Case Details

Item No. 01 CC No. 36/14 New Case No. 11/2016 SEBI v. M/s N. P. Agro India Ltd. 19.08.2016 Present: Sh. Vivek Yadav, Assistant Manager, Legal for SEBI. Sh. Rakesh Kumar Singh, Advocate, Ld. Counsel for accused no. 1 alongwith AR, Sh. Yogender Singh. Accused no. 2 and 3 are in person, on bail. Accused no. 4 is no more and proceedings qua him already stands abated. It has been informed by the official from SEBI that application for compounding preferred by accused has been finally rejected by the SEBI which would be conveyed to the accused in due course. In these circumstances, since the charge has not been framed so far, list the case on 21.10.2015 for consideration on charge. [Vimal Kumar Yadav] ASJ-01/CENTRAL/DELHI 19.08.2016/bh

Item No. 01 CC No. 36/2014 New Case No. 11/2016 SEBI v. M/s N. P. Agro India Ltd. 21.10.2016 Present: Sh. Vivek Yadav, Asstt. Manager Legal for SEBI. Sh. Rakesh Kumar Singh, Advocate, Ld. Counsel for accused no. 1 alongwith AR, Sh. Yogender Singh. Accused no. 2 & 3 are in person, on bail. Accused no. 4 has already died and proceedings qua him stands abated. Sh. Vipul Sharma, Advocate, Ld. Counsel for accused no. 2 & 3. Reply is filed on behalf of SEBI to the compounding application which was moved by the accused persons. Copy of the same alongwith the copy of the notification dated 09.01.2014 is provided to the Ld. Counsel for accused. Ld. Counsel for accused persons intend to file rejoinder to the said application and assured that the advance copy of the same shall be supplied to the opposite party atleast a week prior to next date of hearing under acknowledgment. List the case for consideration on application on 09.12.2016. [Vimal Kumar Yadav] ASJ-01/CENTRAL/DELHI 21.10.2016/bh

Item No. 01 CC No. 36/14 New Case No. 11/2016 SEBI v. M/s N.P. Agro India Ltd. 13.02.2017 Present: Sh. Arun Kumar Tiwari, Proxy Counsel for Sh. Ashish Aggarwal, Advocate, Ld. Counsel for SEBI alongwith Sh. Vivek Yadav, Manager Legal. Accused no. 1 through its Authorized Representative, Sh. Yogender Singh alongwith Sh. Rakesh Kumar Singh, Advocate. Accused no. 2 is present on bail alongiwth Sh. Vikas Kakkar, Advocate. Proceedings against accused no. 4 have already been abated. Whereas, Sh. Praveen Khandelwal – accused no. 3 seeks exemption, inasmuch, as he was hospitalized on 11.02.2017 and he is still in ICU. In view of the these facts and circumstances, as sought, exemption is granted to accused no. 3 for today only through his Counsel. An application and a supplementary application to the same moved on behalf of the accused no. 1, reply to which shall be filed within four weeks as sought by Ld. Counsel for SEBI and the advance copy of the same can be furnished to the Ld. Counsel for the accused no. 1 under acknowledgment atleast 10 days before next date of hearing. List the case for arguments on 27.04.2017. [Vimal Kumar Yadav] Special Judge (POCSO ACT)/ASJ-01 Central/THC/DELHI 13.02.2017/bh

Item No. 11 CC No. 36/14 New Case No. 11/2016 SEBI v. M/s N. P. Agro India Ltd. 27.04.2017 Present: Sh. Ashish Aggarwal, Advocate, Ld. Counsel for SEBI. Accused no. 1 through its Authorized Representative, Sh. Yogender Singh alongwith Sh. Rakesh Kumar Singh, Advocate. Accused no. 2 and accused no. 3 are in person, on bail alongwith Sh. Vikas Kakkar, Advocate. Proceedings against accused no. 4 have already been abated. To the application moved on the last date, it is submitted by Ld. Counsel for SEBI that the reply can only be filed after the decision of compounding proceedings pending before Hon'ble High Powered Committee comes and it is likely to take some time. As sought, by both the parties, list the case for further proceedings / reply on 03.08.2017, as the case may be. [Vimal Kumar Yadav] Special Judge (POCSO ACT)/ASJ-01 Central/THC/DELHI 27.04.2017/bh

Item No. 11 CC No. 36/14 New Case No. 11/16 SEBI v. M/s N.P. Agro India Ltd. 03.08.2017 Present: Sh. Ashish Aggarwal, Advocate, Ld. Counsel for SEBI alongwith Sh. Vivek Yadav, Manager Legal. Accused no. 1 company through its Authorized Representative, Sh. Yogender Singh. Accused no. 2 and accused no. 3 are in person, on bail alongwith Sh. Vikas Kakkar, Advocate. Proceedings against accused no. 4 have already been abated. It is orally informed by the Ld. Counsel for SEBI that compounding application moved on behalf of the accused no. 1 has been moved formally and shall place on record during the course of the day or before next date of hearing. List the case for further proceedings as well as for framing of notice on 08.09.2017. [Vimal Kumar Yadav] Special Judge (POCSO ACT)/ASJ-01 Central/THC/DELHI 03.08.2017/bh

