Bombay High Court
The Securities & Exchange Board Of India vs Libra Plantation Ltd on 11 November, 2024
Author: M. S. Sonak
Bench: M.S. Sonak
WP-1337-1998(F).DOCX
2024:BHC-OS:18319-DB
Niti
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.1337 OF 1998
1] The Securities & Exchange Board of
India, a Board constituted under
the Securities & Exchange Board of
India Act 1992, having its address
at Mittal Court, B Wing Nariman
Wing 222 Nariman Point Bombay
400021 ... Petitioner
Versus
1] Libra Plantation Ltd. a Company
incorporated under the Companies
Act 1956 and having its Registered
office at 304 Tirupati Udyog, 3rd floor
J.B. Patel Road, Goregaon (East)
Mumbai 400 063
2] Mr Lalit Jogani a Director of
Respondent and residing at C-1
Dhiraj Apartments, Poddar Park
Malad (East) Mumbai 400 097
3] Mr Manish Jogani a Director of
Respondent and residing at C-1
Dhiraj Apartments, Poddar Park
Malad (East) Mumbai 400 097
4] Mr Prahalad Ray a Director of
Respondent No 1 residing at B-2
I.C. Colony, Goldess Green, Holy
Cross Road, Borivli (West) Mumbai
Page 1 of 9
WP-1337-1998(F).DOCX
5] Mr Nandu Poddar a Director of
Respondent and residing at 232/34
Kalbadevi Road, 3rd Floor Mumbai
400 002
6] The Reserve Bank of India,
constituted under the Reserve Bank
of India Act 1934 and having its
office inter alia at Mint Road,
Mumbai
7] Mr Omprakash Jogani
Chairman and Managing Director
of Respondent No.1 Company
residing at C-1, Dhiraj Apartment
Poddar Park, Malad (East)
Mumbai 400 097.
8] The State of Maharashtra
9] The Official Liquidator
appointed by this Hon'ble Court
in Company Petition No.226 of 1998. ... Respondents
WITH
NOTICE OF MOTION NO. 125 OF 1999
WITH
NOTICE OF MOTION NO. 274 OF 2000
WITH
NOTICE OF MOTION NO. 342 OF 2000
WITH
NOTICE OF MOTION NO. 273 OF 2002
WITH
NOTICE OF MOTION NO. 572 OF 2010
IN
WRIT PETITION NO.1337 OF 1998
The Securities & Exchange Board of India ... Petitioner
Versus
Libra Plantation Ltd. and others ... Respondents
Page 2 of 9
WP-1337-1998(F).DOCX
WITH
INTERIM APPLICATION (L) NO. 5606 OF 2022
IN
WRIT PETITION NO.1337 OF 1998
Shree Jogani Beneficiary Trust ... Applicant
In the matter between
Securities and Exchange Board of India ... Petitioner
Versus
Libra Plantation Limited Company and others ... Respondents
And
Dhiraj Co-operative Housing Society Ltd. ... Non-applicant
WITH
CIVIL APPLICATION NO. 576 OF 2016
IN
COMPANY PETITION NO. 226 OF 1998
Ramesh Siddeshwar Nagre ... Petitioner
Versus
The Official Liquidator of M/s Libra
Plantation Ltd. ... Respondent
WITH
CIVIL APPLICATION NO. 478 OF 2010
WITH
CIVIL APPLICATION NO. 479 OF 2010
IN
COMPANY PETITION NO. 226 OF 1998
Smt Kaushlyabai O. Jogani ... Petitioner
Versus
The Provisional Liquidator of Libra Plantation
Ltd. and anr. ... Respondents
_______________________________________________
Mr Prathamesh Kamat a/w Mr Kayush Zaiwalla, Mr Omprakash
Jhah, Ms Radha Naik i/b. the Law Point, for the Petitioner-SEBI.
Ms P H Kantharia, G.P. a/w Ms Jyoti Chavan, Addl.G.P., Mr Abhay
Patki, Addl.G.P., Ms Nazia Sheikh, AGP, for Respondent Nos.2 and
7- State of Maharashtra.
Page 3 of 9
WP-1337-1998(F).DOCX
Mr Ranjeev Carvalho, for the Official Liquidator and Mr Chetan
Shelke, Asst. Official Liquidator.
Mr Yadav, Senior Police Inspector, Unit IV, E.O.W. Mumbai present.
Mr Amit Mhatre, Assistant Police Inspector, Unit IV, E.O.W. Mumbai
present.
_________________________________________________
CORAM M.S. Sonak &
Jitendra Jain, JJ.
RESERVED ON: 24 October 2024
PRONOUNCED ON: 11 November 2024
JUDGMENT :
(Per M. S. Sonak, J.)
1. Heard learned counsel for the parties.
2. The Securities Exchange Board of India (SEBI) instituted
this Public Interest Litigation seeking several reliefs to deal
with the menace of entities issuing financial instruments like
Agro Bonds, Plantation Bonds, etc. (Financial Schemes) luring
investors with promises of high returns but without any
tangible securities and then leaving the investors in a lurch.
3. The SEBI instituted this Public Interest Litigation when
there was no effective regulatory and statutory framework to
control the mushrooming number of entities indulging in such
financial schemes. The SEBI did point out that some
regulatory and statutory framework was under contemplation,
but it prayed for effective directions to deal with the
unfortunate situation pending the formulation of statutes and
regulatory frameworks to protect the interests of investors.
