Delhi District Court
Sebi vs . P.N.G. on 18 May, 2011
SEBI Vs. P.N.G.
IN THE COURT OF SH. PAWAN KUMAR JAIN,
ADDL. SESSIONS JUDGE-01(CENTRAL):DELHI
Complaint Case No. 15/10
ID No: 02401R0174132002
SECURITIES AND EXCHANGE BOARD OF INDIA, a statutory
body established under the provisions of Securities and Exchange
Board of India Act, 1992, having its Regional Office at New Delhi,
and represented by its Manager Sh. Aman Jain.
Versus
1. PNG Agro Finvest Ltd.,
A company incorporated under the provisions
of Companies Act, 1956 and having its Regd.
Office at 58/3, Arya Nagar,
Dayanand Vihar, Delhi-1110 092.
........Accused no.1
2. Sh. Nain Singh Samdarshi
S/o Not known to the complainant,
Occupation Director of the Accused No.1;
R/o 58/3, Arya Nagar, Dayanand Vihar,
Delhi- 110 092.
........Accused no.2
3. Sh. Lal Chand
s/o Not known to the complainant;
Occupation Director of the Accused No.1
r/o 27/A, Arya Nagar, Dayanand Vihar,
Delhi-110 092.
........Accused no.3
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SEBI Vs. P.N.G.
4. Sh. Surendra Deyol
s/o Not known to the complainant;
Occupation Director of the Accused No.1
r/o 27/A, Arya Nagar, Dayanand Vihar,
Delhi-110 092.
........Accused no.4
Date of Institution : 21.12.2002
Date of Judgement reserved on : 07.05.2011
Date of pronouning of judgment : 16.05.2011
Present: Sh. Sanjay Mann, Advocate Counsel for
complainant SEBI
Sh. A.K. Bansal, Advocate, Counsel for
accused no. 4
Accused no. 2 already died.
Accused no.3 is PO vide order dated 4.8.2006.
None on behalf of accused no.1 company.
JUDGMENT:
1. This criminal complaint was preferred by the Securities & Exchange Board of India (hereinafter referred to as "SEBI" or "the complainant"), on 21.12.2002 in the Court of Additional Chief Metropolitan Magistrate (ACMM), alleging violation of the provisions of Section 12 (1B) of Securities & Exchange Board of India Act, 1992 (hereinafter, "the SEBI Act") and Regulation Nos.
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5(1) read with 68(1), 68(2), 73 and 74 of the Securities & Exchange Board of India (Collective Investment Schemes) Regulations, 1999 (hereinafter referred to as "the CIS Regulations" or "the said Regulations"), constituting offence punishable under Section 24(1) read with Section 27 of the SEBI Act.
2. Four persons were arrayed as accused in the criminal complaint preferred under Section 200 Cr.P.C., they being PNG Agro Finvest Ltd., (hereinafter, "A1" or "the Company Accused"), accused No. 2 Sh. Nain Singh Samdarshi ("A2"), accused No. 3 Sh. Lal Chand ("A3"), accused No.4 Sh. Surendra Deyol ("A4"). It is alleged that A2 to A4 were Directors of the Company Accused and as such persons were in charge of, and responsible to, A1 for the conduct of its business within the meaning of the provision contained in Section 27 of the SEBI Act.
3. It is alleged in the complaint that A1 had floated the Collective Investment Scheme (CIS) and raised an approximate amount of Rs.0.28 crores from general public, in violation of the provisions contained in Section 12 (1B) of the SEBI Act. It is also alleged that after coming into force of the CIS Regulations and in spite of public notice dated 18. 12.1997, the accused persons had failed to get the Collective Investment Scheme registered with SC No. 15/10 Page no. 3 of 24 SEBI Vs. P.N.G. SEBI or to wind up the said scheme or repay the amount collected from the investors in terms of the CIS Regulations, thus constituting violation of the law and regulations framed thereunder and thereby committing the offence alleged as above.
