2008 ALL MR (Cri) 589


Mahakaushal Agrotech Ltd.Vs.State Of Maharashtra & Anr.

Criminal Application No.2304 of 2007

30th January, 2008

Respondent Counsel: Mr. Y. S. SHINDE,Mr. SUBHASH JHA,M/s. Law Global

Securities and Exchange Board of India Act (1992), S.24 r/w. Regn.73, S.24A - Applicant company collected money from eight investors in 1997 - According to applicant scheme was wound up in 1998 and entire money collected was returned to investors - Counsel for SEBI suggesting that if this is so applicant should apply for compounding by invoking provisions of S.24-A - High Court while permitting applicant to apply for compounding before trial Court also granted stay to execution of non-bailable warrants issued against directors of company for a period of four weeks. (Paras 5, 6)


JUDGMENT :- By the present application the applicant is seeking quashing of the proceedings initiated against it and pending on the file of the Special Judge, Kurla, Mumbai.

2. The applicant is a Public Limited Company incorporated under the provisions of the Companies Act, 1956, having its registered office at Bhopal. The main object of the applicant company was to carry on the business of plantations. The Respondent No.2 - S.E.B.I. came into existence through the Securities and Exchange Board of India Act, 1992 on 4th April, 1992. The object of the said Act was to protect the interest of the investors in securities and to regulate the securities market and the matters connected therewith or incidental thereto.

3. The SEBI - Respondent No.2 filed a complaint against the present applicant for commission of an offence under Section 24 read with Regulation 73. It is pertinent to note that the Regulations have been framed and have come into force with effect from 15th October 1999. The applicant is said to have collected money in the year 1997 from eight investors aggregating to Rs.2.5 lakhs. It is the case of the applicant that the scheme was wound up in the year 1998 itself and the entire amounts collected from the investors, who are eight in number, were returned to them. The affidavits of said eight persons are also filed on record which indicate the repayment of the amounts invested by the investors.

4. In this fact and situation, the learned counsel for the applicant has contended that there cannot be any breach of any Regulation including Regulation No.73, for the reason that the regulations have come into force on 15th October, 1999 i.e. subsequent to return of the amounts by the applicant to the investors. Hence no offence can be made out. A reliance has been placed on Article 20 of the Constitution of India to substantiate the contentions. The learned counsel for the applicant also submits that had Respondent No.2 recorded the statements of the eight investors it would have revealed that the applicant is not guilty of alleged commission of offence.

5. The learned counsel for Respondent No.2, in all fairness, has submitted that instead of this Court going into factual aspect of the matter such as, as to whether did the applicant return the amounts to the investors and, closed the scheme prior to the regulations being brought into force etc., the applicant should approach the trial Court before which the proceedings are pending, for compounding. Both the learned counsel appearing for the respective parties are in agreement to adopt the course that has been suggested by the learned counsel for Respondent No.2.

6. In the result, I permit the present applicant to move an application for compounding before the trial Court by invoking the provisions of Section 24-A of the SEBI Act. The learned counsel for the applicant points out that the Non-bailable warrants are issued against the Directors of the Applicant-Company. The learned counsel for the applicant, therefore, seeks stay of the non-bailable warrants for a period of four weeks so as to enable the directors of the applicant to approach the trial court with a prayer for cancellation of the non-bailable warrants. This prayer is reasonable. In the result, by an interim order I grant stay to the execution of the non-bailable warrants issued against the directors of the applicant-company for a period of four weeks from today. The matter to stand over for 12 weeks from today awaiting progress of the case before the trial Court.

Ordered accordingly.