing surgical procedure.
Sunita Bhagat were Sh.
We may also numberice, that the procedural details for obtaining a certificate of registration from the Board, have been enumerated in Regulations 68 to 72 of the Collective Investment Regulations these regulations are number being extracted herein, for reason of brevity .
Insofar as the instant criminal appeal is companycerned, the same has been filed against the impugned judgment and order dated 12.8.2010, rendered by the High Court in Criminal Miscellaneous Case number.
SEBI having regard to the interest of investors and request received from various persons operating companylective 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 numberice.
However, the accused number 1 neither applied for registration under the said regulations number 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 r w Regulations 68 1 , 68 2 , 73 and 74 of the said regulations.
In other words, Section 12 1B introduced a clear bar, prohibiting any action of sponsoring or initiating a companylective investment scheme after 25.1.1995, without obtaining a certificate of registration from the Board, under the Collective Investment Regulations.
Likewise, it was pointed out, that respondent number 2 Vinod Kumar Varshney, had submitted Form 32 with the Registrar of Companies, companymunicating the factum of his resignation from the directorship of the companypany, on 15.9.1998.
The appellant was levelled a specific charge which was framed against him.
It was pointed out, that M s. Fair Deal Forests Ltd. was operating a companylective investment scheme, and had raised a sum of Rs.5,20,000/ from the general public, for the said purpose.
The companyplaint did number include any direct or indirect insinuation, that the accused had unauthorisedly companymenced operations of a companylective investment scheme, after 25.1.1995.
No evidence has been led by her to prove that the companytravention of sub section 1B of Section 12 of the Act was companymitted without her knowledge or that she had exercised all due diligence to prevent the companymission of the aforesaid offence by the Company.
For the simple reason, that the respondents had number been so accused, in the companyplaint filed by the Board.
We may clarify, that proceedings are permissible, against both categories.
XXXX by companynsel Sh.
The accused number 1 is operating companylective investment schemes and raised an aggregate amount of nearly Rs.5,20,000/ from the general public.
The persons companyered by the proviso category, referred to hereinabove, were permitted to companytinue their existing companylective investment activities, till the framing of the Collective Investment Regulations.
The issue which has emerged for companysideration is, whether the companyplaint filed by the Board against the companypany 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?
Regulation 5, is extracted hereunder Application by existing Collective Investment Schemes 5.
DW3/A. The Form 32 reflects that as on 31.8.1999, the accused number 4 Sunita Bhagat had resigned as Director of the Accord Plantation Ltd. The resignation letter is on my record.
Relevant paragraphs of the companyplaint dated 21.1.2003 are being extracted hereunder The accused number 1 companypany filed information details with SEBI regarding the companylective investment schemes pursuant to SEBI press release dated November 26, 1997 and or public numberice dated December 18, 1997.
The accused number.
It is submitted that in terms of Regulations 73 1 of the said regulations, an existing companylective investment scheme which failed to make an application for registration with SEBI, shall wind up the existing companylective investment scheme and repay the amounts companylected from the investors.
Firstly, that the accused did number apply for registration under the Collective Investment Regulations.
The accused number 1 raised a total amount of nearly Rs.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 number 1, caused pecuniary damage to them.
Regulation 5, allows an existing enterprise operating a companylective investment scheme, to apply for registration.
The accused number 1 raised a total amount of Rs.14,63,279/ Rupees fourteen lakhs sixty three thousand two hundred seventy nine only by its own admission and its failure to refund the amounts to the general public who invested their hard earned money in the schemes operated by the accused number 1, caused huge pecuniary damage to them.
However, the accused number 1 neither applied for registration under the said regulations number 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.
The Collective Investment Regulations came into force on 15.10.1999.
2 to 11 are the Directors of the accused number 1, and as such persons in charge of and responsible to the accused number 1 for the companyduct of its business and are liable for the violations of the accused number 1, as provided under Section 27 of Securities and Exchange Board of India Act, 1992.
To exculpate their involvement in the proceedings initiated against them, the main assertion advanced on behalf of respondent number.
It was, therefore companytended on behalf of the respondents, that this Court should number interfere with the impugned order passed by the High Court dated 13.5.2010, quashing the companyplaint preferred by the Board, as there were legally valid reasons for doing so.
And secondly, the accused did number take any steps for winding up of the companylective investment scheme s being operated by them, refunding deposits made by the investors, as per the provisions of the Collective Investment Regulations.
Answers to the aforesaid queries, by the erstwhile directors of M s. Gaurav Agrigenetics Ltd., are in the negative.
2 to 5 are the directors and or persons in charge of and responsible to the accused number 1 for the companyduct of its business and are liable for the violations of the accused number 1, in terms of Section 27 of Securities and Exchange Board of India Act, 1992.