4. The cognizance on the complaint was taken by the learned ACMM vide order dated 21.12.2002 whereby process was issued under Section 204 Cr.P.C. against all the accused persons.
5. On account of the amendment, particularly in Sections 24 and 26 of the SEBI Act, through Amendment Act which came into force w.e.f. 24.11.02, pursuant to Administrative Directions of Hon'ble High Court, under orders of the Ld. Distt. & Sessions Judge, this case was transferred on 29.04.2005 from the Court of Ld. ACMM to the Court of Sessions, then presided over by Ms. Asha Menon, the then Addl. Sessions Judge, Delhi.
6. Vide order dated 04.08.2006, A3 Lal Chand was declared proclaimed offender.
7. Vide order dated 21.04.2006, a notice for the offence punishable under Section 24 read with section 27 of the SEBI Act was served upon the A1(company), A2 & A4. Since A2 represented A1 company accused, he also responded to the notice SC No. 15/10 Page no. 4 of 24 SEBI Vs. P.N.G. on behalf of company. All accused persons pleaded not guilty and claimed trial. However, during the trial, A2 Sh. Nain Singh Samdarshi had passed away. Accordingly, proceedings qua him was abated vide order dated 27.01.2011. After his death, none represented company accused.
8. To prove its case, complainant examined only one witness named Sh. Aman Jain, Manager of SEBI. Thereafter, accused persons were examined under section 313 Cr.P.C. A2 Nain Singh Samdarshi died after his examination under Section 313 Cr.P.C and A4 Sh. Surender Deyol admitted that he was one of the promoters/directors of the company accused which had floated the CIS and further started that the CIS had already been wound up and amount had already been refunded to the investors. He also admitted the signature of A2 on Ex. CW1/3 but took the plea that he was only a sleeping director. Though A4 submitted that he would lead evidence in his defence, yet he failed to produce any witness in his defence. Thus, DE was closed vide order dated 06.02.2009.
9. I have heard arguments advanced by Sh. Sanjay Mann, Advocate, Counsel for complainant and Sh. A.K. Bansal, Advocate, Counsel for A4, perused the record carefully and gave my thoughtful consideration to their contentions.
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10. Learned Defence Counsel Sh. A. K. Bansal, Advocate appeared for A4 strenuously contented that A4 Surender Deyol was not in charge of, and responsible, to the conduct of the company accused as he was merely a sleeping director of the company accused. In support of his contention, he has relied upon the several judgments of different High Courts and Apex Courts wherein it is held that in order to bring the director of a Company, within the ambit of vicarious liability in terms of Section 141 of Negotiable Instrument Act for the commission of offence punishable under Section 138 Negotiable Instrument Act, complainant is not only bound to make averment in the complaint about the specific role of the concerned director but also bound to lead evidence to show that the accused was in charge of, and responsible, to the conduct of the business of the company accused. It is pertinent to mention here that all the cited judgments pertain to the dishonour of the cheques for the offence punishable under Section 138 Negotiable Instrument Act. This preposition of law is not disputed by the Counsel for the complainant, thus no purpose would be achieved to refer all the said judgments.
11. Learned counsel argued that in the present case neither the complainant had made any averment in the complaint about the role of A4 nor led any evidence to show that A4 was in charge of, and responsible to, the conduct of the business of the company SC No. 15/10 Page no. 6 of 24 SEBI Vs. P.N.G. accused. The said contention is refuted by the Counsel of the complainant by arguing that complainant had led unrebutted evidence on the court record to establish that A4 was not only the director but was also in charge of, and responsible, to the the conduct of the business of the company accused.
