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Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether the summoning of the petitioners as directors and the continuation of proceedings under the Securities and Exchange Board of India Act, 1992 were liable to be quashed for want of specific averments and for not being arrayed as accused in the original complaint.
Analysis: The complaint and the initial summoning order referred to the promoters and directors as persons in charge of, and responsible for, the conduct of the company's business and alleged their active connivance in the offence. The Court held that cognizance is taken of the offence and not merely of the named offenders, and the later issuance of process after particulars of the accused were supplied did not make the proceedings without jurisdiction. It further held that, on the facts pleaded, Section 27 of the Securities and Exchange Board of India Act, 1992 could not be avoided at the threshold, and the plea that summons could issue only under Section 319 of the Code of Criminal Procedure, 1973 was misconceived.
Conclusion: The challenge to the summoning order and the request to quash the complaint failed.
Ratio Decidendi: Where a complaint specifically alleges that directors and promoters were in charge of and responsible for the company's business and actively connived in the offence, process may be issued against them under the deeming liability provision of the special statute, and the proceedings are not liable to be quashed at the threshold merely because they were not initially named as accused.
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