Item No. 03 C.C. No. 36/2014 New C.C. No. 11/2016 SEBI Vs. M/s. N.P. Agro India Ltd. 08.09.2017 Present: SEBI through Sh. Ashish Aggarwal, Advocate alongwith Sh. Vivek Yadav, Manager (Legal). Accused No. is a company through its authorized representative Yogender Singh. Accused No. 2 Naveen Khandelwal on bail. Accused No. 3 Praveen Khandelwal is absent. Proceedings qua accused No. 4 Skhilesh K. Aggarwal have already been abated. Sh. R.K. Singh, Advocate, Counsel for accused No. 1 company. Sh. Vikas Kakkar, advocate, Counsel for accused Nos. 2 and 3. An application seeking exemption from personal appearance has been filed on behalf of applicant/accused No. 3 Praveen Khandelwal by his Counsel on medical grounds. The application is accompanied by medical certificate, therefore in the interest of justice, the same is allowed for today only. Reply to the application filed on behalf of accused No. 1/company has been filed by Counsel for SEBI, copy supplied to the Counsel for accused persons. Rejoinder, if any, be filed on or before the next date of hearing with advance copy to the opposite side. Another application has been filed on behalf of accused No. 1 company seeking directions to SEBI/complainant for filing reply and communicate to accused No. 1 company the 2nd reasons for rejection in writing arising out of order dated 27.04.2017 and 03.08.2017. Copy of the application supplied to the Counsel for SEBI. Reply to the application is not required as it becomes infructuous, in view of the reply filed by the SEBI today. Copies of both the above, exchanged. Counsel for accused No. 1 company submits that the pending applications shall be decided first and thereafter the aspect of notice shall be decided, however, Counsel for SEBI has submitted that as there is no stay in the proceedings, therefore the aspect of notice can be heard and decided, which seems correct as the application pending is qua compounding which can be considered and matter can be compounded even when charge is framed, as that would not be an obstacle. Be that as it may, as both issues are now pending, therefore keeping in view the fact that there is no stay in the proceedings, list the matter for arguments on the pending application as well as on the point of framing notice on 06.10.2017. (VIMAL KUMAR YADAV) SPECIAL JUDGE (POCSO ACT)/ASJ-01 CENTRAL/THC, DELHI/08.09.2017

Cr. Case No.32/2017 SEBI Vs NP Agro India Ltd. & Ors. 25.01.2018 Present: SEBI through counsel Sh. Ashish Aggarwal with Manager   Legal Sh. Vivek Yadav. Accused  No.1   is   a  company   represented  by AR Yogender Singh.  Accused No.2 on bail.  Accused No.3 absent.  Accused No.4 dead.  Sh. R. K. Singh, counsel for accused No.1. Sh. Vikas Kakkar, counsel for accused No.2 and 3.  An   application   moved   for   exemption   from   personal appearance on behalf of accused No.3 by his counsel, heard, in view of submissions made, he is exempted for today.  At request of Ld. counsel for accused No.1, to come up for arguments   on   the   application   for   compounding   on 22.03.2018.    (POONAM CHAUDHRY)     ASJ­02(Central)/DELHI/25.01.2018

Cr. Case No.11/2016 SEBI Vs NP Agro India Ltd. & Ors. 22.03.2018 Present: SEBI through proxy counsel Ms. Rekha Goswami. Accused No.1 is a company represented by AR Sh. Yogender Singh.  Accused No.2 absent.  Accused No.3 on bail Sh. Vikas Kakkar, counsel for accused No.2 and 3.  Accused No.4 is dead.  At request of proxy counsel for complainant, be awaited.                       (POONAM CHAUDHRY)                                  ASJ­02(Central)/DELHI/22.03.2018 At 12.40 am Present: SEBI through counsel Ashish Aggarwal. Accused No.1 is a company represented by AR Sh. Yogender Singh with counsel Sh. Rakesh Kumar Singh.  Accused No.2 and 3 on bail with counsel Sh. Vikas Kakkar.  Accused No.4 is dead.  Arguments   partly   heard   on   the   application   moved   for compounding by accused No.1.  At   request   of   Ld.   counsel   for   accused,   be   listed   for   further arguments on the application on 06.04.2018 at 12 pm. Ld.  counsel   for  SEBI  states   that   the  matter   is  at   the  stage  of framing of charge. Accordingly, be also listed for arguments on charge on date fixed, as the matter can be compounded at any stage, during the pendency of proceedings.                      (POONAM CHAUDHRY)                                  ASJ­02(Central)/DELHI/22.03.2018

Cr. Case No.11/2016 SEBI Vs M/s N. P. Agro India Ltd. & Ors. 06.04.2018 Present: SEBI through counsel Sh. Ashish Aggarwal with Manager Legal  Sh. Vivek Yadav. Accused No.1 is a company represented by its AR Sh. Yogender Singh with counsel Sh. R. K. Singh.  Accused No.2 and 3 on bail with counsel Sh. Vikas Kakkar.  Accused No.4 is dead.  Arguments partly heard on the application for compounding.  Additional written submissions filed on behalf of accused.  At request of Ld. counsels for accused, to come up for further arguments on 26.04.2018.                      (POONAM CHAUDHRY)                                  ASJ­02(Central)/DELHI/06.04.2018

Cr. Case No. 11/2016. SEBI Vs. M/s. N.P. Agro India Ltd. 26.04.2018 Present: SEBI through counsel, Sh. Ashish Aggarwal.  Accused no.2 is a company represented by its AR, Sh. Yogender  Singh, who is present.  Accused Praveen Khandelwal on bail.  Accused Naveen Khandelwal absent.  An application moved for exemption from personal appearance on behalf   of   accused   Naveen   Khandelwal   which   is   supported   with medical   certificate.   Heard,   in   view   of   the   submissions   made, exemption is allowed for today. An application moved on behalf of accused no.1, 2 and 3 u/s. 32 of the SEBI Act, copy has already been supplied.  Arguments   head   on   the   application   for   compounding   and   the application u/s. 32 of the SEBI Act moved on behalf of accused no.1, 2 and 3. Be listed for orders on 17.05.2018 at 3. 00 pm.                                      (Poonam Chaudhry)                                      ASJ: Central­02:Delhi/26.04.2018.