12. Similar contention was raised in 'Ankur Forest & Project Development India Ltd. & others Vs. SEBI in Crl. Appeal No. 220/10 decided on 8.2.2011 before the Hon`ble Court of Delhi High Court, which was dealt in para 14, same is reproduced as under:
"I find no merit in the contention of the learned defence counsel that no role has been attributed to the Appellants Nos. 2 to 5. The Appellants were the promoters and Directors thus, the responsibility of day to day functioning of the Company as has been proved by the complainant witnesses from the memorandum and articles of association is also on them. The Hon'ble Supreme Court in SMS Pharmaceuticals Ltd. vs. Neeta Bhalla and others. 2005 (8) SCC 89 held that a clear, unambiguous and specific allegation against a person impleaded as an accused that he was in charge of, and responsible to, the company in the conduct of its business at the material time when the offence was committed is sufficient. This issue was also considered by the Hon'ble Supreme Court in N. Rangachari vs. BSNL, 2007 Cri. L.FJ 2448, wherein it was held:
" 13. A Company, though a legal entity, cannot act SC No. 15/10 Page no. 7 of 24 SEBI Vs. P.N.G. by itself but can only act through its directions. Normally, the Board of Directors act for and on behalf of the company. This is clear 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. Palmer described the position thus:
" A company can only act by agents, and usually the persons by whom it acts and by whom the business of the company is carried on or superintended are termed directors.
It is further stated in Palmer that:
"Directors are, in the eye of the law, agents of the company for which they act, and the general principles of the law of principal and agent regulate in most respects the relationship of the company and its directors.
The above two passages were quoted with approval in R.K. Dalmia & Ors. v. The Delhi Administration [(1963)] I SCR 253 at page 300]. In Guide to the Companies Act by A. Ramaiya (Sixteenth Edition) this position is summed up thus:
"All the powers of management of the affairs of the company are vested in the Board of Directors. The Board thus becomes the working organ of the company. In their domain of power, there can be no interference, not even by shareholders. The directors as a board are exclusively empowered to manage and are exclusively responsible for that management.
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Therefore, a person in the commercial world having a transaction with a company is entitled to presume that the Directors of the company are in charge of the affairs of the company. If any restrictions on their powers are placed by the memorandum or articles of the company, it is for the Directors to establish it at the trial. It is in that context that Section 141 of the Negotiable Instruments Act provides that when the offender is a company, every person, who at the time when the offence was committed was in charge of and was responsible to the company for the conduct of the business of the company, shall also be deemed to be guilty of the offence along with the company. It appears to us that an allegation in the complaint that the named accused are Directors of the company itself would usher in the element of their acting for an on behalf of the company and of their being in charge of the company. In Gower and Davies Principles of Modern Company Law (Seventh Edition), the theory behind the idea of identification is traced as follows:
"It is possible to find in the cases varying formulations of the under-lying principle, and the most recent definitions suggest that the courts are prepared today to give the rule of attribution based on identification a somewhat broader scope. In the original formulation in Lennard's Carrying Company case Lord Haldane based identification on a person 'who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation'. Recently, however, such an approach has been catisgated by the Privy Council through Lord Hoffmann in Maridian Global case as a misleading "general metaphysic of SC No. 15/10 Page no. 9 of 24 SEBI Vs. P.N.G. companies" The true question in each case was who as a matter of construction of the statute in question, or presumably other rule of law, is to be regarded as the controller of the company for the purpose of the identification rule.
But as has already been noticed, the decision in S.M.S. Pharmasceuticals Ltd. (supra) binding on us, has postulated that a director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of his business and in the context of Section 141 of the Act. Bound as we are by that decision, no further discussion on this aspect appears to be warranted.
14. A person normally having business or commercial dealings with the company, would satisfy himself about its creditworthiness and reliability by looking at its promoters and Board of Directors and the nature and extent of its business and its memorandum or articles of association. Other than that, he may not be aware of the arrangements within the company in regard to its management, daily routine, etc. therefore, when a cheque issued to him by the company is dishonoured, he is expected only to be aware generally of who are in charge of the affairs of the company. It is not reasonable to expect him to know whether the person who signed the cheque was instructed to do so or whether he has been deprived of his authority to do so when he actually signed the cheque. Those are matters peculiarly within the knowledge of the company and those in charge of it. So, all that a payee of a cheque that is dishonoured can be expected to allege is that the persons named in the complaint are in charge of its affairs. The Directors are prima facie in that SC No. 15/10 Page no. 10 of 24 SEBI Vs. P.N.G. position.