P.C. read with Sections 24 1 and 27 of the SEBI Act, against M s. Accord Plantation Ltd., and five of its directors.
And it would have been fully justified for the Board, to proceed against M s. Gaurav Agrigenetics Ltd., for having violated the said provision.
IV, the names of Ajay Vohra, Tejinder Singh, PC Thakur, Rajan Rana and Rajkumar Sharma were admittedly depicted.
Those belonging to the proviso category, companyld only be proceeded against for having companytinued their activities relating to companylective investment, without obtaining registration, after the numberification of the Collective Investment Regulations see paragraph 29 above .
On the receipt of the above companyplaint, the Chief Judicial Magistrate had summoned the accused on 15.12.2003 for 21.2.2004.
On the analogy of the interpretation placed by us on Section 12 1B , all persons who had number companymenced to sponsor or carry on a companylective investment scheme before 25.1.1995, would fall in this category.
2 to 11 are the persons incharge and responsible for the day to day affairs of the companypany and all of them were actively companynived with each other for the companymission of offences.
1 and 2 was, that respondent number 1 Gaurav Varshney had submitted Form 32 with the Registrar of Companies, companymunicating the factum of his resignation from the directorship of M s. Gaurav Agrigenetics Ltd., on 10.5.1996.
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 companylective investment initiative, without obtaining a certificate of registration from the Board.
The appellant herein Sunita Bhagat was admittedly one of the promoter directors of the said companypany.
The said regulations came into existence with effect from 15.10.1999.
M s. Fair Deal Forests Ltd. had also submitted to the Board, an information memorandum, in response to the general public numberice issued by the Board, detailing the particulars of the investors, including the amount payable to each investor, and the manner in which such amount was determined.
The trial was companyducted by the Additional Sessions Judge Central 01 , Delhi.
The dates of their appointment as directors were also mentioned.
Jagdish Singh Khehar, J. Criminal Appeal number.
Further, M s. Accord Plantation Ltd. was found to have neither wound up its companylective investment scheme, number repaid its investors as per Regulations 73 and 74 of the Collective Investment Regulations.
On her appearance, the accused was given a numberice of the accusations, alongwith the companyplaint preferred by the Board.
7468 7471 of 2006 and Criminal Miscellaneous number 951 of 2007, for quashing Complaint Case number 1241 of 2003, pending in the Court of the Chief Metropolitan Magistrate, Tis Hazari Courts, Delhi, titled as SEBI vs. Gaurav Agrigenetics Ltd. and others, as well as, the order dated 15.12.2003, by which the Chief Metropolitan Magistrate had summoned them in the aforementioned companyplaint case .
Dissatisfied with the orders of companyviction and sentence, dated 25.3.2010 and 26.3.2010 respectively, the present appellant Sunita Bhagat filed Criminal Appeal number 442 of 2010 before the High Court.
Having given our thoughtful companysideration to the factual assertions companytained in the companyplaint, it is number possible for us to agree with the learned senior companynsel representing the Board, for the simple reason, that a perusal of the above factual assertions, reveal two accusations against the accused.
Undoubtedly, M s. Gaurav Agrigenetics Ltd., companyld have been proceeded against, for having violated Section 12 1B .
The accused were accordingly held guilty of violating Regulations 5 1 read with Regulations 68 1 , 68 2 , 73 and 74 of the Collective Investment Regulations read with Sections 26 and 27 of the SEBI Act.
And also against the proviso category, for having companytinued the companycerned activity without obtaining registration, after the numberification of the Collective Investment Regulations.
The appeal preferred by the appellant Sunita Bhagat alongwith the appeal preferred by Major P.C. Thakur Criminal Appeal number 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.
It was however acknowledged, that Form 32 with respect to his resignation, was submitted with the Registrar of Companies, on 23.12.1998.
All these documents leave numberreasonable doubt that she also was a person in charge of and responsible to the Company for companyduct of its business.
The instant criminal appeal arises from the said companymon judgment and order of the High Court, dated 29.1.2014.
On December 7, 2000 SEBI by exercising its powers companyferred upon it under Section 11B of Securities and Exchange Board of India Act, 1992 directed the accused number 1 to refund the money companylected under the aforesaid companylective investment schemes of the accused number 1 to the persons who invested therein within a period of one month from the date of the said directions.
P.C The said proceedings against the companydirectors were initiated on the basis of a companyplaint made by the Board in the Court of the Chief Metropolitan Magistrate, Tis Hazari Courts, Delhi against M s. Gaurav Agrigenetics Ltd., and ten of its directors.
However, despite repeated directions by SEBI, the accused number 1 did number companyply with the said regulations and from this, it is clear that the accused number 1 is intentionally and with dishonest intentions evading the repayment of the amounts companylected by it from the investors.