Cr. Case No. 11/2016. SEBI Vs. N.P.Agro India Ltd.  17.05.2018 Present: SEBI through proxy counsel, Sh. Arun Kumar Tiwari.  Accused no.1 is company represented by AR, Sh. Yogender Singh, who is present.  Accused no. 2 and 3 on bail with proxy counsel, Sh. Vaibhav Tiwari. Vide separate order announced in the open court, the application of accused no.1, 2 and 3 u/s. 32 of the SEBI Act r/w section 258 Cr.P.C. stands   allowed,   accused   no.2   and   3   stands   discharged,   complaint stands dismissed as accused no.4 has already died and proceedings against him stand abated. Accused no.2 and 3 are directed to furnish bonds u/s. 437A Cr.P.C. in the sum of Rs.50,000/­ with one surety each of the like amount, personal bonds furnished, same are accepted till next date as they seek time to furnish their surety bonds on next date. The application for compounding u/s. 24 A of SEBI Act moved by accused company stands dismissed. Be listed on 19.05.2018 for further proceedings.                                      (Poonam Chaudhry)                                      ASJ: Central­02:Delhi/17.05.2018.

IN THE COURT OF MS. POONAM CHAUDHRY: ADDL. SESSIONS JUDGE­02, CENTRAL DISTRICT: THC, DELHI Cr. Case No. 11/2016. CNR No.DLCT01­000041­2002. SECURITIES AND EXCHANGE BOARD OF   INDIA,   a   statutory   body   established under   the   provisions   of   Securities   and Exchange Board of India Act, 1992, having its Head office at 221, Nariman Point, Mittal Court, “B” Wing, Nariman Point, Mumbai – 400 072 and represented by its  Asst.  Legal Advisor   (Prosecutions)   Shri   A.   Chandra Sekhar Rao. .....Complainant Versus 1. N. P. Agro India Ltd., a company incorporated under the provisions of    Companies   Act,   1956   and   having   its registered   office   at   190A,   Civil   Lines, Bareilly 243001, UP. 2. Shri Naveen Khandelwal,     S/o. Not known to the complainant,     Occupation : Director/Promoter of      the Accused No. 1: address : 35/Z­7,     Rampur Garden, Bareilly.  3. Shri Praveen Khandelwal,     S/o. Not known to the complainant,      Occupation : Director/Promoter of      the Accused No. 1: address : 35/Z­7,     Rampur Garden, Bareilly.  Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 1 4. Shri Akhilesh K. Agarwal,     S/o. Not known to the complainant,      Occupation : Director/Promoter of      the Accused No. 1: address : 35/F,     13B, Rampur Garden, Bareilly.  .....Accused ORDER 1.   Vide this order, I proceed to decide the applications moved by  accused  No.  1   company   (hereinafter   referred   to   as   accused company) for compounding/composition of the offences u/s. 24A of Securities and Exchange Board of  India Act 1992 read with clause   19   of   SEBI   Circular   No.   EFD/ED/CIR­1/2007   dated 20.04.2007 read with Circular No. EFD/1/2012 dated 25.05.2012 and another application moved on behalf of accused no.2 and 3 u/s.   32   of   the   Securities   and   Exchange   Board   of   India   Act (hereinafter referred to as the 'SEBI Act') r/w section 258 of  Code of Criminal Procedure (in short 'Cr.P.C.'). 2.   The   averments   made   are   that   complainant   had   filed   the complaint against the accused company u/s. 200  of  Cr.P.C. read with   section   24(1)   and   27   of   SEBI   Act   alleging   that   accused Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 2 company had violated the provisions of section 11B, 12 (1B) of the SEBI Act r/w Regulation 5 (1), 68(1), 68(2), 73 and 74 of the SEBI (CIS) Regulations 1999. SEBI claimed that accused no. 2 to 4 were the directors of the accused company at the relevant time and were   responsible   for   the  conduct  of   its  business  when   the offences were committed and were thus liable under section 27 of the SEBI Act.  3.   It was contended that the complainant alleged commission of offences by accused in the month of July, 2002 i.e. upon expiry of   the period of  notice dated  12.06.2002  regarding payment  of money to the investors. It was further alleged that at the time of commission of the alleged offences in July, 2002 and when the complaint was filed on 16.08.2002, the punishment for violation of the offences u/s. 24 of the SEBI Act was imprisonment for one year   or   fine   or   both.   The   punishment   has   been   made   more stringent after the amendment in section 24(1) w.e.f. 29.10.2002. It was further contended that accused no.2 and 3 had resigned on 12.10.1999 and were wrongly impleaded, as they were neither the directors nor incharge of the affairs of the accused company after Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 3 their resignation. It was alleged that a copy of Form No.32 in this regard  was   submitted   to  Registrar  of  Companies  and  was  also placed on record. It was also alleged that accused no. 4 had died on 15.09.1998 as such no complaint could have been filed against him on 16.08.2002. It was further stated that death of accused no. 4 on 15.09.1998 was also communicated to ROC vide Form No. 32. 4.   It was further alleged that accused company had intimated SEBI   that   it  had  not  collected  any   fund  after  1998  that   it  had started refunding funds to investors. It was also alleged that SEBI had   communicated   to   accused   company   vide   letter   dated 30.09.2010   and   01.12.2010   that   it   had   received   58   complaints against it. Pursuant to same accused company informed SEBI that 56  complaints  were   already   redressed   and   that   two  complaints could not be redressed as the investors were not traceable at the given addresses and that advertisements given in the newspapers also could not be served on the above investors as their addresses were incomplete. It was also submitted by Ld. counsel for accused that  it had informed SEBI that it was ready to settle the claim of Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 4 remaining two investors also, which was substantial compliance of SEBI's directions. It was also alleged that since accused company did not intend to continue its Schemes after the regulations were notified it did not apply for registration. It is prayed that the court may allow the compounding of applications. 