A Treatise on contraventions under Companies Act, Securities Law and FEMA (Second edition) by Bloomsbury India Professional

Dr. K. S. Ravichandran

M Com, LLB, FCS, PhD

SECOND EDITION

Highlights • Amendments through the Companies (Amendment) Second Ordinance, 2019 and Companies (Adjudication of Penalties) Amendment Rules, 2019 have been taken into account and explained. • Detailed discussion on Settlement of Proceedings under Securities Laws amended with effect from 01st January 2019. • Detailed analysis of “Continuing Offences”. • Comprehensive discussion on frauds in a separate sub-chapter. • Detailed analysis of various penal clauses and their peculiarities.

Bloomsbury Profess

A Treatise on Contraventions under Companies Act, Securities Laws and FEMA

Contents at a glance About the author. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi Preface to the second edition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii Preface to the first edition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xix Table of contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxvii Table of cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . lv Ready Reckoner to compoundable and non-compoundable offences under the Companies Act, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RR-1 Chapter 1A

Duties and Liabilities of Company, Directors and Officers for Offences-Company Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.1

Chapter 1B

Contraventions under the Companies Act, 2013 – the Penal and other Consequences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1B.1

Chapter 1C

Punishment for Frauds under the Companies Act, 2013. . . . . . . . . 1C.1

Chapter 2

Compounding of offences under the Companies Act, 2013 . . . . . . . . 2.1

Chapter 3

Adjudication of penalties – section 454. . . . . . . . . . . . . . . . . . . . . . . . 3.1

Chapter 4

Trial Procedure under Criminal Procedure Code. . . . . . . . . . . . . . . . . 4.1

Chapter 5

Inspection, Investigation, Search and Seizure. . . . . . . . . . . . . . . . . . . 5.1

Chapter 6

Complaint and complainant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1

Chapter 7

Relief to directors and officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1

Chapter 8

Quashing of Criminal Complaints. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1

Chapter 9

SEBI Act, 1992 – provisions, procedures, penalties and prosecutions – an overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1

Chapter 10

Collective investment schemes – SEBI directions and adjudication of penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1

Chapter 11

Adjudication under securities laws – provisions, principles and procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1

Chapter 12

Settlement Proceedings – provisions and procedures . . . . . . . . . . . . 12.1

Chapter 13

Appeals under Securities Laws – provisions, principles and procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1

Chapter 14

Composition of certain offences – Section 24A of SEBI Act . . . . . . 14.1

Chapter 15

An overview of FEMA 1999, rules and regulations – provisions and procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.1 xxiii

Treatise on contraventions under Companies Act, Securities Laws & FEMA

Chapter 16

Compounding of contraventions under FEMA. . . . . . . . . . . . . . . . . 16.1

Chapter 17

Adjudication, appeals under FEMA, 1999 . . . . . . . . . . . . . . . . . . . . 17.1

Chapter 18

Prosecution against offences under FEMA. . . . . . . . . . . . . . . . . . . . 18.1 APPENDICES

LIST OF APPENDICES PERTAINING TO COMPANIES ACT Appendix 1: Companies (Adjudication of Penalties) Rules, 2014. . . . . . . . . . . App-1.1 Appendix 2: Important sections of the Companies Act, 1956 dealing with offences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . App-2.1 Appendix 3: Section 621A Composition of offences. . . . . . . . . . . . . . . . . . . . . . App-3.1 Appendix 4: MCA Circular – Prosecution of Directors. . . . . . . . . . . . . . . . . . . App-4.1 Appendix 4A: Commencement Notification of Companies (Amendment) Act, 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . App-4A.1 Appendix 4B: Commencement Notification of Companies (Amendment) Act, 2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . App-4B.1 Appendix 4C: Insolvency and Bankruptcy Code, 2016 – (Section 255, The Eleventh Schedule and Commencement Notifications). . . . . App-4C.1 LIST OF APPENDICES PERTAINING TO SECURITIES LAWS Appendix 5: Depositories (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 2005. . . . . . . . . . . . . . . App-5.1 Appendix 6: Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . App-6.1 Appendix 7: The Securities Contracts (Regulation) (Procedure for Holding Inquiry and imposing Penalties by Adjudicating Officer) Rules, 2005. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . App-7.1 Appendix 8: Securities Appellate Tribunal (Procedure) Rules, 2000. . . . . . . . . App-8.1 Appendix 9: The Securities Contracts (Regulation) (Appeal to Securities Appellate Tribunal) Rules, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . App-9.1 Appendix 10: The Depositories (Appeal to Securities Appellate Tribunal) Rules, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . App-10.1 Appendix 11: Securities and Exchange Board of India (Manner of Service of Summons and Notices Issued by the Board (Amendment) Regulations, 2007. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . App-11.1 Appendix 12: Securities and Exchange Board of India (Settlement Proceedings) Regulations, 2018. . . . . . . . . . . . . . . . . . . . . . . . . . App-12.1 LIST OF APPENDICES PERTAINING TO FEMA Appendix 13: The Foreign Exchange Management Act, 1999. . . . . . . . . . . . . . App-13.1 Appendix 14: Foreign Exchange (Compounding Proceedings) Rules, 2000. . . App-14.1 xxiv

Contents at a glance

Appendix 15: Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . App-15.1 Appendix 16: Foreign Exchange Management (Regularization of assets held abroad by a person resident in India) Regulations, 2015 . . App-16.1 LIST OF APPENDICES PERTAINING TO CODE OF CRIMINAL PROCEDURE Appendix 17: Relevant Sections of the Code of Criminal Procedure, 1973. . . . App-17.1 LIST OF SPECIAL COURTS Appendix 18: List of Special Courts â&#x20AC;&#x201C; under Section 435 . . . . . . . . . . . . . . . . . App-18.1

xxv

Table of contents About the author. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi Preface to the second edition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii Contents at a glance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxiii Table of cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . lv Ready Reckoner to compoundable and non-compoundable offences under the Companies Act, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RR-1 Chapter 1A

Duties and Liabilities of Company, Directors and Officers for Offences-Company Law. . . . . . . . . . . . . . . . . . . . . . 1A.1 1A.1 Evolution of Company Form of Organization. . . . . . . . . . . . . . . . . . . . . . . . 1A.1 1A.1.1 Maximum number of members/partners of associations and partnerships. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.1 1A.2 Companies Act, 2013 – a New Statute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.3 1A.3 Broad Categories of Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.4 1A.4 Ministry of Corporate Affairs, Registrars, Regional Directors and Official Liquidators. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.4 1A.4.1 Ministry of Corporate Affairs. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.4 1A.4.2 Registrar of companies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.5 1A.4.3 Regional directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.5 1A.5 Preference for Corporate Form of Organisation. . . . . . . . . . . . . . . . . . . . . . 1A.6 1A.5.1 Limited Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.6 1A.5.2 Corporate power is with board of directors . . . . . . . . . . . . . . . . . 1A.8 1A.6 Duties of Directors – Position in UK, Australia and South Africa . . . . . . . 1A.10 1A.6.1 The legal position in UK – duties of directors. . . . . . . . . . . . . . 1A.10 1A.6.2 The legal position in Australia – duties of directors. . . . . . . . . . 1A.12 1A.6.3 The legal position in South Africa – duties of directors. . . . . . . 1A.13 1A.7 Duties of Directors - Legal Position in India. . . . . . . . . . . . . . . . . . . . . . . . 1A.13 1A.7.1 Individual duties of directors – section 166. . . . . . . . . . . . . . . . 1A.13 1A.7.2 Comply with articles of association – section 166(1). . . . . . . . . 1A.13 1A.7.3 To exercise due and reasonable care – section 166(2). . . . . . . . 1A.15 1A.7.4 Duty to avoid conflicts of interest. . . . . . . . . . . . . . . . . . . . . . . . 1A.16 1A.7.5 Duty not to make undue gain or advantage . . . . . . . . . . . . . . . . 1A.17 1A.7.6 Assignment of office prohibited. . . . . . . . . . . . . . . . . . . . . . . . . 1A.19 1A.8 Meaning of “Offences”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.20 1A.9 Commission of an offence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.20 1A.10 Mens Rea (Guilty Mind). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.21 1A.11 Mens rea vis-a-vis offences under the act. . . . . . . . . . . . . . . . . . . . . . . . . . 1A.22 xxvii

Treatise on contraventions under Companies Act, Securities Laws & FEMA

1A.12 Criminal Liability of Companies – Identification Principle and Vicarious Liability!. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.23 1A.13 Punishment of Imprisonment cannot be imposed on a company . . . . . . . . 1A.26 1A.14 Relevance of certain Propositions and Principles in the context of Companies Act, 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.28 1A.14.1 Officers in default and persons responsible for the management of the affairs of the company. . . . . . . . . . . . . . . . . 1A.29 1A.15 Officers of the Company who are in Default. . . . . . . . . . . . . . . . . . . . . . . . 1A.31 1A.15.1 Consent or connivance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.37 1A.16 Scheme of Act – Penal Provisions and Persons Liable. . . . . . . . . . . . . . . . 1A.48 1A.16.1 Company must be an accused. . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.48 1A.17 Continuing Offences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.49 1A.18 Statutory scheme of offences and punishments under Companies Act, 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.55 1A.19 Scheme of the Companies Act and other Acts offering relief and remedies.1A.55 1A.20 Inspection and investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.56 Chapter 1B

Contraventions under the Companies Act, 2013 – the Penal and other Consequences. . . . . . . . . . . . . . . . . . . . . . . . . . . 1B.1 1B.1 Analysis of Penal clauses for select offences . . . . . . . . . . . . . . . . . . . . . . . . 1B.1 1B.1.1 Issue of securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1B.1 1B.1.2 Offences relating to deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1B.2 1B.1.3 Offences relating to dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . 1B.6 1B.1.4 Offences arising from non-filing of returns and documents. . . . . 1B.8 1B.1.5 Punishment for contravention of provisions relating to auditors. 1B.8 1B.1.6 Offences relating to composition of board of directors . . . . . . . 1B.13 1B.1.7 Offences related to acts beyond the powers of the board. . . . . . 1B.13 1B.1.8 Offences relating to political contributions – section 182. . . . . 1B.14 1B.1.9 Offences arising from granting loans, guarantees and securities and making investments. . . . . . . . . . . . . . . . . . . . . . . 1B.15 1B.1.10 Offences relating to related party transactions. . . . . . . . . . . . . . 1B.19 1B.1.11 Offences relating to registers of contracts and arrangements. . . 1B.21 1B.1.12 Offences relating to transactions for a consideration other than cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1B.23 1B.1.13 Offences relating to managerial remuneration. . . . . . . . . . . . . . 1B.23 1B.1.14 Offence of Disobeying orders to produce books and records. . . 1B.25 1B.1.15 Offences of False Statement and False Evidence. . . . . . . . . . . . 1B.27 1B.1.16 Offence of Wrongful Withholding of Property. . . . . . . . . . . . . . 1B.28 1B.1.17 Offence of Unauthorised Use of the Words “Limited” or “Private Limited”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1B.29 1B.1.18 Offences arising from Illegal Associations or Partnerships. . . . 1B.29 xxviii

Table of contents

1B.2 Offences leading to Disqualifications and Vacation of Directorships. . . . . 1B.29 1B.3 Offences by Foreign Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1B.33 1B.4 Offences Creating Liability to Indemnify or Compensate . . . . . . . . . . . . . 1B.36 1B.4.1.1 Contravention of section 74. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1B.36 1B.4.1.2 Contravention of sections 139 / 143 / 144 / 145. . . . . . . . . . . . . 1B.37 1B.4.1.3 Contravention of section 177. . . . . . . . . . . . . . . . . . . . . . . . . . . 1B.37 1B.4.1.4 Contravention of section 184. . . . . . . . . . . . . . . . . . . . . . . . . . . 1B.37 1B.4.1.5 Contravention of section 188. . . . . . . . . . . . . . . . . . . . . . . . . . . 1B.37 1B.4.1.6 Contraventions of Section 192. . . . . . . . . . . . . . . . . . . . . . . . . . 1B.37 1B.4.1.7 Contravention of Section 197. . . . . . . . . . . . . . . . . . . . . . . . . . . 1B.38 1B.4.1.8 Liability in case of Misfeasance or Breach of Trust – Section 340. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1B.38 1B.5 Offences for which no separate penal clause exists – Section 450. . . . . . . 1B.38 1B.6 Repeat Offences where fine is part of the Prescribed Punishment . . . . . . . 1B.39 1B.7 Repeat Defaults – Where penalty is the prescribed punishment. . . . . . . . . 1B.41 1B.8 Factors to be considered for deciding quantum of punishment. . . . . . . . . . 1B.42 1B.9 Reduced quantum of punishment for certain class of companies. . . . . . . . 1B.43 Chapter 1C Punishment for Frauds under the Companies Act, 2013. . . . . . 1C.1 1C.1 Frauds a direct reflection of failure of Governance. . . . . . . . . . . . . . . . . . . . 1C.1 1C.2 Punishment for Frauds, generally!. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1C.7 1C.3 Offences punishable as fraud. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1C.8 1C.4 Auditor’s duty to report frauds committed by officers or employees. . . . . 1C.14 Chapter 2 Compounding of offences under the Companies Act, 2013. . . . . . 2.1 2.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 2.2 Compounding - meaning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 2.3 The Code of Criminal Procedure, 1973 (CRPC). . . . . . . . . . . . . . . . . . . . . . . . 2.2 2.3.1 Nature of offences that must be compoundable. . . . . . . . . . . . . . . . 2.5 2.4 Compounding of an offence may be desirable!. . . . . . . . . . . . . . . . . . . . . . . . . 2.6 2.5 Relief afforded by the scheme for compounding . . . . . . . . . . . . . . . . . . . . . . 2.10 2.6 Statutory scheme for compounding of offences – section 441. . . . . . . . . . . . 2.10 2.6.1 Section 441(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.10 2.6.1.1 Compounding authority under sub-section (1). . . . . . . 2.10 2.6.1.2 Compoundable offences under sub-section (1). . . . . . . 2.10 2.6.1.3 Impact of the non-obstante clause. . . . . . . . . . . . . . . . . 2.13 2.6.1.4 Persons who can apply for compounding. . . . . . . . . . . 2.14 2.6.1.5 Compounding fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.15 2.6.1.6 Weight of additional fee paid. . . . . . . . . . . . . . . . . . . . . 2.17 2.6.1.7 Effect of Investigation, if any . . . . . . . . . . . . . . . . . . . . 2.18 2.6.2 Section 441(2) – compounding of repeat offences. . . . . . . . . . . . . 2.20 2.6.3 Apply to registrar of companies - section 441(3). . . . . . . . . . . . . . 2.21 xxix

Treatise on contraventions under Companies Act, Securities Laws & FEMA

2.6.4 2.6.5

2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14 2.15 2.16 2.17 2.18 2.19 2.20

Before compounding comply - section 441(4). . . . . . . . . . . . . . . . Consequences of failure to comply with compounding order - section 441(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6.6 Compounding of offences by special court - section 441(6). . . . . Impact of amendments by companies (Amendment) Second Ordinance, 2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Offences not Compoundable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Compounding must be only as per section 441 - section 441(7). . . . . . . . . . . General pre-requisites for compounding of offences . . . . . . . . . . . . . . . . . . . Applications and Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Principles of natural justice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Illustrative List of Offences that have been compounded. . . . . . . . . . . . . . . . Compounding would wipe out only penal consequences. . . . . . . . . . . . . . . . Compounding of offences involving public interest. . . . . . . . . . . . . . . . . . . . Transfer of applications pending before CLB to the Tribunal. . . . . . . . . . . . . Compounding of Offences by Companies under Liquidation. . . . . . . . . . . . . Factors to be considered by NCLT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appeals against Orders of NCLT / Regional Director. . . . . . . . . . . . . . . . . . . Power of NCLT to review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.22 2.24 2.24 2.29 2.29 2.33 2.33 2.34 2.38 2.39 2.41 2.42 2.43 2.43 2.45 2.46 2.47

Chapter 3 Adjudication of penalties – section 454. . . . . . . . . . . . . . . . . . . . . . 3.1 3.1 Penalties vis-à-vis other punishments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 3.2 Offences inviting penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 3.3 Penalties levied by other authorities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.17 3.4 Appointment of Adjudicating Officers – Section 454 (1). . . . . . . . . . . . . . . . 3.18 3.5 Jurisdiction of Adjudicating Officers –Section 454(2) . . . . . . . . . . . . . . . . . . 3.19 3.6 Adjudicating Penalties –Section 454(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.19 3.6.1 “Any other person”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.19 3.6.2 No contravention; no liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.21 3.7 Opportunity of being Heard –Section 454(4) . . . . . . . . . . . . . . . . . . . . . . . . . 3.22 3.7.1 Show cause notice – rule 3(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.23 3.7.2 Nature of non-compliance –rule 3(3). . . . . . . . . . . . . . . . . . . . . . . 3.24 3.7.3 Reply and Extension of time for replying to notice –rule 3(4). . . . 3.25 3.7.4 Notice of enquiry – rule 3(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.25 3.7.5 Order of the adjudicating officer and adjournments –rule 3(6) . . . 3.26 3.7.6 Time limits for passing order after adjudication – rule 3(7). . . . . . 3.27 Signing of and sending the order of adjudicating officer – 3.7.7 rules 3(8) and 3(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.27 3.7.8 Powers of adjudicating officer – rule 3(10) . . . . . . . . . . . . . . . . . . 3.28 3.7.9 Ex parte order by adjudicating officer – rule 3(11) . . . . . . . . . . . . 3.29 3.7.10 Relevant factors leading to adjudication of penalties – rule 3(12).3.29 xxx

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3.7.11 3.7.12 3.7.13 3.7.14 3.7.15

Good faith. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lex non cogit ad impossiblia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fixed sum as penalty – rule 3(13) . . . . . . . . . . . . . . . . . . . . . . . . . Penalties should be paid through Portal – rule 3(14). . . . . . . . . . . Penalties collected to go to Consolidated Fund of India – rule 3(15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8 Appeal against Orders of Adjudicating Officers –Section 454(5). . . . . . . . . . 3.9 Time Limit for Preferring an Appeal – Section 454(6). . . . . . . . . . . . . . . . . . 3.9.1 Form of appeal – sub-section (6) and rule 4. . . . . . . . . . . . . . . . . . 3.9.2 Registration of appeal – rule 5. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9.3 Disposal of appeal by regional director – rule 6. . . . . . . . . . . . . . . 3.9.4 Ex-parte orders - rule 6(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.10 Order by Regional Director – Section 454(7). . . . . . . . . . . . . . . . . . . . . . . . . 3.10.1 Signing and serving of orders of regional director – rules 6(6) and 6(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.11 Non-compliance of Orders –Section 454(8). . . . . . . . . . . . . . . . . . . . . . . . . . 3.11.1 Need for enhancing integrity of the systems and procedures. . . . . 3.11.2 Voluntary submission to Adjudication Regime . . . . . . . . . . . . . . .

3.30 3.30 3.31 3.31 3.32 3.32 3.33 3.33 3.34 3.35 3.36 3.37 3.37 3.38 3.38 3.39

Chapter 4 Trial Procedure under Criminal Procedure Code . . . . . . . . . . . . . 4.1 4.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 4.2 Major Recommendations of Dr.J.J.Irani Committee on Offences. . . . . . . . . . 4.1 Definition of offence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 4.2.1 4.2.2 List of penalties for offences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 4.2.3 Penalties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 4.2.4 Deterrence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 4.2.5 Delay in prosecutions should not be there. . . . . . . . . . . . . . . . . . . . 4.3 4.2.6 Role of knowledge factor to decide liability . . . . . . . . . . . . . . . . . . 4.3 4.2.7 Compounding of offences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 4.2.8 Frauds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 4.2.9 Liability for fraudulent transactions. . . . . . . . . . . . . . . . . . . . . . . . . 4.4 4.3 Code of Criminal Procedure, 1973 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 4.4 Object of Trial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6 4.5 Criminal Proceeding vis-à-vis Civil Proceeding. . . . . . . . . . . . . . . . . . . . . . . . 4.6 4.6 Criminal Courts and Civil Courts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7 4.7 Public Prosecutors and Company Prosecutors . . . . . . . . . . . . . . . . . . . . . . . . . 4.8 4.8 Courts under the Companies Act, 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.9 4.9 Criminal Courts and their Powers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11 4.10 Territorial Jurisidiction of Criminal Courts for Offences under the Companies Act, 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.14 4.11 Cognizable and Non-Cognizable Offences. . . . . . . . . . . . . . . . . . . . . . . . . . . 4.15 4.12 Summons Cases and Warrant Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.18 xxxi

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4.13 Complaint and taking Cognizance of an Offence. . . . . . . . . . . . . . . . . . . . . . 4.13.1 Issuing process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.13.2 Dispensing with the personal attendance of the accused. . . . . . . . 4.13.3 Supply of copies of documents to the accused. . . . . . . . . . . . . . . . 4.13.4 Committing the case to a court of session . . . . . . . . . . . . . . . . . . . 4.14 Charge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Charge when series of offences are committed . . . . . . . . . . . . . . . 4.14.1 4.15 Summons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.15.1 Service of summons on corporate bodies and societies. . . . . . . . . 4.15.2 Proof of service in such cases and when serving officer not present. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.16 Trail of Summons Cases by Magstrates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.16.1 Right of accused to be told about the offence. . . . . . . . . . . . . . . . Conviction in summons cases. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.16.2 4.16.3 Summoning of witnesses of prosecution . . . . . . . . . . . . . . . . . . . . 4.16.4 Power of the court to summon witnesses/examine. . . . . . . . . . . . . 4.16.5 Issue of summons to produce document or thing. . . . . . . . . . . . . . 4.16.6 Acquittal or conviction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.16.7 Conviction without being â&#x20AC;&#x153;chargedâ&#x20AC;? . . . . . . . . . . . . . . . . . . . . . . . 4.16.8 Effect of non-appearance or death of complainant. . . . . . . . . . . . . 4.16.9 Non-appearance of any person on behalf of a complainant, which is a company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.16.10 Withdrawal of complaint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.16.11 Power to stop proceedings in certain cases . . . . . . . . . . . . . . . . . . 4.16.12 Powers of trial courts to drop proceedings. . . . . . . . . . . . . . . . . . . 4.16.13 Power of court to convert summons cases into warrant Cases. . . . 4.17 Summary Trials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.17.1 Procedure for summary trials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.17.2 Judgment in cases tried summarily. . . . . . . . . . . . . . . . . . . . . . . . . 4.17.3 Language of record and judgment . . . . . . . . . . . . . . . . . . . . . . . . . 4.18 Trial Procedure in Court of Session. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.18.1 Company prosecutors will conduct the prosecution. . . . . . . . . . . . 4.18.2 Opening of the case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.18.3 Discharge of the accused . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.18.4 Framing of charge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.18.5 Accused pleading guilty and conviction. . . . . . . . . . . . . . . . . . . . . Date for examining witnesses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.18.6 4.18.7 Evidence for prosecution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.18.8 Acquittal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.18.9 Entering upon defense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.18.10 Arguments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.18.11 Judgment of acquittal or conviction. . . . . . . . . . . . . . . . . . . . . . . . xxxii

4.20 4.22 4.23 4.24 4.24 4.24 4.25 4.27 4.27 4.28 4.28 4.28 4.30 4.31 4.31 4.31 4.32 4.33 4.33 4.33 4.34 4.34 4.34 4.35 4.35 4.37 4.37 4.37 4.37 4.38 4.38 4.38 4.40 4.40 4.40 4.40 4.41 4.41 4.41 4.41