15.......
16. In the light of the ratio in S.M.S. Pharmaceuticals Ltd. What is to be looked into is whether in the complaint, in addition to asserting that the appellant and another are the Directors of the company, it is further alleged that they are in charge of and responsible to the company for the conduct of the business of the company. We find that such an allegations is clearly made in the complaint which we have quoted above. Learned Senior Counsel for the appellant argued that in Saroj Kumar Poddar case this Court had found the complaint unsustainable only for the reason that there was no specific averment that at the time of issuance of the cheque that was dishonoured, the persons named in the complaint were in charge of the affairs of the company. With great respect, we see no warrant for assuming such a position in the context of the binding ratio in S.M.S. Pharmaceuticals Ltd. and in view of the position of the Directors in a company as explained above."
13. Thus, testing of the facts of the present case in the light of ratio down, it would be relevant to reproduce the portion of complaint filed by the complainant which is duly proved by the statement of CW1 Aman Jain.
Para 18 of the complaint runs as under:
In view of the above, it is charged that the Accused No.1 has committed the violation of Section 11B, 12(1B) of Securities and Exchange Board of India Act, 1992 read with Reg.5 (1) read SC No. 15/10 Page no. 11 of 24 SEBI Vs. P.N.G. with Reg. 68(1), 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 Securities and Exchange Board of India Act, 1992. The Accused No.2 to 4 are the directors and /or persons in charge of and responsible to the Accused No.1 for the conduct of its business and are liable for the violations of the Accused no.1 in terms of Section 27 of Securities and Exchange Board of India Act, 1992.
14. To prove the averments made in the complaint, complainant has examined CW1 Aman Jain. In his examination in chief, CW1 categorically deposed that as per the letter of company accused Ex. CW1/2, company accused furnished the name and other information of the directors of company accused which includes the name of A4 Surender Deyol. Similarly, he further deposed that A2 to A4 being the directors of company accused were in charge of, day to day affairs of the company accused, thus required to comply with the regulations. He further deposed that A2 & A4 were also communicated by SEBI through letter Ex. PW3/7 & PW3/8 and through public notice dated 10.12.1999. But the letter returned undelivered with the remarks 'Left without address' and CW1 further deposed that contents of the directions issued by the Chairman of SEBI were communicated to company accused as well as A2 to A4 through public notice Ex. CW1/15 but SC No. 15/10 Page no. 12 of 24 SEBI Vs. P.N.G. accused persons failed to respond the same. Though CW1 was cross examined at length by the learned counsel for the accused persons but no question was asked about the above deposition made by CW1. Accordingly, the testimony of CW1 to that extent remained unrebutted and unchallenged. In his statement under Section 313 Cr.P.C, A4 admitted that when the CIS was floated by company accused, he was one of the directors/promoters, but took the defence that the amount had already been refunded to the investors. In one of the questions, he also took the defence that he was sleeping director. There is no concept of sleeping director under the Company Act. Moreover during the trial, A4 failed to lead any evidence to prove the fact that he was only sleeping director and was not active director of the company accused. It is admitted case of the A4 that company accused had sent the letter Ex. CW1/2 to the SEBI disclosing the name and address of the directors of company accused and his name is mentioned at serial no. 3. Address of Sh. Lal Chand (A3) and Sh. Surender Deyol (A4) is the same. Background of all the three directors mentioned therein was also the same. In the background, it is mentioned that all the directors has rich exposure in Finance and Plantation. Thus, from Ex. CW1/2, it becomes clear that A4 was inducted on the Board of Directors of the company accused because he had rich exposure in the field of Finance and Plantation. It is admitted case of A4 that company accused was dealt in Plantation and SC No. 15/10 Page no. 13 of 24 SEBI Vs. P.N.G. Finance. Thus, A4 was inducted on the Board of Directors because of his qualification, thus it cannot be said that he was merely a sleeping director as alleged by A4 in his statement under Section 313 Cr.P.C.
