Chhattisgarh High Court: Rajendra Chandra Singh Samant J. dismissed the revision petitions being devoid of merit.
The facts of the case are such that the petitioners are directors of a company named H.B.N. Dairy & Allied Limited whose business is to seek investment from investors in the business of the company and part of the profit was assured to the investors. Due to irregularities being found, SEBI directed to discontinue the services and to make repayments to the investors. The charges have been framed against the applicants for commission of the offence under Section 420, 409 of the Indian Penal Code and Section 3, 4 & 5 of the Prize Chits Money Circulation Schemes (Banning) Act, 1978 and Section 10 of Protection of Depositors Interest Act, 2005. An application under Section 239 of Criminal Procedure Code i.e. Cr.P.C. was filed seeking discharge from the charges which came to be dismissed. Assailing this order, instant revision petitions were filed.
Counsel for the petitioners Mr. Bhashkar Payashi, Vibhash Tiwari and Rohitashwa Singh submitted that the framing of charges against the applicants in all three cases is erroneous and illegal, as there had been no prima-facie case present against these applicants for framing of such charges. The company has acted in accordance with the direction of SEBI and repaid the amount to various investors in Chhattisgarh. Therefore, the applicants’ company did not have any dishonest intention. Because of the registration of FIR, the applicants’ company is now unable to dispose of its property, which has become hindrance in making repayment to the investors.
Counsel for the respondents Mr. Adil Minhaj submitted that material in the charge-sheet in all three cases contains evidence to show that the applicants had no intention to make any refund to the investors/depositors, therefore, intention of the applicants was fraudulent from the very beginning.
The Court observed that it has been found that the applicants are directors of that company, who have given inducement to numerous persons regarding their fraudulent schemes and taken deposits and none of them have been paid the refund. On this basis charge-sheets have been filed. The applicants have been unable to establish that by any reason present, the applicants’ company, which was Non-Banking Company, had any authority to take such collections of money from the public. The order of SEBI is also not in favour of the applicants’ company. Hence, the allegations present regarding dishonest intention of the applicants cannot be discarded unless and until these applicants establish in the trial that their intention were bonafide.
The Court thus held “it can be said that the activity of the applicants’ company appears to be covered under Section 2 (c) of the Act, 1978 and therefore, promotion of such scheme, which is banned under Section 3 of the Act, 1978 is punishable under Section 4 of the same Act, 1978, regarding which, there is sufficient evidence present for framing of charge against the applicants.”[Amandeep Singh Saran v. State of Chhattisgarh, 2021 SCC OnLine Chh 901, decided on 07-04-2021]
Arunima Bose, Editorial Assistant has reported this brief.