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of <h1>Court denies discharge application in SEBI Act violation case, mandates full trial to determine liability. Prima facie evidence sufficient.</h1> <h3>PRATIMA SRIVASTAVA Versus STATE OF NCT OF DELHI & ANR.</h3> PRATIMA SRIVASTAVA Versus STATE OF NCT OF DELHI & ANR. - TMI Issues Involved:1. Validity of the petitioner's discharge application.2. Petitioner's directorship and liability for SEBI Act violations.3. Applicability and interpretation of SEBI regulations and provisions.4. Evaluation of evidence at the stage of framing charges.Issue-wise Detailed Analysis:1. Validity of the petitioner's discharge application:The petitioner sought discharge from the complaint filed by SEBI, arguing that she had ceased to be a director of the company long before the alleged violations. The court examined whether the charge against the petitioner was groundless under Section 239 of the Code of Criminal Procedure, which mandates discharge if no prima facie case is established.2. Petitioner's directorship and liability for SEBI Act violations:The petitioner was a director from 1.1.1998 to 25.7.1998, resigning before the alleged violations. SEBI's complaint was based on the company's failure to register its Collective Investment Schemes (CIS) as required by the SEBI Act and regulations. The court noted that Form 32, indicating the petitioner's resignation, was filed with the Registrar of Companies on 22.9.2004, after the complaint was lodged. This raised a disputed question of fact about the petitioner's involvement in the company's affairs during the alleged violations, necessitating a full trial to resolve.3. Applicability and interpretation of SEBI regulations and provisions:The court discussed various SEBI regulations, including Section 12(1B) of the SEBI Act, which prohibits sponsoring or carrying on CIS without registration. The company failed to comply with these regulations, leading to the complaint. The court highlighted that the violations were continuous offenses until the company complied with SEBI's directives by refunding the money to investors, as established in Vishnu Prakash Bajpai vs. SEBI.4. Evaluation of evidence at the stage of framing charges:The court emphasized that at the stage of framing charges, detailed discussions or in-depth inquiries are not required. The court must determine if a prima facie case is made out based on the complaint and materials presented by the prosecution. The court referenced the Supreme Court's ruling in State of Orissa vs. Debendra Nath Padhi, which held that the accused cannot produce material at the stage of framing charges. The petitioner's defense, including Form 32, could not be considered at this stage, as it would lead to a mini-trial, defeating the purpose of the Code of Criminal Procedure.Conclusion:The court concluded that no interference was required with the order dated 19.11.2012, which refused to discharge the petitioner. The petition was dismissed, and the petitioner was directed to prove her non-involvement in the company's affairs during the trial.
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