15. It is also undisputed fact that company accused was engaged in the business of teak plantation activities and agro finance and company had floated CIS. The decision to float the CIS could only be taken by the Board of Directors and not by individual person because company acts through the decision of Board of Directors. Thus, it cannot be said that A4 was not responsible for the conduct of the company accused which decided to mobilize fund from general public by floating CIS. According to Section 106 of the Indian Evidence Act, when any fact is specially within the knowledge of any person, the burden of proving that fact is upon him. Admittedly A4 was one of the directors of company accused. If A4 is taking the plea that he was merely a sleeping director and was not involved in the decision making process of the Board of Directors in the company accused, the burden was upon A4 to prove that he was merely a sleeping director and had not participated in the decision making process of the Board of Directors of the company accused. But A4 failed to discharge the burden as he preferred not to lead any evidence in support of his contention. In the absence of any evidence contrary SC No. 15/10 Page no. 14 of 24 SEBI Vs. P.N.G. to the testimony of CW1 and documents on record, I do not find any substance in the contention of learned defence counsel that A4 was merely a sleeping directors. Being the director, A4 was in charge of, and responsible to the conduct of the business of the company accused and if the complainant succeeds to prove the guilt of company accused, A4 shall also be liable for the violation in terms of Section 27 of the SEBI Act.
16. Learned Defence Counsel argued that CW1 Aman Jain was not duly authorised representative of complainant SEBI accused. Thus, his testimony cannot be read in evidence. The said contention is refuted by the Counsel for the complainant on the grounds inter-alia that the powers were delegated in favour of certain officers of a particular rank by the Chairman of SEBI in terms of Section 9 read with Section 19 of the SEBI Act. As per Section 19 of SEBI Act, the Board has the power to delegate its power and function in favour of any member, officer of the Board in writing and as per Section 9 of the Act, the Board has also power to appoint such other officers and employees as it considers necessary for the efficient discharge of its functions under the Act. In other words, the Board has power to appoint officers/employees for the efficient discharge of its function and has also power to delegate its power in writing in favour of such officers/employees for the efficient discharge of its function. In terms of Section 9 SC No. 15/10 Page no. 15 of 24 SEBI Vs. P.N.G. read with 19 of the SEBI Act, Chairman of SEBI had delegated some of his powers in favour of legal officers/prosecution division/Manager on 21.4.2003 which is Ex. CW1/1. Admittedly CW1 is a Manager, thus by virtue of CW1/1, he is competent to proceed with the matter and to depose on behalf of the SEBI. Thus, to my mind, the said contention is without any substance.
17. Learned Defence Counsel for A4 further argued that the present complaint is not maintainable as it is beyond the period of limitation. It is contended that the maximum punishment for the offence punishable under Section 24(1) of the SEBI Act is only one year. Thus as per Section 468 of Cr.P.C, the limitation period to file the complaint is only one year. The said contention is opposed by the Counsel for the complainant on the ground that since the violation of provision of SEBI Act are continue in nature, Section 468 Cr.P.C is not applicable in the present matter.
18. Section 472 of the Code of Criminal Procedure runs as under:
Continuing offence- In the case of a continuing offence, a fresh period of limitation shall begin to run at every moment of the time during which the offence continues.