5.   In the application u/s. 32 of the SEBI Act, it has alleged that accused company has filed an application for compounding. That SEBI   had   during   the   consideration   of   the   compounding application unilaterally   taken the decision that accused company was in losses.  Thus, accused company had been left with no other option but to respond to the unilateral decision of SEBI in court.  6.   It was alleged that the Winding up and Repayment Report (in   short   “WRR”)   dated   04.09.2013   of   accused   company   was verified   by   its   Auditors   of   SEBI.   According   to   the   Auditors Report, accused company had mobilized Rs.376.07 lacs whereas the allegations in the complaint were that accused company had mobilized Rs.3.582 crores. It was further stated that SEBI did not verify   from   the   accused   about   its   financial   capacity   and unilaterally   took   the  view   that   accused  company  was  not   in   a Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 5 position to repay the investors. 7.   It was further contended that accused company had asked SEBI to take DD of Rs. 30 lakhs from it towards reconsideration of the composition of offences against accused company. It was further argued that no personal hearing was being given to accused company by SEBI  neither   its   explanation  was  sought  about   its ability to pay.  8.   It  was further alleged that as the accused no.2 and 3 had resigned on 12.10.1999 as such the proceedings against them and accused company may be stopped and they be discharged.  It was also   submitted   that   the   application  u/s.  32  was  moved  without prejudice   to   the   compounding  application   and  averments  made therein. It was further alleged that even in the absence of consent of SEBI this court has power to stop the proceedings against the accused company and its ex­directors/accused no.2 and 3. 9.   Sections 24A, 32 of the SEBI Act and Section 258 Cr.P.C. on which reliance has been placed and are relevant for deciding the applications are as follows : “24A.   Composition   of   certain   offences.­­ Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 6 Notwithstanding anything contained in the Code of   Criminal   Procedure,   1973   (2   of   1974),   any offence punishable under this Act, not being an offence punishable with  imprisonment only,  or with   imprisonment   and   also   with   fine,   may either   before   or   after   the   institution   of   any proceeding,   be   compounded   by   a   Securities Appellate Tribunal or a court before which such proceedings are pending.”  10.  Section 32 of the SEBI Act.   “32. Application of other laws not barred.­­ The provisions of this Act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force.” Section 258 Cr.P.C. “258.   Power   to   stop   proceedings   in   certain cases.   ­­   In   any   summons­case   instituted otherwise that upon complaint, a Magistrate of the first class or, with the previous sanction of the Chief Judicial Magistrate, any other Judicial Magistrate, may, for reasons to be recorded by him, stop the proceedings at any stage without pronouncing   any   judgment   and   where   such stoppage   of   proceedings   is   made   after   the evidence   of   the   principal   witnesses   has   been recorded,   pronounce   a   judgment   of   acquittal, and in any other case, release the accused, and such release shall have the effect of discharge.” 11.  Reply   had   been   filed   on   behalf   of   SEBI   opposing   the Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 7 applications   stating   that   it   had   referred   the   compounding application of  accused company to  the High Powered Advisory Committee (HPAC) constituted for the purpose of examining the proposals of compounding.  The said committee after considering the   compounding   application   and   the  documents   recommended that the offences may not be compounded keeping in view the fact that accused failed to comply with the directions of SEBI and had failed to make repayment to investors.  12.  It was further submitted on behalf of SEBI that pursuant to a   compounding   application   being   filed   by   accused   company, accused   company   also   filed   WRR   with   SEBI.     SEBI   had accordingly appointed an auditor to conduct verification of WRR of accused company. The auditor filed report stating that company had mobilized Rs.376.07 lakhs as per WRR the mode of payment was cash except in 57 cases where payment was by demand drafts. That the auditor was unable to verify the amount mobilized from public and  total  number of   investors  as  Books of  accounts  and records for the period 1993 to 2000 were not produced before it for verification by the accused company. The accused company Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 8 had  informed  that  old  records  were  not   traceable.  There  was a difference of  Rs.10,60,722.00 in  the contribution outstanding in the WRR and as per Audited Financial Statement. As per Audited Financial Statement as on 31.03.2013, an amount of Rs.29,60,262 was outstanding whereas as per WRR dated 04.09.2013 an amount of   Rs.18,99,540.00   was   payable   to   investors.   The   accused company gave explanation that the difference between the audited financial statement and WRR was due to non­availability of old records. 13.  Rejoinder   was   filed   on   behalf   of   accused   company reiterating the averments made in the applications.  It   was   argued on behalf of accused that this court can exercise discretion u/s. 24 A of the SEBI Act even in the absence of consent by SEBI in view of Section 24A of the SEBI Act.   