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4.19 Power of Sepcial Courts to Try Offences other than Offences trying under the Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.20 Which Court has Jurisidciton? – Same Offences; different Punishments. . . . 4.21 Transitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.22 Persons Authorised to FilE Criminal Complaint against Offences under the Companies Act, 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.23 Arrest of Accused . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.24 Issue of Warrant in Lieu of, or in Addition to, Summons. . . . . . . . . . . . . . . . 4.25 Rosecution of Officers of Public Sector Undertakings. . . . . . . . . . . . . . . . . . 4.26 Offences relating to Perjury. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.26.1 Section 340. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.26.2 Section 195. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.27 Bailable and Non-bailable Offences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.28 Other Major Stages of Any Trial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.28.1 Recording of evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.28.2 Arguments of prosecution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.28.3 Personal examination of the accused. . . . . . . . . . . . . . . . . . . . . . . 4.28.4 Hearing of the accused. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.28.5 Arguments of/for the accused. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.29 Detailed Written Orders Unnecessary at Every Stage of Trial . . . . . . . . . . . . 4.30 Judgment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.31 Irregularities, Technicalities and Erroneous Interpretations. . . . . . . . . . . . . . 4.32 Can a Person be Prosecuted Again for the Same Offence?. . . . . . . . . . . . . . . 4.33 Power of Trial Court to Order Filing of Documents. . . . . . . . . . . . . . . . . . . . 4.34 Compensation for Vexatious Complaints – Section 445 . . . . . . . . . . . . . . . . 4.35 Issue of Warrant for Recovery of fines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.36 Application of Fines and Reward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.37 Appeals under CrPC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.38 Reference, Calling for Records, Revision Powers . . . . . . . . . . . . . . . . . . . . . 4.39 Appeal in Case of Acquittal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.40 Powers of the Appellate Court. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.41 Powers of the Supreme Court. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.42 Other Connected Topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.42.1 Compounding of offences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.42.2 Relief to officers of companies from prosecution . . . . . . . . . . . . . 4.42.3 Quashing of criminal complaints. . . . . . . . . . . . . . . . . . . . . . . . . . Duties of complainants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.42.4

4.42 4.42 4.42 4.43 4.45 4.46 4.46 4.47 4.47 4.48 4.53 4.62 4.62 4.63 4.63 4.63 4.63 4.63 4.64 4.67 4.68 4.70 4.71 4.71 4.72 4.72 4.74 4.77 4.79 4.84 4.85 4.85 4.85 4.85 4.85

Chapter 5 Inspection, Investigation, Search and Seizure. . . . . . . . . . . . . . . . . 5.1 5.1 Inquiry and Inspection by Registrar or Inspector . . . . . . . . . . . . . . . . . . . . . . . 5.1 5.2 Wrongful Conviction – A Case Study. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 xxxiii

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5.3

Investigation into the Affairs of a Company by an Order of Central Government. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5 5.3.1 Action to be taken on the passing of an order directing an investigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7 5.3.2 Inspectors to be appointed by the Central Government. . . . . . . . . . 5.7 5.4 Serious Fraud Investigation Office [SFIO]. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7 Director of SFIO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8 5.4.1 5.5 Investigation into the Affairs of a Company by SFIO. . . . . . . . . . . . . . . . . . . . 5.8 5.5.1 Grounds when Central Government may require SFIO to investigate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8 5.5.2 Once SFIO, none else!. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.10 5.5.3 Investigation procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.10 5.5.4 Powers of inspector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.10 5.5.5 Duty of employees and officers . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.10 5.5.6 Powers to arrest – provisions and principles . . . . . . . . . . . . . . . . . 5.10 5.5.7 Cognizable offences covered under section 212 . . . . . . . . . . . . . . 5.11 Limitations to the grant of bail. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12 5.5.8 5.5.9 Officers empowered to arrest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12 5.5.10 Completion of investigation, reporting and prosecution . . . . . . . . 5.13 5.5.11 Investigation report submitted to special court acquires status of police report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.13 5.5.12 Continuation of actions under the Companies Act, 1956. . . . . . . . 5.13 5.5.13 Support of/to other authorities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.13 5.5.14 Judicial precedents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.14 5.6 Investigation by an Order of Tribunal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.15 5.6.1 No Limitation of Period for Investigation . . . . . . . . . . . . . . . . . . . 5.23 5.6.2 Punishable as Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.23 5.6.3 Illustrations where Investigation may be justified. . . . . . . . . . . . . 5.24 5.6.4 Piercing the corporate veil. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.26 5.7 Advance Security for Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.28 5.8 Investigation must be done by Natural Persons only . . . . . . . . . . . . . . . . . . . 5.28 5.9 Investigation into the Ownership of Shares and Debentures. . . . . . . . . . . . . . 5.28 5.10 General Powers relating to Investigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.31 5.10.1 Certain powers of civil court conferred upon inspectors. . . . . . . . 5.32 5.10.2 Consequences of disobedience. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.33 5.10.3 Notes of examination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.33 Punishment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.33 5.10.4 5.10.5 Inspector is entitled assistance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.34 5.10.6 Reciprocal provisions between India and other countries . . . . . . . 5.34 5.11 Search and Seizure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.37

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5.11.1

5.12 5.13

5.14 5.15 5.16 5.17 5.18 5.19

Section 100 of CrPC - persons in charge of closed places to allow search . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11.2 Section 102 - power of police officer to seize certain property. . . Power to apply to High Court for Search and Seizure . . . . . . . . . . . . . . . . . . Protection of Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.13.1 During the course of investigation. . . . . . . . . . . . . . . . . . . . . . . . . During the pendency of any proceedings under Chapter XVI. . . . 5.13.2 5.13.3 Other provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investigation of Affairs of Related Parties and Associates. . . . . . . . . . . . . . . Freezing of Assets and Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Imposition of Restrictions upon Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . Reports and Actions based on Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Actions to be taken in Pursuance of Inspector’s Report. . . . . . . . . . . . . . . . . Miscellaneous Provisions relating to Investigation. . . . . . . . . . . . . . . . . . . . .

5.42 5.43 5.46 5.48 5.49 5.49 5.50 5.50 5.51 5.52 5.53 5.54 5.55

Chapter 6 Complaint and complainant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 6.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 6.2 Show Cause Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 6.3 Filing of a Complaint. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 6.4 Purpose of a Complaint. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 6.5 Ingredients of a Complaint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 6.6 Significance of the expression “Aggrieved of an Offence”. . . . . . . . . . . . . . . . 6.3 6.7 Delay in filing complaint. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4 6.8 When Complainant is a Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5 6.8.1 Major duties of complainants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6 6.8.2 Duty to make out the offence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6 6.8.3 Duty to understand the basics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7 6.8.4 Duty to fix liability clearly. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7 6.8.5 Duty to investigate/enquire thoroughly and collect materials . . . . . 6.8 6.8.6 Duty to collect necessary evidence. . . . . . . . . . . . . . . . . . . . . . . . . . 6.8 6.8.7 Duty to ensure service of notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9 6.8.8 Duty to know time limitation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9 6.8.9 Duty to note the principles of natural justice. . . . . . . . . . . . . . . . . 6.12 6.8.10 Duty to know who would be the proper complainant . . . . . . . . . . 6.12 6.8.10.1 Securities Contracts (Regulation) Act, 1956 [SCRA]. . 6.12 6.8.10.2 Securities and Exchange Board of India Act, 1992 [SEBI Act]. . . . . . . . . . . . . . . . . . . . . . . . . . 6.12 6.8.10.3 Foreign Exchange Management Act, 1999 [FEMA]. . . 6.12 6.8.10.4 Companies Act, 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13 6.8.10.5 Competency of assistant registrar to file complaint. . . 6.13 6.8.10.6 Provisions restrict right to file complaint in certain cases. . . 6.14 6.8.10.7 Complaint against a government company. . . . . . . . . . 6.15 6.8.11 Duty to know the proper court. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.15 xxxv

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6.8.11.1 SCRA & SEBI Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8.11.2 FEMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8.11.3 Companies Act, 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8.12 Duty to obtain prior sanctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8.13 Duty to know the impact of transfer of powers to NCLT. . . . . . . . 6.8.14 Duty to make proper averments. . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8.14.1 SCRA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8.14.2 SEBI Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8.14.3 FEMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8.14.4 Companies Act, 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9 Prosecution’s Objective. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.10 Emerging Scenario. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.15 6.16 6.16 6.19 6.20 6.20 6.20 6.22 6.22 6.24 6.27 6.27

Relief to directors and officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 Chapter 7 7.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 7.2 Extract of Section 463. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 7.3 Analysis of Important Ingredients of Section 463. . . . . . . . . . . . . . . . . . . . . . . 7.2 7.4 Analysis of Key Words. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 7.4.1 Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 7.4.2 Negligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 7.4.3 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 7.4.4 Misfeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6 7.4.5 Breach of trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6 7.4.6 Honestly and reasonably. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8 7.4.7 Court and High Court. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.9 7.5 Appropriate Court when Prosecution has already been Launched. . . . . . . . . 7.10 7.6 Scope of Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.13 7.6.1 Corporate sector’s contribution to economy. . . . . . . . . . . . . . . . . 7.13 A boon to directors and officers of companies!. . . . . . . . . . . . . . . 7.15 7.6.2 7.6.3 Wide powers – can even be acquitted or exonerated!. . . . . . . . . . 7.16 7.6.4 Relief not available to companies. . . . . . . . . . . . . . . . . . . . . . . . . . 7.16 7.6.5 Relief discretionary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.17 7.6.6 Relief may be in full or in part. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.17 7.6.7 Relief depends upon facts and circumstances . . . . . . . . . . . . . . . . 7.17 7.6.8 Relief may be granted subject to conditions. . . . . . . . . . . . . . . . . . 7.18 7.6.9 Admission of offence is not necessary for grant of relief. . . . . . . . 7.19 No relief for offences against other Acts . . . . . . . . . . . . . . . . . . . . 7.19 7.6.10 7.7 Situations under which an Officer may apply to Court for Grant of Relief under Section 463. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.20 7.7.1 Though the offence in question is compoundable, relief under this section may be desirable. . . . . . . . . . . . . . . . . . . . . . . . 7.21 xxxvi

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7.7.2 7.7.3 7.7.4

7.8 7.9 7.10 7.11 7.12 7.13

Minor or technical offences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.21 Defaults or delays in compliances . . . . . . . . . . . . . . . . . . . . . . . . . 7.22 Directors who have had no role in management of the affairs of the company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.23 7.7.5 No mens rea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.24 7.7.6 Not prejudicial to public interest . . . . . . . . . . . . . . . . . . . . . . . . . . 7.25 Relief from Disqualification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.25 7.7.7 7.7.8 Tedious trial procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.27 7.7.9 Time barred prosecution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.28 7.7.10 Existence of strong compliance controls and systems. . . . . . . . . . 7.29 7.7.11 Malicious or infructuous prosecution. . . . . . . . . . . . . . . . . . . . . . . 7.29 7.7.11.1 Punishment as per penal clause is disproportionate . . . 7.30 7.7.12 Proceedings for damages against fraud . . . . . . . . . . . . . . . . . . . . . 7.31 7.7.12.1 Class action suits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.31 Service of Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.32 Relief to Professional – directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.33 Relief to Government Officers/Public Servants . . . . . . . . . . . . . . . . . . . . . . . 7.34 Relief in the Case Sick Companies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.34 Usual Clause in the Articles of Association. . . . . . . . . . . . . . . . . . . . . . . . . . . 7.35 Illustrative Cases where Relief Granted/Not Granted. . . . . . . . . . . . . . . . . . . 7.35 7.13.1 Relief granted – petitioner ceased to be a director by operation of law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.35 7.13.2 Relief granted – deemed information under section 190 of CrPC.7.35 7.13.3 Relief granted – no misstatement in prospectus . . . . . . . . . . . . . . 7.36 7.13.4 Relief not granted – resignation subsequent to the commission of the offence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.36 7.13.5 Relief not granted – detailed examination of conduct is necessary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.36 7.13.6 Relief not granted – collateral purpose! . . . . . . . . . . . . . . . . . . . . 7.36 7.13.7 Relief not granted – Directors cannot go scot free . . . . . . . . . . . . 7.37 7.13.8 Relief not granted – directors are bound to comply with law. . . . 7.37 7.13.9 Relief not granted – violations of mandatory provisions . . . . . . . 7.37 7.13.10 Relief not granted as ‘acted in good faith’ is a question of fact. . . 7.38 7.13.11 Absolute relief from all apprehended proceedings cannot be granted! . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.38

Quashing of Criminal Complaints. . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 8 8.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1.1 Quashing of criminal proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 Quashing Criminal Complaints. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3 Width and Contours of Powers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4 Principal Grounds for quashing a criminal complaint. . . . . . . . . . . . . . . . . . . .

8.1 8.1 8.2 8.5 8.7 8.7

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8.5 8.6

illustrative Case where Section 482 was Invoked. . . . . . . . . . . . . . . . . . . . . . . 8.9 Case Studies - Criminal Complaints Quashed. . . . . . . . . . . . . . . . . . . . . . . . . 8.10 8.6.1 Case study 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.10 8.6.2 Case study 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.10 8.6.3 Case study 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.11 8.6.4 Case study 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.12 Case study 5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.13 8.6.5 8.7 Other Grounds upon which Complaints are Quashed. . . . . . . . . . . . . . . . . . . 8.15 8.8 Case Studies - Refusal to Quash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.15 8.8.1 Case study 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.15 8.8.2 Case study 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.18 8.8.3 Case study 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.18 8.9 Revisional Jurisdiction vis-à-vis Power to Quash. . . . . . . . . . . . . . . . . . . . . . 8.18 8.10 Power of Supreme Court to Quash Criminal Complaints. . . . . . . . . . . . . . . . 8.21 Chapter 9 9.1 9.2 9.3 9.4 9.5 9.6 9.7 9.8 9.9 9.10 9.11 9.12

9.13 9.14

xxxviii

SEBI Act, 1992 – provisions, procedures, penalties and prosecutions – an overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1 Functions of SEBI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1 Regulating Capital Market Intermediaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3 Powers of SEBI under the Companies Act, 2013. . . . . . . . . . . . . . . . . . . . . . . 9.4 Powers to Issue Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.5 Three Types of Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6 Enquiry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6 Inspection of Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.9 Powers of a Civil Court. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.9 Suspend Trading and Restrain from Accessing Securities Market. . . . . . . . . 9.10 Powers of SEBI To Issue Directions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.14 Analysis of the Power to Issue Directions and the Ingredients thereof. . . . . . 9.17 9.12.1 Similar powers under SCRA and Depositories Act . . . . . . . . . . . . 9.17 9.12.2 Ingredients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.18 9.12.3 Exercising powers under section 11(4) not dependent upon section 11B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.19 Disgorge Powers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.19 Powers to Issues Directions under Various Regulations. . . . . . . . . . . . . . . . . 9.22 9.14.1 ICDR regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.22 LODR regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.24 9.14.2 9.14.3 Takeover regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.25 9.14.4 Insider Trading Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.26 9.14.5 Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Markets (PFUTP) Regulations. . . . . . . . . . . 9.27 9.14.6 Violation of regulations may lead to ban orders. . . . . . . . . . . . . . . 9.32

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9.15

9.16

9.17 9.18 9.19 9.20 9.21 9.22 9.23 9.24 9.25

9.26 9.27

9.28 9.29

9.14.6.1 Restraint orders of SEBI vis-à-vis punishment for an offence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.14.6.2 SAT confirms order of SEBI banning access to securities market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.14.6.3 Proceedings should be concluded without delay. . . . . . 9.14.7 Regulate collective investment schemes . . . . . . . . . . . . . . . . . . . . Power to Appoint Investigation Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.15.1.1 Powers of investigating authority derived from Companies Act, 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . 9.15.2 Power to order production of books and records. . . . . . . . . . . . . . 9.15.3 Section 11C(2) vis-à-vis Section 11C(3) of the SEBI Act. . . . . . . 9.15.4 Power to require personal appearance of certain persons. . . . . . . . Penal Consequences under SEBI Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.16.1 Notes of examination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.16.2 Seize books and records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.16.3 Police assistance could be sought for seizure. . . . . . . . . . . . . . . . . 9.16.4 Orders of seizure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.16.5 Custodian of seized books and records. . . . . . . . . . . . . . . . . . . . . . 9.16.6 Search and seizure procedure – Criminal Procedure Code . . . . . . Cease and Desist Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prohibit Manipulative and other Practices. . . . . . . . . . . . . . . . . . . . . . . . . . . . Penal Provisions under SEBI Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjudication of Penalties - Section 15-I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appeals before Securities Appellate Tribunal and Supreme Court. . . . . . . . . Offences under SEBI Act - Section 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Composition of Certain Offences – Section 24A . . . . . . . . . . . . . . . . . . . . . . Cognizance of Offences – Section 26. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Offences by Companies – Section 27. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.25.1 Deeming fiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.25.2 Prosecution owes a minimum duty. . . . . . . . . . . . . . . . . . . . . . . . . 9.25.3 The saving clause of proviso . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.25.4 Section 27(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consent or connivance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.25.5 9.25.6 Company first; officers next. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Special Courts and Procedures – Section 26A. . . . . . . . . . . . . . . . . . . . . . . . . Offences Triable by Special Courts – Section 26B. . . . . . . . . . . . . . . . . . . . . Special court, Mumbai. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.27.1 9.27.2 Special court, Kolkata. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.27.3 Special court, Chennai. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appeal and Revision – Section 26C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Application of Code to Proceedings before Special Court – Section 26D. . .

9.33 9.34 9.36 9.36 9.37 9.38 9.40 9.41 9.42 9.43 9.43 9.45 9.45 9.46 9.46 9.47 9.47 9.49 9.50 9.51 9.52 9.52 9.54 9.54 9.54 9.56 9.59 9.59 9.60 9.61 9.63 9.64 9.66 9.66 9.67 9.67 9.67 9.68 xxxix

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9.29.1 Recovery of penalties and other amounts – section 28A. . . . . . . . 9.29.2 Rule 60. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.29.3 Rule 61. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.30 Powers of Central Government. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9.68 9.71 9.72 9.76

Chapter 10 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8

10.9 10.10 10.11 10.12 10.13 10.14 10.15 10.16 10.17 10.18 10.19 10.20

Collective investment schemes – SEBI directions and adjudication of penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1 Definition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3 CIS Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.8 Certificate of Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.9 Enquiry, orders, adjudication and penalties. . . . . . . . . . . . . . . . . . . . . . . . . . . 10.9 Jurisdiction of SEBI over Schemes existing prior to CIS Regulations. . . . . 10.11 Certain Schemes that are not Collective Investment Schemes. . . . . . . . . . . 10.13 Contaventions and Consequences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.13 10.8.1 Directions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.14 10.8.2 Adjudication. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.14 10.8.3 Prosecution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.15 SEBI Direction in Pancard Clubs Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.15 SEBI Direction in Nicer Green housing and infrastructure developers Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.18 Directions in Osian’s Connoisseurs of Art Private Limited Modified by Appellate Tribunal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.19 Directions in Royal Twinkle Modified by Appellate Tribunal . . . . . . . . . . . 10.20 Adjudication and Collective Investment Schemes – PGF Case. . . . . . . . . . 10.21 Adjudication IN PACL’s case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.23 Adjudication Proceedings in Nicer Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.30 Adjudication Order in Ramel Industries Limited . . . . . . . . . . . . . . . . . . . . . 10.33 Enhanced Penalty after Order of Adjudicating Officer. . . . . . . . . . . . . . . . . 10.33 Court refuses to quash Criminal Complaint filed by SEBI. . . . . . . . . . . . . . 10.34 Quashing of Criminal Complaint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.35 Reckless Disregard of Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.35

Chapter 11 11.1 11.2 11.3 11.4 11.5 11.6 xl

Adjudication under securities laws – provisions, principles and procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1 Similar Provisions across the three Legislations & Regulations. . . . . . . . . . . 11.2 Effect of Adjudication. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2 Adjudication and Penalties under SEBI Act. . . . . . . . . . . . . . . . . . . . . . . . . . 11.6 Power to adjudicate – section 15-I. . . . . . . . . . . . . . . . . . . . . . . . . 11.6 11.4.1 Adjudication and Penalties under Depositories Act . . . . . . . . . . . . . . . . . . . 11.10 Adjudication and Penalties under SCRA. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.12

Table of contents

11.7 11.8 11.9 11.10 11.11 11.12 11.13

11.14 11.15

11.16 11.17 11.18

Penalty vis-à-vis Fine or other Punishment awarded by a Criminal Court. . Nature of Defaults liable to Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Role of adjudicating officer under the Scheme of SEBI Act. . . . . . . . . . . . . Powers of adjudicating officer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sensitive Nature of Orders of adjudicating officers . . . . . . . . . . . . . . . . . . . Adjudication brings out the Principles behind the Regulations . . . . . . . . . . 11.12.1 Follow principles of natural justice . . . . . . . . . . . . . . . . . . . . . . . Illustrative Cases on Adjudication of Penalties. . . . . . . . . . . . . . . . . . . . . . . 11.13.1 Adjudication for defaults under SEBI (Insider Trading) Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.13.2 Need for doing compliances in the prescribed manner . . . . . . . . 11.13.3 Chairman and company secretary are not mere conduits to pass information to exchanges. . . . . . . . . . . . . . . . . . . . . . . . . . . 11.13.4 Merchant banker has to apply more than ordinary prudence in view of its role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.13.5 Front running – a fraud under FUTP Regulations!. . . . . . . . . . . . 11.13.6 Action not taken against some intermediaries does not vitiate proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.13.7 Promoters are liable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.13.8 Violation of Debenture Trustees Regulations. . . . . . . . . . . . . . . . 11.13.9 Failure to furnish details and documents is detrimental to the interests of securities market . . . . . . . . . . . . . . . . . . . . . . . . . 11.13.10 Delayed disclosures defeat the interest of investors. . . . . . . . . . . 11.13.11 Failure to cooperate is a serious issue as it throttles investigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.13.12 Principle of proportionality – when applicable . . . . . . . . . . . . . . Factors to be taken into account by the adjudicating officer – Section 15J. . Mitigating Factors – An Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.15.1 Small market player – a mitigating factor . . . . . . . . . . . . . . . . . . 11.15.2 Mitigating factors already considered cannot be considered again. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.15.3 Technical defaults and not repetitive – mitigating factors. . . . . . 11.15.4 Expiry of company secretary is a mitigating factor. . . . . . . . . . . 11.15.5 Voluntary disclosure – a mitigating factor. . . . . . . . . . . . . . . . . . 11.15.6 Inability to quantify undue gain or unfair advantage – a mitigating factor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.15.7 Appellant a housewife and investors have not suffered are not mitigating factors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Residual Penal Clause – Applicability and Inapplicability. . . . . . . . . . . . . . Analysis some orders of adjudication officer not imposing any penalty. . . . moratorium under IBC is not a bar to proceed with adjudication – Amtek Auto Limited. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11.14 11.14 11.17 11.18 11.19 11.24 11.24 11.25 11.25 11.28 11.28 11.30 11.31 11.32 11.33 11.33 11.34 11.35 11.36 11.37 11.37 11.39 11.39 11.40 11.40 11.40 11.41 11.41 11.41 11.42 11.43 11.45 xli

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11.19 No penal proceedings against a deceased. . . . . . . . . . . . . . . . . . . . . . . . . . . 11.20 Running collective investment schemes – Servehit Housing and Infrastructure India Limited. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.21 Prosecution if Penalty Adjudged is not Paid. . . . . . . . . . . . . . . . . . . . . . . . . 11.22 Recovery of Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.23 Penalties are adjudged by adjudicating officers only . . . . . . . . . . . . . . . . . . 11.24 Enquiry and adjudication under securities laws – procedures. . . . . . . . . . . . 11.25 Manner of Construction of Rules of Procedure. . . . . . . . . . . . . . . . . . . . . . . 11.26 Rules for Procedure for Enquiry and Adjudication Under SEBI Act . . . . . . 11.26.1 SEBI (Procedure for Holding Inquiry and imposing penalties by adjudicating officer) Rules, 2015. . . . . . . . . . . . . . . 11.26.1.1 Appointment of adjudicating officer for holding enquiry – rule 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.26.1.2 Holding of enquiry - rule 4 . . . . . . . . . . . . . . . . . . . . . 11.26.1.3 Order of adjudicating officer - rule 5. . . . . . . . . . . . . . 11.26.1.4 Copy of the order - rule 6 . . . . . . . . . . . . . . . . . . . . . . 11.26.1.5 Service of notices and orders - rule 7 . . . . . . . . . . . . . 11.27 Rules for Procedure for Enquiry and Adjudication under SCRA. . . . . . . . . 11.27.1 Securities Contracts (Regulation) (Procedure for Holding Inquiry and imposing Penalties by adjudicating officer) Rules, 2005. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.27.1.1 Enquiry [rule 2]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.27.1.2 Appointment of adjudicating officer for holding enquiry – regulation 3. . . . . . . . . . . . . . . . . . . . . . . . . 11.27.1.3 Order of adjudicating officer - rule 5. . . . . . . . . . . . . . 11.27.1.4 Copy of the order - regulation 6 . . . . . . . . . . . . . . . . . 11.27.1.5 Service of notices and orders - rule 7 . . . . . . . . . . . . . 11.28 Rules of Procedure for Enquiry and Adjudication under Depositories Act, 1996. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.29 SEBI (Manner of Service of Summons and Notices Issued by Board) Amendment Regulations, 2007 and Repeal thereof . . . . . . . . . . . . . . . . . . .

