S. Avtar Singh vs State Of Nct Of Delhi & Anr

Delhi High Court
S. Avtar Singh vs State Of Nct Of Delhi & Anr on 20 November, 2012
Author: Manmohan


CRL.M.C. 3940/2012 & CRL.M.A. 18919/2012

S. AVTAR SINGH                      ….. Petitioner
Through          Mr. Rajiv Shukla, Advocate


STATE OF NCT OF DELHI & ANR ….. Respondents
Through   Ms. Jasbir Kaur, APP for State

Date of Decision : 20th November, 2012



1. Present petition has been filed under Section 482 Cr. P.C. seeking quashing of complaint case being CC No. 1041/2002 (New No. 42/2005) pending before Additional Chief Metropolitan Magistrate (Special Acts), Central District, Tis Hazari Courts, Delhi filed by the Securities and Exchange Board of India (for short ‘SEBI’) on the ground that same was not maintainable in accordance with Section 446 of the Companies Act, 1956.
2. Mr. Rajiv Shukla, learned counsel for the petitioner submits that the alleged offence was committed on 12th July, 2002 when SEBI issued a letter directing M/s. G.P. Forest Development India Ltd. (hereinafter referred as ‘company’) to refund the money collected under the collective investment scheme floated by the company to its investors within a period of one month. He submits that by that time, the Provisional Liquidator had already been appointed by the Punjab and Haryana High Court vide order dated 5th October, 2001. Consequently, he states that neither the company nor petitioner, being a Managing Director of the company was in a position to refund money to its depositors.
3. However, having perused the paper book it transpires that in the year 1995 a collective investment scheme was floated by the company. Subsequently, in 1999 SEBI notified Regulations making it mandatory for registration of even existing collective investment schemes. The time for registration of existing collective investment schemes with SEBI was extended up to March, 2000. The company, however, failed to make any application with SEBI for registration of the collective investment scheme being operated by it within the prescribed period. Thereafter, some correspondences were exchanged between SEBI and the company. In between, on 5th October, 2001, Provisional Liquidator was appointed.
4. Keeping in view the aforesaid facts, this Court is of the prima facie view that the offence for non-registration of Collective Investment Scheme floated by the petitioner was complete in March, 2000 itself. Consequently, the order appointing Provisional Liquidator offers no assistance to the petitioner.
5. Moreover, whatever protection is afforded by Section 446 of the Companies Act, 1956 – is provided to the company and not to the individual directors of the company.

6. In any event, a Division Bench of this Court in Krishna Texport Industries Ltd. v. DCM Limited, 150 (2008) DLT 259 (DB) has held that Courts under Section 446 of the Companies Act, 1956 are not empowered to stay criminal proceedings against officers/directors of the company. In the said judgment, it has also been held that proceedings which are not of pecuniary nature involving recovery of money cannot be stayed. In the present case, criminal complaint filed by SEBI cannot be said to be pecuniary in nature involving recovery of money.
7. Accordingly, present petition and application are dismissed.