It was further contended that alleged  offences  are  not  punishable  with   imprisonment  only  or imprisonment and fine as such the discretion could be exercised by this Court u/s.  24A of the SEBI Act. It  was also urged that SEBI had appointed auditors to audit the accounts of the company but nothing adverse was communicated by the auditors or by SEBI Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 9 to accused company. It was also contended on the date of hearing of  19.08.2016  SEBI   informed   the  Court   that   the   compounding application   preferred   by   the   accused   had   been   rejected   and   it would be convey the same to the accused in due course. However, no communication has been received by the accused company.  14.  It  was further  submitted that  from the reading of  Section 24A   of   the   SEBI   Act,   it   was   evident   that   offence   can   be compounded either by Securities Appellate Tribunal or Court.  15.  It   was   also   argued   by   Ld.   counsel   for   accused   that   the HPAC   had   jurisdiction   only   under   notification   09.01.2014   of SEBI u/s. 15 JB of SEBI Act and does not have the authority for composition of offences u/s. 24A of the Act.  16.  Section 15 JB relates   to  settlement  of  administrative and civil proceedings. Section 15 JB of the SEBI Act is as follows :  “15 JB. Settlement of administrative and civil proceedings – (1) Notwithstanding anything contained in any other law for the time being in force, any person, against whom any proceedings have been initiated or may be initiated under Section 11, section 11B, section 11D, sub-section (3) of section 12 or section 15-I, may file an application in writing to the Board proposing for settlement of the proceedings initiated or to be initiated for the alleged defaults. Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 10 (2) The Board may, after taking into consideration the nature, gravity and impact of defaults, agree to the proposal for settlement, on payment of such sum by the defaulter or on such other terms as may be determined by the Board in accordance with the regulations made under this Act. (3) The settlement proceedings under this section shall be conducted in accordance with the procedure specified in the regulations made under this Act. (4) No appeal shall lie under section 15T against any order passed by the Board or adjudicating officer, as the case may be, under this section.” 17.  It   was   contended   that   Sec   15   JB   of   the   Act   relates   to settlement   and   not   composition   of   offences.   Thus   rejection   by SEBI's HPAC has no bearing on the application for compounding.  18.  It was further contended that SEBI could not be allowed to plead more than what was alleged in the complaint.  It was further contended that no other reason except those stated in the reply of SEBI dated 20.10.2016 could be looked into or reflected by this Court.   It  was also alleged that accused company had informed SEBI of its willingness for paying Rs.30,00,000/­ (30 lakhs) vide DD towards consideration of composition. It was also argued that SEBI  did not  dispute   the   fact   that  company had not  mobilized funds after 28.02.1998.   It was also contended that auditor also Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 11 noted that 58 complaints against company have been found to be addressed except two investors who are untraceable.  19.     I have heard and considered the submissions made by Ld. counsel for SEBI and Ld. counsel for accused no.1 to 3.  20.   Ld. counsel for accused in support of his contentions that the court may compound the offence on being satisfied that complainant has   been   duly   compensated   placed   reliance   on   Meters   and Instruments Pvt. Ltd. & Anr. Vs.Kanchan Mehta, (2018) 1 SCC 560. However, in my view the same, it is distinguishable as in the instant case complainant SEBI did not give its consent for compounding as such   it   cannot   be   said   that   allegations   in   the   complaint   that   all investors were not repaid stood redressed by accused.   21.     Ld. counsel for accused also relied upon Damodar S. Prabhu V. Sayed Babu Lal, H 2010 (5) SCC  663,   however   in   my   view the same is also distinguishable as in the above judgment/relied upon  parties had agreed to compounding the offences.  22.     On the other hand, Ld. counsel for SEBI placed reliance relied upon   Ranjita   Mittal   Vs.   State   of   Delhi,   Crl.MC   2397/2011 wherein the judgment of Damodar S.Prabhu was referred to and it Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 12 was held that word compromise implies an agreement between the two parties to compound the offence. That it is for the court to consider  whether   the  amount  offered  by  accused  was  adequate compensation.   23.  In the instant case, SEBI claimed that it rejected the offer of compounding as accused had not submitted its account books and records for the period 1993 to 2000 to enable SEBI to verify the amount   mobilized   from   public   and   repayment   to   all   investors. Thus,   in  my view  the  offences  cannot  be  compounded  by   this Court as the factum of repayment to all investors is not borne out from the records of accused company. 24.  Now coming  to  the submissions made on  the application u/s. 32 of the SEBI Act r/w Sec. 258 Cr.P.C. it is to be noted that Section 12(1B) was incorporated in the SEBI on 25.01.1995 and provides that :­ “No   person   shall   sponsor   or   cause   to   be sponsored or carry on or cause to be carried on any   venture   capital   funds   or   collective investment   scheme   including   mutual   funds, unless   he   obtains   a   certificate   of   registration from   the   Board   in   accordance   with   the Regulations.” Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 13 25.  The  SEBI  Collective   Investment  Scheme Regulations   (in short CIS) came into force on 15.10.1999.   It is to be noted that CIS had not been defined in the Act till 25.01.1995 when section 12(1B) was  incorporated.  CIS was defined when section 11AA was incorporated in the Act on 22.02.2000. The proviso to section 12(1B) of the Act permitted any person sponsoring or causing to be sponsored any scheme to continue the same till the Regulations were notified.  