11.46 11.48 11.49 11.49 11.49 11.50 11.50 11.51 11.51 11.51 11.52 11.53 11.53 11.53 11.54

11.55 11.55 11.55 11.56 11.57 11.57 11.58 11.61

Chapter 12 Settlement Proceedings – provisions and procedures. . . . . . . . . . 12.1 12.1 Section 15JB – Provisions and regulations enabling settlement of certain proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1 12.2 Settlement Regulations 2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2 12.3 Specified Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.3 12.4 Nature, gravity and impact of defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5 12.5 Manner of conducting settlement proceedings. . . . . . . . . . . . . . . . . . . . . . . . 12.8 12.6 Panel of whole-time members. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.8 12.7 Application for settlement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.8 12.8 Undertakings and Waivers – [Part C of Schedule I under regulation 3]. . . . 12.11 xlii

Table of contents

12.9 Limitation for submitting a settlement proposal [regulation 4]. . . . . . . . . . . 12.13 12.10 Grounds barring SEBI from considering settlement applications regulation 5(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.15 12.10.1 No settlement possible for wilful defaulters and fugitive economic offenders – regulation 5(4). . . . . . . . . . . . . . . . . . . . . . 12.18 12.10.2 Supreme power of panel of whole-time members regulation 5(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.18 12.11 Rejection of application – regulation 6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.18 12.12 Withdrawal of application – regulation 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.19 12.13 Effect of pending application on Specified Proceedings – regulation 8. . . . 12.19 12.13.1 Existing proceedings will be kept in abeyance - regulation 8(1).12.19 12.13.2 New proceedings to wait till disposal of settlement application - regulation 8(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.19 12.14 Settlement terms – regulation 9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.20 12.14.1 Broad terms of settlement - regulation 9(1). . . . . . . . . . . . . . . . . 12.20 12.15 Guidelines for Arriving at Settlement Terms – Schedule-II read with Regulation 9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.21 12.15.1 Mitigating factors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.25 12.15.2 Aggravating factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.25 12.15.3 Factors suggesting deliberate defaults. . . . . . . . . . . . . . . . . . . . . 12.27 12.15.4 Multiple applicants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.28 12.16 Factors to be considered to arrive at the Settlement Terms – Regulation 10.12.29 12.17 High Powered Advisory Committee [HPAC] – Regulation 11. . . . . . . . . . . 12.30 12.18 Internal Committee(s) – Regulation 12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.31 12.19 Proceedings before Internal Committee [IC] – Regulation 13 . . . . . . . . . . . 12.31 12.20 Proceedings before HPAC – Regulation 14. . . . . . . . . . . . . . . . . . . . . . . . . . 12.32 12.21 Action on Recommendation of HPAC – Regulation 15. . . . . . . . . . . . . . . . 12.32 12.21.1 Panel of whole-time members may accept or reject recommendation of HPAC – regulation 15(1). . . . . . . . . . . . . . . 12.32 12.21.2 Communication of acceptance by panel of whole-time members – regulation 15(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.33 12.21.3 Sub-regulation (1) – Procedure when Panel of WTMs rejects the recommendations of HPAC. . . . . . . . . . . . . . . . . . . . . 12.33 12.21.4 Sub-regulation (2) – Procedure when panel of WTMs accepts the recommendation of HPAC. . . . . . . . . . . . . . . . . . . . . 12.33 12.21.5 Sub-regulation (3) – Procedure when panel of WTMs does not accept the recommendations of HPAC. . . . . . . . . . . . . . . . . . 12.36 12.22 Summary Settlement Procedure – Chapter VII – regulations 16 and 17. . . . 12.37 12.22.1 Specified Proceedings eligible for summary settlement – regulation 16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.37 12.22.2 Consequences of failure to act in response to summary settlement notice – regulation 17. . . . . . . . . . . . . . . . . . . . . . . . . 12.39 xliii

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12.23 Settlement notice – Chapter VIII - Regulation 18. . . . . . . . . . . . . . . . . . . . . 12.24 Settlement with Confidentiality – Chapter IX. . . . . . . . . . . . . . . . . . . . . . . . 12.24.1 Minimum conditions and undertakings for settlement with confidentiality – regulation 19. . . . . . . . . . . . . . . . . . . . . . . . . . . 12.24.2 Chapter IX Procedure – regulation 20. . . . . . . . . . . . . . . . . . . . . 12.24.3 Confidentiality and Assurance– regulation 21. . . . . . . . . . . . . . . 12.24.4 Confidentiality– regulation 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.25 Settlement of Proceedings before the adjudicating officers – Regulation 23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.26 Settlement of the Proceedings Pending before the SAT or any Court – Regulation 24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.27 Service of settlement order and publication – regulation 25. . . . . . . . . . . . . 12.28 Rejection in certain eventualities – regulation 20. . . . . . . . . . . . . . . . . . . . . 12.28.1 Grounds for rejection – regulation 20(1). . . . . . . . . . . . . . . . . . . 12.28.2 Communication of rejection - regulation 20(2). . . . . . . . . . . . . . 12.29 Settlement orders under settlement schemes – regulation 26. . . . . . . . . . . . 12.30 Effect of settlement order on third party rights or other proceedings – regulation 27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.31 Revocation of settlement order – regulation 28. . . . . . . . . . . . . . . . . . . . . . . 12.32 Confidentiality of Information – Regulation 29 . . . . . . . . . . . . . . . . . . . . . . 12.33 Power to Remove Difficulties – Regulation 30. . . . . . . . . . . . . . . . . . . . . . . 12.34 Irregularity in procedure does not render void – regulation 31. . . . . . . . . . . 12.35 Extent of relevance of schedule II – regulation 32. . . . . . . . . . . . . . . . . . . . 12.36 Compounding enabled – regulation 33. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.37 No Appeals agianst Settlement Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.38 Effect of Repeal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.39 Repository of Consent/Settlement Orders. . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 13 13.1 13.2 13.3 13.4 13.5 13.6 13.7 13.8 13.9 xliv

12.39 12.40 12.41 12.42 12.43 12.43 12.43 12.47 12.48 12.48 12.48 12.48 12.48 12.49 12.50 12.51 12.52 12.52 12.52 12.53 12.54 12.59 12.60

Appeals under Securities Laws – provisions, principles and procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Similar provisions across three legislations & regulations. . . . . . . . . . . . . . . Appeal to the Securities Appellate Tribunal – section 15T. . . . . . . . . . . . . . . respondent will invariably be sebi. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SAST regulations non compliance invite penalty even if no control exercised by the acquirer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jayesh Shah is not Jayesh Shah. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Failure to cooperate with Investigation will be invite maximum penalty. . . . SAT reduces penalty since evidence relied upon by SEBI was inadequate to SLAP maximum penalty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SAT reduces penalty as appellants had suffered other orders and directions too. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . No writ will lie as statute provides right of appeal. . . . . . . . . . . . . . . . . . . . .

13.1 13.1 13.2 13.4 13.4 13.4 13.5 13.6 13.7 13.8

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13.10 Procedure and powers of the Securities Appellate Tribunal – Section 15U. . 13.9 13.10.1 Right to legal representation – section 15V. . . . . . . . . . . . . . . . . 13.12 13.10.2 Limitation – section 15W. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.13 13.10.3 Civil court not to have jurisdiction – section 15Y. . . . . . . . . . . . 13.13 13.10.4 Appeal to Supreme Court – section 15Z . . . . . . . . . . . . . . . . . . . 13.14 13.10.4.1 Normal time lines in complicated matters!. . . . . . . . . 13.14 13.10.4.2 Public announcement of open offer cannot be permitted to be withdrawn. . . . . . . . . . . . . . . . . . . . . . 13.16 13.10.5 Amendment in law cannot take away pre-amendment statutory rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.16 13.11 Decision in Narayanan’s Case – Fraudulent and Unfair Practices . . . . . . . . 13.23 13.12 Decision in Sahara’s Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.25 13.12.1.1 Interpretation of regulations – follow the correct approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.34 13.12.1.2 Limited power of Supreme Court to condone delays. 13.34 13.12.2 Appeals – section 20. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.34 13.12.3 Bar of jurisdiction – section 20A of SEBI Act. . . . . . . . . . . . . . . 13.35 13.13 Appeals before Securities Appellate Tribunal – Procedures. . . . . . . . . . . . . 13.35 13.13.1 Securities Appellate Tribunal (Procedure) Rules, 2000. . . . . . . . 13.35 13.13.1.1 Limitation for filing appeals –Rule 3. . . . . . . . . . . . 13.36 13.13.1.2 Form and procedure of appeal – Rule 4. . . . . . . . . . 13.36 13.13.1.3 Sittings of SAT – rule 5 . . . . . . . . . . . . . . . . . . . . . . 13.37 13.13.1.4 Language of SAT – rule 6 . . . . . . . . . . . . . . . . . . . . 13.37 13.13.1.5 Appeal to be in writing – rule 7. . . . . . . . . . . . . . . . 13.37 13.13.1.6 Presentation and scrutiny of memorandum of appeal – rule 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.37 13.13.1.7 Fee – rule 9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.38 13.13.1.8 Contents of memorandum of appeal – rule 10. . . . . 13.39 13.13.1.9 Documents to accompany memorandum of appeal – rule 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.39 13.13.1.10 Plural remedies – rule 12. . . . . . . . . . . . . . . . . . . . . 13.39 13.13.1.11 Endorsing copy of appeal to SEBI – rule 13. . . . . . 13.42 13.13.1.12 Filing of reply to the appeal and other documents by the respondent – rule 14. . . . . . . . . . 13.42 13.13.1.13 Date and place of hearing to be notified – rule 15. . 13.42 13.13.1.14 Hearing of appeal – rule 16. . . . . . . . . . . . . . . . . . . 13.42 13.13.1.15 Dress regulations for the presiding officer, members and for the representative of the parties – rule 17. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.44 13.13.1.16 Order to be signed and date – rule 18 . . . . . . . . . . . 13.44 13.13.1.17 Publication of orders – rule 19. . . . . . . . . . . . . . . . . 13.45 13.13.1.18 Communication of order – rule 20. . . . . . . . . . . . . . 13.45 xlv

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13.13.1.19 Orders and directions in certain cases – rule 21. . . . 13.45 13.13.1.20 Fee for inspection of records and obtaining copies thereof – rule 22 . . . . . . . . . . . . . . . . . . . . . . 13.45 13.13.1.21 Working hours of the Appellate Tribunal – rule 23. 13.45 13.13.1.22 Holiday – rule 24. . . . . . . . . . . . . . . . . . . . . . . . . . . 13.45 13.13.1.23 Functions of the registrar – rule 25 . . . . . . . . . . . . . 13.46 13.13.1.24 Additional functions and duties of registrar – rule 26. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.46 13.13.1.25 Seal and emblem – rule 27. . . . . . . . . . . . . . . . . . . . 13.47 13.13.1.26 Repeal and saving – rule 28. . . . . . . . . . . . . . . . . . . 13.47 13.13.2 The Securities Contracts (Regulation) (Appeal to Securities Appellate Tribunal) Rules, 2000 . . . . . . . . . . . . . . . . . 13.47 13.13.3 Limitation for filing appeal - [Regulation 3] . . . . . . . . . . . . . . . . 13.51 13.13.3.1 The Depositories (Appeal to Securities Appellate Tribunal) Rules, 2000 – Appeal to SAT under Depositories Act, 1996 . . . . . . . . . . . . . . . 13.55 13.14 No Appeal against Order of Settlement in Proceedings . . . . . . . . . . . . . . . . 13.56 Chapter 14 Composition of certain offences – Section 24A of SEBI Act . . . . 14.1 14.1 Compounding of Offences under Securities Laws . . . . . . . . . . . . . . . . . . . . . 14.1 14.2 Compounding under Securities Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1 14.2.1 SEBI Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1 14.2.2 SCRA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1 14.2.3 Depositories Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.2 14.3 Compounding, Adjudication and Prosecution. . . . . . . . . . . . . . . . . . . . . . . . . 14.2 14.4 Compoundable Offences under Securities Laws. . . . . . . . . . . . . . . . . . . . . . . 14.4 14.5 Non-compoundable Offences under Securities Laws. . . . . . . . . . . . . . . . . . . 14.4 14.5.1 Offence under section 11C of SEBI Act. . . . . . . . . . . . . . . . . . . . . 14.5 14.5.2 Offence punishable under section 24 of the SEBI Act. . . . . . . . . . 14.5 14.5.3 Position under SCRA and Depositories Act. . . . . . . . . . . . . . . . . . 14.6 14.6 Courts and Tribunals Authorised for Compounding. . . . . . . . . . . . . . . . . . . . 14.7 14.7 Effect of CRPC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.8 14.8 Compounding Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.8 14.9 Factors to be kept in Mind Regarding Compounding. . . . . . . . . . . . . . . . . . 14.11 14.10 Factors to be considered for settlement may be applied. . . . . . . . . . . . . . . . 14.13 14.11 Lack of Sufficient Information in Public Domain. . . . . . . . . . . . . . . . . . . . . 14.14 An overview of FEMA 1999, rules and regulations – provisions and procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2 Analysis of Select Words and Expressions Defined under FEMA – Section 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2.1 Authorised person – section 2(c) . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 15

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15.1 15.1 15.2 15.2

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15.3 15.4 15.5

15.6

15.2.2 Authorised officer – section 2(cc) . . . . . . . . . . . . . . . . . . . . . . . . . 15.3 15.2.3 Competent authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.3 15.2.4 Indian currency – section 2(q) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.3 15.2.5 Foreign currency – section 2(m). . . . . . . . . . . . . . . . . . . . . . . . . . . 15.3 15.2.6 Security – section 2(za) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.3 15.2.7 Special Director (Appeals). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.3 Person – section 2(u) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.3 15.2.8 15.2.9 Person resident in India – section 2(v). . . . . . . . . . . . . . . . . . . . . . 15.4 15.2.10 Person resident outside India – section 2(w) . . . . . . . . . . . . . . . . . 15.5 15.2.11 Repatriate to India – section 2(y). . . . . . . . . . . . . . . . . . . . . . . . . . 15.5 Dealing in Foreign Exchange – Section 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.5 Holding of Foreign Exchange, Foreign Security, Foreign Property – Section 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.6 Current Account Transactions – Section 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.6 15.5.1 Foreign Exchange Management (Current Account Transactions) Rules, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.7 Capital Account Transactions – Section 6. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.8 15.6.1 Foreign Exchange Management (Capital Account Transactions) Regulations, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . 15.12 15.6.2 Foreign Exchange Management (Transfer or issue of Security by a Person Resident outside India) Regulations, 2000 - inbound investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.13 15.6.3 Foreign Exchange Management (Transfer or issue of Security by a Person Resident outside India) Regulations, 2000 - outbound investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.15 15.6.4 Export of goods and services – section 7. . . . . . . . . . . . . . . . . . . 15.16 15.6.5 Realisation and repatriation of foreign exchange – section 8. . . . 15.16 15.6.6 Foreign Exchange Management (Export of Goods and Services) Regulations, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.17 15.6.7 Exemption from realisation and repatriation in certain cases –section 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.19 15.6.8 Authorised persons and provisions relating thereto – section 10.15.19 15.6.8.1 Power of RBI to authorise persons to deal in foreign exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.19 15.6.8.2 Duty of authorised persons to comply with general and special directions of RBI. . . . . . . . . . . . . 15.20 Need for check before entering into transactions in foreign 15.6.9 exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.20 15.6.10 Surrender of unused foreign exchange. . . . . . . . . . . . . . . . . . . . . 15.21 15.6.11 Bringing into India of goods imported must be proved. . . . . . . . 15.22 15.6.12 Copy of bill of entry may also constitute evidence . . . . . . . . . . . 15.22 15.6.13 Authorised dealer owes certain duty of care . . . . . . . . . . . . . . . . 15.23 xlvii

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15.7 Reserve Bank’s powers to issue directions to authorised person – Section 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.8 Power of Reserve Bank to inspect authorised person – Section 12. . . . . . . . 15.9 Penalties - Section 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.10 Enforcement of the orders of adjudicating authority – Section 14. . . . . . . . 15.11 Power to recover arrears of penalty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.12 Power to Compound Contravention – Section 15. . . . . . . . . . . . . . . . . . . . . 15.13 Appointment of Adjudicating Authority – Section 16. . . . . . . . . . . . . . . . . . 15.14 Appeal to Special Director (Appeals) – Section 17. . . . . . . . . . . . . . . . . . . . 15.15 Establishment of Appellate Tribunal – Section 18 . . . . . . . . . . . . . . . . . . . . 15.16 Appeal to Appellate Tribunal – Section 19. . . . . . . . . . . . . . . . . . . . . . . . . . 15.17 Sections 20 to 27 – matters relating to Appellate Tribunal. . . . . . . . . . . . . . 15.18 Procedure and powers of Appellate Tribunal and Special Director (Appeals) – Section 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.19 Provisions relating to Benches of Appellate Tribunal. . . . . . . . . . . . . . . . . . 15.19.1 Distribution of business amongst benches - section 29 (Omitted) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.19.2 Power of chairperson to transfer cases – section 30 (Omitted) . . 15.19.3 Decision to be majority – section 31 (Omitted). . . . . . . . . . . . . . 15.20 Right of appellant to take assistance of legal practitioner or chartered accountant and of government, to appoint presiding officers – Section 32. . 15.21 Members, etc, to be public servants – Section 33. . . . . . . . . . . . . . . . . . . . . 15.22 Civil court not to have jurisdiction – Section 34. . . . . . . . . . . . . . . . . . . . . . 15.23 Appeal to High Court – Section 35. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.24 Directorate of Enforcement – Section 36 . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.24.1 Power of search, seizure, etc – section 37 . . . . . . . . . . . . . . . . . . 15.25 Special provisions relating to assets held outside India in contravention of Section 4 – Section 37A. . . . . . . . . . . . . . . . . . . . . . . . . . . 15.26 Empowering other officers – Section 38. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.27 Presumption as to documents in certain cases – Section 39. . . . . . . . . . . . . 15.28 Suspension of operation of this Act – Section 40. . . . . . . . . . . . . . . . . . . . . 15.29 Power of Central Government to give Directions – Section 41 . . . . . . . . . . 15.30 Contravention by Companies – Section 42. . . . . . . . . . . . . . . . . . . . . . . . . . 15.31 Death or insolvency in certain cases – Section 43. . . . . . . . . . . . . . . . . . . . . 15.32 Bar of legal proceedings – Section 44. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.33 Removal of difficulties – Section 45. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.34 Power to make Rules – Section 46 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.35 Power to make Regulations – Section 47 . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.36 Rules and Regulations to be laid before Parliament – Section 48. . . . . . . . . 15.37 Repeal of FERA – Section 49. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.38 Illustrative Cases of Contraventions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xlviii

15.23 15.24 15.24 15.25 15.25 15.25 15.26 15.26 15.26 15.27 15.28 15.29 15.29 15.29 15.29 15.30 15.30 15.30 15.30 15.31 15.32 15.33 15.33 15.34 15.34 15.36 15.36 15.36 15.37 15.37 15.37 15.38 15.39 15.40 15.41 15.44

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Chapter 16 Compounding of contraventions under FEMA. . . . . . . . . . . . . . . 16.1 16.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.1 16.2 Compoundable Offences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.2 16.3 Compounding Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.3 16.4 Non-compoundable Contraventions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.3 16.4.1 Contravention of section 37A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.3 16.4.2 Offences not quantifiable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.3 16.4.3 Repeat offences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.4 16.4.4 Contraventions being subject matter of appeal under Section 17 or 19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.4 16.4.5 Contraventions requiring approvals. . . . . . . . . . . . . . . . . . . . . . . . 16.4 16.4.6 Serious contraventions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.5 16.5 Similar Contravention – Reckoning of the Three Year Period . . . . . . . . . . . . 16.5 16.6 Cases requiring Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.6 16.7 Effect of Compounding – Section 15(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.6 16.8 Compounding vis-à-vis Adjudication. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.8 16.9 Compounding Authority – Rule 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.8 16.10 Compounding Powers of Reserve Bank – Rule 4. . . . . . . . . . . . . . . . . . . . . . 16.9 16.10.1 Authorised officers of Reserve Bank– sub-rule (1). . . . . . . . . . . . 16.9 16.10.2 Delegation of powers to regional offices. . . . . . . . . . . . . . . . . . . 16.10 16.11 Particualrs to be Added in the Application for Compounding. . . . . . . . . . . . 16.12 16.12 Incomplete Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.12 16.13 Compounding Powers of Enforcement Directorate – Rule 5 . . . . . . . . . . . . 16.13 16.13.1 Authorised officers of Directorate of Enforcement – subrule (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.13 16.14 No Adjudication Proceedings on the Contravention Compounded – Rule 6.16.13 16.15 Discharge in Adjudication Proceedings – Rule 7 . . . . . . . . . . . . . . . . . . . . . 16.13 16.16 Power to Call for Records – Rule 8(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.14 16.17 Granting an Opportunity of being Heard – Rule 8(2). . . . . . . . . . . . . . . . . . 16.14 16.18 Payment of Amount Compounded – Rule 9. . . . . . . . . . . . . . . . . . . . . . . . . 16.14 16.19 Consequences of Default to Pay the Compounding Order - Rule 10. . . . . . 16.14 16.20 Compounding is not Permitted, if Appeal is there – Rule 11 . . . . . . . . . . . . 16.15 16.21 Contents of the Order of the Compounding Authority – Rule 12. . . . . . . . . 16.15 16.22 Copy of the Order to Adjudicating Authority – Rule 13 . . . . . . . . . . . . . . . 16.15 16.23 Other Important Points relating to Compounding – Master Circular/ Master Direction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.15 16.24 Authorised Representative for Personal Hearing . . . . . . . . . . . . . . . . . . . . . 16.16 16.25 Directions to Authorised Dealers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.17 16.26 Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.18 16.27 Prescribed Forms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.18 16.28 Guidance Note on Computation Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.18 xlix

