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SEBI Versus Information Technologies (India) Lrd & Others

2017 (1) TMI 576 - DELHI HIGH COURT

Condonation of delay - reasons for delay - Held that:- A perusal of the complaint and the application seeking condonation of delay reveals that efforts were made to trace the respondents and to inspect the records which were all frustrated and finally reverting back to the IFCIL, the petitioner collected the documents and filed the complaint. Thus the date of knowledge of offence to the petitioner can be attributed only when complete facts with incriminating documents were disclosed by IFCIL aft .....

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filing of the complaint. Hence there was no need for seeking condonation of delay in filing the complaint. - CRL. M. C. 1341/2011 - Dated:- 9-1-2017 - Mukta Gupta, J. For the Petitioner : Mr. Anantram Nadkarni, Advocate with Mr. Ashish Aggarwal, Adv For the Respondents : Mr. Ravi Nayak, APP, Mr. Ramesh Gupta, Sr. Adv. with Mr. Shakeel, Mr. Y.K. Sharma, Advs. for R-1,24&5. Mohd. Auram, Adv.for R-3. Mr. Anendra Kr. Saraswat, Adv. JUDGMENT 1. The petitioner Securities and Exchange Board of Ind .....

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delay and extension of period of limitation in filing the complaint, the petitioner stated that by the complaint dated 23rd December, 2002 M/s. Industrial Finance Corporation of India Limited (in short IFCIL) informed the petitioner that in spite of repeated requests respondent No.1 did not transfer the 2.265 million equity shares of the respondent No.1 company having face value of ₹ 5/- each to the account of M/s. IFCIL. On receipt of the complaint, the petitioner forwarded the same to t .....

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was received from respondent No.1. 3. Thus on 21st April, 2003 the petitioner ordered for carrying out the inspection of the books of accounts, other records and documents of respondent No.1 company and in this regard the Chairman SEBI in exercise of his power conferred under Section 4(3) of the SEBI Act read with Section 18 of the Depositories Act, 1996 and Regulation 59 of the SEBI (Depositories and Participants) Regulations, delegated its power to the Executive Director Shri Pratip Kar and ap .....

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e traced and it was reported that educational institution was being run there by respondent No.2 and others in the name of M/s. Rai Foundation. Persons at M/s. Rai Foundation claimed ignorance about respondent No.1, hence the other addresses were contacted. It was finally found that respondent No.1 had shifted to Microwave Towers, Adekhi Colony, Shankar Vihar Colony, Hardaoi Road, Lucknow. Even at this address, there was no trace of respondent No.1. Different addresses which came to the knowledg .....

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Act could not be filed within the period of limitation of six months as prescribed under Section 468 read with Section 469 Cr.P.C. Thus it was prayed that the delay be condoned. 4. The learned ACMM took cognizance of the offence on 30th September, 2004 and besides issuing summons to the respondent also issued notice in the application seeking condonation of delay. In a revision petition being Crl. Rev. Pet No. 428/2005 filed by the respondents before this Court, it was held that the learned ACMM .....

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mpany and its director; ultimately the complainant was supplied documents by M/s. IFCIL which it could have taken within the period of limitation. Hence the application seeking condonation of delay was dismissed. 6. In the revision petition filed by SEBI, the learned ASJ vide the impugned order dated 18th January, 2011 agreed with the view expressed by the learned ACMM. The Court noted that enquiry into the complaint of M/s. IFCIL was a mere bureaucratic exercise rather than an investigative pro .....

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lapse of period of two months after equity shares had been lodged for dematerialization with the letter dated 17th November, 2000. M/s. IFCIL had the knowledge of the offence by middle of January 2001, thus the complaint was highly belated. In view of the decision of this Court in M/s. Nestle India Ltd. & Ors. Vs. State & Anr. 81(1999) DLT 283 the revision petition was dismissed. 7. Before this Court the contention of learned counsel for the petitioner is two-fold; firstly that sufficien .....

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dustrial Ceramics P. Ltd. & Ors. (1990) 68 CompCas 36(Mad) and Anita Chadha Vs. Registrar of Companies 74 (1998) DLT 537. 8. Contradicting the arguments, learned counsel for the respondents contend that the two Courts below have held that there was no sufficient cause to condone the delay and this Court will not interfere in the concurrent finding of fact. Moreover the plea that it is a continuing offence was not taken before the learned Metropolitan Magistrate. Reliance is placed on B. Para .....

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ompanies vs. Rajshree Sugar & Chemicals Ltd. & Ors. and it was held: 14. The only decision cited by the respondents which is on Section 113 of the Act is the decision in Nestle India Limited (supra). Neither the learned Judge in his decision in Nestle India nor the High Court in the judgment under appeal considered the provisions of Section 621(1) of the Companies Act, which provides: 621(1) No Court shall take cognizance of any offence against this Act (other than an offence with respec .....

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been defined in the Code. However, as far as offences under the Companies Act are concerned, the words must be understood and construed in the context of Section 621 of the Act. If the words 'person aggrieved' are read to mean only 'the person affected' by the failure of the Company to transfer the shares or allot the shares, then the only 'person aggrieved' would be the transferee or the allottee, as the case may be. Under Section 621 of the Act, no Court can take cogniz .....