26.  CIS   has   been   defined   in   11AA   of   the   Act   which   is   as follows:­ “Collective investment scheme – (1) Any scheme or   arrangement   which   satisfies   the   conditions referred to in sub­section (2) shall be a collective investment scheme.  (2) Any scheme or arrangement made or offered by any company under which, –  (i)   the   contributions,   or   payment   made   by   the investors,  by whatever  name called,  are  pooled and utilized  for   the purposes of   the scheme or arrangement; (ii)   the  contributions or  payments  are  made  to such   scheme   or   arrangement   by   the   investors with a view to receive profits, income, produce or property,  whether movable or  immovable,   from such scheme or arrangement;  (iii)   the   property,   contribution   or   investment Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 14 forming part of scheme or arrangement, whether identifiable or not, is managed on behalf of the investors;  (iv) the investors do not have day­to­day control over   the   management   and   operation   of   the scheme or arrangement.”  27.  Thus, person not covered by the proviso to Section 12(1B) could   commence   activities   only   after   obtaining   certificate   of Registration   from   SEBI.     The   proviso   to   section   12(1B)   was applicable only to those schemes which were already in operation when   Section   12(1B)   was   incorporated.   SEBI   had   vide   press release and public notices informed entrepreneurs of CIS of the notification of regulations.   28.  It is to be noted that accused company was incorporated on 23.03.1993.  SEBI  claimed   that   subsequent   to   the  press   release dated 26.11.1997 and public notice dated 18.12.1997 of the SEBI, accused no.1 had furnished information regarding its schemes that it   was   running   CIS   and   had   mobilized   3.582   crores   from   the general   public.     It  was   also   claimed   by   SEBI   that   as   accused company was operating CIS when the regulations were notified, it was   thus   deemed   to   be   an   existing   CIS   and   had   to   apply   for Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 15 registration.    SEBI further  claimed as accused company neither applied for registration nor had to wind up its Schemes and make repayments   to   the   investors   in   terms of  Regulation  73 and  74. SEBI further claimed that it had violated the provisions of the Act and   Regulations   and   its   violations   continued,   till   filing   of complaint.  29.  Section 5(1) of the regulations which relates to application for registration by existing CIS is as follows:­ “Any   person   who   immediately   prior   to   the commencement   of   these   regulations   was operating   a   scheme,   shall   subject   to   the provisions   of   Chapter   IX   of   these   regulations make an application to the Board for the grant of a certificate within a period of two months from such date.” 30.  Regulation 68 is as under :­ Section 68 (1) Any person who has been operation a collective investment scheme at the time of commencement of these regulations shall be deemed to be an existing collective investment scheme and shall also comply with the provisions of this Chapter. Explanation: The expression 'operating a collective investment scheme' shall include carrying out the obligations undertaken in the various documents entered into with the investors who have subscribed to the scheme. (2) An existing collective investment scheme shall make an application to the Board in the manner Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 16 specified in regulations 5. (3) The application made under sub-regulation (2) shall be dealt with in any of the following manner: (a) by grant of provisional registration by the Board under sub-regulation (1) of regulation 71; (b) by grant of a certificate of registration by the Board under regulation 10: (c) by rejection of the application for registration by the Board under regulation 12.   31.  Regulations 73 and 74 relates to schemes to be wound up and repayments to be made to investors read as under :­ “Section 73 (1) An existing collective investment scheme which :  (a)   has   failed   to   make   an   application   for registration of the Board; or (b) has not been granted provisional registration by the Board; or  (c) having obtained provisional registration fails to  comply with  the provisions of  regulation 71; shall wind up the existing scheme.  (2) The existing Collective Investment Scheme to be wound up under sub­regulation (1) shall send an   information   memorandum   to   the   investors who have subscribed to   the scheme,  within  two months   from   the   date   of   receipt   of   intimation from the Board, detailing the state of affairs of the   scheme,   the   amount   repayable   to   each investors and the manner in which such amount is determined.  (3) The information memorandum referred to in sub­regulations (2) shall be dated and signed by all the directors of the scheme.  (4) The Board may specify such other disclosure to be made in the information memorandum, as it Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 17 deems fit.  (5) The information memorandum shall be sent to the investors within one week from the date of the information memorandum.  (6) The information memorandum shall explicitly stated that investors desirous of continuing with the scheme shall have to give a positive consent within   one   month   from   the   date   of   the information to continue with the scheme.  (7) The investors who give positive consent under sub­regulation (6) shall continue with the scheme at their risk and responsibility;  Provided that if the positive consent to continue with the scheme, is received from only twenty­five per cent or  less  of   the total  number of  existing investors, the scheme shall be wound up.  (8) The payment to the investors, shall be made within   three   months   of   the   date   of   the information memorandum.  (9) On completion of the winding up the existing collective scheme shall file with the Board such reports, as may be specified.  Section   74   An   existing   collective   investment scheme   which   is   not   desirous   of   obtaining provisional   registration   from   the   Board   shall formulate a scheme or repayment and make such payment to the existing investors in the manner specified in regulations 73.” 32.  It   was   contended   on   behalf   of   accused   that   accused company filed Form no.32 with ROC informing that accused no.4 had died on 15.09.1998 and regarding the resignations of accused Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 18 no.2 and 3 on 12.10.1999.  It was further contended that SEBI had not verified from ROC about the names of directors before filing the complaint.  It  was further argued that there were no specific allegations in the complaint that any violations were committed by accused no.1, 2 and 3.  33.  It is to be noted that SEBI has relied upon a letter sent by it to ROC dated 25.09.2002 requesting it to confirm the names of the promotors/directors of accused no.1.  SEBI had enclosed with the said letter the list of directors of accused company.  However, the reply of ROC to the said letter was not filed with the complaint.  34.  It   is   to   be   noted   Section   27   of   the   SEBI   Act   creates vicarious   liability   of   a   director   and   only   a   director   who   was incharge  of  and   responsible   for   the  conduct  of  business  of   the company at the time of commission of offence would be liable for criminal action u/s. 24 r/w S.27. 35.  Accused   no.2   and   3   were   aggrieved   by   the   filing   of complaint against them on 16.08.2002 on the allegations that they had   breached   the   bar   contained   in   Section   12(1B)   and   the Regulations.     Ld.   counsel   for   accused   placed   reliance   on   a Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 19 document   of   Hon'ble   Supreme   Court   in   case   titled   SEBI   Vs. Gaurav Varshney & Anr. (2016) 14 SCC 430 in support of his contentions   that  any  act  or  omission  by   the  company  after   the resignations of directors would not affect  them in so far as  the vicarious liability u/s. 27 of SEBI Act is concerned. The relevant extract of the Judgment is as under :  S.27 makes every person who at the time when the   offence   was   committed,   was   in   charge   of and   responsible   for   the   conduct   of   the company's   business,   guilty   of   the   offence committed   by   the   company.­­­   Further,   any action   of   omission   or   commission   of   the company,  after the date on which the Director concerned had resigned, would not affect after the date on which the Director concerned has resigned,would   not   affect   him,   insofar   as   his culpability   under   S.27   of   the   SEBI   Act   is concerned.  It   makes   every   person   who,   at   the   time   the offence was committed, was in charge of,  and was responsible to the company for the conduct of   business   of   the   company,   as   well   as   the company,   liable   for   the   offence.   The   liability arises from being in charge of and responsible for the conduct of business of the company at the   relevant   time   when   the   offence   was committed   and   not   on   the   basis   of   merely holding a designation. Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 20 36.  Ld. counsel for accused further contended that by the time the CIS regulations on 15.10.1999 were notified the accused no.2 and 3 had already resigned on 12.10.1999.  37.  It is also noted that last date for moving an application for registration   had   been   extended   by   SEBI   from   15.12.1999   to 31.03.2000   and   in   the   instant   case,   accused   no.2   and   3   had resigned on 12.10.1999. A copy of Form 32 relating to resignation of accused no.2 and 3 has been placed on the record, the same was not  controverted  by  SEBI.  The  Ld.   counsel   for  SEBI  however contended that as violations continued and the offence u/s. 12(1B) was a continuing one accused no.2 and 3 were liable. Ld. counsel for SEBI also contended that accused company and its directors were thus liable for not applying for certificate of registration and secondly for not taking steps for winding up the CIS business. 38.  On the other hand, Ld. counsel for accused contended that after   resignation   accused   no.2   and   3   cannot   be   said   to   be responsible to the company for the conduct of its business. It is to be noted that accused company was not accused of having violated the substantive provision of  12(1B) of   the Act by commencing Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 21 CIS as a new operator without obtaining certificate of registration, as the accused company was incorporated in the year 23.03.1993. Thus as held in SEBI Vs. Gaurav Varshney & Another, (supra), the accused company was an existing CIS.  The relevant extract of the judgment is as follows:  “After incorporation of S. 12(1­B) on 25­1­1995, there were two classes of persons; the first clas comprised   of   such   person(s)   who   had commenced   the   activity   of   sponsoring   or carrying on a collective investment scheme prior to   25­1­1005   (the   proviso   category)   and   the second category constituted of persons who had not commenced such activity prior to 25­1­1995 (the non­proviso category) – persons governed by   the   substantive   provision   (the   non­proviso category)   were   permitted   to   “commence activities concerning collective investment, only after obtaining a certificate of registration; and persons   covered   under   the   proviso   category (who were already carrying on such activities), were   permitted   to   “continue”   their   activities (concerning collective investment), but after the regulations concerned were framed, they could continue the said activities only post obtaining a certificate of registration.” 