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16.29 Illustrative Cases of Contraventions Compounded. . . . . . . . . . . . . . . . . . . . 16.21 16.30 Compounding Orders in public domain . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.26 16.31 Contraventions FEMA Regulations thereto and Compounding by RBI in 2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.27 16.31.1 Major cases of compounding of contraventions under FEMA in 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.27 16.31.1.1 In the matter of Essar Oil Limited. . . . . . . . . . . . . . . . 16.27 16.31.1.2 In the matter of RIR Enterprises – II. . . . . . . . . . . . . . 16.27 16.31.1.3 In the matter of Jasper Infotech Private Limited. . . . . 16.28 16.31.1.4 In the matter of Cisco Systems (India) Private Limited. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.28 16.31.1.5 In the matter of Sanmar Group International Limited.16.28 16.31.1.6 In the matter of IBM India Private Limited. . . . . . . . . 16.28 16.31.1.7 In the matter of RIR Enterprises – I . . . . . . . . . . . . . . 16.29 16.31.1.8 In the matter of Ellucian Higher Education Systems India Pvt Ltd. . . . . . . . . . . . . . . . . . . . . . . . . 16.29 16.31.1.9 In the matter of Mahindra and Mahindra Limited. . . . 16.29 16.31.1.10 In the matter of Ventureast Tenet Fund II . . . . . . . . . . 16.30 16.31.2 Major cases of compounding of contraventions under FEMA in 2016 involving a compounding fee of Rs.50 Lakhs and more . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.31 16.32 a glance at major compounded contraventions of 2018 . . . . . . . . . . . . . . . . 16.34 16.33 Compounding of contraventions – a business tool!. . . . . . . . . . . . . . . . . . . . 16.40 Chapter 17 Adjudication, appeals under FEMA, 1999 . . . . . . . . . . . . . . . . . . 17.1 17.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.1 17.1.1 The FERA era. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.2 17.2 Adjudication and appeals – relevant provisions . . . . . . . . . . . . . . . . . . . . . . . 17.4 17.3 Penalties – section 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.5 17.3.1 Wide in its sweep. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.5 17.3.1.1 Quantifiable and non-quantifiable. . . . . . . . . . . . . . . . . 17.5 17.3.2 Impact of section 42. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.6 17.3.3 Continuing contraventions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.6 17.4 Acquisition of Foreign Exchange, Foreign Security, Foreign Property . . . . . 17.7 17.4.1 Confiscation is in addition to penalty. . . . . . . . . . . . . . . . . . . . . . . 17.7 17.4.2 Punishment in addition to penalty!. . . . . . . . . . . . . . . . . . . . . . . . . 17.7 Officer entitled to file criminal complaint . . . . . . . . . . . . . . . . . . . 17.8 17.4.3 17.5 Confiscation of Properties – Section 13(2). . . . . . . . . . . . . . . . . . . . . . . . . . . 17.8 17.6 Enforcement of the Orders of Adjudicating Authority - Section 14. . . . . . . 17.10 17.7 Authorised Officer for recovering penalties – Section 14A . . . . . . . . . . . . . 17.14 17.8 Appointment of Adjudicating Authority – Section 16. . . . . . . . . . . . . . . . . . 17.16 l

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17.9 17.10 17.11 17.12

17.13

17.14 17.15

17.8.1 Appointing adjudicating authority for enquiry. . . . . . . . . . . . . . . 17.8.2 Jurisdiction of adjudicating authority. . . . . . . . . . . . . . . . . . . . . . 17.8.3 Complaint sets the adjudication process in motion . . . . . . . . . . . 17.8.4 Appearance through legal practitioner or chartered accountant. . 17.8.5 Powers of civil court. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.8.6 Stipulation of time limit for adjudicating authority. . . . . . . . . . . Procedure before the Adjudication Authority. . . . . . . . . . . . . . . . . . . . . . . . Proceedings before Adjudicating Authority are not Criminal Proceedings. . Continuation of Criminal Proceedings when Adjudication Authority Does not Find Contravention. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appeal before Special Director (Appeals) – Section 17. . . . . . . . . . . . . . . . 17.12.1 Appointment of Special Director (Appeals) and jurisdiction. . . . 17.12.2 Orders against which appeal will lie before Special Director (Appeals) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.12.3 Time limit for filing the appeal. . . . . . . . . . . . . . . . . . . . . . . . . . . 17.12.4 Power of Special Director (Appeals). . . . . . . . . . . . . . . . . . . . . . 17.12.5 Copy of order to be sent to parties. . . . . . . . . . . . . . . . . . . . . . . . 17.12.6 Powers of civil court. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Procedural Aspects of Filing Appeals before the Special Director (Appeals). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.13.1 Form of appeal – rule 5(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.13.2 Manner of setting out grounds – rule 5(2). . . . . . . . . . . . . . . . . . 17.13.3 Petition for condonation of delay – rule 5(3). . . . . . . . . . . . . . . . 17.13.4 Serving notice on applicant – rule 5(4) . . . . . . . . . . . . . . . . . . . . 17.13.5 Procedure to be followed by Special Director (Appeals) – rule 6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.13.5.1 Sending copy of appeal to enforcement directorate – rule 6(1) . . . . . . . . . . . . . . . . . . . . . . . . . 17.13.5.2 Notice of hearing – rule 6(2). . . . . . . . . . . . . . . . . . . . 17.13.5.3 Hearing of both sides of the appeal – rule 6(3). . . . . . 17.13.5.4 Hearing and deciding on merits though a party may be absent – rule 6(4) . . . . . . . . . . . . . . . . . . . . . . 17.13.6 Contents of the order in appeal – rule 7. . . . . . . . . . . . . . . . . . . . 17.13.7 Representation of party – rule 8. . . . . . . . . . . . . . . . . . . . . . . . . . 17.13.8 Service of notices, requisitions or orders – rule 9 . . . . . . . . . . . . Administrative Provisions relating to special director (appeals). . . . . . . . . . Appeal to Appellate Tribunal - Section 19 . . . . . . . . . . . . . . . . . . . . . . . . . . 17.15.1 Right of appeal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.15.2 Nature of right to appeal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.15.3 Appeal can arise on questions of fact/law . . . . . . . . . . . . . . . . . . 17.15.4 Appeal from orders under FERA. . . . . . . . . . . . . . . . . . . . . . . . .

17.16 17.16 17.17 17.17 17.17 17.17 17.17 17.20 17.21 17.25 17.25 17.26 17.26 17.26 17.26 17.27 17.27 17.27 17.28 17.28 17.28 17.28 17.28 17.28 17.29 17.29 17.29 17.29 17.29 17.30 17.31 17.31 17.32 17.32 17.32 li

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17.15.5 17.15.6

17.16

17.17

17.18 17.19

17.20 17.21

lii

Penalty must be deposited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.32 Waiver of pre-appeal deposit - undue hardship and safeguarding of interests of the revenue. . . . . . . . . . . . . . . . . . . . 17.33 17.15.7 Time limit for preferring an appeal . . . . . . . . . . . . . . . . . . . . . . . 17.36 17.15.8 Sweep of powers of appellate tribunal. . . . . . . . . . . . . . . . . . . . . 17.40 17.15.9 Financial Condition – a good ground for reduction of penalty . . 17.41 17.15.10 Retracted statements could be relied upon by corroboration. . . . 17.41 17.15.11 Show cause notices after expiry of sunset period not valid. . . . . 17.41 17.15.12 Use of foreign exchange for declared purposes is important! . . . 17.42 17.15.13 Where company is not liable, MD cannot be vicariously liable. . 17.42 17.15.14 Order must be sent to the parties to the appeal. . . . . . . . . . . . . . . 17.42 17.15.15 Statutory time limit for disposal of appeals. . . . . . . . . . . . . . . . . 17.42 17.15.16 Power to call for records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.43 17.15.17 Power to remand the matter back to lower authority. . . . . . . . . . 17.43 Procedural Aspects of Filing an Appeal before the Appellate Tribunal . . . . 17.44 17.16.1 Form of appeal – rule 10(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.44 17.16.2 Manner of setting out grounds – rule 10(2). . . . . . . . . . . . . . . . . 17.44 17.16.3 Petition for condonation of delay – rule 10(3). . . . . . . . . . . . . . . 17.44 17.16.4 Serving notice on applicant – rule 10(4) . . . . . . . . . . . . . . . . . . . 17.45 Procedure to be Followed by the Appellate Tribunal – Rule 11. . . . . . . . . . 17.45 17.17.1 Sending copy of appeal to enforcement directorate – rule 11(1). 17.45 17.17.2 Notice of hearing – rule 11(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.45 17.17.3 Hearing of both sides of the appeal – rule 11(3) . . . . . . . . . . . . . 17.45 17.17.4 Hearing and deciding on merits though a party may be absent – rule 11(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.45 17.17.5 Contents of the order in appeal – rules 12(1) and 12(2). . . . . . . . 17.45 17.17.6 Representation of party – rule 13. . . . . . . . . . . . . . . . . . . . . . . . . 17.46 17.17.7 Service of notices, requisitions or orders – rule 14 . . . . . . . . . . . 17.46 Composition of Appellate Tribunal – Section 20 . . . . . . . . . . . . . . . . . . . . . 17.46 Applicability of Rules of Code of Civil Procedure – Section 28 . . . . . . . . . 17.46 17.19.1 Summoning and enforcing attendance. . . . . . . . . . . . . . . . . . . . . 17.48 17.19.2 Reviewing powers – clause (f) of sub-section (2) of Section 28. 17.49 17.19.3 Order executable as a decree . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.52 Right of appellant to take assistance of legal practitioner or chartered accountant and of government to appoint presenting officers – Section 32. 17.53 Appeal to high court – Section 35. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.53 17.21.1 Any Decision or Order. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.53 17.21.2 Question of law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.54 17.21.3 Person aggrieved. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.55 17.21.4 Date of communication of the decision or order . . . . . . . . . . . . . 17.56 17.21.5 High Court may remand the matter back to the lower authority. 17.57

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17.21.6 No power to condone delay beyond 60 days. . . . . . . . . . . . . . . . 17.21.7 Applicability of Limitation Act, 1963 . . . . . . . . . . . . . . . . . . . . . 17.21.8 Proper High Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.22 Civil Court or Writ Court will not Assist!. . . . . . . . . . . . . . . . . . . . . . . . . . .

17.57 17.58 17.60 17.61

Chapter 18 Prosecution against offences under FEMA. . . . . . . . . . . . . . . . . . 18.1 18.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.1 18.2 Serious nature of the economic offence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.1 18.3 Commencement of Section 37A and sub-sections (1A) to (1D) to Section 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.3 18.4 Analysis of Connected Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.4 18.5 Synopsis of Section 37A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.5 18.6 Operation of Section 37A – Prospective; not retrospective. . . . . . . . . . . . . . 18.12 18.7 Synopsis of sub-sections (1A) to (1D) of Section 13 . . . . . . . . . . . . . . . . . . 18.14 18.8 Offences under Section 37a Prosecution will be in accordance with CrPC. 18.16 18.9 Directorate of Enforcement – Section 36 . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.17 18.9.1 Powers and functions of Enforcement Directorate. . . . . . . . . . . . 18.17 18.9.2 Nature of proceedings before Enforcement Directorate. . . . . . . . 18.18 18.9.3 Show cause notices and summons. . . . . . . . . . . . . . . . . . . . . . . . 18.18 18.10 Right of Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.20 18.10.1 Stage of proceedings before enforcement directorate . . . . . . . . . 18.22 18.11 Power to Investigate, Search, Seizure, etc – Section 37. . . . . . . . . . . . . . . . 18.22 18.12 Scope of Powers under Section 133 of the Income Tax Act. . . . . . . . . . . . . 18.23 18.12.1 Summons to furnish information and documents. . . . . . . . . . . . . 18.23 18.12.2 Persons from whom information may be sought. . . . . . . . . . . . . 18.24 18.12.3 Definition of the expression “person” . . . . . . . . . . . . . . . . . . . . . 18.25 18.12.4 Officers who are authorised to exercise powers under section 133(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.25 18.12.5 Analysis of section 37 of FEMA read with section 133(6) of Income Tax Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.25 18.13 Returning of Seized Currency and Payment of Interest thereof. . . . . . . . . . 18.28 18.14 Rules of Evidence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.29 18.15 Retraction of Confessional Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.35 18.16 Authentication of Documents – Section 39. . . . . . . . . . . . . . . . . . . . . . . . . . 18.38 18.17 Contravention by Companies – Section 42. . . . . . . . . . . . . . . . . . . . . . . . . . 18.40 APPENDICES LIST OF APPENDICES PERTAINING TO COMPANIES ACT Appendix 1: Companies (Adjudication of Penalties) Rules, 2014. . . . . . . . . . . App-1.1 Appendix 2: Important sections of the Companies Act, 1956 dealing with offences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . App-2.1 liii

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Appendix 3: Section 621A Composition of offences. . . . . . . . . . . . . . . . . . . . . . App-3.1 Appendix 4: MCA Circular – Prosecution of Directors. . . . . . . . . . . . . . . . . . . App-4.1 Appendix 4A: Commencement Notification of Companies (Amendment) Act, 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . App-4A.1 Appendix 4B: Commencement Notification of Companies (Amendment) Act, 2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . App-4B.1 Appendix 4C: Insolvency and Bankruptcy Code, 2016 – (Section 255, The Eleventh Schedule and Commencement Notifications). . . . . App-4C.1 LIST OF APPENDICES PERTAINING TO SECURITIES LAWS Appendix 5: Depositories (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 2005. . . . . . . . . . . . . . . App-5.1 Appendix 6: Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . App-6.1 Appendix 7: The Securities Contracts (Regulation) (Procedure for Holding Inquiry and imposing Penalties by Adjudicating Officer) Rules, 2005. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . App-7.1 Appendix 8: Securities Appellate Tribunal (Procedure) Rules, 2000. . . . . . . . . App-8.1 Appendix 9: The Securities Contracts (Regulation) (Appeal to Securities Appellate Tribunal) Rules, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . App-9.1 Appendix 10: The Depositories (Appeal to Securities Appellate Tribunal) Rules, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . App-10.1 Appendix 11: Securities and Exchange Board of India (Manner of Service of Summons and Notices Issued by the Board (Amendment) Regulations, 2007. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . App-11.1 Appendix 12: Securities and Exchange Board of India (Settlement Proceedings) Regulations, 2018. . . . . . . . . . . . . . . . . . . . . . . . . . App-12.1 LIST OF APPENDICES PERTAINING TO FEMA Appendix 13: The Foreign Exchange Management Act, 1999. . . . . . . . . . . . . . Appendix 14: Foreign Exchange (Compounding Proceedings) Rules, 2000. . . Appendix 15: Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appendix 16: Foreign Exchange Management (Regularization of assets held abroad by a person resident in India) Regulations, 2015 . .

App-13.1 App-14.1 App-15.1 App-16.1

LIST OF APPENDICES PERTAINING TO CODE OF CRIMINAL PROCEDURE Appendix 17: Relevant Sections of the Code of Criminal Procedure, 1973. . . . App-17.1 LIST OF SPECIAL COURTS Appendix 18: List of Special Courts – under Section 435 . . . . . . . . . . . . . . . . . App-18.1 liv

Table of cases A P Foods v. Samuel [2006] 5 SCC 469. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.8 A Stock and Co. (In liquidation) v. Dilip Kumar Chakraborty and Ors. [1996] 87 Comp Cas139 (Cal). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.38 A.R. Antulay v. R.S. Nayak and Anor., AIR 1988 SC 1531. . . . . . . . . . . . . . . . . . . . . . . . . . . 11.51 A.Sivasailam v. Registrar of Companies [1995] 83 Comp Cas 141. . . . . . . . . . . . . . . . . . . . . . . 6.1 A.Stephen Samuel v. Union of India and Ors. [2004] 118 Comp Cas 82 (Mad). . . . . . . . . . . . 9.71 A.V. Joglekar and Ors. v. Wamandeo Mahadeo Deosthale and Anor. [1990] 69 Comp Cas 347 (Bom) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.12, 8.15 Abhinav Silicate Industry v. Chairman, Central Coalfields Ltd. and Anor., [2003 (4) JCR 588 (Jhr)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.31 Additional judicial first class magistrate v state of A P, 2005 CriLJ 1168. . . . . . . . . . . . . . . . . 4.14 Adi Pherozshah Gandhi v. H.M. Seervai, Advocate General of Maharashtra, Bombay, 1971 AIR 385, 1971 SCR (2) 863 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.32 Adityaa Energy Resources Pte Limited v Cauvery Power Generation Chennai Private Limited, CP/1014/2018, NCLT, Chennai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.52 AI Chapdany Industries Limited and Ors. v. Registrar of Companies and Ors. [2011] 166 Comp Cas 576 (Cal) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.22 Ajay Bagaria v. Union of India and Ors., 2008(103) DRJ 324. . . . . . . . . . . . . . . . . . . . . . . . . 15.37 Alim Ahuja and Anor. v. Registrar of Companies [2006] 129 Comp Cas 104 (Raj). . . . . . . . . 7.37 Allahabad Bank v Canara Bank and Ors., [2000] 101 Comp Cas 64 (SC); [2000] 37 CLA 293 (SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.74 Amison Foods Limited and Ors. v. Registrar of Companies [2001] 103 Comp Cas 846 (Ker). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.18 Anantha R.Hegde v. Capt.T.S.Gopalakrishna [1998] 91 CompCas 312 (Kar). . . . . . . . . . . . . . . 6.2 Andhra Pradesh State Essential Commodities Corporation Limited v. Registrar of Companies [2002] 38 SCL 1016 (AP). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.47, 8.15 Aneeta Hada v. Godfather Travels and Tours Private Limited, AIR 2012 SC 2795. . . . 1A.48, 9.63 Ankur Chaturvedi v. SEBI, [20145]132 SCL 263 (SAT). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.25 Anya v. University of OxfordÂ 2001 EWCA Civ 405 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.61 APC Credit Rating Private Limited v Registrar of Companies, NCT of Delhi and Haryana, [2018] 143 CLA 166 (NCLAT). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.47 Arkwright v. Newbold 17 ChD 301. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1B.9 Arun Jain v Securities and Exchange Board of India (26.09.2013 - MADHC) : MANU/TN/3134/2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.10 Arun Jain v. SEBI, [2014] 128 SCL 89 (SAT). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.17, 13.8 Ashok K. Parashramka v. Union of India (UOI) and Ors. MANU/DE/0670/2008 . . . . . . . . . 15.16 Ashok Malhotra and Anor. v. Mansi Finance (Chennai) Limited [2002] 110 CompCas 604 (Mad). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.47 Ashoka Marketing Limited and Ors v The Calcutta Stock Exchange Limited, W.P. No. 523 of 2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.53 Asian Films Production and Distribution Limited (Appeal No.203 of 2010) . . . . . . . . . . . . . 11.36

Treatise on contraventions under Companies Act, Securities Laws & FEMA Assistant Commissioner, Assessment-II, Bangalore and Ors. v. Velliappa Textiles Limited and Anor., [2003] 11 SCC 405. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.21 Associated Cement Company Limited v. Keshvanand [1998] 91 Comp Cas 361 (SC). . . 4.33, 6.6 Asst. Registrar of Companies v. Premier Synthetics Private Limited and Ors. [1997] 89 Comp Cas 732 (Mad) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.53 Asst. Registrar of Companies v. R.Narayanaswamy and Ors. [1985] 57 CompCas 787 (Mad). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.50 Avro Commercial Company (Adjudication Order: SS/AS/2018-19/2016) . . . . . . . . . . . . . . . 11.44 B.N.Chikarmane v. Swashraya Benefit (P) Limited (In Liquidation) and Ors. [1983] 53 Comp Cas 519 (Guj). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7 Bagirath Kanoria v. State of M.P. AIR 1984 SC 1688. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.50 Bank of Rajasthan Ltd. v. Rajasthan Breweries Ltd. [2007] 140 CompCas 622 (CLB) . . . . . . 9.38 Barium Chemicals Limited v. Company Law Board, AIR 1967 SC 295. . . . . . . . . . . . . . . . . . 5.20 Beetal Livestocks and Farm Pvt. Ltd. and Ors., in Re: (09.08.2017 - SEBI / SAT) : MANU/SB/0168/2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.35 Bengal Tools Ltd v. Registrar of Companies [1991] 71 Comp Cas 85 (Cal). . . . . . . . . . 8.11, 8.15 Bhagwansingh Shriramsingh L/H Dinesh Bhagwan Singh v. Income Tax Officer, Ward 3(1) (30.05.2006 - ITAT Mumbai) : MANU/IU/5143/2006. . . . . . . . . . . . . 11.47 Bhagwati Foods Private Limited v. Registrar of Companies, West Bengal reported in [2008] 143 Comp Cas 531 (Cal). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.28 Bharat Plywood and Timber Products Private Limited and Onr. v. Registrar of Companies and Anor. [2002] 108 Comp Cas 601 (Ker). . . . . . . . . . . . . . . . . . . . . . . 4.68, 8.15 Bharath Overseas Bank v Minu Publication (1988) Madras Law Weekly (Crl.) 106 . . . . . . . . 5.44 Bhaskar Industries Ltd. v. Bhiwani Denim and Apparels Ltd. and Ors., AIR 2001 SC 3625. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.23, 4.62, 4.75 Bhimappa v. Laxman AIR 1970 SC 1153. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 Bhuban Mohan Mitter Charitable Trust v. Income Tax Officer (30.12.1991 ITAT Kolkata) : MANU/IK/0354/1991. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.47 Bihar Cotton Mills Limited and Ors v. State of Bihar and Anor. [1990] 67 Comp Cas 143 (Pat). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.21, 8.18 Binay Kishore Prasad and Anor. v. Union of India, [2012] 171 CompCas 355 (Patna). . . . . 1A.52 Birkback Permanent Benefit Building Society, Re., [1912] 2 Ch. 183. . . . . . . . . . . . . . . . . . 1A.15 Birla Corporation Ltd. and Gouri Shankar Kayan and Ors. v. East India Investment Co. Pvt. Ltd. and Ors. (24.08.2005 - CALHC): MANU/WB/0260/2005. . . . . . 5.30 Bithal D.Mundra and Others v. Registrar of Companies, West Bengal, [2011] 164 Comp Cas 375 (Cal). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.22, 7.28 BOC India Ltd. v. Registrar of Companies [2012] 110 SCL 46 (Cal). . . . . . . . . . . . . . . . . . . . 7.28 Bombay Textiles v. Union of India [2014] 126 SCL 416 (ATFE-New Delhi). . . . . . . . . . . . . 15.17 Brazilian Rubber Plantations and Estate Limited, In re: [1911] 1 Ch.425. . . . . . . . . . . . . . . . . . 7.5 C.K. Rajkumar and Ors. v. Deputy Registrar of Companies, Office of Registrar of Companies, Shastri Bhavan (19.01.2017 - MADHC) : MANU/TN/0176/2017. . . . . . . . 7.17 Caetano Colaco v. Joao Rodrigues, 1966 Cr LJ 1412 (Goa) . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.19 Caparo Industries Plc v. Dickman [1990] 2 AC 605. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1B.11 Central Bank of India v. Shri Gokal Chand, AIR 1967 SC 799. . . . . . . . . . . . . . . . . . . . . . . . 13.44 Chandra Kumar Dhanuka and Others v. Registrar of Companies, West Bengal, [2008] 141 Comp Cas 101 (Cal). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11, 7.19