According to the Section 472 of the Code of Criminal Procedure, if offence is continuing in nature, fresh period of SC No. 15/10 Page no. 16 of 24 SEBI Vs. P.N.G. limitation shall begin to run at every moment of the time during which the offence continues. In the instant case, company accused violated Section 12 (1B) of the SEBI Act as it launched the CIS without obtaining the registration from the SEBI and when CIS regulations were notified in October 1999, company accused failed to apply for registration in terms of regulation 5 and if company failed to apply for registration or the registration is declined, as per regulation 73, company accused was liable to refund the amount to the investors and to submit the wind up and repayment report with the SEBI. But company failed to comply with the CIS regulations. Since company failed to comply with the regulations till the filing of present complaint, the violations are continuing in nature, hence the limitation period provided under Section 468 Cr.P.C is not applicable in the present matter and complainant is entitled for the benefit of provision of Section 472 of the Code of Criminal Procedure. Same view was taken by the Hon`ble High Court of Delhi in case Vishnu Prakash Bajpai Vs. SEBI, in CR. MC. 1182/2009 decided on 10.02.2010.
19. Now, coming to the issue whether the company accused has violated the provisions of SEBI Act or CIS regulations or not. Admittedly, the company accused was incorporated on 25.04.1996. As per the provision of Section 12 (1) B of the Act, no person shall sponsor or cause to be sponsored or carry on or SC No. 15/10 Page no. 17 of 24 SEBI Vs. P.N.G. caused to be carried on collective investment schemes unless he obtains a certificate of registration from the Board. According to the proviso to the said Section, the companies which were operating the CIS immediately before the commencement of the Amendment Act 1995 for which no certificate of registration was required prior to such commencement, may continue to operate till such time regulations are made under clause (d) of sub-section (2) of Section 30. Admittedly Section 12(1B) was inserted in the SEBI Act on 25.01.1995. As company accused was incorporated only on 25.04.1996, company accused was not entitled to carry on or caused to be carried on any CIS unless company obtains registration certificate from the SEBI. Admittedly company had not obtained any such certificate from the SEBI, company accused had violated the provision of Section 12 (1B) of the SEBI Act.
20. It is undisputed fact that company accused had sent a letter Ex. CW1/2 to the SEBI stating that company had raised Rs. 10,000/- approximately from public by way of issue teak units as on 31.12.1997 and further mobilized Rs. 28 lac approximately from agro finance scheme till 31.03.1998. Since the company had not obtained the certificate of registration from SEBI before mobilizing the said fund, company accused has violated the Section 12(1B) of the SEBI Act.
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21. It is undisputed fact that CIS regulations were notified on 15.10.99. By notifying the CIS regulations, SEBI had given another chance to the companies who were operating the collective investment schemes to seek certificate of registration. As per regulation 5, such companies were supposed to move an application within a period of two months for obtaining of the certificate from the date of notification. Admittedly, the company accused had not applied for seeking registration of the certificate in terms of regulation 5. As per the CIS regulations, if company failed to apply to seek registration for grant of certificate or if company applied for but rejected by the SEBI, such companies were liable to refund the amount to the investors and submit the winding up and repayment report in terms of regulations 73 of CIS regulations.
22. Since, in the instant case company accused failed to apply for registration in terms of regulation 5, company accused was liable to refund the amount to the investors and to submit the winding up and repayment report with the SEBI, but company accused failed to do so. Thus, company accused also violated the regulation 5 (1) and 73 of the CIS regulations. As already discussed that A4 Surender Deyol was the director of the company accused, thus being the director, he was in charge of, and responsible to, the conduct of the company accused. Thus, being SC No. 15/10 Page no. 19 of 24 SEBI Vs. P.N.G. the director, he is also liable for the violation committed by the company accused in terms of the Section 27 of the SEBI Act. Even A4 admitted in his statement recorded under Section 313 Cr.P.C that the company accused had mobilized the fund to the tune of Rs. 28.10 lac in its CIS but took the defence that company accused had refunded the amount to the investors. However, A4 failed to lead any evidence on record to prove the fact that company accused had refunded the amount to the investors.
23. Pondering the on going discussion, I am of the considered opinion that complainant succeeds to prove beyond doubt that company accused has violated the Section 12(1B) of the SEBI Act as well as regulations 5 (1) & 73 of the CIS regulations. Being the in charge of, and responsible to, the conduct of company accused, A4 Surender Deyol is also liable for the said violation. Accordingly, I hold both of them (A1 & A4) guilty for the offence punishable under Section 24 (1) read with section 27 of the SEBI Act.
