SEBI Regulations Violation: Continuing Offence & Time Barred Complaint

The court held that the violation of regulations 73 and 74 of the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999 constituted a continuing offence as the petitioners failed to register the scheme with SEBI or repay investors. The complaint filed by SEBI was not barred by time under section 468 of the Code of Criminal Procedure, 1973, as the offense was ongoing. The court dismissed the petition, emphasizing the importance of compliance with regulatory requirements for collective investment schemes and upholding SEBI's authority in enforcement.

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Issues Involved:
1. Whether the violation of regulations 73 and 74 of the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999 is a continuing offence.
2. Whether the complaint filed by the Securities and Exchange Board of India (SEBI) was barred by time under section 468 of the Code of Criminal Procedure, 1973 (Cr.P.C.).

Issue-wise Detailed Analysis:

1. Continuing Offence under Regulations 73 and 74:
The core issue in this case was whether the violation of regulations 73 and 74 of the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999, punishable under section 24 of the Securities and Exchange Board of India Act, 1992, constitutes a continuing offence. The petitioner had failed to register a collective investment scheme with SEBI or wind up the scheme and repay the investors as mandated by regulations 73 and 74. Regulation 68 required any person operating a collective investment scheme at the commencement of the regulations to apply for registration with SEBI. If the application was not made or rejected, the scheme had to be wound up, and the investors repaid as per regulations 73 and 74. The court concluded that the infringement of these regulations was a continuing offence since the petitioners had not taken steps to comply with the regulations, and the amount collected from investors was still retained by them.

2. Barred by Time under Section 468 of Cr.P.C.:
The petitioners contended that the complaint was time-barred under section 468 of Cr.P.C., as the alleged offence occurred in 2000, and the complaint was filed after more than three years. However, the court referred to section 472 of Cr.P.C., which states that in the case of a continuing offence, a fresh period of limitation begins to run at every moment the offence continues. The court cited several precedents, including the Supreme Court's judgments in State of Bihar v. Deokaran Nenshi and Bhagirath Kanoria v. State of Madhya Pradesh, which defined a continuing offence as one that arises from a failure to comply with a legal obligation that persists over time. The court held that the failure to wind up the collective investment scheme and repay the investors was a continuing offence, and thus, the limitation period under section 468 of Cr.P.C. did not apply.

Conclusion:
The court dismissed the petition, affirming that the violation of regulations 73 and 74 was a continuing offence and the complaint was not barred by limitation. The petitioners were under a legal obligation to comply with the regulations, and their failure to do so constituted an ongoing infringement, making the offence continuing in nature. The judgment emphasized the importance of adhering to the legal requirements for collective investment schemes and upheld SEBI's regulatory authority in enforcing compliance.

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