lvi

Table of cases Chandra Spinning & Weaving Mills (P) Limited v. Registrar of Companies [1990] 4 CLA 232/[1990] 69 Comp Cas 117 (Kar). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.51 Chandran Ratnasamy v. K.C. Palanisamy, AIR 2013 SC 1952 . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6 Chandravadan J Dalal v. SEBI, Appeal No. 35/2004 decided on June 15, 2005. . . . . . . . . . . 11.46 Charan Lal Sahu v. Giani Zail Singh, AIR 1984 SC 309. . . . . . . . . . . . . . . . . . . . . . . . 1A.38, 9.62 Cinepolis India Private Limited and Ors v Registrar of Companies, NCT of Delhi & Haryana, New Delhi. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12 City Equitable Fire Insurance Co Limited, In re: [1925] 1 Ch.407. . . . . . . . . . . . . . . . . . . . . . . 7.6 Claro Consultancy Private Limited, re: , CP. 16/18/2015 (NCLT Delhi). . . . . . . . . . . . . . . . . . 2.19 Coimbatore Flavours and Fragrances Ltd v. SEBI, [2014] 128 SCL 128 (SAT),. . . . . . . . . . . 11.37 Commissioner of Income tax – I v Sahu Investment Mutual Benefit Co Ltd [2017] 396 ITR 595 (All). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.26 Commissioner of Wealth Tax, Tamil Nadu-IV v. V. Varadarajan (22.01.1980 MADHC) : MANU/TN/0083/1980. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.47 Cook v. G S Deeks (AIR 1916 PC 161). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.17 Corporation of The City of Toronto v. Attorney-General for Canada [1946] A.C. 32. . . . . . . . 9.49 CWT v. Suresh Seth [1981] 129 ITR 328. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.50 D.C.Kothari v. Asst. Registrar of Companies [1993] 78 Comp Cas 520 (Mad). . . . . . . . . . . . . . 7.8 Damodar S. Prabhu v. Sayed Babalal H., AIR 2010 SC 1907. . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Day v. Mead [1987] 2 NZLR 443. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.7 Delhi Development Authority v. Skipper Construction Company (P) Ltd. and another (06.05.1996 - SC): MANU/SC/0497/1996. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.16 Delhi Judicial Service Association, Tis Hazari Court, Delhi v. State of Gujarat, AIR 1991 SC 2176. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.21 Deodatt Pursottam Patel v Alembic Glass Industries Ltd., (1972) 42 Comp Cas 63. . . . . . . . . 5.19 Derry v. Peek [1889] UKHL 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.15, 1B.9, 1C.3 Devendra Kumar Kedavat v. Apple Ceremics Limited and Ors. [2006] 129 Comp Cas 816 (Raj). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.37 Dhananjay Chatterjee @ Dhana v. state of W.B. reported in 1994 (2) S.C.C. 626. . . . . . . . . . 1C.3 Dhaval Mehta v SEBI, MANU/SB/0112/2009. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.21 Dilip Kumar, Jaquelin Kapur and Akash Kapur v. The Registrar of Companies, Ministry of Corporate Affairs, [2011] 166 CompCas 216 (Mad) . . . . . . . . . . . . . . . . . . . . . 7.24 Dipak J Panchal v. SEBI, [2013] 117 SCL 238 (SAT). . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6, 11.24 Dipak Shubhashchandra Mehta v. CBI and Anor. AIR 2012 SC 949. . . . . . . . . . . . . . . . . . . . . 4.54 Director of Enforcement v. M.C.T.M. Corporation Pvt. Ltd. and Ors. (1996) 2 SCC 471. . . . 11.14 DR ITM Limited and Anor. v Registrar of Companies, CPNo.252/Chd/CHD/2017. . . . . . . . . 2.16 Dr. A. Lakshmanaswami Mudhaliar and Ors. v. Life Insurance Corporation of India and Anor. AIR 1936 CS 1185, : [1963] 33 Comp Cas 420 (SC),. . . . . . . . . . . . . . . 1A.14 Dr. Francis Cleetus and Ors. v. Respondent: Rashtra Deepika Ltd. and Ors. [2013] 178 CompCas 206 (CLB). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.22 Dr. Gurcharan Singh v The State of Punjab MANU/PH/0094/1977 . . . . . . . . . . . . . . . . . . . . . 5.44 Dr.C.R.Bhansali v. K.Ramesh and Anor. [2001] 104 Comp Cas 732 (Kar). . . . . . . . . . . . . . . . 6.20 DSE Financial Services Ltd. v. SEBI Appeal No. 153 of 2012 . . . . . . . . . . . . . . . . . . . . . . . . 11.40 Dushyant N Dalal and Another v SEBI [2017] 140 CLA 275 (SC). . . . . . . . . . . . . . . . . . . . . . 9.72 E-Ally Consulting (India) Private Limited v. Securities Exchange Board of India [2014] 128 SCL 125 (SAT – Mumbai). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.40 East End Dwellings Company Ltd. v. Finsbury Borough Council 1952 AC 109. . . . . . . . . . . . 9.55 lvii

Treatise on contraventions under Companies Act, Securities Laws & FEMA East Punjab Traders and Ors. v. Collector of Customs, 1987 (12) ECR 354 (Tri.-Delhi) . . . . 15.35 E-Land Apparel Limited and Ors., In Re: MANU/SB/0137/2015 . . . . . . . . . . . . . . . . . . . . . 11.43 Enakshi Impex Pvt. Ltd. and Ors, MANU/SB/0143/2015, In Re. . . . . . . . . . . . . . . . . . . . . . . 11.34 Ess Ess Intermediaries v. SEBI, [2013] 121 SCL 22 (SAT), . . . . . . . . . . . . . . . . . . . . . . . . . . 11.39 Evans v. Brunner, Mond and Company Limited, Chancery Division [1920. E. 920] [1921] 1 Ch. 359. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.14 Executive Engineer (Irrigation and Flood Control) v. Shree Ram Construction Co. 2010 (120) DRJ 615 (DB). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.34 Falcon Tyres Limited v. Mohan Rajan [1997] 88 Comp Cas 547 (Ker). . . . . . . . . . . . . . . 4.33, 6.5 Farouk Irani and Anor. v. Board for Industrial and Financial Reconstruction [2002] 110 Comp Cas 64 (Mad) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.37 First Leasing Co. of India Limited and Ors. v. Addl. Registrar of Companies [1997] 89 Comp Cas 635 (Mad) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11, 8.4 Fodare Pty Ltd v. Shearn [2011] NSWSC 479. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.19 Fortune Financial Services (India) Limited ,(ADJUDICATION ORDER NO. EAD-3/ORDER/JS/SP/2018/2018-19). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.46 G. M. Mohan and Ors. v. Registrar of Companies, Karnataka [1984] 56 Comp Cas 265 (Kar). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.35 G. N. Sridharan v. Registrar of Companies [2012] 173 Comp Cas 44 (Mad) . . . . . . . . . . . . . . 7.35 G. Sagar Suri and Anor. v. State of U.P. and Ors. (2000) 2SCC636. . . . . . . . . . . . . . . . . . . . . . . 8.6 Gautam Kanoria and Ors. v. Assistant Registrar of Companies and Anor. [2002] 108 Comp Cas 260 (Bom). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.22 General Officer Commanding-in-Chief v. Dr. Subhash Chandra Yadav, AIR 1988 SC 876. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.39 General Produce Company Limited, In Re. (CLB) [1994] 81 Comp Cas 570 (CLB). . . . . . . . 2.23 GFL Financials India Limited, In Re:, MANU/SB/0135/2015 . . . . . . . . . . . . . . . . . . . . . . . . 11.33 Ghasi Ram and Ors. v. Chait Ram Saini and Ors. AIR 1998 SC 2476. . . . . . . . . . . . . . . . . . . . 3.30 GHCL Ltd v. SEBI, [2014] 128 SCL 5 (SAT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.28 Gian Singh v. State of Punjab and Anor., (2012) 10 SCC 303. . . . . . . . . . . . . . . . . . . . . . . 2.5, 8.7 Girijanandhini v. Brijesh Narain AIR 1967 SC 2110. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.46 Gokak Patel Volkart Ltd. v. Dundayya Gurushiddaiah Hiremath and Ors. [1991] 71 CompCas 403 (SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.54 Gold Multifab Ltd. v. Chairman, SEBI [2003]48 SCL 249 (SAT). . . . . . . . . . . . . . . . . . . . . . 13.12 Gulab Impex Enterprises Ltd v. SEBI, [2015] 129 SCL 425 (SAT). . . . . . . . . . . . . . . . . . . . . 11.41 Gullapalli Nageswara Rao and Ors. v. Andhra Pradesh State Road Transport Corporation and Anor. AIR 1959 SC 308 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.9 Gunmala Sales (P) Ltd v. Anu Mehta [2015] 190 CompCas 77 (SC) . . . . . . . . . . . . . . . . . . . . 6.23 H. Nanjundaiah v. V.Govindan, Registrar of Companies, Maharashtra (1986) 59 Com Cas 356. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.23 H.L.Bolton (Engineering) Co Limited v. T.J.Graham and Sons Limited [1956] 3 All ER 624 (CA). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.25 H.V. Jayaram v ICICI Limited [2000] 99 Comp Com 341 (SC) . . . . . . . . . . . . . . . . . . . . . . . . 6.19 Hafez Rustom Dalal v. Register of Companies [2005] 128 Comp Cas 883 (Guj). . . . . . . . . . . 7.29 Haldiram Bhujiawala & Anor. v. M/s. Anand Kumar Deepak Kumar & Anor., AIR 2000 SC 1287, 2010 (43) PTC 771 (Del),. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1B.35 Hamilton v. Wright (1842), 9 Cl. and Fin. III. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.17 Hanuman Prasad Gupta v. Hiralal [1970] 40 Comp Cas 1058 (SC). . . . . . . . . . . . . . . . . . . . . . 6.19 lviii

Table of cases Harbans Singh v. U.P. State, 1982 Cri LJ 795 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.21 Hareshchandra Maganlal and Ors. v. Union Bank of India and others [1991] 71 Comp Cas 69 (Bom) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.20 Hariganga Cement Ltd. v. Company Law Board and another (17.12.1986 BOMHC) : MANU/MH/0007/1988 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.22 Hemal a. Kanuga and Others v. Registrar of Companies, [2008] 143 Comp Cas 8 (Guj). . . . . 7.27 Hemant Babubhai Desai v. Jayant Vitamins Ltd. (2010) 3 CompLJ 730 (CLB). . . . . . . . . . . . 5.21 Hemant Kothari v. Adjudicating Officer, MANU/SB/0060/2014. . . . . . . . . . . . . . . . . . . . . . . 11.26 Hindustan Wire & Metal Products, In re: [1983] 54 Comp Cas 104 (Cal). . . . . . . . . . . . . . . . . 7.10 Hitendera Vishnu Thakur v. State of Maharashtra [1994 (4) SCC 602]. . . . . . . . . . . . . . . . . . . 9.65 Hoffland Finance Ltd., In re the Company Law Board, Northern Region Bench [1997] 90 Comp Cas 38. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.26 Hrushikesh Panda v. State of Orissa and Ors. [1997] 89 Comp Cas 613 (Ori) . . . . . . . . . . . . . 4.71 Hyderabad Vanaspathi Limited and Ors. v. Registrar of Companies and Anor. [1986] 59 Comp Cas 654 (AP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.52 Hypine Carbons Limited v. J.C.Bhatia and Ors. [2001] 103 Comp Cas 422 (HP). . . . . . . . . . . . 6.8 ICICI Limited v. H.V.Jayaram [1998] 94 Comp Cas 409 (Kar). . . . . . . . . . . . . . . . . . . . . . . . . 6.19 Inder Mohan Goswami and Anor. v. State of Uttaranchal and Ors. (2007) 12SCC1. . . . . . . . . . 8.6 Indian Council of Investors v. Union of India [2014]186CompCas512(Bom) . . . . . . . . . . . . . 9.41 Indian Overseas Bank, Re, adjudication order No. EAD-2/DSR/RG/909/2018 dated 23rd January 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.33 Indian Petro Chemicals Corporation Limited and Anor. v. State of Rajasthan and Anor. [2001] 104 Comp Cas 285 (Raj). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.15 Indira Securities (P) Ltd v. SEBI, [2014]128 SCL 185(SAT). . . . . . . . . . . . . . . . . . . . . . . . . . 11.26 Indo Burma Industries Ltd, In re:, AIR 1956 Cal 648. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6 Indus Weir Industries Limited v SEBI, (ADJUDICATION ORDER NO. EAD/ BJD/BKM/ 100 /2017-18). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.6 Industrial Credit and Investment Corporation of India Limited v. Graphco Industries Ltd and Ors. AIR 1999 SC 1975. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.10 Innoventive Industries Ltd. Vs. Respondent: ICICI Bank and Ors, [2017] 205 Comp Cas 57 (SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.75 Institute of Chartered Accountants of India v. L.K. Ratna [1986] 4 SCC 537. . . . . . . . . . . . . 11.24 Iqbal Singh Marwah v. Meenakshi Marwah and Anor. AIR 2005 SC 2119. . . . . . . . 4.6, 4.49, 4.52 ISF Securities Ltd v. SEBI [2015] 129 SCL 469 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.20 Ishwarlal v. Special Director, MANU/AE/0012/2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.35 ITC Agro-Tech Limited and Ors. v. Registrar of Companies and Anor. [1996] 86 Comp Cas 170 (AP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11 J.I.K. Industries Ltd. and Ors. v. Amarlal V Jumani and Anor., [2012] 170 CompCas 223 (SC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.13 J.K. Industries Ltd. and Ors. v. Chief Inspector of Factories and Boilers and Ors. [1997] 88 CompCas 285 (SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.57 J.K. Industries Ltd. v. Chief Inspector of Factories and Boilers, (1997) ILLJ 722 SC,. . . . . . 11.16 J.K. Paliwal and Shri B.K. Paliwal v. Paliwal Steel Ltd. and Ors., [2008] 141 CompCas 624 (CLB). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.18 Jagjivan Hiralal Doshi and Ors. v. Registrar of Companies [1989] 65 Comp Cas 553 (Bom). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.15, 7.17 Janata Dal v. H.S. Chowdhary and Ors. AIR 1993 SC 892 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.20 lix

Treatise on contraventions under Companies Act, Securities Laws & FEMA Jayes R. Mor v. State of Gujarat [2002] 109 CompCas 232 (Guj). . . . . . . . . . . . . . . . . . . . . . . . 8.4 Jiyajeerao Cotton Mills Ltd. V. Company Law Board and Ors MANU/MP/0065/1969. . . . . . 5.23 Jiyuan LI v. Registrar of Companies and in Tianjin Tianshi India Private Limited v. Registrar of Companies [2012] 171 CompCas 280 (Delhi). . . . . . . . . . . . . . . 1A.51 Jyotindra Manharlal Vakil and Anor. v. Registrar of Companies, Maharahstra [2001] 103 Comp Cas 935 (Bom). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11 K Subramony v. Official Liquidator, Malabar Phyto Chemicals Ltd, [2010] 157 compCas 61 (Ker) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.47 K.K.Mehra v. Registrar of Companies [1991] 71 Comp Cas 669 (Del). . . . . . . . . . . . . . . . . . . 4.22 K.M.Mathew v. State of Kerala, AIR 1992 SC 2206, 2208. . . . . . . . . . . . . . . . . . . . . . . . 4.34, 8.5 K.Seethalakshmi v. Registrar of Companies and Anor. [1999] 21 SCL 1 (Mad); [2001] 103 Comp Cas 532 (Mad) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.39 Kajol Impex v. SEBI (Appeal No. 167 of 2009). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.36 Kalra Iron Stores v. Faridabad Fabricators (P) Ltd. [1992] 73 CompCas 330 (Delhi). . . . . . 1B.35 Kannan Devan Hills Produce Company Limited v. T.N.Madhavan Pillai, AIR 1956 SC 189. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6 Kanti Bhadra Shah v. State of West Bengal, [2000] 1 SCC 722. . . . . . . . . . . . . . . . . . . . . . . . . 4.63 Karthikeya Paper and Boards Limited v Registrar of Companies, Company Appeal (AT) Nos. 240-241 of 2018 NCLAT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.27 Karvy Financial Services Limited v SEBI, Misc. Application No. 317 of 2017 and Appeal No. 349 of 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.4 Karvy Stock Broking Ltd. v. SEBI [2008] 84 SCL 208 (SAT). . . . . . . . . . . . . . . . . . . . . . . . . . 9.20 Kasturi and Sons Limited v. Sporting Pastime India Limited and Ors. [2007] 139 Comp Cas 623 (CLB). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6 Kaushalya Devi Massand v. Roopkishore Khore, [2011] 4 SCC 593 . . . . . . . . . . . . . . . . . . . . . 2.4 Keki Hormusji Gharda v. Mehervan Rustom Irani [2009] 150 CompCas 70 : [2009] 6 SCC 475 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.24 Keynote Corporate Services Ltd v. SEBI, [2014] 125 SCL 355 (SAT). . . . . . . . . . . . . . . . . . 11.30 Kingston Cotton Mills, In Re: [1896] 1 Ch 331 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1C.16 Kottamasu Sreemannarayanamurthy and Anor. v. Chakka Arjanadu AIR 1939 Mad 145. . . 1B.35 Kranti Associates Pvt. Ltd. and Anor. v. Sh. Masood Ahmed Khan and Ors., (2010) 9 SCC 496 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.59 KSL and Industries Ltd., Shri Pravin K. Tayal, Shri Navin K. Tayal and Shri Sanjay K. Tayal v. Chairman, SEBI [2005] 59 SCL 1 (SAT) . . . . . . . . . . . . . . . . . . . . . . . . 9.34 Kuldip Singh v. State [1990] 68 Comp Cas 625 (Del). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.50 Kunj Behari Lal Butail and Ors. v. State of H.P. and Ors. AIR 2000 SC 1069 . . . . . . . . . . . . 15.38 L.I.C. of India v. Escorts Ltd. and others, AIR 1986 SC 1370. . . . . . . . . . . . . . . . . . . . . . . . . . 5.26 Lapointe v. L’Association (1906) AC 535 (539). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.8 Late Iqbal Hussain v ITO (06.10.2006 - ITAT Allahabad) : MANU/IW/5006/2006. . . . . . . . 11.47 Law Society v. KPMG Peat Marwick [2000CLC1965] : [2000]EWCACiv5563 . . . . . . . . . 1B.10 Lazarus Estates Ltd v. Beasley, [1956] 1 All ER 341. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1C.7 Lee v Stockmen’s Nat. Bank et al., 63 Mont. 262, 207 P. 623. . . . . . . . . . . . . . . . . . . . . . . . . . 9.31 Llewelyn Evans, In Re:, AIR 1926 Bom 551. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 Local Government Board v. Arlidge, (1915) AC 120 (138). . . . . . . . . . . . . . . . . . . . . . . . . . . 13.10 M M Shah v. Deputy Director of Enforcement and Ors. [2011] 166 Comp Cas 17 (Bom). . . . 6.26 M. Kishan Rao and Ors. v. Mrs P. Santha Reddy and Anor. (No.1) [2002] 111 CompCas 361 (AP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.13, 8.15 lx

Table of cases M. Meyyappan v. Registrar of Companies [2002] 112 Comp Cas 450 (Mad). . . . . . . . . . . . . . 7.11 M.Kishan Rao v. Mrs.P.Santha Reddy (No.2) [2002] 111 Comp Cas 373 (AP) . . . . . . . 5.41, 5.46 M.O.H.Iqbal v. M.Uthaman and Anor. [1995] 82 CompCas 726 (Ker). . . . . . . . . . . . . . . . . . . . 6.3 M.O.Varghese v. Thomas Stephen and Co.Limited [1970] 40 Comp Cas 1131 (Ker); AIR 1971 Ker 223. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.19 M.S. Sheriff v. The State of Madras and Ors. AIR 1954 SC 397. . . . . . . . . . . . . . . . . . . . . . . . . 4.6 Madan Gopal Dey and Anor. v. State and Anor. [1969] 39 Comp Cas 119 (Cal). . . . . . . . . . . . 4.26 Madan Mohan Upadhya and Ors. v. State of Bihar 1987 (35) BLJR 305 . . . . . . . . . . . . . . . . . 9.56 Madhavan Nambiar v. Registrar of Companies [2002] 108 Comp Cas 1 (Mad). . . . . . . . . . . . 7.34 Madhavrao Jiwaji Rao Scindia v. Sambhajirao Chandrojirao Angre, AIR 1988 SC 709. . . . . . 8.10 Madras & Southern Mahratta Railway Co. v. Bezwada Municipality I.L.R. (1944) Ap 113 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.49 Mahakaushal Agortech Limited v State of Maharashtra and Another, MANU/ MH/1184/2008. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.8, 14.9 Maharashtra Power Development Corpn. Ltd. v. Dabhol Power Company, [2004] 120 CompCas 560 (Bom). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8 Mahmud Ali v. State of Bihar MANU/BH/0029/1986. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.59 Maksud Saiyed v. State of Gujarat [2007]1 40 CompCas 590 (SC) : [2008] 5 SCC 668 . . . 1A.24 Mannalal Khetan and Ors. v. Kedar Nath Khetan and Ors. AIR1977SC536. . . . . . . . . . . . . . . 9.50 Mau Cold Storage and Khandsari Sugar Factory (P) Limited and Ors. v. Registrar of Companies and Ors. [1985] 57 Comp Cas 37 (All). . . . . . . . . . . . . . . . . . . . . . 7.16 Mishra Dhathu Nigam Ltd v. State [1998] 92 Comp Cas 730 (AP). . . . . . . . . . . . . . . . . . . . . . 6.11 Mitsubishi Corporation v. Director of Enforcement, [2014] 126 SCL 198(Del). . . . . . . . . . . 15.46 Modern Malleables Limited and Ors. v. Sri B.R. Sinku (07.05.2010 - CALHC): MANU/WB/0228/2010. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4 Mohammad Safi v. State of West Bengal, AIR 1966 SC 69. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.68 Mohd.Hadi Raja and Ors. v. State of Bihar and Anor. [1998] 93 Comp Cas 362 (SC). . . . . . . 4.46 Mohinder Singh Gill and Anor. v. The Chief Election Commissioner, New Delhi and Ors., AIR 1978 SC 85. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.7 Morgan Stanley Mutual Fund v. Kartick Das [1994] 81 Comp Cas 318 (SC). . . . . . . . . 6.16, 6.18 Mr. Narayanan v. Adjudicating Officer, SEBI, in Civil Appeal Nos.4112 â&#x20AC;&#x201C; 4113 of 2013 . . . . 9.50 Mrs. Komal Nahata v. SEBI [2014] 125 SCL 53 (SAT). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.41 Ms. Sunitha Gupta v. SEBI, Appeal No.56 of 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.40 Mukund Kanaiyalal Patel v. Swarup Shree Yarn Private Limited [2002] 109 Comp Cas 413 (Bom) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.28 N. Narayanan v Adjudicating Officer, Securities and Exchange Board of India (2013) 12 SCC 152 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1C.6 N.H. Securities Ltd. and Ors. v Securities and Exchange Board of India and Ors, MANU/MH/3014/2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.9, 14.11 N.Narayanan v. Adjudicating Officer, SEBI, [2013] 178 CompCas 390. . . . . . . . . . . . . . . . . 13.23 Nagindas Ramdas v. Dalpatram Ichharam, AIR 1974 SC 471. . . . . . . . . . . . . . . . . . . . . . . . . . 9.44 Nathulal v. State of MP AIR 1966 SC 43. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.21 National Cotton Mills v. Asst. Registrar of Companies [1984] 56 Comp Cas 222 (Cal). . . . 1A.53 National Stock Exchange Member v. Union of India reported in [2006] 70 SCL 151 (DELHI). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.43 Natvarlal A.Jani v. N.N.Jain, Chairman and Managing Director, Prestige Foods Limited [1999] 98 Comp Cas 720 (Guj). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7 lxi