Announced in the open Court.
On this 18th day of 2011. (PAWAN KUMAR JAIN) Additional Sessions Judge-01, Central/THC/Delhi SC No. 15/10 Page no. 20 of 24 SEBI Vs. P.N.G. IN THE COURT OF SH. PAWAN KUMAR JAIN, ADDL. SESSIONS JUDGE-01(CENTRAL):DELHI Complaint Case No. 15/10 ID No: 02401R0174132002 SECURITIES AND EXCHANGE BOARD OF INDIA, a statutory body established under the provisions of Securities and Exchange Board of India Act, 1992, having its Regional Office at New Delhi, represented by its Manager Sh. Aman Jain.
Versus
1. PNG AGRO FINVEST LTD., A Company incorporated under the provisions of Companies Act, 1956 and having its Regd. Office at 58/3, Arya Nagar, Dayanand Vihar, Delhi-110 092.
........Convict no.1
2. Sh. Surendra Deyol S/o Not known to the complainant Occupation Director of the Convict No.1(A1) R/o 27/A, Arya Nagar, Dayanand Vihar, Delhi-110 092.
........Convict no.2 Present: Sh. Sanjay Mann, Advocate, Counsel for complainant SEBI.
Sh. A.K. Bansal, Advocate, Counsel for Convicts SC No. 15/10 Page no. 21 of 24 SEBI Vs. P.N.G. ORDER ON THE POINT OF SENTENCE:
1. Vide judgment dated 18.05.2011, A1 i.e. Company accused and A4 Sh. Surender Deyol have been found guilty for the offence punishable under Section 24 (1) of the SEBI Act.
2. Counsel for the convicts requests for a lenient view on the ground that convict Sh. Surender Deyol is a sole bread earner of the family and the amount had already been refunded to the investors by the convict no.1(company accused). On the other hand, Counsel for the complainant argued for substantial punishment on the ground that convict no.1(company accused) had not filed any proof on the record to show that the amount had been refunded to the investors.
3. I have heard counsel for complainant and defence counsel on the question of Sentence, perused the record carefully and gave my thoughtful consideration to their contentions.
4. As per the record, the convict no.1(company accused) had mobilized Rs. 28.10 lac from the general public. Though convicts took the defence that they had already been refunded the amount to the public/investors, yet during the trial, they failed to adduce any evidence on record to prove that convict no.1(company SC No. 15/10 Page no. 22 of 24 SEBI Vs. P.N.G. accused) had refunded the amount to the investors. Earlier, the maximum punishment for the offence punishable under under Section 24 (1) of the SEBI Act was imprisonment for a period of one year, which was found insufficient by the Legislature, consequently, by way of Amendment, the sentence of imprisonment has been enhanced to the period of 10 years or fine to the tune of Rs. 25 Crore or both. This itself shows that how seriously the Legislature has taken this offence. Since convicts failed to adduce any evidence on record to show that they had refunded the amount to the investors, I am of the considered opinion that convicts do not deserve any leniency. Accordingly, I sentence the convict Surender Deyol for a period of 6 months Rigorousness imprisonment & is also burdened with a fine of Rs. 3 lac in default 3 months Simple Imprisonment for the offence punishable under Section 24 (1) of the SEBI Act.
Since, convict no.1 is a company, convict company is also burdened with a fine of Rs. 5 lac for the offence punishable under Section 24 (1) of the SEBI Act.
6. Bail Bond and Surety bond of convict stand cancelled. Surity stands discharged.
7. Copy of judgment alongwith order on the point of Sentence be given to the convicts free of cost.
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8. File be consigned to record room.
Announced in the open Court
on this 18th day of May, 2011 (PAWAN KUMAR JAIN)
Additional Sessions Judge-01
Central/THC, Delhi
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