SECURITIES AND EXCHANGE BOARD OF INDIA v. GAURAV VARSHNEY & ANR.

83Copy pinpoint83. The position stands reversed again. 'The Board' is the appellant in this matter and Raj Chawla, accused no. 10 before the trial Court, is the respondent.

84Copy pinpoint84. The instant appeal has been preferred by 'the Board' against c the respondent - Raj Chawla, who had approached the High Court by filing Criminal Miscellaneous Case 3937 of2009, under Section 482 of the Cr.r.~., seeking quashing of the complaint filed by 'the Board', dated 15.12.2003 in the Court of Chief Metropolitan Magistrate, Tis Hazari Court, Delhi, under Section 200 of the Cr.P.C. read with Sections 24(1) D and 27 of the SEBJ Act. On the receipt of the above complaint, the Chief Judicial Magistrate had summoned the accused on 15 .12.2003 for 21.2.2004. The High Court, through the impugned order dated 12.1.2010, quashed the criminal complaint filed by 'the Board' against Raj Chawla. 'The Board' has approached this Court by filing the instant criminal appeal, to assail the order of the High Court, dated 12.1.2010. E

85Copy pinpoint85. In order to effectively adjudicate upon the cause which has arisen with reference to the respondent- Raj Chawla, it would be essential to notice that the respondent - Raj Chawla was a promoter-director of Mis. Fair Deal Forests Ltd .. Mis. Fair Deal Forests Ltd. was incorporated under the Companies Act, 1956, on 16.10.1996. The respondent- Raj F Chawla resigned from the directorship of the said company on 30.3 .1997. On his resignation, he submitted Form-32 with the Registrar of Companies. It was pointed out, that Mis. Fair Deal Forests Ltd. was operating a collective investment scheme, and had raised a sum of Rs.5,20,000/- from the general public, for the said purpose. Mis. Fair G Deal Forests Ltd. had also submitted to 'the Board', an information memorandum, in response to the general public notice issued by 'the Board', detctiling the particulars of the investors, including the amount payable to each investor, and the manner in which such amount was determined. H

84 SUPREME COURT REPORTS [2016] 7 S.C.R.

86Copy pinpoint86. Dissatisfied with response received, 'the Board' filed a criminal complaint against M/s. Fair Deal Forests Ltd. and 9 of its directors, wherein the respondent - Raj Chawla was arrayed as accused no. I 0. A relevant extract of the complaint is reproduced below:- "7. The accused no. I is a company registered under the B provisions of Companies Act and the accused nos. 2 to 11 are the Directors of the accused no. I company. The accused nos. 2 to 11 are the persons incharge and responsible for the day to day affairs of the company and all of them were actively connived with each other for the commission of offences.

8. The accused no. 1 is operating collective investment schemes c and raised an aggregate amount of nearly Rs.S,20,000/- from the general public.

9. The accused no. I company filed infonnation/details with SEBI regarding its collective investment schemes pursuant to SEBI press release dated November 26, 1997, and/or public notice dated D December 18, 1997. *** *** ***

12. SEBI having regard to the- interest of investors and request received from various persons operating collective investment schemes, extended the last date of submitting the applic<1tion by E existing entities upto March 31, 2000 and the same was declared by SEBI vide a press release and a public notice.

13. However, the accused no. I failed to make any application with SEBI for registration of the collective investment schemes being operated by it as per the said regulations.

F 14. It is submitted that in terms of Regulations 'i .J( 1) of the said regulations, an existing collective investment scheme which failed to make an application for registration with SEBI, shall wind up the existing collective investment scheme and repay the amounts collected from the investors. Further, in terms of Regulation 74 of the said regulations, an existing collective investment scheme which is not desirous of obtaining provisional registration from SEBI shall formulate a scheme of repayment and make such repayment to the existing investors in the manner specified in Regulation 73.

15. However, the accused no. I neither applied for registration under the said regulations nor took any steps for 11 inding up of the

SECURITIES AND EXCHANGE BOARD OF INDIA v. 85 GAURAVVARSHNEY & ANR. [JAGDISH SINGH KHEHAR, J.]

schemes and repayment to the investors as provided under the regulations and as such had violated the provisions of Section 12(1B) of Securities and Exchange Board oflndiaAct, 1992, and Regulation 5(1) read with Regulations 68(2), 73 and 74 of the said regulations. *** *** *** B

18. The accused no. I raised a total amount of nearly Rs.5,20,000/- by its own admission and its failure to refund the amounts to the general public who invested hard-earned money in the schemes operated by the accused no. I, caused pecuniary damage to them.

19. In view of the above, it is charged that the accused no. I has committed the violation of Sections 11 B, 12(1 B) of the Securities c and Exchange Board of India Act, 1992 and regulation 5( 1) read with regulations 68( I), 68(2), 73 and 74 of the Securities and Exchange Board of India (Collective investment schemes) Regulations, 1999, which is punishable under Section 24( 1) of the Securities and Exchange Board of India Act, 1992." D

87Copy pinpoint87. We are satisfied, that the controversy raised in the instant appeal is exactly similar to the one decided in Criminal Appeal nos. 827- 830 of 2012 (Securities and Exchange Board of India vs. Gaurav Varshney and another), for the reason that the respondent herein had resigned from the position of director of Mis. Fair Deal Forests Ltd., on E 30.3.1997. We are also satisfied, that the controversy raised in the instant appeal is also similar to the one decided in Criminal Appeal no. 251 of 2015 (Sunita Bhagat vs. Securities and Exchange Board of India) for the reason, that the complaint in the present case was filed against the respondent on 15.12.2003 i.e., well after the period ofone year, calculated from the date of the respondent's resignation. For the reasons recorded F in the two similar cases referred to above, the instant appeal deserves to be rejected. Accordingly this appeal stands dismissed. Note: The emphases supplied in all the quotations in the instant judgment, are ours. G

Devika Gujral Appeals disposed of.