Treatise on contraventions under Companies Act, Securities Laws & FEMA Nestle India Limited and Ors. v. State and Anor. [2000] 101 Comp Cas 263 (Del). . . . . . . . . . . 6.3 New Central Jute Mills Co.Ltd., v Deputy Secretary, Ministry of Finance and Ors., 1966 36 CompCas 512 Cal, 70 CWN 280 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.23 New India Assurance Company Ltd. v. Shanti Mathur: 1975 (2) SCC 840. . . . . . . . . . . . . . . . 9.65 Niranjan Singh and Anor. v. Prabhakar Rajaram Kharote and Ors., 1980 CriLJ 426. . . . . . . . . 4.60 Nirma Industries Ltd. and Anor. v. SEBI (2013) 8 SCC 20. . . . . . . . . . . . . . . . . . . . . . . . . . . 13.16 Noted Infotech P. Ltd. v. SEBI, (2008) 8 SCC 431 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.2 Nutech Agros Limited and Ors. v. Ch.Mohan Rao and Anor. [2002] 109 Comp Cas 487 (AP). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.31 Official Liquidator, Supreme Bank limited v. P.A.Tendolkar (dead) by L.INR AIR 1973 SC 1104. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6 Officine Lovata S.p.a. v. Ajay Kumar Aggarwal and Anor. 2005 (30) PTC 465 (Mad). . . . . 1B.35 Om Prakash Kapila v. State of Bihar and Ors., 1997 (1) BLJR 433. . . . . . . . . . . . . . . . . . . . . . 9.60 Om Prakash Khaitan v. Shree Keshariya Investment Ltd and Ors. (01.03.1977 DELHC) : MANU/DE/0091/1977. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.33 Omiyo Ranjan Jaiswal and Ors. v. State of Bihar and Ors. [2012] 170 CompCas 14 (Jharkhand). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.26 Oriental Power Cables Ltd and Ors. v. Registrar of Companies and Ors. [1995] 83 Comp Cas 447 (Raj). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.34 Osian’s Connoisseurs of Art (P.) Ltd. vs. Securities and Exchange Board of India (13.10.2015 - SEBI/SAT): MANU/SB/0250/2015. . . . . . . . . . . . . . . . . . . . . 10.10, 10.20 Osian’s-Connoisseurs of Art Private Limited, In Re:, (15.04.2013 - SEBI/SAT) : MANU/SB/0009/2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.19 Overseas Textiles Corporation v. Special Director, Enforcement Directorate [2013] 117 SCL 118 (Bom) (Mag). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.18 P K Palanisamy v Doraisamy, (1993) 1 Crimes 923(Mad). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.22 P. Sengupta and Anor. v. Registrar of Companies and Anor. [1991] 72 Comp Cas 421 (Cal). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12, 8.15 P. Vaman Roa v. Secretary to Government and Anor. [1998] 93 Comp Cas 486 (AP). . . . . . . . 7.21 P.Venkatakrishna Reddy v. Registrar of Companies [1996] 85 Comp Cas 572 (Mad) . . . . . . . . 5.2 Pahuja Takii Seed Ltd. & Ors. v The Registrar of Companies, NCT of Delhi & Haryana, Company Appeal (AT) No. 80 of 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.35 Pancard Clubs Ltd. and Ors. v SEBI, MANU/SB/0055/2017 . . . . . . . . . . . . . . . . . . . . . 10.4, 10.5 Panther Fincap and Management Services Ltd v. Union of India (UOI) through the Department of Company Affairs, [2006] 134 Comp Cas 773 (Bom). . . . . . . . . . 5.14, 9.38 Parvinderjit Singh and Anor. v. State (U.T. Chandigarh) and Anor. AIR 2009 SC 502. . . . . . . 4.60 Peirce Leslie and Co. Limited v. Miss. Violet Ouchterlony Wapshare and Ors.; [1969] 39 Comp Cas 808 (SC) : 1969] 3 SCR 203. . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8, 1A.16 Pepsico India Holdings Private Limited v. Food Inspector and Anor. [2011 ]161 CompCas 197 (SC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.24 Polaris Software Lab Limited, (ADJUDICATION ORDER NO: EAD-6/PMRR/AO/60/2018-19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.43 Pooja Menghani v. SEBI, [2014] 125 SCL 391 (SAT). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.31 Pradip Kumar Khaitan and Ors. v. Registrar of Companies, Orissa [2012] 171 Comp Cas 49 (Orissa). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.21 Pratik Minerals Pct. Ltd. v SEBI, (SAT Appeal No. 303 of 2016). . . . . . . . . . . . . . . . . . . . . . . 13.4

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Table of cases Pravin Jha and Ors. v. State of Uttar Pradesh [2001] 44 CLA 145 (All) . . . . . . . . . . . . . . . . 1A.53 Premchand Shah and Others v. SEBI, [2011] 106 SCL 364 (SAT) . . . . . . . . . . . . . . . . . . . . . 11.28 Prestolite of India Limited, In re: (1990) 69 Comp Cas 556 (P&H) . . . . . . . . . . . . . . . . . . . . . 7.14 Progressive Aluminium Limited and Ors. v. Registrar of Companies and Anor. [1997] 89 Comp Cas 147 (AP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11 Province of Bombay v. Kusaldas S. Advani and Ors. AIR 1950 SC 222. . . . . . . . . . . . . . . . . 13.11 Puneet Enterprises v. Assistant Director, Enforcement Directorate, Ahmedabad, [2014] 127 SCL 350 (ATFE-New Delhi). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.22 Purbanchal Road Service v The State (13.09.1990 - GUHC) : MANU/GH/0058/1990 . . . . . . 5.43 R.C. Kohli v. Sports Goods Export Promotion Council, MANU/DE/2215/2014/ LAWS(DLH)-2014-4-112. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.39 R.P. Kapur v. State of Punjab, AIR 1960 SC 866. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7 R.S.Nayak v. A.R.Antulay, AIR 1986 SC 2045 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.38 Rabindra Chamaria and Ors. v. Registrar of Companies and Ors. [1992] 73 Comp Cas 257 (SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 Radheshyam Kejriwal vs. State of West Bengal and Ors. (18.02.2011 - SC) : MANU/SC/0134/2011. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.53, 11.5 Radhey Shyam Khemka and Anor. v. State of Bihar [1993] 77 Comp Cas 356 (SC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1C.2, 6.8, 8.15 Radhey Shyam Khemka and Anor. v. State of Bihar, MANU/SC/0896/1993. . . . . . . . . . . . . . 5.14 Raj Kumar Damani v. Director of Enforcement, Enforcement Directorate [2014] 123 SCL 316 (ATFE-NewDelhi). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.46 Raj Kumar Shivhare v. Assistant Director, Directorate of Enforcement and anor. MANU/SC/0249/2010 : (2010) 4 SCC 772. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.32 Raja Narayanlal Bansilal v. Maneck Phiroz Mistry [1961] 1 SCR 417. . . . . . . . . . . . . . . 5.6, 9.37 Rajaram Khandige v. State of Karnataka and Anor., [2008] 145 Comp Cas 451 (Karn). . . . . . 7.36 Rajasthan Financial Corporation and Ors. v The Official Liquidator and Ors [2005]128 Comp Cas 387(SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.74 Rajkot Municipal Corporation v. Manjulben Jayantilal Nakum [1997] 9 SCC 552. . . . . . . . . . . 7.5 Rakesh Kumar and Anor. v. Registrar of Companies and Ors. [1995] 82 Comp Cas 681 (P&H). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.15 Ram Kaashyap Investment Ltd v. SEBI, [2013] 118 SCL 337 (SAT) . . . . . . . . . . . . . . 13.8, 13.37 Ram Kaashyap Investment Ltd v. SEBI, MANU/SB/0064/2014. . . . . . . . . . . . . . . . . . . . . . . . 9.32 Ram Narain Sons Ltd. v. Assistant Commissioner of Sales Tax MANU/ SC/0084/1955 : [1955] 2 SCR 483 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.48 Ram Preeti Yadav v. U.P. Board of High School and Intermediate Education and Ors. AIR 2003 SC 4268 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1C.3 Rama Narang v. Ramesh Narang and Ors. [1995] 83 CompCas 194 (SC) . . . . . . . . . . . . . . . . 4.83 Ramakrishna Flour and Besan Mills Private Limited v. Company Registrar, MP, [1994] 79 CompCas 528(MP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.10 Ramel Industries Ltd. and Ors., In Re: (07.07.2017 - SEBI/SAT) : MANU/SB/0130/2017. . 10.33 Ranger v. Great Western Ry. Co. ([1854] 5 H.L.C.72. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.10 Ratan Jasarasaria v. Deputy Director, Enforcement Directorate, Calcutta, MANU/AE/0022/2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.45 Regal (Hastings) Limited, v. Gulliver And Others, HL/PO/JU/4/3/973. . . . . . . . . . . . . . . . . . 1A.9

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Treatise on contraventions under Companies Act, Securities Laws & FEMA Registrar of Companies cum Official Liquidator v Gyan Chand Agarwal, Company Appeal (AT) No. 249 of 2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.17 Registrar of Companies v. Bharat Produce Co. Ltd. and Ors. [1980] 50 CompCas 250 (Cal). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.20, 1A.51 Registrar of Companies v. Rajshree Sugars and Chemicals Limited and Ors. [2000] 101 Comp Cas 271 (SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.8, 6.4 Registrar of Companies, Orissa v. Orissa Paper Products Ltd and Ors. [1988] 63 Comp Cas 460 (Ori). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.41 Reliance Industries Limited v. SEBI, [2014] 127 SCL 30 (SAT). . . . . . . . . . . . . . . . . . 12.8, 12.55 Reliance Industries Ltd and Ors. In re [1997] 89 Comp Cas 67 (CLB-Western Region Bench). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9, 2.25 Rohtas Industries v. S. D. Agarwal and Ors. (16.12.1968 - SC) : MANU/SC/0020/1968. . . . . 5.20 Roofit Industries Ltd v. BSE Ltd, MA No. 373/2017 in C.P. No. 1055/I&BP/2017 . . . . . . . . 11.45 Rose Valley Hotels and Entertainments Ltd v. State of Assam, [2015] 129 SCL 367 (Gauhati). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.23 Royal Twinkle Star Club Private Ltd. and Ors. v. Securities and Exchange Board of India (03.02.2016 - SEBI/SAT) : MANU/SB/0051/2016. . . . . . . . . . . . . . . . . . . 10.20 Rustom Cavasjee Cooper v. Union of India [1970] 40 Comp Cas 325 (SC). . . . . . . . . . . . . . 1A.3 S. Pandit, In re: [1990] 68 Comp Cas 129 (Bom). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.18 S. Parthasarthi v. State of Andhra Pradesh, AIR 1973 SC 2701. . . . . . . . . . . . . . . . . . . . . . . . . 5.15 S. Satyanarayana v. Energo Masch Power Engineering and Consulting Pvt. Ltd. and Ors. [2015] 190 CompCas 1 (SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.18 S. Thamizharasan v. The State of Tamil Nadu, 2010 â&#x20AC;&#x201C; 2 MLJ (Crl). . . . . . . . . . . . . . . . . . . . . . . 4.8 S.B.I. Home Finance Ltd. and Kidambi Srinivash Varda Krishnamachari v. Regional Director, Department of Company Affairs [2007] 138 CompCas 106 (Cal). . . . . 7.16 S.B.Shankar v. Amman Steel Corporation [2002] 110 CompCas 50 (Mad). . . . . . . . . . . . . .1A.47 S.C.Bhatia v. P.C.Wadhawa [1998] 92 Comp Cas 511 (P & H). . . . . . . . . . . . . . . . . . . . . . . . . 6.13 S.K. Mittal and Ors. v. Union of India (UOI) and Anr. (26.05.2009 - DELHC) : MANU/DE/0757/2009. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.43 S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Anor [2005] 127 CompCas 563 (SC) . . . . . 6.23 S.P. Chengalvaraya Naidu v. Jagannath, AIR 1994 SC 853. . . . . . . . . . . . . . . . . . . . . . . . . . . 1C.7 S.P. Gupta and Ors. v. The State (NCT of Delhi) and Anor., [2006] 132 Comp Cas 402 (Delhi) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.14 S.P.Chopra & Co. (Muktsar Electric Supply Co.Ltd.), In re: [1966] 36 Comp Cas 144 (Punj). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.24 S.P.Punj and Ors. v. Registrar of Companies [1991] 71 Comp Cas 509 (Del). . . . . . . . . . . . . . . 6.5 S.S.Dhanoa v. Municipal Corporation of Delhi [1981] 3 SCC 438; AIR 1981 SC 1395. . . . . . 4.46 S.S.Rao v. Inspector of Police [2002] 109 Comp Cas 406 (Mad) . . . . . . . . . . . . . . . . . . . . . . . 4.72 S.Santosh and Anor. v. Asst. Registrar of Companies [2011] 163 ComCas 467 (Mad)]. . . . . . . 6.7 Sabero Organics Gujarat Limited, MANU/SB/0014/2015, In re. . . . . . . . . . . . . . . . . . . . . . . 11.20 Sachida Nand Singh v. State of Bihar, AIR 1998 SC 1121. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.52 Sahara India Real Estate Corpn. Ltd v. SEBI [2013] 1 SCC 1. . . . . . . . . . . . . . . . . . . . . 9.3, 13.25 Sahara India Real Estate Corporation Limited and Ors. v. SEBI and Anor., [2012] 174 Comp Cas 154 (SC) / AIR 2014 SC 3241. . . . . . . . . . . . . . . . . . . . . . . . 9.13, 13.25 Sahara India Real Estate Corporation Ltd. and Ors. v Securities and Exchange Board of India and Anr. (31.08.2012 - SC) : MANU/SC/0702/2012 . . . . . . . . . . . . . . . . . . 6.14 lxiv

Table of cases Salauddin Abdulsamad Shaikh v. State of Maharashtra, AIR 1996 SC 1042. . . . . . . . . . . . . . . 4.59 Sandeep Badriprasad Agarwal v. SEBI and Ors. [2014] 123 SCL 22 (Bom) / (2013) 39 Taxman 139 (Bom). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.7 Sangram Singh v. Election Tribunal AIR 1955 SC 425. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12 Sanjay Modi v. Registrar of Companies [1995] 82 Comp Cas 651 (Raj). . . . . . . . . . . . . . . . . . 7.18 Sanjay Somani and Ors. v. Registrar of Companies, West Bengal [2011] 167 Comp Cas 367 (Cal). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5, 7.28, 7.35 Saradha Realty India Ltd. and Ors., In Re: (11.01.2017 - SEBI/SAT) : MANU/ SB/0003/2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.33 Satish Dayal v. Mackinnon Mackenzie & Co. Ltd [1988] 64 Comp Cas 750 (Del) . . . . . . . . . 4.20 Say-Dee v. Farah Constructions Pty Ltd [2005] NSWCA 309. . . . . . . . . . . . . . . . . . . . . . . . 1A.19 Scope Vyapar (P) Ltd v. SEBI, [2014]125 SCL 195(SAT). . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.32 SEBI and Ors. v Gaurav Varshney and Ors., [2016] 133 CLA 294 (SC). . . . . . . . . . . 10.18, 10.35 SEBI v. Ajay Agarwal, [2010] 98 SCL 424 (SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.14 SEBI v. Ajay Agarwal, AIR 2010 SC 3466 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.34 SEBI v. Akshya Infrastructure Pvt. Ltd. [2014] 184 CompCas 248 (SC) . . . . . . . . . . . . . . . . 13.34 SEBI v. Cabot International Capital Corporation, [2005] 123 CompCas 841(Bom). . . . . . . . 11.15 SEBI v. Gold Multifab Ltd, [2013] 121 SCL 10(SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.12 SEBI v. Kunnamkulam Paper Mills Ltd. and Ors. [2013] 178 CompCas 371 (Ker). . . . . . . . . 13.8 SEBI v. Pan Asia Advisors Ltd. and Ors. [2015] 191 CompCas 410 (SC). . . . . . . . . . . . . . . . 13.18 SEBI v. Saikala Associates Ltd. AIR 2009 SC 2540 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.11 Securities and Exchange Board of India and Ors. v Gaurav Varshney and Ors., [2016]133CLA294(SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.29, 8.4 Securities and Exchange Board of India v Pan Asia Advisors Ltd. and Ors. (06.07.2015 - SC) : MANU/SC/0761/2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.11 Selangor United Rubber Estates Ltd v. Cradock and Ors, [1968] 1 W.L.R. 1555. . . . . . . . . . 1A.9 Servehit Housing and Infrastructure India Ltd, (ADJUDICATION ORDER NO. EAD-7/BJD/BKM/2018-19/1669-1674). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.48 Sharad Kumar Singh and Ors. v. Registrar of Companies [2011] 162 Comp Cas 352 (Raj) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.38 Share India Securities Ltd. v. SEBI, MANU/SB/0004/2012 . . . . . . . . . . . . . . . . . . . . . . . . . . 11.42 Shivkumar Dalmia and Ors. v. Mangalchand Hukmichand Industries (M.P.) Pvt. Ltd. and Ors. [1996] 86 Comp Cas 366 (MP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.37 Shree Dharma Sugar Industries (P) Limited and Ors. v. Registrar of Companies [1989] 66 Comp Cas 337 (Kar). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.52 Shree Rama Multi Tech Limited v The HSBC Private Equity India fund Limited - MANU/CL/0010/2004. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.19 Shri Gauri Shankar Kayan v. East India Investment Co. Private Ltd. and Ors. (25.04.2005 - CLB) : MANU/CL/0025/2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.31 Shri Umashankar Rath v Director General-cum-Inspector General of Police, Vigilance and Ors. (20.10.1995 - ORIHC) : MANU/OR/0259/1995 . . . . . . . . . . . . . . . . . . 5.44 Siddhartha Sen and Anor. v. Registrar of Companies, Orissa [2012]172 Comp Cas 72(Ori). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.53, 6.5 Simple infrastructures Limited and Banwarilal Bajoria and Ors. v. Registrar of Companies, West Bengal [2014] 182 Comp Cas 243 (Cal). . . . . . . . . . . . . . . . . . . . . . . . . . 7.23 Sitaram Biyani and Anor. v. Registrar of Companies [1985] 58 Comp Cas 870 (Cal) . . . . . . . 7.19 Sivandhi Adityan v. Additional Registrar of Companies [1995] 83 Comp Cas 616 (Mad). . . . . 6.9 lxv

Treatise on contraventions under Companies Act, Securities Laws & FEMA Slee v Bloom, 19 Johns 456, 1822, WL 1808 (N.Y.1822). . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.7 Smt. Gerty Suvarna and Anor v. Union of India and Ors. [1998] 92 CompCas 782 (Kar) . . . 13.40 Smt. Nagawwa v. Veeranna Shivalingappa Konjalgi, AIR 1976 SC 1947. . . . . . . . . . . . . . . . . . 8.8 Smt.Krupa Sanjay Soni v. SEBI [2014] 125 SCL 233 (SAT). . . . . . . . . . . . . . . . . . . . . . . . . . 11.41 South Eastern Coalfields Ltd. v. State of MP and Ors. AIR 2003 SC 4482. . . . . . . . . . . . . . . 11.38 Spencer & Co. v. CWT, [1969] 72 ITR 33 (Mad) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.3 Sri Krishna Parshad v. Registrar of Companies, Delhi [1978] (48) Comp Cas 397 (Del). . . . . 7.10 Srikishan Agarwal vvv. DCIT, Circle-Sikar (06.05.2016 - ITAT Jaipur: MANU/ IJ/0124/2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.47 Standard Chartered Bank and Ors. v Directorate of Enforcement and Ors. [2006]130CompCas341(SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.52 Standard Chartered Bank and Ors. v. Directorate of Enforcement and Ors AIR 2005 SC 2622. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.22 Standard Chartered Bank and Ors. v. Directorate of Enforcement and Ors. [2005] 125 CompCas 513(SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1A.28 Standard Chartered Bank v. Directorate of Enforcement [2005] 4 SCC 530. . . . . . . . . . . . . 1A.24 State Bank of India v. Madhumita Construction Private Limited [2004] 119 Comp Cas 242 (Cal). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.14 State Bank of Patiala & Ors v. S.K.Sharma 1996 AIR 1669, 1996 SCC (3) 364. . . . . . . . . . . 13.10 State of Bihar v. Deokaran Nenshi, AIR 1973 SC 908. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.49 State of Bihar v. Ramesh Singh [1978] 2 SCR 257 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.39 State of Bihar v. Ramesh Singh, MANU/SC/0139/1977: 1977CriLJ1606. . . . . . . . . . . . . . . . . 4.25 State of Gujarat v Ramprakash P. Puri and Ors., [1969] RD-SC 288 (16 October 1969) . . . . 11.51 State of Gujarat v. Ramprakash P. Puri and Ors. and in the State of Gujarat v. Satu Khayaldas and Ors. (1969) 3 SCC 156. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.51 State of Gujarat v. Shyamlal Mohanlal, AIR 1965 SC 1251 . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.41 State of Haryana v. Bhajan Lal, AIR 1992 SC 604. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8 State of Haryana v. Brij Lal Mittal and Ors. (1998) 5 SCC 343. . . . . . . . . . . . . . . . . . . . . . . 1A.26 State of Karnataka v. L. Muniswamy, AIR 1977 SC 1489. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7 State of Madras v. C.V. Parekh and Anor. AIR 1971 SC 447. . . . . . . . . . . . . . . . . . . . . . . . . 1A.48 State of Maharashtra v. Jugmander Lal, AIR 1966 SC 940 . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.27 State of Mahashtra v Tapas D Neogy, [1999] 98 Comp Cas 626 (SC). . . . . . . . . . . . . . . . . . . . 5.44 State of Punjab v. Sarwan Singh, AIR 1981 SC 1054 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.10 State v. Byrraju Ramalinga Raju and Ors., MANU/OT/0002/2015. . . . . . . . . . . . . . . 1B.30, 1C.3 Subhkam Capital and Ors., In Re , MANU/SB/0172/2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.35 Suborno Bose and Zoom Enterprises Private Limited v. Appellate Tribunal for Foreign Exchange and ors, [2009] 150 Comp Cas 113 (Cal) . . . . . . . . . . . . . . . . . . . . . . . 15.21 Subrata Chattoraj v Union of India (UOI) and Ors. (09.05.2014 - SC) : MANU/ SC/0453/2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1 Sudhir Rai v. The Registrar of Companies, (2015) 2 WBLR (Cal) 549. . . . . . . . . . . . . . . . . . . 7.18 Sukhbir Saran Bhatnagar v. Registrar of Companies [1972] 42 CompCas 408(Del). . . . . . . 1A.20 Sunday Exports Ltd. v. Adjudicating Officer, SEBI, [2013] 119 SCL 326 (SAT). . . . . . . . . . 11.40 Sunil Bharti Mittal v. Central Bureau of Investigation [2015] 191 Comp Cas 177 (SC). . . . 1A.26 Supreme Bank Limited v. P.A.Tendolkar [1973] 43 Com Cases 382 (SC) . . . . . . . . . . 1A.39, 9.62 Suresh Batra and Ors. v. Securities and Exchange Board of India [2011] 166 Comp Cas 13 (Del) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.26 lxvi

