Police investigation may proceed despite SEBI involvement where alleged collections appear to be deposits, not genuine advisory fees.

Section 26 of the Securities and Exchange Board of India Act does not bar police action for cognizable offences under other laws, and section 32 preserves the operation of the Indian Penal Code. On the stated facts, the FIR and investigation remained valid because the allegations disclosed cognizable offences and were not defeated by the involvement of SEBI-related information. The document also notes that collections presented as advisory fees may, on receipts, invoices, payment pattern and surrounding circumstances, be treated as prima facie deposits under the M.P. Nikshepakon Ke Hiton Ka Sanrakshan Adhiniyam, 2000, which can justify refusal of bail where dishonest collection is indicated.

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Issues: (i) Whether the police investigation and registration of the FIR were barred because the alleged conduct also attracted the Securities and Exchange Board of India Act, 1992. (ii) Whether the amounts collected from investors were prima facie fees for advisory services or deposits within the meaning of the M.P. Nikshepakon Ke Hiton Ka Sanrakshan Adhiniyam, 2000, so as to justify refusal of bail.

Issue (i): Whether the police investigation and registration of the FIR were barred because the alleged conduct also attracted the Securities and Exchange Board of India Act, 1992.

Analysis: The statutory bar under section 26 of the Securities and Exchange Board of India Act, 1992 operates only in relation to offences punishable under that Act and does not exclude prosecution for offences under other enactments such as the Indian Penal Code, 1860. Section 32 of the Securities and Exchange Board of India Act, 1992 preserves the operation of other laws. The FIR named the complainants, their statements were recorded, and the allegations disclosed cognizable offences requiring police investigation. The fact that information was obtained from SEBI did not invalidate the FIR or the investigation.

Conclusion: The police investigation was not barred, and the prosecution under the Indian Penal Code, 1860 could proceed.

Issue (ii): Whether the amounts collected from investors were prima facie fees for advisory services or deposits within the meaning of the M.P. Nikshepakon Ke Hiton Ka Sanrakshan Adhiniyam, 2000, so as to justify refusal of bail.

Analysis: The receipts and invoices did not support the claim that the collections were fixed fees for services. The pattern of payments, the service descriptions, and the surrounding circumstances indicated that the amounts were collected from customers with assurances of investment and returns. On the material available, the collections appeared more in the nature of deposits than fees. The applicant's role in the operations at Indore and the prima facie involvement in the alleged dishonest collection of money weighed against grant of bail.

Conclusion: The amounts were prima facie deposits, and the applicant was not entitled to bail.

Final Conclusion: In view of the prima facie involvement in cognizable offences and the apparent collection of deposits under the guise of fees, no ground was made out for release on bail.

Ratio Decidendi: Section 26 of the Securities and Exchange Board of India Act, 1992 does not bar police action for offences under other laws, and collections that are not genuine service fees but are prima facie deposits can support criminal investigation and denial of bail.

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