PAWAN GOYAL Vs. SEBI

JUDGEMENT

(1.) A complaint was filed on behalf of SEBI through its General Manager Mr. Jyoti Jindgar, and taking cognizance of the same the accused i.e. the company and persons stated to be its directors and in day-to-day control of the affairs of the company were summoned to face trial by the learned Metropolitan Magistrate. It is alleged in the complaint that Section 11 of the SEBI Act casts a duty on SEBI to protect the interest of investors in securities. It was alleged that SEBI noted that many companies were issuing instruments such as agro bonds, plantation bonds etc. which were to be treated as "Collective Investment Schemes" and thus SEBI framed and notified the "Securities and Exchange Board of India (Collective Investment Schemes) Regulations 1999" and as per Regulation 68 thereof persons operating Collective Investment Schemes had to register the scheme before the Board and as per Regulation 73 in the failure to do so, the scheme would be wound up with information to the investors and the board and simultaneously the investments would be returned to the investors. It was alleged in the complaint that the last date by which the Collective Investment Schemes had to be got registered was 31.3.2000. Alleging that accused No. 1 i.e. M/S. Bright Forests Ltd., neither got registered the Collective Investment Scheme(s) floated by it nor refunded the amounts to the investors, alleging further that the company raised a huge amount, it was prayed that in view of violation of Section 11(b) and 12(1b) of the SEBI Act 1992 read with Articles 5, 68, 73 and 74 of SEBI (Collective Investment Schemes) Regulations 1999, an offence punishable under Section 24 of the SEBI Act was committed. Qua accused No. 2 to accused No. 11 it was alleged that as Directors of accused No. 1 they were in-charge of and responsible for the acts of accused No. 1 and were liable vicariously as per Section 27 of the SEBI Act 1992. It be highlighted that at the relevant time infringement of the Regulations invited imprisonment for a term which may extend to 1 year, which punishment stands enhanced to 10 years with effect from 29.10.2002 when SEBI Act was amended.

(2.) The complaint was filed on 15.12.2003.

(3.) The Petitioners who were stated to be the Directors of the company and were impleaded as accused have filed the above-captioned petitions.