Table of cases Sushil Kumar Lahiri and Ors. v. Registrar of Companies [1983] 53 Comp Cas 54 (Cal). . . . . 6.14 Swedish Match AB and Anor. v. SEBI and Anor.[2004] 122 CompCas 83 (SC). . . . . . . . . . . 13.34 T.G. Venkatesh v. Registrar of Companies (05.06.2006 - APHC) : MANU/AP/1249/2006. . . . . . . 7.36 T.P.G. Nambiar v. Registrar of Companies [1998] 92 Comp Cas 564 (Kar). . . . . . . . . . . . 6.2, 8.3 T.R.Bhagat v. Director General of Central Excise and Ors. [2012] 170 CompCas 61(Del) . . . 6.26 T.Subramania Achari, In re , AIR 1955 Mad 129. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.67 T.V.Mathew v. Nadukkara Agro Processing Co. Limited and Ors. [2002] 108 Comp Cas 130 (Ker) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.53 Thakar Gobind Singh v. Merchant Mohani Flour Mills Limited [1944] 14 Comp Cas 184. . . . . . . 7.5 Thakur Dan Singh Bist v. Registrar of Companies AIR 1960 (All) 160 . . . . . . . . . . . . . . . . . . 7.10 The Bank of Rajasthan Ltd. v. Rajasthan Breweries Ltd. and Ors. [2007] 140 CompCas 622(CLB) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.21 The Bihar State Co-operative Marketing Union Ltd. v. Uma Shankar Sharan and Anor., AIR 1993 SC 1222. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.39 The Chairman, SEBI v. Shriram Mutual Fund and Anor. AIR 2006 SC 2287. . . . . . . 11.14, 1A.22 The Commissioner of Income Tax, Mysore, Travancore-cochin and Coorg, Bangalore v. The Indo Mercantile Bank Limited AIR 1959 SC 713. . . . . . . . . . . . . . . . . . . 9.48 Thermis Agencies v. Union of India, AIR2007Bom144. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.22 Thirumalai Chemicals Limited v. Respondent: Union of India (UOI) and Ors [2011] 102 CLA 269 (SC), : [2011]163 CompCas 380(SC), : AIR 2011 SC 1725. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.27, 15.42, 15.45 Thirumalai Chemicals Ltd. vs. Addl. C.C., Enforcement, Mumbai (16.12.2015 - ATFE):MANU/AE/0003/2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.32 Thomas Gerrard & Son Ltd, In Re: [1969] 39CompCas79 (Ch.D). . . . . . . . . . . . . . . . . . . . . 1B.9 Timbor Home Ltd (Adjudication Order/SS/AS/2018-19/1928). . . . . . . . . . . . . . . . . . . . . . . . 11.36 Tristar Consultants v. Customer Services India Private Limited 2007 CLC 1407 (Del). . . . . . . 7.7 Tri-sure India Limited, In re: [1983] 54 Comp Cas 197 (Bom). . . . . . . . . . . . . . . . . . . . 7.17, 7.18 Tulip Star Hotels Limited v. Special Director of Enforcement, [2014]124SCL160(SC). . . . . . . . 15.20 Tulshidas Kanolkar v. State of Goa [2003] 8 SCC 590 . . . . . . . . . . . . . . . . . . . . . . . . . 1A.38, 9.61 Tumlare Software Services Private Limited v. Magic Software Services, 92 (2001) DLT 572. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1B.34 U A Sumathy and another v Dig Vijay Chit Fund (P) Limited, [1983]53CompCas493(Ker) . . . . . 5.18 Udai Shankar Awasthi v. State of U.P. and Anor. (2013) 2 SCC 435. . . . . . . . . . . . . . . . . . . 1A.51 Uma Shankar Gopalika v. State of Bihar and Anor. (2005)10SCC336 . . . . . . . . . . . . . . . . . . . . 8.6 Unimers Limited v. Smt.Renu Jain [1998] 92 Comp Cas 841 (Raj) . . . . . . . . . . . . . . . . . . . 1A.51 Union Carbide Corporation v. Union of India [1991] 4 SCC 584 . . . . . . . . . . . . . . . . . . . . . . 11.24 Union of India (UOI) and Ors. v. Dharamendra Textile Processors and Ors., (2008) 13 SCC 369 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.15 Union of India v. Jesus Sales Corporation, (1996) 4 SCC 69. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.8 Union of India v. Tech Mahindra Ltd. [2015] 124 CLA 65(AP) . . . . . . . . . . . . . . . . . . . . . . . . 2.43 Union of India, Ministry of Corporate Affairs and Ors. v Gitanjali Gems Ltd. and Ors. (12.07.2018 - NCLAT) : MANU/NL/0148/2018 . . . . . . . . . . . . . . . . . . . . . . . . . . 5.52 Union of India, Ministry of Corporate Affairs v Gitanjali Gems Ltd. and Ors. (23.02.2018 - NCLT - Mumbai) : MANU/NC/1471/2018 . . . . . . . . . . . . . . . . . . . . . . . . . . 5.52 United Western Bank Ltd. v. Khaitan Hostombe Spinels Ltd. [2008] 145 Comp Cas 612 (All) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7 lxvii

Treatise on contraventions under Companies Act, Securities Laws & FEMA Uniworth Textiles Ltd. v. Asset Reconstruction Co. (India) Ltd. (06.09.2012 CALHC) : MANU/WB/1160/2012. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.30 Upendra Kumar Joshi v. Manik Lal Chatterjee [1982] 52 Comp Cas 177 (Pat) . . . . . . . . . . . . 6.19 Usha (India) Ltd v. SEBI, [2014] 128 SCL 342 (SAT). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3 UW International Training & Education Centre for Health Private Limited, Re: , C.A. No. 16/59/2017 (NCLT Delhi) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16 V. Hariprasad v Commissioner of Income Tax, Manu/AP/0144/1987. . . . . . . . . . . . . . . . . . . . . 3.1 V. Sugandhalal v. St. Maryâ&#x20AC;&#x2122;s Finance Limited [2001] 107 Comp Cas 451 (Ker). . . . . . . . . . . . 2.44 V. Thangavel v. Associated Business Credits Limited (in Liqudation) and Ors. [2009] 149 CompCas 543 (Mad). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.9 V.L.S. Finance Ltd. v. Union of India (UOI) and Ors., [2013] 178 CompCas 348 (SC) : AIR 2013 SC 3182. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5, 2.27 V.M.Modi v. State of Gujarat and Anor. [1997] 88 Comp Cas 871 (Guj) . . . . . . . . . . . . . . . . . . 6.9 V.R.S. Manikumar v. The Official Liquidator High Court & Ors., [2013] 176 CompCas 547(Mad). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.36 V.V. Purie v E.M.C. Steel Ltd. and Ors. (22.12.1978 - DELHC), [1980] 50 CompCas 127 (Del). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.19 Vesa Holdings P. Ltd. and Ors. v. State of Kerala and Ors. [2015] 189 Comp Cas 580 (SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.18 Videocon Industries Ltd. and Ors. v State of Maharashtra and Ors., AIR 2016 SC 2843. . . . . 11.5 Videocon International Ltd. v. SEBI, [2015] 188 CompCas 566 (SC). . . . . . . . . . . . . . . . . . . 13.16 Vikas Agarwal v. Serious Fraud Investigation Office (06.02.2019 - DELHC) : MANU/DE/0606/2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.23 Vishnu Prakash Bajpai v. SEBI, decided on 10 February 2010, [2010] 154 CompCas 147 (Delhi) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.34 Vishwa Mitter of Vijay Bharat Cigarette Stores, Dalhousie Road, Pathankot v. O.P. Poddar and Ors. AIR 1984 SC 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 Visram Financial Services (P) Limited v. Rajendran and Anor., [2015] 188 CompCas 175 (Mad). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.12, 7.27 Viswapriya Financial Services and Securities Limited and Ors. v. Registrar of Companies [2002] 108 Comp Cas 160 (Mad). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13 VKC Credit and Forex Service Private Limited v. Director, Enforcement Directorate, [2011] 106 SCL 104 (ATFFE-New Delhi). . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.23 Walchandragar Industries Ltd v. Ratanchand Khimchand Motishaw, AIR 1953 Bom 285. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.38, 9.61 William C. Leitch Bros., Re, [1932] 2 Ch. 71 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.20 Wynston Alexander Cecil Chirnside and Anor. v. Richard Elmore Fay [2006] NZSC 68. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1A.18 Yatra Art Fund, In Re: (06.11.2015 - SEBI/SAT) : MANU/SB/0180/2015. . . . . . . . . .10.6, 10.10 Yogendra Singh v. Ranbir Sharma and Anor. [2011] 165 CompCas 69(All). . . . . . . . . . . . . . . 6.26 Zandu Pharmaceutical Works Ltd. and Ors. v. Mohd. Sharaful Haque and Anor. (2005) 1 SCC 122 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3 Zee Tele Films Limited and Ors. v. State of Andhra Pradesh and Anor. [2002] 110 Comp Cas 884 (AP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.19

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Ready Reckoner to compoundable and non-compoundable1 offences under the Companies Act, 2013 [*Â 2Â *3] Sl. No 1.

Section Subject 8

1 2 3

Punishment for company Fine, of not less than ten lakh rupees but which may extend to one crore rupees Compoundable

Punishment for Officers in Default Failure to comply Imprisonment for a term which with the provisions may extend to three years or with of Section 8 relating Fine, of not less than twenty-five to formation of thousand rupees but which may companies for extend to twenty-five lakh rupees, pursuing charitable or with both. objects or failure Compoundable to comply with the If it is proved that the affairs of provisions Section 8 the company were conducted by such Companies fraudulently, every officer in default is liable for the punishment prescribed under Section 447. In case, Section 447 is invoked, the offence is compoundable only if the value of the fraud is less than Rs.10 Lakhs or 1% of the turnover of the company and the fraud does not involve any public interest. Failure of a company Fine of one thousand Fine, of not less than five to comply with any rupees for every day thousand rupees but which may direction of Central during which the extend to one lakh rupees. Government to rectify default continues. Compoundable the name of company Compoundable that is identical with or too nearly resembling the name of a company already registered or failure to comply with any direction of Central Government in pursuance of an application by the registered proprietor of a trademark that name of the company in question is identical with or too nearly resembles.

Others Directors who may not be officers in default are also punishable to the same extent as officers in default.

_______

Offences punishable with imprisonment only or imprisonment and fine are not compoundable. Offences inviting penalty have been discussed in detail in Chapter 03. A list of offences inviting punishment for fraud under Section 447 of Act has been given in Chapter 01C.

RR-1

Section

Sl. No

RR-2

Issuing duplicate certificate of shares with intent to defraud.

Failure to keep monies received from public on application for subscription to securities in a separate bank account and utilizing such monies except for adjustment against allotment of securities if permitted to be listed in the stock exchanges named in the prospectus or for repayment of the monies within the prescribed time if securities could not be allotted.

Issuing prospectus in contravention of the provisions of this Section

Subject

Liable for the punishment prescribed under Section 447. The offence is compoundable only if the value of the fraud is less than Rs.10 Lakhs or 1% of the turnover of the company and the fraud does not involve any public interest.

--------------

_______

Imprisonment for a term which may extend to one year or with Fine, of not less than fifty thousand rupees but which may extend to three lakh rupees, or with both. Compoundable

Fine, of not less than five lakh rupees but which may extend to fifty lakh rupees. Compoundable

Fine, of not less than five times the face value of the shares involved in the issue of the duplicate certificate but which may extend to ten times the face value of such shares or rupees ten crores whichever is higher. Compoundable

Every person who is knowingly a party to the issue of a prospectus in contravention of the provisions of Section 26 is punishable with imprisonment for a term which may extend to three years or with Fine, of not less than fifty thousand rupees but which may extend to three lakh rupees, or with both. Compoundable

Others

_______

Punishment for Officers in Default

Fine, of not less than fifty thousand rupees but which may extend to three lakh rupees Compoundable

Punishment for Company

Treatise on contraventions under Companies Act, Securities Laws & FEMA

Section

56(6)

Sl. No

Failure to comply with the order of the National Company Law Tribunal [NCLT] relating to refusal of registration of transfer or transmission of securities.

Deceitfully personating as an owner of any security or interest in a company, or of any share warrant or coupon issued and obtains or attempts to obtain any such security or interest or any such share warrant or coupon, or receives or attempts to receive any money due to any such owner.

Default in complying with the provisions of sub-sections (1) to (5) of this section relating to transfer and transmission of securities. [For instance, delay in delivering certificates for shares, securities or debentures]

Default in complying with the provisions of this Section relating to variation of shareholders’ rights

Subject

------------

Every person who contravenes any such order is punishable with imprisonment for a term which shall not be less than one year but which may extend to three years and with Fine, of not less than one lakh rupees but which may extend to five lakh rupees. Not Compoundable

Every person who impersonates is punishable with imprisonment for a term which shall not be less than one year but which may extend to three years and with Fine, of not less than one lakh rupees but which may extend to five lakh rupees. Not Compoundable

_____

Fine, of not less than ten thousand rupees but which may extend to one lakh rupees. Compoundable

Fine, of not less than twenty-five thousand rupees but which may extend to five lakh rupees. Compoundable -------------

--------------

Others

Imprisonment for a term which may extend to six months or with Fine of not less than twenty-five thousand rupees but which may extend to five lakh rupees, or with both. Compoundable

Punishment for Officers in Default

Fine, of not less than twenty – five thousand rupees but which may extend to five lakh rupees. Compoundable

Punishment for Company

Ready Reckoner to compoundable and non-compoundable offences under…

RR-3

Section

66(11) r/w (4)

71(11)

Sl. No

10.

11.

RR-4

12.

13.

14.

Failure to comply with order of NCLT in relation to redemption of debentures

Failure to comply with the provisions of this Section relating to (buy back) purchase of its own securities including failure to comply with regulations made by the Securities and Exchange Board of India in relation to buy-back of securities listed in stock exchanges

Failure to comply with the provisions of this Section relating to (buy back) purchase by company of its own shares without effecting consequent reduction of share capital and failure to comply with the provisions of this Section relating to giving of loans for purchase of its shares.

Failure to publish order of confirmation of NCLT relating to reduction of share capital

Failure to comply with any order of NCLT directing the rectification of register of members or setting right contravention of Securities Laws

Subject

--------------

Fine, of not less than one lakh rupees but which may extend to three lakh rupees Compoundable

Imprisonment for a term which may extend to three years or with Fine, of not less than two lakh rupees but which may extend to five lakh rupees, or with both. Compoundable

Imprisonment for a term which may extend to three years or with Fine, of not less than one lakh rupees but which may extend to three lakh rupees, or with both. Compoundable

Imprisonment for a term which may extend to three years and with Fine, of not less than one lakh rupees but which may extend to twenty-five lakh rupees. Not Compoundable

--------------

Fine, of not less than five lakh rupees but which may extend to twenty-five lakh rupees. Compoundable Fine, of not less than one lakh rupees but which may extend to twenty-five lakh rupees Compoundable

Imprisonment for a term which may extend to one year or with Fine, of not less than one lakh rupees but which may extend to three lakh rupees, or with both. Compoundable

Punishment for Officers in Default

Fine, of not less than one lakh rupees but which may extend to five lakh rupees Compoundable

Punishment for Company

--------------

Others

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Section

76A

Sl. No

15.

16.

Accepting deposits from members of a company or from public in contravention of the provisions of Section 73 / Section 76 or failure to repay deposits with interest thereon within the time limit prescribed or within such extended time as may be permitted by NCLT.

Failure to repay deposits, accepted before the commencement of the Act, within the time limit prescribed under sub-section (1) of this Section or any part thereof or interest thereon.

Subject

Fine, of not less than one crore rupees or twice the amount of deposit accepted by the company, whichever is lower but which may extend to ten crore rupees. Compoundable [This punishment is in addition to the obligation to repay the amount of deposit or part thereof and the interest due.]

Fine, of not less than one crore rupees but which may extend to ten crore rupees. Compoundable [This punishment is in addition to the obligation to repay the amount of deposit or part thereof and the interest due.]

Punishment for Company

Imprisonment which may extend to seven years and with Fine, of not less than twenty-five lakh rupees but which may extend to two crore rupees, or with both. Not Compoundable If it is proved that the contravention has taken place with the officer who is in default permitting the same knowingly or wilfully with the intention to deceive the company or its shareholders or depositors or creditors or tax authorities, every such officer is liable for the punishment prescribed under Section 447. The offence is compoundable only if the value of the fraud is less than Rs.10 Lakhs or 1% of the turnover of the company and the fraud does not involve any public interest.

Imprisonment which may extend to seven years or with Fine, of not less than twenty-five lakh rupees but which may extend to two crore rupees, or with both. Compoundable

Punishment for Officers in Default --------------

Others

Ready Reckoner to compoundable and non-compoundable offences underâ&#x20AC;Ś

RR-5

Section

86(1)

86(2)

Sl. No

17.

RR-6

18.

19.

Failure to maintain Register of Members or Security Holders or Debenture holders in accordance with the provisions of this Section.

Punishment for willfully furnishing false or incorrect particulars while registering charges and modification of charges.

Punishment for contravention of provisions of Chapter VI on Charges. [Contravention of any provisions of Chapter VI relating to Charges]

Subject

Fine, of not less than fifty thousand rupees but which may extend to three lakh rupees and where the failure is a continuing one, with a further fine which may extend to one thousand rupees for every day, after the first during which the failure continues. Compoundable

___

Fine, of not less than one lakh rupees but which may extend to ten lakh rupees

Punishment for Company

____

Imprisonment for a term which may extend to six months or with Fine, of not less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both.

Punishment for Officers in Default

--------------

If any person willfully furnishes any false or incorrect information or knowingly suppresses any material information, required to be registered with in accordance with the provisions of section 77, he shall be liable for action under Section 447. The offence is compoundable only if the value of the fraud is less than Rs.10 Lakhs or 1% of the turnover of the company and the fraud does not involve any public interest.

_____

Others

Treatise on contraventions under Companies Act, Securities Laws & FEMA

Section

89(5)

89(7)

90(10)

Sl. No

20.

21.

22.

Failure to make a declaration of beneficial interest as a significant beneficial owner

Failure to file a return showing the declarations of beneficial interest in shares within the prescribed time

Failure to furnish declaration in respect of beneficial interest in any shares.

Subject

-----

Fine, of not less than five hundred rupees but which may extend to one thousand rupees and where the failure is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the failure continues. Compoundable

_______

Punishment for Officers in Default

______

Punishment for Company

Punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than one lakh rupees but which may extend to ten lakh rupees or with both and where the failure is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the failure continues.

______

If any person commits such a failure, without any reasonable cause, he shall be punishable with fine which may extend to fifty thousand rupees and where the failure is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the failure continues. Compoundable

Others

Ready Reckoner to compoundable and non-compoundable offences under…

RR-7

Section

90(11)

124(7)

Sl. No

23.

RR-8

24.

25.

Failure to comply with the provisions of this Section relating to Unpaid Dividend Account and failure to transfer to Investor Education and Protection Fund of monies and shares liable to be transferred

Punishment for default in complying with provisions of Sections 96 to 98 or in complying with orders of NCLT

Failure on the part of the Company to (a) maintain a register of significant beneficial owners; (b) file a return of such beneficial owners with Registrar of Companies; (c) denies to provide to any member an inspection of the said register.

Subject

Fine, of not less than five lakh rupees but which may extend to twenty-five lakh rupees. Compoundable

Punishable with fine which shall not be less than ten lakh rupees but which may extend to fifty lakh rupees and where the failure is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the failure continues. Compoundable

Punishment for Company

_______

--------------

Fine, which may extend to one lakh rupees and in the case of a continuing default, with a further fine which may extend to five thousand rupees for every day during which such default continues. Compoundable Fine, of not less than one lakh rupees but which may extend to five lakh rupees. Compoundable

_____

Others

Punishment for Officers in Default

Treatise on contraventions under Companies Act, Securities Laws & FEMA

Section

127

128(6)

129

Sl. No

26.

27.

28.

Contravention of provisions of this Section pertaining to Financial Statement such as the following: (a) that the Financial statement must give a true and fair view of the state of affairs of the company; (b) that the Financial Statement must comply with accounting standards; if there is any deviation from accounting standards, it should be disclosed; (c) that the Financial Statement must be in the prescribed form;

Failure to keep and maintain proper books of account, etc., to be kept by company as per the provisions of this Section.

Punishment for failure to distribute dividends

Subject

_______

Simple interest at the rate of eighteen per cent per annum during the period for which such default continues. [This does not come under the category of punishment at all]

Punishment for Company

Every person who is a managing director, the whole-time director in charge of finance, the Chief Financial Officer is punishable with imprisonment for a term which may extend to one year or with Fine, of not less than fifty thousand rupees but which may extend to five lakh rupees, or with both. Compoundable

_______

Punishment for Officers in Default

Any other person charged by the Board with the duty of complying with the requirements of this section and in the absence of any of the officers mentioned above, all the directors are punishable with imprisonment for a term which may extend to one year or with Fine, of not less than fifty thousand rupees but which may extend to five lakh rupees, or with both. Compoundable

Any other person who has been made responsible for the maintaining proper books of account shall be liable for imprisonment for a term which may extend to one year or with Fine, of not less than fifty thousand rupees but which may extend to five lakh rupees or with both. Compoundable

Every director of the company who is knowingly a party to the default, is punishable with imprisonment which may extend to two years and with a Fine, of not less than one thousand rupees for every day during which such default continues. Not Compoundable.

Others

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RR-9

Section

134

143(15)

147(1)&(2)

Sl. No

RR-10

29.

30.

31.

Punishment for contravention of the provisions of Sections 139 to 146 (both inclusive).

Failure to report on frauds in the manner prescribed under sub-section (12) of this Section.

Failure to comply with the provisions of this Section relating to Boardâ&#x20AC;&#x2122;s report, etc.

(d) the Board of directors must lay before every annual general meeting the Financial Statement; that wherever applicable, (e) consolidated financial statement must be prepared;

Subject

Fine, of not less than twenty-five thousand rupees but which may extend to five lakh rupees. Compoundable

--------------

Fine, of not less than fifty thousand rupees but which may extend to twenty-five lakh rupees. Compoundable

Punishment for Company

Imprisonment for a term which may extend to one year or with Fine, of not less than ten thousand rupees but which may extend to one lakh rupees, or with both. Compoundable .

--------------

Imprisonment for a term which may extend to three years or with Fine, of not less than fifty thousand rupees but which may extend to five lakh rupees, or with both. Compoundable

Punishment for Officers in Default

The auditor of a company who contravenes any of the provisions of Section 139, Section 143, Section 144 or Section 145, shall be punishable with Fine, of not less than twenty-five thousand rupees but which may extend to five lakh rupees or four times the remuneration of the auditor, whichever is less.

The auditor, cost accountant or company secretary in practice who commits such a failure is punishable with Fine, of not less than one lakh rupees but which may extend to twenty-five lakh rupees. Not Compoundable, [Section 441 permits compounding of offences only for officers of the Company].

_______

Others

Treatise on contraventions under Companies Act, Securities Laws & FEMA

Section

147(3)

Sl. No

32.

