Jay Sengupta, J. - (1.) This is an application for quashing of proceeding in Complaint Case No. SEBI/44/2018 pending before the Learned Judge, 5th Special Court, Kolkata under Section 26(1) read with Sections 24(1) and 27 of the SEBI Act, 1992 read with Regulation No. 3 of the SEBI Act Regulations, 2003 read with Sections 55A, 56, 60, 67, 68, 70, 2(36), 73 of the Companies Act, 1956 read with Section 40 of the Companies Act, 2013 along with Section 621 of the Companies Act, 1956 read with Sections 436 and 439 of the Companies Act, 2013 read with Section 6 of the General Clauses Act read with Section 193 of the Code of Criminal Procedure.
(2.) In the petition of complaint filed on behalf of the complainant/opposite party, it was alleged that the accused had violated the provisions of Sections 55A, 56, 60, 67, 68, 70, 2(36), 73 of the Companies Act, 1956 read with Section 40 of the Companies Act, 2013 along with Section 621 of the Companies Act, 1956 read with Sections 436 and 439 of the Companies Act, 2013 read with Section 6 of the General Clauses Act read with Section 193 of the Code of Criminal Procedure. On 29.09.2018 cognizance was taken of the alleged offences and a warrant was issued.
(3.) Mr. R.M. Chatterjee, Learned Senior Counsel appearing on behalf of the petitioners, submitted as follows. While the petitioner no. 1 was the accused company in question, the petitioner no. 2 was a former director of the said company. On 01.03.2016 the Whole Time Member, SEBI passed certain directions upon the accused company for compliance of certain statutory provisions. In effect, the impugned petition of complaint relates of alleged violations of provisions of the company law as well as the SEBI Act that had been referred to in the order of the Whole Time Member. However, the Whole Time Member itself referred to the compliance by the petitioners. An appeal was filed before the Learned Securities Appellate Tribunal. On 05.08.2016, the Learned Securities Appellate Tribunal in Appeal No. 213/16, upon hearing the submissions made by the Learned Senior Counsel of the accused petitioners therein, was pleased to permit the petitioners to withdraw the appeal with a proposal for sale of the assets belonging to them. Reference was made to letter dated 13.10.2016 from the Manager, Eastern Regional Office, SEBI detailing compliance procedure as per the direction of the appellate authority. This was duly complied with by the petitioners. On 19.03.2018, the Learned Securities Appellate Tribunal in Appeal No. 58/2018 directed the SEBI to sell the assets of the appellants only if the amount realised from the sale of assets belonging to the company were not sufficient to repay the amounts due to the investors. After all these, on 30.11.2018, the complainant filed a false complaint leading to the initiation of the present proceeding. On 18.12.2018 the petitioners raised a preliminary objection and challenged the maintainability of the case. By reason of doctrine of merger, the order passed by the Whole Time Member got merged into the order of the Learned Securities Appellate Tribunal and did not exist anymore. Therefore, its observations could not have become the basis of a criminal complaint. Since the directions of the Learned Securities Appellate Tribunal to sell the assets of the company was being complied with by the petitioners as per the procedure laid down by the SEBI, no criminality could be imputed against the accused. As the accused were facilitating the repayment of dues of investors by selling their assets, no criminal offence could be sustained as against them. In the facts and circumstances, no prima facie case could be said to have been made out against the petitioners as alleged. Any further continuation of the impugned proceeding would be an abuse of the process of the Court.;