4. In terms of the 1995 amendments to the SEBI Act 1992,
specific provisions were introduced, inter alia, to prohibit any
WP-1337-1998(F).DOCX
new Collective Investment Schemes (CIS) without obtaining
registration from the SEBI. However, separate regulations for
regulating such CIS were not in place when SEBI instituted
this petition. Therefore, the existing CIS were permitted to
continue until regulations were framed under Section 30 of
the SEBI Act for effective implementation of the provisions of
Section 11(2)(c) and 12(1B) of the SEBI Act. The SEBI did
issue some press releases just before and after the institution
of this petition.
5. Disclosures regarding the first respondent Company
revealed that it floated 18 schemes, each maturing after about
15 years. The company collected approximately
Rs.16,01,81,000/--(Rupees Sixteen Crores, One Lakh, and
Eighty One Thousand only) through these 18 schemes. The
SEBI sought specific reliefs concerning the first respondent
because it was found that the promoters and directors
absconded after collecting a vast amount to avoid honouring
the commitments made.
6. The Company Court also admitted a Company Petition
No.226/1998, and an Official Liquidator was appointed to
take over the assets of the first respondent. Several orders
were passed in the Company Petition, and it was suspected
that even the order for the appointment of the Liquidator was
obtained without complete disclosures and only to absolve the
promoters and directors of the first respondent Company.
Accordingly, the Company Petition was also tagged along with
this petition so that the division bench could consider both
matters in tandem. The first respondent's assets, including
bank accounts, were attached under the various orders made
in the two petitions. The Official Liquidator controls and
WP-1337-1998(F).DOCX
possesses these assets, and the winding-up process is
underway.
7. Learned Counsel for the parties submitted that most of
the reliefs in this petition are substantially worked out. They
pointed out that this petition was filed, given the vacuum in
primary and subordinate legislation, to deal with a situation
where CIS were rampantly floated without any safeguards or
securities for investors. Learned Counsel pointed out that the
Securities and Exchange Board of India (Collective Investment
Scheme) Regulations, 1999, are already in place. They have
been amended from time to time to protect the interests of
investors.
8. Learned Counsel for the parties agreed that this petition
could be disposed of now, given that the 1999 regulations
already address the situation highlighted in it. They suggested
that Company Petition No.226/1998 be detagged from this
petition so that the Company Court could consider it applying
the well-settled principles under Company Law and the 1999
regulations.
9. We see no difficulty in accepting the above suggestion.
Now that the main petition can be disposed of, it would not be
appropriate for this Court to continue with the proceedings in
the Company Petition. Instead, it would be appropriate if the
Company Petition is detagged and the Company Court
considers the same. This would include consideration of the
various reports made by the Liquidator from time to time
considering the affairs of the first respondent Company (in
winding up).
WP-1337-1998(F).DOCX
10. There are specific issues regarding non-compliance with
the directions issued by this Court from time to time in these
joint proceedings. Even these matters can now be effectively
considered by the Company Court in the Company Petition.
These directions were common to both the proceedings and
would now pertain to the Company Petition. The orders and
directions in these joint proceedings would now continue
operating in the Company Petition.
11. By orders made in this petition, the Deputy
Commissioner of Police was appointed as the Investigating
Officer and directed to file reports in sealed covers at the final
hearing. However, we could find no such reports in the file,
and ultimately, it turned out that the Deputy Commissioner of
Police did not file any such Reports. Accordingly, we
adjourned the matter to enable the learned A.P.P. to obtain
instructions.
12. Learned A.P.P. submitted that the Police Authorities were
unable to locate any reports. He submitted that since the
directions were made in 1998, there has been difficulty in
complying with these directions or reporting on the
compliance status. This is not acceptable. The concerned
Deputy Commissioner of Police must file the necessary
reports, including compliance reports, before the Company
Court in Company Petition No.226/1998. This should be
done within eight weeks from today.
13. Similarly, we find that the Reserve Bank of India was
directed to appoint three auditors to investigate the affairs of
the first respondent Company. One of the auditors submitted
its report to the Deputy Commissioner of Police. However, no
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inquiry report has been filed as directed in our order dated
16.06.1998. Therefore, this direction should be complied with
within eight weeks of today by filing the inquiry report before
the Company Court in company petition no. 226/1998.
14. The Official Liquidator oversees respondents nos.1 to 5
and 7 properties. He should take steps in the best interest of
the investors, make reports to the Company Court, and
hereafter act under the orders and guidance of the Company
Court. The issue of attachment, sale, etc., of the assets of
respondents nos.1 to 5 and 7 will now be considered by the
Company Court in Company Petition No.226/1998. The
further issues of repayment of the invested amounts or at least
proportionate invested amounts will also be dealt with in the
Company Petition in terms of the procedure prescribed. This
will involve inviting of claims, adjudication of claims,
formulation of schemes, etc.
15. The pending notices of motion and civil applications do
not survive and are disposed of. However, this does not
preclude any parties from filing similar notices of motion,
interim applications, etc., in Company Petition No.226/1998.
16. This petition is accordingly disposed of after detagging
the Company Petition No.226/1998. The Registry must
obtain necessary orders for placing Company Petition
No.226/1998 before the Company Court to facilitate disposal
of the said Company Petition by the Company Court.
17. This Writ Petition No.1337 of 1998 is disposed of in the
above terms without any cost orders. Notice of Motions and
Interim Application (L) No. 5606 of 2022 in Writ Petition
WP-1337-1998(F).DOCX
No.1337 of 1998 are also disposed of with the liberty to file a
fresh Motions/Interim Application in the Company Petition.
However, it is clarified that Company Petition No.226/1998 is
not disposed of but only detagged so that the Company Court
could independently hear it.
18. All concerned to act on an authenticated copy of this
order.
(Jitendra Jain, J) (M.S. Sonak, J)
Signed by: Darshan Patil
Designation: PA To Honourable Judge
Date: 11/11/2024 11:37:01