39.   The accused company was accused of breach of Regulation 5,  68,  73,  74.   In  view of   the above  judgment,   the  Regulations could have been breached by the person in case it did not file an Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 22 application for registration till 31.03.2000.  40.  Ld.   counsel   for   accused   contended   that   the   bar   against sponsoring  CIS  without   registration   could   arise  only   after  CIS regulations were notified.  That   the regulations were notified on 15.10.1999.   41.  Ld.   counsel   contended   that   the   violations   of   regulations would only apply to a person who was the director at  the  time when regulations were notified and committed breach of the same. Ld. counsel for accused also contended that an existing CIS was permitted to continue activities and they had to obtain certificate of registration after the Regulations were framed and notified as I find force in the said submission of Ld. counsel for accused. 42.  It is pertinent to note that complainant moved an application for   withdrawal   of   the   complaint   on   16.03.2011   stating   that   as matter had been settled. But thereafter Ld. counsel for complainant contended   that   application   for   withdrawal   had   been   moved   by some unknown person without instructions of the complainant and the complainant wishes to pursue the matter.  43.  Ld.   counsel   contended   that   Section   258   Cr.P.C.   which Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 23 empowers   this   court   to   stop   proceedings   is   applicable   to   a complaint case filed by SEBI in view of Section 32 of the SEBI Act. 44.  It was contended on behalf of accused that a company being a juristic person acts  through its board of directors.    Therefore, only a person who at the time of commission of offence by the company was incharge of and responsible to it for the conduct of its business would be liable. It was also contended that SEBI did not dispute the factum of resignations of accused no.2 and 3. thus any act or omission by the company after the date on which the accused no.2 and 3 resigned would not make them liable. In my view, as the factum of resignation of accused no.2 and 3 has not been controverted by SEBI, any act or omission commission of company   after   the  date   on  which   the   accused  no.2   and  3   had resigned would not affect them in so far as his culpability u/s. 27 of the SEBI Act is concerned.   Thus in my view as accused no.2 and 3 resigned on 12.10.1999 as such the proceeding against them were not maintainable.  45.  It is also to be noted that at the time of filing the complaint Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 24 the punishment u/s. 24 of the SEBI Act did not exceed one year. Thus   as   held   in   SEBI   Vs.   Gaurav   Varshney,   the   period   of limitation for taking cognizance u/s. 468 of Cr.P.C. would be one year. The relevant extract of judgments is as follows :  “For   invoking   the   plea   of   limitation,   the learned   counsel   also   pointed   out   that   under section   24   of   the   SEBI   Act,   before   its amendment   on   29.10.2002,   a   punishment   of imprisonment of one year or fine or both was postulated.   Since   the   punishment contemplated under section 24 of the SEBI Act was not in excess of one year for the violation alleged against the appellant, it was submitted that   the   competence   to   taking   cognizance would   lapse   after   a   period   of   one   year   on account of the bar created by section 468(2)(b) Cr. P. C.” 46.  Section 468 of Cr.P.C. is as under :  “Section   468.   Bar   to   taking   cognizance   after lapse of the period of limitation – (1) Except as otherwise  provided  elsewhere   in   this  Code,  no court, shall take cognizance of an offence of the category   specified   in   sub­section   (2),   after   the expiry of the period of limitation.  (2) The period of limitation shall be –  (a) six months, if the offence is punishable with fine only.  (b)  one year,   if   the offence is  punishable with imprisonment for a term not exceeding one year. Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 25 (c) three years, if the offence is punishable with imprisonment   for   a   terms   exceeding   one   year but not exceeding three years.”  47.  Thus in the instant case as accused no.2 and 3 had resigned on 12.10.1999, the period of limitation u/s. 468 Cr.P.C. for taking cognizance against them be one year and would run w.e.f. the date they   tendered   their   resignations   and   bar   of   taking   cognizance against them would operate w.e.f. 12.10.2000. The complaint in the   instant   case   was   filed   against   them   on   16.08.2002.   Thus, cognizance could not have been taken against them in view of the bar u/s. 468 Cr.P. C.  48.  For the foregoing reasons, I allow the application of accused no.1,   2   and   3   u/s.   32   of   the   SEBI   Act   r/w   Sec.   258   Cr.P.C., accused   no.   2   and   3   stand   discharged,   their   bail   bonds   are cancelled   and   sureties   discharged.   Accused   no.4   had   died   and proceedings against him stood abated vide order dated 10.12.2013. The   complaint   stands   dismissed.   The   application   of   accused company   for   compounding   u/s.   24A   of   SEBI   Act   stands dismissed. Accused no.2 and 3 are directed to furnish bail bonds u/s. 437A Cr.P.C. in the sum of Rs. 50,000/­ each with surety each Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 26 of   the   like   amount.   File   be   consigned   to   record   room   after compliance.  Announced in the open court  on this 17th day of May 2018          (Poonam Chaudhry)            Additional Sessions Judge­02                                             Central District, THC, Delhi. Cr. Case No.11/2016 SEBI VS M/s. N.P. Agro India Ltd.. & Ors. 27 2018-05-19T14:48:14+0530 POONAM CHAUDHRY