Varinder Bharti vs Securities & Exchange Board Of ...
2011 Latest Caselaw 3263 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI

                          Judgment delivered on: July 11, 2011

+       CRIMINAL M.C. No.858/2010


        VARINDER BHARTI                ....PETITIONER
            Through: Ms. Beenashaw N.Soni with Ms.Sunita Gupta,
                     Advocates.

                        Versus

        SECURITIES & EXCHANGE BOARD OF INDIA
        & OTHERS                          .....RESPONDENTS

Through: Ms.Pinki Anand, Senior Advocate with Mr.Ashish Aggarwal, Advocate.

CORAM:

HON'BLE MR. JUSTICE AJIT BHARIHOKE

1. Whether Reporters of local papers may be allowed to see the judgment?

2. To be referred to the Reporter or not ?

3. Whether the judgment should be reported in Digest ?

AJIT BHARIHOKE, J.(ORAL)

1. This is a petition under Section 482 of the Code of Criminal

Procedure for quashing of criminal complaint filed by respondent

No.1/Securities and Exchange Board of India (SEBI) against M/s Janraksha

Green Forests Limited (respondent No.2) and others, including the

petitioner under Sections 24(1) and 27 of Securities and Exchange Board

of India Act 1992 (for short `SEBI Act'). Quashing has been sought

primarily on the ground that the petitioner was neither a Director nor a

person in charge of and responsible to the company Janraksha Green

Forests Limited for conduct of its business nor did he have any connection

whatsoever with the said company.

2. The Govt. of India, in order to regulate entities which used to issue

instruments such as Agro Bonds, Plantation Bonds etc. decided to treat

such schemes as `Collective Instrument Schemes' and brought them

under the purview of SEBI Act, 1992, with the object of protecting the

investors and promoting investment activities. SEBI (Collective

Investment Schemes) Regulations, 1999 were thus framed by SEBI. The

Regulations were notified in the year 1999.

3. The accused company M/s Janraksha Green Forests Ltd., under

Collective Investment Schemes, had raised an aggregate amount of

`4.285 crores from the general public. Accused company, pursuant to the

regulations, submitted an application with SEBI for registration of the

Collective Investment Schemes run by it. Since the company did not fulfil

certain requirements for the grant of registration, its application was

rejected. Intimation of rejection of application was sent to the accused

company vide letter dated 15th February, 2002. Pursuant to the rejection

of application for registration, in terms of Regulation 73 of SEBI (Collective

Investment Schemes) Regulations 1995, the accused company was

required to send an information memorandum to the investors who had

subscribed to its schemes within two months from the date of receipt of

information. Further, on completion of winding up and repayment, the

company was also required to file a detailed report within 3 ½ months

from the date of information memorandum. The accused company,

however, failed to comply with the said provisions of the Regulations.

4. SEBI, thus, on 27th December 2002, in exercise of its powers under

Section 11B of SEBI Act, 1992, directed the accused company to refund

the money under the aforesaid Collective Investment Schemes to the

investors within a period of one month from the date of said directions.

Accused company, however, failed to comply with the directions which led

to the filing of the complaint against the accused company and its

Directors, including the petitioner, under Section 24(1) read with Section

27 of the SEBI Act, 1992. It is alleged that the petitioner was one of the

Directors and person in charge of and responsible to the accused No.1

company for conduct of its business, as such, he is also liable for the

offence in view of Section 27 of the SEBI Act, 1992.

5. Ms.Beenshaw Soni, Advocate appearing for the petitioner submitted

that this is a case of mistaken identity and the complaint against the

petitioner is liable to be quashed for the reason that petitioner was never

a Director of the accused company, rather he had no connection

whatsoever with said company. In support of this contention, learned

counsel has drawn my attention to the copy of the winding up petition in

respect of accused No.1 company filed in High Court of Punjab & Haryana,

wherein the petitioner is not arrayed as a respondent in capacity of

Director of the company. She has also referred to the copy of annual

return of the company submitted to Registrar of Companies in which

petitioner is not shown as Director and petitioner has also referred to the

copy of order dated 6th December, 2004 wherein consumer court has

recorded that "respondent No.4 Prem Raj Dhand (inadvertently

mentioned) in the complaint as Varinder Kumar Dhand". It is urged that

from the above, it is clear that the petitioner was not associated with the

accused company in any manner, as such, his inclusion as accused in the

complaint is abuse of process of law. Learned counsel has urged for

setting aside of impugned order as well as complaint qua the petitioner.

6. Learned counsel for respondent No.1, on the contrary, submits that

the petitioner is in the habit of operating with different names. It is

pointed out that though Varinder Kumar Dhand has been named as

accused No.4 in the complaint, the petitioner has filed the instant petition

under the name Varinder Bharti. Learned counsel further submitted that

the petitioner was a Director of respondent No.2 company (accused No.1

in the complaint), which is apparent from certain communications made

on behalf of the accused company and the petitioner himself to SEBI. In

support of this contention, learned counsel for the respondent No.1 has

drawn my attention to copy of letter dated 29th April, 1998 purported to

have been sent by Managing Director of respondent No.2 company to

SEBI whereby he had forwarded Memorandum of Articles and Articles of

Association, Balance sheet for the year 1996-97, List of Directors and the

Certificate. Perusal of the copy of list of Directors annexed to the letter

would show that Varinder Dhand s/o Prem Dhand has been shown as one

of the Directors of the Company. Respondent No.1 has also placed on

record another letter purportedly sent by the Managing Director of the

accused company to SEBI vide which list of Directors with the details of

their assets was forwarded. In the said list also petitioner Varinder Dhand

is shown as a Director having NIL assets.

7. Respondent No.2 has also placed on record photocopy of list of

organisational personnel of respondent No.2/accused company submitted

to SEBI wherein also the name of the petitioner occurs. Besides the

above, respondent No.1 has placed on record a letter purportedly written

by the petitioner whereby he claimed to have resigned from the Board of

Directors of the company on 29th April, 2000.

8. Only plea of the petitioner is that he was neither a Director nor he

had any association with the accused company, namely, M/s. Janraksha

Green Forests Limited (respondent No.2). This plea is denied by the

respondent No.1 on the strength of certain communications sent by

accused company and the petitioner noted above. Since parties are at

dispute in this regard, it is apparent that the plea raised by the petitioner

is a question of fact, which can be determined only on the basis of

evidence, which is the subject-matter of trial. Thus, I find no reason to

invoke Section 482 CrPC to quash the impugned summoning order or the

complaint qua the petitioner.

9. Petition is accordingly dismissed.

JULY 11, 2011                                    (AJIT BHARIHOKE)
gg/ks                                                  JUDGE