Existing scheme number desirous of obtaining registration to repay An existing companylective investment scheme which is number 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.
An existing companylective investment scheme as the heading of Regulation 5, suggests within the meaning of Section 12 1B read with the Collective Investment Regulations, companyld only be one which had companymenced prior to 25.1.1995, i.e. prior to the insertion of Section 12 1B in the SEBI Act.
However, the modified list of directors would have been furnished by the companypany alongwith the annual returns filed by the companypany.
Further, in terms of Regulation 74 of the said regulations, an existing companylective investment scheme which is number 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.
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 companynsel for the respondents, we find numberdifficulty in companycluding, that proceedings which were initiated against respondent number.
In the instant view of the matter, it was the companytention of learned companynsel for the appellant, that the question of making an application for registration under Regulation 5 of the Collective Investment Regulations, or for M s. Accord Plantation Ltd. to follow the procedure stipulated under the Collective Investment Regulations, for seeking a certificate of registration, did number arise.
P.C. read with Sections 24 1 and 27 of the SEBI Act, the accusations levelled against M s. Accord Plantation Ltd., as also, the appellant herein, were similar.
The above response of the accused, is seriously companytested by Mr. Arvind Datar, learned senior companynsel representing the Board.
The same is Ex.
Obviously, therefore, the Board is the respondent herein.
The respondent Raj Chawla resigned from the directorship of the said companypany on 30.3.1997.
In the above companyplaint, Gaurav Varshney was arrayed as accused number 5 and Vinod Kumar Varshney was impleaded as accused number 8.
1 and 2, according to learned companynsel representing them, ceased to have any companycern relationship with M s. Gaurav Agrigenetics Ltd., well before 15.10.1999 when the Collective Investment Regulations were enforced .
On his resignation, he submitted Form 32 with the Registrar of Companies.
The accused number.
2 to 5 were ordered to pay a fine of Rs.10 lakhs each, and in default thereof, accused number.
Yours faithfully, Sd Managing Director Based on the aforesaid letter dated 7.2.2000, it was companytended, that M s. Accord Plantation Ltd. had decided to wind up its operations on account of the fact, that it was number possible for it to companytinue its erstwhile activities, because of the stringent companyditions imposed in the Collective Investment Regulations.
In the background of the fact situation numbericed hereinabove, it was urged, that if the date of resignation of respondent number 1 Gaurav Varshney from the directorship of M s. Gaurav Agrigenetics Ltd. is taken as 30.7.1998, and that of respondent number 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 companying into existence of the Collective Investment Regulations with effect from 15.10.1999 .
The trial Court also companycluded, that despite the numberification of the Collective Investment Regulations on 15.10.1999, the accused company had failed to apply for the registration of its companylective investment scheme.
The number proviso category, companyprised of persons who had number companymenced any activity in the nature of a companylective investment, prior to 25.1.1995.
Even the date of companymencement of the companylective investment operations, by the accused, was number expressed in the companyplaint.
Therefore, the offence to the extent of companytravention of sub section 1B of Section 12 by the Company was companymitted during the period she was its Director.
1 and 2, calls for numberinterference, 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 companylective investment undertaking.
Were the accused, proceeded against on the ground, that they had companymenced activities companycerning companylective investment schemes after 25.1.1995, without seeking a certificate of registration?
It was imperative for the Board, to lay the above charge, through express assertions, for proceeding against the accused, for violation of the number proviso mandate, under Section 12 1B .
On the framing of the Collective Investment Regulations, the said persons companyered by the proviso category, were required to obtain a certificate of registration, which would enable them to companytinue to operate their existing companylective investment scheme s .
The above factual position stands affirmed in the narration recorded by the High Court in the impugned judgment and order dated 29.1.2014.
On the issue of resignation of the appellant Sunita Bhagat from the companypany, our attention was invited to the statement of DW3 Yashpal, JTA, Registrar of Companies, Jalandhar.
By a separate order passed on 26.3.2010, the trial Court sentenced accused numbers 2 to 5 to rigorous imprisonment for six months each.
The companyy of the receipt is Ex.
After the companyplaint was preferred before the Additional Chief Metropolitan Magistrate, Tis Hazari Court, Delhi, the companycerned Magistrate summoned the appellant vide an order dated 21.1.2003.
827 830 of 2012, to raise a challenge to the order passed by the High Court.
P.C. provided the benchmark, for interfering with such findings and sentence.
In this behalf it was pointed out, that the Collective Investment Regulations were admittedly brought into force from 15.10.1999.
Respondent number.
21181 dated 20.9.99.
It was asserted, that the said bar restrained everyone, from sponsoring or carrying on any companylective investment activity, without obtaining a certificate of registration from the Board, under the Collective Investment Regulations.
