TMI Blog2023 (6) TMI 195X X X X Extracts X X X X X X X X Extracts X X X X ..... hich suggests that the liability is fastened upon an individual by virtue of being in charge, and being responsible when the offence was committed, and not merely on the basis of holding a designation or office in the company. Even an individual not holding a particular designation in the Company, but who was at the helm of affairs at the relevant time can be held liable. Hence, such vicarious criminality is not attributed to individuals simply by virtue of the position held by them in the company. The Director or officer of the company needs to have played a role in the functioning of the Company or in the commission of the offence, as recorded in the Complaint, to be arraigned as an Accused. There must be specific averments against the Accused Director detailing the manner in which the Director was responsible for the conduct of the business. A company may have numerous Directors, however, it is apposite to state that to make each of these Directors accused persons simply by virtue of their position in the Company is not the true import of Section 27 of the SEBI Act. As stated, there is not even a bald cursory averment which ties Respondent No. 1 to the allegations of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the Director of IHIL. 3. Vide Order dated 29.03.2000, the Ld. ACMM, Tis Hazari, Delhi was pleased to issue summons to all the accused persons, including Mr. Arihant Jain. Thereafter, a Revision Petition under Section 397, CrPC for setting aside the Summoning Order dated 29.03.2000 was filed by Mr. Arihant Jain. 4. Vide Impugned Order dated 24.03.2009, the Learned Additional Session Judge set aside the summoning order qua the Respondent No. 1 herein while observing that the Complaint filed by the Appellant herein did not contain any material to suggest that the Respondent No. 1 herein was responsible for the carrying out the business of IHIL. Aggrieved by this order, the instant Revision Petition was filed by the SEBI. 5. In sum and substance, the Ld. Counsel for the Petitioner has argued that the Impugned Order ought to be set aside since the averments in the complaint, when read in their entirety, establish a prima facie case against the Respondent No. 1. 6. Per contra, the counsel for Respondent No. 1 has defended the propriety of the Impugned Order by stating not only that the Summoning Order was quashed qua similarly placed accused persons but also that without sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also the office of Shri Prakash Gupta Shri Prakash Gupta and his wife Smt. Nirmal Gupta PKP consultants P Ltd. B-34, Sagar Apts, Tilak Marg, New Delhi-1 is the regd. Office of IDEAL and also the office of Shri Prakash Gupta Directors include Shri Prakash Gupta and his wife Smt. Nirmal G Fidelity FinvestPvt. B-34, Sagar Apts, Tilak Marg, New Delhi-1 is the regd. Office of IDEAL and also the office of Shri Prakash Gupta Directors included Salil Dubey employee of IDEAL and Shri Sudhir Gupta, a friend of Shri Prakash Gupta. Fourays Construction P Ltd. No linkage. Directors include Smt. Nirmal Gupta, Shri Salil Dubey, an employee of IDEAL, Shri Sudhir Gupta, a friend of Shri Parkash Gupta and Shri Sushil Kumar, a relative of Shri Prakash Gupta, A D Data Products D-169, Sarita Vihar, New Delhi, a property owned by Shri Parkash Gupta Proprietary concern of Shri Vikram Kumar an employee of Shri Parkash Gupta. Bhagyauday Investment P. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Regulations 6(1), 8(1), 10(1) and 10(2) of Takeover Regulations, 1994. Shri Parkash Gupta Regulation 4(a) of UFTP Regulations 6(1), 8(1), 10(1) and 10(2) of Takeover Regulations, 1994. 13. The above table also does not contain the name of the Respondent No. 1. Hence, the Complaint is entirely silent insofar as the Respondent No. 1 is concerned. 14. A perusal of the Complaint also indicates that the Appellant had issued summons under Section 11(13) of the SEBI Act, 1992 to Accused Nos. 5-7 and 9 Companies, Accused No. 16 i.e., Mr. Prakash Gupta, and Shri L.R. Maurya, Accused No. 10. The Complaint refers to the statements given by both, Accused Nos. 10 and 16. Mr. Prakash Gupta, in his statement, mentioned that the Accused No. 4-9 Companies were directly or indirectly the group companies of Accused No. 10 and 11, and their friends and family. He further stated that the affairs of these companies were handled by him from his office and residence. This was reiterated by Accused No. 10 i.e., Shri L.R. Maurya in this statement recorded on 05.07.1999. He admitted that Accused No. 4-9 Companies were controlled directly or indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed all due diligence to prevent the commission of such [contravention]. (2) Notwithstanding anything contained in sub-section (1), where an [contravention] under this Act has been committed by a company and it is proved that the [contravention] has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of the [contravention] and shall be liable to be proceeded against and punished accordingly. Explanation . For-the purposes of this section, (a) company means any body corporate and includes a firm or other association of individuals; and (b) director , in relation to a firm, means a partner in the firm. 17. It emerges that every person responsible for the commission of the offence or with the knowledge of whom the offence was committed, is liable for the offence. There is now burgeoning jurisprudence both under the SEBI Act, and under the Negotiable Instruments Act, 1881 which suggests that the liability is fastened upon an individual by virtue of being in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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