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TMI Blog2014 (1) TMI 1956X X X X Extracts X X X X X X X X Extracts X X X X ..... n the security market immediately before 25.1.1995, for which no certificate of registration was required prior to the said date, to continue to operate till such time Regulations are made under clause (d) of sub-section (2) of Section 30, which to the extent it is relevant, permits SEBI to make Regulations inter alia providing for the conditions subject to which certificate of registration is to be issued, the amount of fee is to be paid for certificate of registration and the manner of suspension or cancellation of certificate of registration under Section 12 of the Act. 2. The Securities and Exchange Board of India Regulations, 1999, (hereinafter referred to as 'the Regulations') came to be notified only on 15.10.1999. The appellants in Crl. A. Nos.330/2010, 331/2010, 332/2010 & 334/2010, namely Mr. Brijinder Makkar, Mr. S.P. Kalia, Mr. Manoj Kapur & Smt. Sudha Mittal respectively, are the Directors of the Company, Asian Plantations Limited, and the appellant in Crl. A. No.329/2010, Mr. Shalender Kaushik, is one of the subscribers to its Memorandum and Articles of Association. 3. Pursuant to a Government press release dated 18.11.1997, notifying that the schemes issuing instru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts were convicted under Sections 24 & 27 of the Act and were sentenced to pay fine of Rs. 5.00 lakh each. The appellants were also sentenced to undergo RI for six (6) months each. They were also to undergo RI for six (6) months each in default of payment of fine. Being aggrieved the appellants are before this Court by way of these appeals. 6. Admittedly, the Company came to be incorporated on 21.9.1995, which was much after sub-section (1B) of Section 12 of the Act came to be notified. In view of the absolute bar contained in the aforesaid sub- section, the Company could not have come out with any scheme, without obtaining a certificate of registration from SEBI, in accordance with its Regulations on the subject. Admittedly, no such registration was even applied for by the Company before it came out with its scheme. As far as the proviso is concerned, it is evident from its bare perusal that it applies to only those schemes which were already in operation on 25.1.1995 when Security Laws (Amendment) Act, 1995, came into force. Though really not necessary, a reference in this regard may be made to a judgement of the Allahabad High Court in Paramount Biotech Industries Limited Vs. U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) months from the date of receipt of intimation from SEBI, and such memorandum detail the state of affairs of the scheme, the amount repayable to each investor and the manner in which such amount was determined. A perusal of the report Ex.CW1/D1 submitted by the appellants to SEBI does not show compliance with the provisions of Regulation 73. In fact, the report does not even indicate that the information memorandum was sent to the investors, nor does it show when the alleged payment was made to them. As noted earlier, the information memorandum was to be sent within two (2) months from the receipt of intimation from SEBI and the payment was to be made within three (3) months from the date of the information memorandum. Clause 3 of Annexure A to the report required the Company to indicate the date of sending the information memorandum. No date, however, is given against the said clause and it is stated that the terms of Regulation 73 was not made as the management itself decided to wind up the Company and start repayment of investors' money. The alleged decision of the management to wind up the Company and start repayment did not relieve the Company of its obligations under the Reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tributable to any neglect on their part, they shall be guilty in terms of sub-section (2) of Section 27 even if they were not persons in-charge of and responsible to the Company for conduct of its business. 12. As per the bio datas submitted by the Company along with the letter Ex.CW1/1, the appellant, S.P. Kalia was a Director of the Company looking after Personnel Management Section and day-to-day routine work of the Company; the appellant, Brijinder Makkar, was a Director taking part in policy making in respect of Agriculture Projects of the Company; the appellant, Manoj Kapur, was a Director looking after Administration and policy making; whereas the appellant Sudha Mittal was a housewife. The appellant Shalender Kaushik was one of the subscribers to its Memorandum and Articles of Association. In view of the above-referred bio datas, there can be no dispute that the appellants, S.P. Kalia, Brijinder Makkar & Manoj Kapur were in-charge of and responsible to the Company for conduct of its business. No evidence has been led by them to prove that contravention of sub- section (1B) of Section 12 and CIS Regulations of SEBI was committed without their knowledge or that they had exer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Company, as is evident from Section 291 of the Companies Act which provides that subject to the provisions of that Act, the Board of Directors of a company shall be entitled to exercise all such powers and to do all such acts and things as the company is authorized to exercise and do. There is no quarrel with the proposition of law enunciated by the Hon'ble Supreme Court in N. Rangachari (supra) but mere being a Director of the Company does not render a person liable to conviction with the aid of Section 27 of the Act unless it is shown that such a person was also in-charge of and responsible to the Company for conduct of its business or it is proved that the offence was committed with the consent or connivance or was attributable to any neglect on the part of such a person. No such consent, connivance or neglect on the part of Smt. Sudha Mittal, however, came out during the course of her deposition and no evidence in this regard was produced by SEBI. For the reasons stated hereinabove, the appellant, Smt. Sudha Mittal is given benefit of doubt and is hereby acquitted. 16. As far as appellant, Shalender Kaushik, in Crl. A. No.329/2010 is concerned, admittedly, he has never b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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