TaxTMI 
TaxTMI 
2023 (7) TMI 586
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.... and Section 27 of SEBI Act, was filed against the company, Aim Plantation Ltd along with its directors, including the petitioner herein. As per the said complaint, it had been alleged by SEBI (the complainant therein) that the aforesaid company was running a Collective Investment Scheme (C.I.S.) and had raised an aggregate amount of Rs. 0.532 crores from the general public, but had not applied to the former for registration of the collective investment schemes allegedly being operated by it. It is further alleged that the aforesaid company never initiated any steps for winding up of the schemes and for repayment to the investors despite notices. In view of the above allegations, SEBI, by way of the aforesaid mentioned complaint alleged that the company along with its directors violated Sections 11B, 12(1B) of the Securities and Exchange Board of India Act, 1992 read with Regulations 5(1), 68(1), 68 (2), 73 and 74 of C.I.S. Regulations 1999. 3. Learned counsel for the petitioner restricted his submissions only to the extent that the alleged complaint made no specific averments qua the present petitioner. In support of the aforesaid submission, the learned counsel for the petitio....
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.... liable under Section 27 of the SEBI Act, 1992. 4. It was the submission of the learned counsel for the petitioner that the Learned Magistrate erred while taking cognizance of the alleged offences and thereby issuing summons to the present petitioner in the absence of any cogent material placed on record. 5. The learned counsel for the respondent submitted that the offence committed by the present petitioner is an act of omission and commission whereby the accused had failed to comply with statutory provisions. In support of the aforesaid submission, he urged that the petitioner along with the other co-accused persons sponsored and caused to be sponsored C.I.S., without getting the mandatory registration from SEBI, thereby violated the provision of Section 12(1B) of the SEBI Act. It was also the contention of the learned counsel for the respondent that the petitioner being the director and promoter of the accused company and person in charge of the affairs of the accused company, was required to wind up the existing C.I.S., and duly file audited reports after make necessary payments to the investors, with the regional office of SEBI, as per procedure under the statutory regul....
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.... commission of the offences." 15. In view of the decision in Sushila Devi which is on identical facts concerning a complaint by SEBI against a plantation company, and which follows the judgment of the Supreme Court in N.Rangachari, the inevitable conclusion is that the complaint in question do not make out a prima facie case against the petitioners for the offences complained of under the SEBI Act" 8. Learned counsel for the respondent further drew the attention of this Court to paragraphs 14 & 15 of Ankur Forest and Project Development India Ltd. and others v. SEBI, 2011 SCC OnLine Del 690 wherein it was held as under: "14. A person normally having business or commercial dealings with a company, would satisfy himself about its creditworthiness and reliability by looking at its promoters and Board of Directors and the nature and extent of its business and its memorandum or articles of association. Other than that, he may not be aware of the arrangements within the company in regard to its management, daily routine, etc. thereforee, when a cheque issued to him by the company is dishonoured, he is expected only to be aware generally of who are in charge of the af....
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....tion of this witness had been conducted on this aspect. Thus the testimony of this witness on this aspect has gone unchallenged. In response to the question No. 2 that the Appellant No. 1 that is the company had filed the details including the list of Directors, funds mobilized and memorandums and articles exhibited as Ex. CW1/1, the Appellant Nos. 2 to 5 in their statements under Sec. 313 CrPC have stated that we did not file this information. They have shown ignorance even about the audited balance-sheets etc. However, the defence witness DW1 Tarsem Saini has stated in his testimony that the company was run by the Appellant Nos. 2 to 5 and Hemant Sharma as directors. The relevant part of the testimony of DW1 reads as under: "....Accused No. 1 company had mobilized only Rs. 1 to 1.5 lac rupees and the same stand repaid. It is wrong to suggest that the accused no. 1 company has received Rs. 34,79,151/- as investment. I was the director of the accused company apart from me Sh. Hemant Sharma, Sh. Rajbir Singh, Sh. Jagjit Singh, Sh. Mohan Lal Saini were also directors of accused no. 1 company. I had stated that our company started few months before the filing of the petition ....
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.... conduct of the business of the company because as per Memorandum of Association of the company, petitioner was merely one of the initial subscribers of the shares of the company and was not the director. 6. Learned Senior Counsel for the petitioner has further argued that allegations against the petitioner are contained in paragraph 20 of the complaint only and correspondence as regards SEBI regulations were addressed to and replied by the company and no such correspondence was made by the petitioner on behalf of the company." 11. Heard the parties and perused the record. 12. Section 24 and Section 27 of the SEBI Act provide as under: "24. Offences - (1) Without prejudice to any award of penalty by the adjudicating officer under this Act, if any person contravenes or attempts to contravene or abets the contravention of the provisions of this Act or of any rules or regulations made thereunder, he shall be punishable with imprisonment for a term which may extend to [ten years, or with fine, which may extend to twenty-five crore rupees or with both]. (2) If any person fails to pay the penalty imposed by the adjudicating officer or fails to co....
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....pect to the directors:- "18. In view of the above, it is charged that the Accused No. 1 has committed the violation of Sec. 11B, 12 (IB) of Securities and Exchange Board of India Act, 1992 read with Reg. 5 (1) read with Reg. 68(1), 68(2), 73 and 74 of the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999 which is punishable under Sec. 24 (1) of Securities and Exchange Board of India Act, 1992. The Accused No. 2 to 8 are the directors and / or persons in charge of and responsible to the Accused No. 1 for the conduct of its business and are liable for the violations of the Accused No. 1, in terms of Sec. 27 of Securities and Exchange Board of India Act, 1992." [emphasis supplied] In the present case, it is an admitted fact that the present petitioner (Accused no. 3 in the complaint) along with other co-accused persons were the directors of the accused company at the relevant time when the offences have been alleged to have been committed. 14. Recently, the Hon'ble Supreme Court, in S.P. Mani and Mohan Dairy v. Dr. Snehalatha Elangovan, 2022 SCC OnLine SC 1238, with regard to the issue of specific averments in a complaint,....