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;person aggrieved' as used in Section 469(1)(b) restrictively particularly when, as in this case, the statute creating the offence provides for the initiation of the prosecution only on the complaint of particular persons. Having regard to the clear language of Section 621 of the Act, we have no manner of doubt that the appellant would be a 'person aggrieved' within the meaning of Section 469(1)(b) of the Code in respect of offence (except those under Section 545) against the Compani .....

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imarily compensatory in nature whereas Section 113(2) is punitive. An application under Section 113(3) can only be made by the transferee. And as already seen, a transferee who is not an existing shareholder of the Company cannot file a complaint under Section 113(2) at all. 18. For the reasons stated, we are of the view that the appellant as a person aggrieved would be entitled to the benefit of the provisions of Section 469(1)(b) of the Code. It is not in dispute that the appellant came to kno .....

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ies to whom the complaint was forwarded was also an aggrieved party. Similar view was expressed by the Calcutta High Court in the decision reported as 1983 (53) Comp. Cas 54 Sushil Kumar Lahiri vs. Registrar of Companies. Thus the date to compute the delay in filing the complaint is not the date of knowledge of the shareholder but that of the complainant who files the complaint in the Court, which in the present case is SEBI, the petitioner herein. 11. In Sanjay Suri (Supra) the learned Single J .....

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the offence came to the knowledge of the person aggrieved by the offence., the next question which comes up for consideration is when the offence alleged to have been committed by the petitioners came to the knowledge of the complainant/respondent. The contention advanced by the learned Counsel for the petitioners is that since the office of the respondent is required to scrutinize the balance sheet, etc. at the time it is filed and not to just store the document in its godown, the offence alleg .....

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mp; 82 in shares of other bodies corporate was in excess of 30% limited prescribed in Section 372(2) of the Companies Act and the approval of Central Government as well as Resolution under Section 376(2) having not been obtained, the respondents had committed an offence under Section 377(2)(4) read with Section 374 of Companies Act. It was held by the High Court that the Registrar of Companies was deemed to have knowledge of the contents of the Balance Sheets and of the offence, on the day, the .....

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of Companies, he is deemed to have knowledge about the contents of the balance-sheets and, consequently, of the offence, and limitation will start running from that day onwards. 19. As against this, the learned Counsel for the respondent has referred to decision of Kerala High Court in Thomas Philip and Ors. v. Assistant of Registrar of Companies and Anr. 2006 (133) Comp Cas 842. In the case before Kerala High Court, a complaint was filed on October, 24, 2001 under Section 628 of Companies Act, .....

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to go by the view taken by Andhra Pradesh High Court in Mishra Dhathu Nigam Ltd. v. State 1998 (92) Comp Cas 730. During the course of judgment, the High Court observed that there may be patent as well as latent offences revealed from the Balance Sheet and that at least regarding latent offences, merely because a Balance Sheet comes into the hands of the Registrar, it cannot be assumed that the Registrar had come to know of all the offences revealed on a vetting of the Balance Sheet. The learne .....

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r, actually or constructively, on the date when the Balance Sheet was delivered at his office, so as to hold that the period of limitation starts running from that date. It was noticed that Balance Sheets and Annexures thereto are usually voluminous documents and receipt of Balance Sheet or even a cursory perusal cannot and may not bring to the knowledge of the Registrar and his officials, information about the commission of the offence. The learned Judge of the High Court felt that detailed con .....

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interpretation were placed on Section 469(1)(b) the complainants will be able to assert that the offence came to their knowledge only on a later point of time that suits them is disturbing. But the contra interpretation may result in graver injustice and prejudice. In an appropriate case the indicate will be able to contend and establish that the complainant did have actual knowledge or at least constructive knowledge about the offence and the period of limitation had started running from that .....

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ere filing of Balance Sheet is sufficient to impute knowledge of the offence to the Registrar of Companies, inter alia, observed as under: Mere filing of the balance-sheets with voluminous annexures does not necessarily mean that the offence can be detected by the Registrar immediately. As there are a number of limited companies, it is humanly impossible for the Registrar to closely scrutinise each and every balance-sheet the moment it is filed and to find out whether any offence has been commit .....

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panies v. H.C. Kothari [1992] 75 Comp Cas 688. Accordingly, the first contentions of Mr. S. Ravi is rejected. 21. Though the complaints, subject matter of these petitions, were filed within one year from the date inspection was concluded, even the date on which the contraventions came to the knowledge of the Inspecting Report, cannot be said to be the date when the offence came to the knowledge of the complainant. It was only on receipt of Inspecting Officer, in its office that the complainant c .....

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atter of Crl. M.C. 531/2009, the allegation in the complaint is that the Company having acquired 95 % of Total Paid Capital and Total Care Limited, the Balance Sheet of the acquired Company was also required to be attached to the Balance Sheet of the company and that having not been done, there was contravention of Section 212(1) of Companies Act. Even if the office of Registrar of Companies were to scrutinize the Balance Sheet of the Company, it could not have known that Total Care Limited had .....

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lainant could have known commission of this offence, unless it is carried out detailed inspection of the record of the Company and also cross- checked the information given in its Balance Sheet with the information given in the Balance Sheet and other documents of Total Care Limited. Therefore, the offence alleged to have been committed by the petitioners, cannot be said to be a patent one, which could be detected merely by examination of the Balance Sheet. 23. The allegation in the complaint su .....

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