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2023 (3) TMI 1214
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....of the Securities and Exchange Board of India Act, 1992 pending before the Learned Judge-in-Charge, 5th Special Court, Kolkata and all orders passed therein including the order dated 29th July, 2019 qua the petitioner herein. 2. The petitioner's case is that the petitioner along with others have been arraigned as an accused along with others on the basis of a written complaint filed by the opposite party before the Learned 5th Special Court, Kolkata in Special Case No. SEBI/27/2017 as stated above. 3. The prosecution case, in short, is that the accused no.1 company, made a public issue of debentures without filing any offer document in violation of Section 56 of the Companies Act, 1956 nor did the accused persons file any statement instead of the prospectus. The accused persons also failed to file the Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India and violated the provisions of Section 73 of the Companies Act, 1956, and have also not complied with the aforesaid provisions for public issue of shares and thereby violated provisions of Sections 56, 60 and 70 read with Sections 56, 60 read with Sections 2(36), 73 of the companies Act, 1956 rea....
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....bout his resignation on 28th November 2013 to the Securities and Exchange Board of India vide letter dated 16th September 2014 against SEBI's letter vide no. ERO/OW/PH/M-5700/2014/12 on 5th August 2014 and the said information was duly recorded by the Securities and Exchange Board of India in their order no. WTM/PS/07/IMD//ERO/APR/206 dated 20th April, 2016. V. In the order dated 20th April 2016 passed by the Securities and Exchange Board of India it has been specifically mentioned that the allotment of the Non-Convertible Debentures (NCD) took place during the financial year 2012-2013 which initiates from 1st April 2012 and ends on 31st March 2013. In the said order it has been specifically recorded by the Securities and Exchange Board of India that the present petitioner and few other Directors joined the said company after allotment of the Non- Convertible Debentures (NCD). In respect to the aforesaid statement Section 27 of the SEBI Act, 1992 which read as follows is relevant:- "Offences by Companies:- (1) Where an offence under this Act has been committed by a company, every person who at the time the offence was committed was in charge of, and wa....
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....continue beyond the stage it has already reached shall degenerate itself into a weapon of undue harassment and persecution and as such the same is liable to be quashed for the ends of justice. 11. It is further submitted that the Learned Trial Court failed to appreciate that in the order dated 20th April 2016 passed by the Securities and Exchange Board of India it has been specifically mentioned that the allotment of the Non-Convertible Debentures (NCD) took place during the financial year 2012-2013 which initiates from 1st April 2012 and ends on 31st March 2013. In the said order it has been specifically recorded by the Securities and Exchange Board of India that the present petitioner and few other Directors joined the said company after allotment of the Non-Convertible Debentures (NCD). 12. Mr. Bhattacharjee has further submitted that the Hon'ble Apex Court on various occasions has held that Section 27 of the Securities and Exchange Board of India Act, 1992 deals with offences by Companies. Section 27 of Securities and Exchange Board of India Act, 1992 is pari materia to Section 141 of the Negotiable Instruments Act and similar provisions are also contained under the Drugs....
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.... accused company and never resigned (inner page 27 of order dated 20.04.2016). Therefore, even though the petitioner became a director of the accused company after the issuance of the debenture, he had a continuing liability to make repayment/refund of the money raised illegally from the public by the accused company as envisaged under Section 73(2) of the Companies Act, 1956 and Regulation 28 of SEBI (Issue and Listing of Debt Securities) Regulations, 2008 and non-compliance of such duty was to be visited by punishment as provided under Section 24(1) of the SEBI Act and Section 629A of the Companies Act, 1956. As the petitioner had neither remedied his violations by making the necessary refunds nor taken steps to reports the violations to the regulators, he is liable for all enforcements actions in the prescribed Acts. From the said order of the Whole Time Members of SEBI Passed on 20.04.2016, it is also established that the petitioner, being a director, appointed after issuance of the illegal debenture, obtained the monetary benefits of the debenture amount illegally raised by the accused company and subsequently, refused to make repayments of the said debenture despite specific ....
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.... SEBI Act. e) Regulation 28(a) of the SEBI (ISSUE AND LISTING OF DEBT SECURITES) REGULATIONS, 2008 clearly lays down that SEBI has powers to issue directions thereby directing an issuer to refund the application monies to the applicants in a public issue. Non-compliance of any direction passed under the any Rule or Regulation of SEBI, is an offence punishable under Section 24 (1) of the SEBI Act. In the instant case as well, SEBI by its order dated 20.04.2016 had passed directions upon the petitioner to repay the illegal gains made from the issuance of the illegal debenture, which has not been compiled by the petitioner and failure to comply with such direction is an offence punishable under Section 24(1) of the SEBI Act. Thus, it is palpably clear that the petitioner has committed an offence under Section 24(1) of the SEBI Act by not making repayments for the illegal debenture raised from the public. f) Section 629A of the Companies Act, 1956 provides for "Penalty where no specific penalty is provided elsewhere in the Act". Thus, for the violation of Section 73(2) of the Companies Act, 1956, the petitioner is liable to be prosecuted and under Section 629A of the ....
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....cee now understands that Mr. Partha Chakraborty did not remove his name from RoC records for reasons best known to him. v. During his tenure, the Company did not pay any remuneration/fees to him. vi. Further, during his tenure of four months, the Company did not mobilize funds through issuance of bonds and did not convene any meeting. vii. In view of the above, he is not in a position to provide information as sought by SEBI. viii. He does not have any connection with the Company since November 2013. The noticee further submitted that the Company's registered office was closed and indicated that Mr. Partha Chakraborty was the key person cum promoter of the Chakra group who would be able to provide information." (h) In paragraph 22(e) at page 27 of the order, it is held:- "From the details pertaining to the tenure of the directors, as mentioned in the table above, it can be inferred that:- a) Partha Chakraborti, Soma Chakraborti, Swapan Kumar Sen, Biplab Halder, Litan Chandra Sen, Prithwis Kumar Das and Swapan Majumdar were the directors of the Company when the Company made the offer and allotment of NCDs during 2012-201....
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....the petitioners under the dragnet of Section 27 of the SEBI Act. The Opposite Party No. 2 also relies upon S.M.S Pharmaceutical Ltd. Vs Neeta Bhalla & Anr. (2005) 8 SCC 89 (Para 10, 18 and 19) wherein it had been clearly laid down that to make a director liable for the acts of the company, it has to be specifically averred in the complaint that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. Such averments are clearly laid down in the instant petition of complaint and therefore, it is prima facie established that the petitioner is vicariously responsible for the acts of the company. (b) The Opposite Party No. 2 has also relied upon Gunmala Sales Pvt. Ltd Vs Anu Mehta and Ors. (2015) 1 SCC 103 (para 31, 31) wherein it has been held that a complaint cannot be quashed merely on the ground that apart from the basic averment no particulars are given in the complaint about his role, because ordinarily the basic averment, would be sufficient to send him to trial and it could be argued that his further role could be brought out in the trial. Hence, with requirement of basic averment being fulfi....
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.... apparent that the petitioner is not connected with the allotment of NCDs. At page 27 paragraph 22 (g) of the said order, the liability of the company and its directors has been held:- "(g) The liability of the company and directors to repay under Section 73(2) of the Companies Act, 1956 and Section 27 of the SEBI Act, is a continuing liability and the same continues till all the repayments are made. Therefore, the directors (irrespective of whether they continue or resign) who were present during the period when the Company made the offer and allotted NCDs shall be liable for violation of Sections 56, 60 and 73 of the Companies Act, including the default in making refunds as mandated therein. As the liability to make repayments under Section 73(2) of the Companies Act read with Section 27 of the SEBI Act is a continuing liability, the persons who join the Company's Board pursuant to the offer and allotment of NCDs shall also be liable if the Company and the concerned directors have failed to make refunds as mandated under law." 26. Section 73 of the Companies Act, lays down:- "Section 73. Prohibition on acceptance of deposits from public. (1) On and a....
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.... deposits partially, then, the deposit shall be termed as "unsecured deposits" and shall be so quoted in every circular, form, advertisement or in any document related to invitation or acceptance of deposits. (3) Every deposit accepted by a company under subsection (2) shall be repaid with interest in accordance with the terms and conditions of the agreement referred to in that sub-section. (4) Where a company fails to repay the deposit or part thereof or any interest thereon under subsection (3), the depositor concerned may apply to the Tribunal for an order directing the company to pay the sum due or for any loss or damage incurred by him as a result of such non-payment and for such other orders as the Tribunal may deem fit. (5) The deposit repayment reserve account referred to in clause (c) of sub-section (2) shall not be used by the company for any purpose other than repayment of deposits." 27. The tenure of the petitioner was from August to November, 2013. 28. Section 27 of the SEBI Regulation relates to procedure for action in case of violation of regulations and inspecting board therein. 29. The petitioner was a director from August, 2013 ....