Contravention of the provisions specified in sub-section (2) of this Section resulting in conviction against the auditor of a company

Subject

_______

Punishment for Company

_______

Punishment for Officers in Default

Any auditor who has been convicted of an offence under sub-section (2) of sec 147, he shall be liable to return the remuneration he had received from the company and further he is liable to pay damages to the company, statutory bodies, or authorities or to members or creditors of the company for loss arising out of incorrect or misleading statements or particulars made in his audit report. [It does not come under the category of punishment at all]

Not Compoundable [Section 441 permits compounding of offences only for officers of the Company]. If the auditor had contravened those provisions knowingly or willfully with the intention to deceive the company or its shareholders or creditors or tax authorities, he is punishable with imprisonment for a term which may extend to one year and with fine which shall not be less than fifty thousand rupees but which may extend to twentyfive lakh rupees or eight times the remuneration of the auditor, whichever is less. Not Compoundable

Others

Ready Reckoner to compoundable and non-compoundable offences underâ&#x20AC;Ś

RR-11

Section

148(8)

166(7)

Sl. No

33.

RR-12

34.

Failure to adhere to duties of directors

Failure to comply with the provisions of this Section relating to cost accounting records relating to the utilisation of material or labour or to other items of cost as part of books of account and those provisions relating to cost audits in respect of certain companies

Subject

________

Fine, of not less than twenty-five thousand rupees but which may extend to five lakh rupees. Compoundable

Punishment for Company

_______

Imprisonment for a term which may extend to one year or with Fine, of not less than ten thousand rupees but which may extend to one lakh rupees, or with both. Compoundable .

Punishment for Officers in Default

Any director who does so is punishable with Fine, of not less than one lakh rupees but which may extend to five lakh rupees. Compoundable

The cost auditor of a company who commits any such failure is punishable with Fine, of not less than twenty-five thousand rupees but which may extend to five lakh rupees. Compoundable If the auditor had contravened those provisions knowingly or willfully with the intention to deceive the company or its shareholders or creditors or tax authorities, he is punishable with imprisonment for a term which may extend to one year and with Fine, of not less than one lakh rupees but which may extend to twenty-five lakh rupees. Not Compoundable If the cost auditor gets convicted of any offence aforesaid, he is liable to return the remuneration he had received from the company and further he is liable to pay damages to the company, statutory bodies, or authorities or to any other persons for loss arising out of incorrect or misleading statements or particulars made in his cost audit report.

Others

Treatise on contraventions under Companies Act, Securities Laws & FEMA

Section

167(2)

172

178(8)

182(4)

184(4)

Sl. No

35.

36.

37.

38.

39.

Default in making requisite disclosure of interest by a director as stipulated in sub-section (1) or (2) of this Section

Making political contributions in excess of the limits prescribed or in contravention of the provisions of this Section in any other manner

Contravening the provisions of Section 177 (Audit Committee) and Section 178 (Nomination and Remuneration Committee and Stakeholders Relationship Committee)

Contravention of the provisions of Chapter XI comprising of Section 149 to 172 for which no specific punishment has been prescribed. [Please note that specific punishment is provided under Sections 157, 159, 165, 166 and 167]

Functioning as a director even after knowing that the office of director has become vacant on account of any of the disqualifications.

Subject

Imprisonment for a term which may extend to six months and with fine which may extend to five times the amount so contributed. Not Compoundable

Fine which may extend to five times the amount so contributed. Compoundable _______

_______

Imprisonment for a term which may extend to one year or with Fine, of not less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both. Compoundable

Fine, of not less than one lakh rupees but which may extend to five lakh rupees Compoundable

_______

______

Fine, of not less than fifty thousand rupees but which may extend to five lakh rupees. Compoundable

The director who commits such a default is punishable with imprisonment for a term which may extend to one year or with Fine, but which may extend to one lakh rupees, or with both. Compoundable

_______

Any person who does so is punishable with imprisonment for a term which may extend to one year or with Fine, of not less than one lakh rupees but which may extend to five lakh rupees, or with both. Compoundable

Others

________

Punishment for Officers in Default

_________

Punishment for Company

Ready Reckoner to compoundable and non-compoundable offences underâ&#x20AC;Ś

RR-13

Section

185(4)

186(13)

187(4)

188(5)

Sl. No

40.

41.

RR-14

42.

43.

Entering into or authorising the entering into contracts and arrangements with related parties in contravention of the provisions of this Section.

Contravention of the provisions of this section relating to the general stipulation that a company must hold all its investments in its own name, subject only to the exceptions specified in this Section.

Granting Loans, Guarantees, Security or making investment or acquiring securities in contravention of the provisions of this Section.

Granting Loans, Guarantees, Security to directors, and persons in whom any director is interested in contravention of the provisions of this Section.

Subject

Any director or any other employee of a company who has entered into or who authorised a contract or arrangement in violation of this section â&#x20AC;&#x201C; In the case of a Listed Company Punishable with imprisonment for a term which may extend to one year or with Fine, of not less than twenty-five thousand rupees but which may extend to five lakh rupees, or with both.

_________

Imprisonment for a term which may extend to six months or with Fine, of not less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both. Compoundable

Fine, of not less than twenty-five thousand rupees but which may extend to twenty-five lakh rupees. Compoundable ________

________

Imprisonment for a term which may extend to two years and with Fine, of not less than twenty-five thousand rupees but which may extend to one lakh rupees. Not Compoundable

Fine, of not less than twenty-five thousand rupees but which may extend to five lakh rupees. Compoundable

______

The director or the other person to whom any loan is advanced or guarantee or security is given or provided in connection with any loan taken by him or the other person, shall be punishable with imprisonment which may extend to six months or with Fine, of not less than five lakh rupees but which may extend to twenty-five lakh rupees, or with both. Compoundable

Others

Punishable with imprisonment for a term which may extend to six months or with Fine, of not less than five lakh rupees but which may extend to twenty-five lakh rupees. Compoundable

Punishment for Officers in Default

Fine, of not less than five lakh rupees but which may extend to twenty-five lakh rupees. Compoundable

Punishment for Company

Treatise on contraventions under Companies Act, Securities Laws & FEMA

Section

204(4)

206(7)

Sl. No

44.

45.

Failing to furnish any information or explanation or failing to produce any document to the Registrar or the Inspector or any other statutory authority as required under this Section.

Default in complying with the requirements and obligations relating to Secretarial Audit as stipulated in this Section

Subject

Fine which may extend to one lakh rupees and in the case of a continuing failure, with an additional fine which may extend to five hundred rupees for every day after the first during which the failure continues. Compoundable

Fine, of not less than one lakh rupees but which may extend to five lakh rupees. Compoundable

Punishment for Company

Fine, of not less than one lakh rupees but which may extend to five lakh rupees. Compoundable

Punishment for Officers in Default

_______

Any officer of the company and company secretary in practice, who contravenes this provision, is punishable with Fine, of not less than one lakh rupees but which may extend to five lakh rupees. Compoundable only for officers of the Company. Not Compoundable for persons other than Company or any officer of the Company since Section 441 permits compounding of offences only for officers of the Company.

Compoundable In the case of any other Company Punishable with Fine, of not less than twenty-five thousand rupees but which may extend to five lakh rupees. Compoundable

Others

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RR-15

Section

207(4)

217(6)

Sl. No

46.

RR-16

47.

Disobeying the directions issued by the Registrar or the Inspector under this Section.

Subject

_______

Punishment for Company

_______

Punishment for Officers in Default

The director or officer of the company who disobeys the direction issued by the Registrar or the inspector under this section is punishable with imprisonment which may extend to one year and with Fine, of not less than twentyfive thousand rupees but which may extend to one lakh rupees. Compoundable

The director or officer of the company who disobeys the directions issued by the Registrar or the inspector under this section is punishable with imprisonment which may extend to one year and with Fine, of not less than twentyfive thousand rupees but which may extend to one lakh rupees. Not Compoundable The director or officer who has been convicted of an offence under this Section is disqualified from holding any office in any company and he vacates his office automatically upon such conviction.

Others

Treatise on contraventions under Companies Act, Securities Laws & FEMA

Section

217(8)

221(2)

Sl. No

48.

49.

Removing or transferring or disposing of assets of the company in contravention of an order of the NCLT under this Section.

Any person who fails (a) to produce to an inspector or any person authorised by him in this behalf any book or paper which is his duty under sub-section (1) or sub-section (2) to produce; (b) to furnish any information which is his duty under sub-section (2) to furnish; (c) to appear before the inspector personally when required to do so under sub section (4) or to answer any question which is put to him by the inspector in pursuance of that subsection; or (d) to sign the notes of any examination referred to in sub-section (7).

Subject

Fine, of not less than one lakh rupees but which may extend to twenty-five lakh rupees Compoundable

________

Punishment for Company

Imprisonment for a term which may extend to three years or with Fine, of not less than fifty thousand rupees but which may extend to five lakh rupees, or with both. Compoundable

_________

Punishment for Officers in Default

_______

Any person who commits such a failure without reasonable cause is punishable with imprisonment for a term which may extend to six months and with Fine, of not less than twenty-five thousand rupees but which may extend to one lakh rupees, and also with a further fine which may extend to two thousand rupees for every day after the first during which the failure or refusal continues. Not Compoundable

The director or officer who has been convicted of an offence under this Section shall vacate his directorship or office as the case may be on and from the date of such conviction and upon such vacation of office, he shall stand disqualified from holding any office in any company.

Others

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RR-17

Section

222(2)

232(8)

242(8)

243(2)

Sl. No

50.

51.

RR-18

52.

53.

Knowingly acting as the managing director or other director or manager whose agreement has been terminated or set aside by an order of NCLT issued under Section 242 within a period of five years from the date of the order terminating or setting aside the agreement, without securing the leave of the Tribunal.

Making any alteration to the memorandum or articles of association in contravention of sub-section (5) of this section that is inconsistent with the alterations to the memorandum and articles of association which has been carried out by an order of the NCLT under sub-section (1) of this Section.

Transferor or Transferee Company contravening the provisions of this Section relating to merger and amalgamation of companies.

Issuing or transferring securities in contravention of an order of the NCLT under this Section.

Subject

________

_______

Imprisonment for a term which may extend to six months or with Fine, of not less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both. Compoundable

Imprisonment for a term which may extend to one year or with Fine, of not less than one lakh rupees but which may extend to three lakh rupees, or with both. [Applicable to every officer who is default of the transferor company as well as the transferee company] Compoundable

Fine, of not less than one lakh rupees but which may extend to twenty-five lakh rupees. [Applicable to both transferor company as well as the transferee company] Compoundable Fine, of not less than one lakh rupees but which may extend to twenty-five lakh rupees. Compoundable

Imprisonment for a term which may extend to six months or with Fine, of not less than twenty-five thousand rupees but which may extend to five lakh rupees, or with both. Compoundable

Punishment for Officers in Default

Fine, of not less than one lakh rupees but which may extend to twenty-five lakh rupees. Compoundable

Punishment for Company

Any person who so acts and every other director or manager of the company who is knowingly a party to such contravention, is punishable with imprisonment for a term which may extend to six months or with Fine which may extend to five lakh rupees, or with both. Compoundable

_______

Others

Treatise on contraventions under Companies Act, Securities Laws & FEMA

Section

245(7)

247(3)

Sl. No

54.

55.

Contravention of the provisions of this Section by a Registered Valuer such as failure to be impartial and do a true and fair valuation; failure to exercise due diligence and care; failure to adhere to the prescribed Rules; and undertaking valuation in relation to an asset in which he is directly or indirectly interested.

Failure to comply with any order passed by NCLT in relation to Class Action Suits

Subject

--------------

Fine, of not less than five lakh rupees but which may extend to twenty-five lakh rupees. Compoundable

Punishment for Company

--------------

Imprisonment for a term which may extend to three years and with Fine, of not less than twenty-five thousand rupees but which may extend to one lakh rupees. Compoundable

Punishment for Officers in Default

The valuer who contravenes the provisions of this section or the rules made thereunder, is punishable with Fine, of not less than twenty-five thousand rupees but which may extend to one lakh rupees. Compoundable If the valuer has contravened such provisions with the intention to defraud the company or its members, he shall be punishable with imprisonment for a term which may extend to one year and with Fine, of not less than one lakh rupees but which may extend to five lakh rupees. Not Compoundable

______

Others

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RR-19

Section

249(2)

274(4)

284(2)

Sl. No

56.

RR-20

57.

58.

Promoters, directors, officers, employees of a company in winding up, failing to extend full cooperation to the Company Liquidator in discharge of his functions and duties.

Contravention of the provisions of this Section pertaining to the filing of Statement of Affairs.

Making an application under Section 248 in violation of sub-section (1) of this Section.

Subject

_______

______

The officer of the company who is in default who contravenes so is punishable with imprisonment for a term which may extend to six months or with Fine, of not less than twenty-five thousand rupees but which may extend to five lakh rupees, or with both. Compoundable

________

Fine, which may extend to one lakh rupees. Compoundable _______

Punishment for Officers in Default

Punishment for Company

Any person who, without reasonable cause, fails to extend such cooperation to the company liquidator is punishable with imprisonment which may extend to six months or with fine which may extend to fifty thousand rupees, or with both. Compoundable

The director of the company who contravenes so, is punishable with imprisonment for a term which may extend to six months or with Fine, of not less than twenty-five thousand rupees but which may extend to five lakh rupees, or with both. Compoundable

________

Further sub-section (4) of this Section states that if a valuer has been convicted of any offence aforesaid, he shall be liable to return the remuneration he had received from the company and further he is liable to pay damages to the company or to any other person for loss arising out of incorrect or misleading statements or particulars made in his report.

Others

Treatise on contraventions under Companies Act, Securities Laws & FEMA

Section

302(4)

336(1)

336(2)

Sl. No

59.

60.

61.

Pawning, pledging or disposing of any property in circumstances which amount to an offence under sub-clause (viii) of clause (d) of sub-section (1) of this Section.

Offences by officers of companies in liquidation. [An explanation under this Section says that the word “officer” includes any person in accordance with whose directions or instructions the directors of the company have been accustomed to act].

Failure by the Company Liquidator to forward a copy of the order of NCLT on dissolution of company.

Subject

_______

Punishment for Company

_______

Punishment for Officers in Default

Every person who pawns, pledges or otherwise disposes of the property, or any person who receives such a property so pawned, pledged or disposed of knowing it to be pawned, pledged, or disposed of in such circumstances amounting to be an offence under sub-clause (viii) of clause (d) of sub-section (1) of this Section is punishable with imprisonment for a term which

If any person, who is or has been an officer of a company which, at the time of the commission of the alleged offence, is being wound up, he shall be punishable with imprisonment for a term which shall not be less than three years but which may extend to five years and with Fine, of not less than one lakh rupees but which may extend to three lakh rupees. Not Compoundable

The Company Liquidator in default is punishable with fine which may extend to five thousand rupees for every day during which the default continues. Not Compoundable since Section 441 permits compounding of offences only for officers of the Company.

Others

Ready Reckoner to compoundable and non-compoundable offences under…

RR-21

Section

337

338

Sl. No

62.

RR-22

63.

Liability where proper accounts not kept.

Any person, at the time of commission of offence was an officer of a company which is subsequently ordered to be wound up by the Tribunal under the Companies Act, 2013 (a) has, by false pretences or by means of any other fraud, induced any person to give credit to the company; (b) with intent to defraud creditors of the company or any other person, has made or caused to be made any gift or transfer of, or charge on, or has caused or connived at the levying of any execution against, the property of the company; or (c) with intent to defraud creditors of the company, has concealed or removed any part of the property of the company since the date of any unsatisfied judgment or order for payment of money obtained against the company or within two months before that date.

Subject

Imprisonment for a term which shall not be less than one year but which may extend to three years and with Fine, of not less than one lakh rupees but which may extend to three lakh rupees. Not Compoundable.

_______

Punishment for Officers in Default

Punishment for Company

_______

Any such person, is punishable with imprisonment for a term which shall not be less than one year but which may extend to three years and with Fine, of not less than one lakh rupees but which may extend to three lakh rupees. Not Compoundable

shall not be less than three years but which may extend to five years and with Fine, of not less than three lakh rupees but which may extend to five lakh rupees. Not Compoundable

Others

Treatise on contraventions under Companies Act, Securities Laws & FEMA

Section

342(6)

344(2)

Sl. No

64.

65.

Failure of a company under voluntary winding up or under winding up pursuant to an order of NCLT, to ensure that every invoice, order for goods or business letter issued on its behalf carries a statement that company is being would up.

Failure or neglecting to give assistance in connection with prosecution instituted under sub-section (1) of this section against any person or officer or member of the company who is guilty of any offence in relation to the company.

Subject

Fine, of not less than fifty thousand rupees but which may extend to three lakh rupees. Compoundable

_______

Punishment for Company

Every officer of the company, who wilfully authorises or permits the non-compliance, shall be punishable with Fine, of not less than fifty thousand rupees but which may extend to three lakh rupees. Not Compoundable.

_______

However, the officer is entitled to relief if he is able to show that he had acted honestly and that in the circumstances in which the business of the company was carried on, the default was excusable.

Punishment for Officers in Default

The Company Liquidator and any receiver or manager, who wilfully authorises or permits the noncompliance, shall be punishable with Fine, of not less than fifty thousand rupees but which may extend to three lakh rupees.

Any person who so fails or neglects, is punishable with Fine, of not less than twenty-five thousand rupees but which may extend to one lakh rupees. Not Compoundable. Section 441 permits compounding of offences only for officers of the Company. Once order of winding up has been made, officers of the Company stand discharged in view of sub-section (3) of Section 277 of the Companies Act, 2013. Therefore at the time of commission of this offence, even a person who was an officer of the company will not be an officer and hence offence is not compoundable.

Others

Ready Reckoner to compoundable and non-compoundable offences underâ&#x20AC;Ś

RR-23

Section

347(4)

348(5)

Sl. No

66.

RR-24

67.

Fraudulently posing as a creditor or contributory while furnishing information (in relation to liquidations underway) under sub section (4) of this Section for inspecting statement referred to in sub-section (1) of this Section.

Contravention of Rules framed or order made by Central Government for preventing destruction of books and papers of a company that has been wound up and matters incidental thereto.

Subject

________

_______

Punishment for Company

________

Any person who does so shall be deemed to be guilty of an offence under Section 182 of the Indian Penal Code, and shall, on the application of the Company Liquidator, be punishable accordingly. Not compoundable under the Companies Act, 2013 for any offence punishable as per provisions of other laws.

Any person who acts in contravention of any such is punishable with imprisonment for a term which may extend to six months or with fine which may extend to fifty thousand rupees, or with both. Not Compoundable. Section 441 permits compounding of offences only for officers of the Company.

Not Compoundable. Section 441 permits compounding of offences only for officers of the Company.

Once order of winding up has been made, officers of the Company stand discharged in view of subsection (3) of Section 277 of the Companies Act, 2013. Therefore, at the time of commission of this offence, even a person who was an officer of the company will not be an officer and hence offence is not compoundable. _______

Others

Punishment for Officers in Default

Treatise on contraventions under Companies Act, Securities Laws & FEMA

Section

348(6)

348(7)

356

392

Sl. No

68.

69.

70.

71.

Punishment for contravention if provisions of Chapter XXII pertaining to statutory obligations of Foreign Companies

Failure to file with the Registrar, within thirty days after the making of the order, or such further time as the Tribunal may allow, a certified copy of the order of NCLT (passed by the Tribunal in exercise of its powers to declare dissolution of a company void).

Company Liquidator getting the statement referred to in sub-section (1) audited by a person who is not qualified to act as an auditor

If a Company Liquidator contravenes the provisions of this Section.

Subject

The Foreign Company is punishable with Fine, of not less than one lakh rupees but which may extend to three lakh rupees and in the case of a continuing offence, with an additional fine which may extend to fifty

Every officer of the Foreign Company who is in default shall be punishable with imprisonment for a term which may extend to six months or with Fine, of not less than twenty five thousand rupees but which may extend to five lakh rupees, or with both.

_______

________

_______

________

Punishment for Officers in Default

________

Punishment for Company

_______

The Company Liquidator or the person on whose application the order was made, who fails so, is punishable with fine which may extend to ten thousand rupees for every day during which the default continues. Not Compoundable.

The Company Liquidator shall be punishable with imprisonment for a term which may extend to six months or with fine which may extend to one lakh rupees, or with both. Not Compoundable.

The Company Liquidator who contravenes is punishable with fine which may extend to five thousand rupees for every day during which the failure continues. Not Compoundable. Section 441 permits compounding of offences only for officers of the Company.

Others

Ready Reckoner to compoundable and non-compoundable offences underâ&#x20AC;Ś

RR-25

Section

403(2)

Sl. No

72.

RR-26

Failure to file returns or documents or fails to record any document, fact or information, before the expiry of the period specified under the relevant section requiring the filing of returns etc.,

Subject

Punishment for Officers in Default Compoundable. Every officer of the Foreign Company should also be treated as a officers in default of a company within the meaning of section 441 of the Companies Act, 2013 for compounding purposes. When a statute requires compliance, it should be notionally extended to be subject other provisions mutatis mutandis and be entitled to remedies too mutatis mutandis. Penalty or punishment provided under the relevant section in pursuance of which the requirement to submit, file, register or record any document, fact or information arises under this Act for such failure or default. Compoundable if the punishment prescribed in the penal clause of relevant section is compoundable. [The above stipulation is without prejudice to the liability for payment of fee and additional fee]

Punishment for Company thousand rupees for every day after the first during which the contravention continues. Compoundable. Foreign Company should also be treated as a company within the meaning of section 441 of the Companies Act, 2013 for compounding purposes. Penalty or punishment provided under the relevant section in pursuance of which the requirement to submit, file, register or record any document, fact or information arises under the Act for such failure or default. Compoundable if the punishment prescribed in the penal clause of relevant section is compoundable. [The above stipulation is without prejudice to the liability for payment of fee and additional fee]

_______

Others

Treatise on contraventions under Companies Act, Securities Laws & FEMA

Section

405(4)

447

Sl. No

73.

74.

Punishment for Fraud

Failure to comply with an order made under sub-section (1) or subsection (3), or knowingly furnishes any information or statistics which is incorrect or incomplete in any material respect as required by Central Government in exercise of its powers under this Section.

Subject

_______

Fine which may extend to twenty-five thousand rupees Compoundable

Punishment for Company

_______

Imprisonment for a term which may extend to six months or with Fine, of not less than twenty-five thousand rupees but which may extend to three lakh rupees, or with both. Compoundable

Punishment for Officers in Default

Any person who is found to be guilty of fraud, involving an amount of at least ten lakh rupees or 1% of the turnover of the Company, whichever is lower: Imprisonment for a term which shall not be less than six months but which may extend to ten years and shall also be liable to fine which shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved in the fraud. Not Compoundable Any person who is found to be guilty of fraud, involving an amount of at least ten lakh rupees or 1% of the turnover of the Company, whichever is lower and where the fraud in question involves public interest: Imprisonment for a term which shall not be less than three years but which may extend to ten years and shall also be liable to fine which shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved in the fraud. Not Compoundable

_______

Others

Ready Reckoner to compoundable and non-compoundable offences underâ&#x20AC;Ś

RR-27

Section

449

Sl. No

75.

RR-28

Any person who intentionally gives false evidence (a) upon any examination on oath or solemn affirmation, authorised under this Act; or (b) in any affidavit, deposition or solemn affirmation, in or about the winding up of any company under this Act, or otherwise in or about any matter arising under this Act.

Subject

_______

Punishment for Company

_______

Punishment for Officers in Default

Such person punishable with imprisonment for a term which shall not be less than three years but which may extend to seven years and with fine which may extend to ten lakh rupees. Not Compoundable.

Any person who is found to be guilty of fraud, involving an amount less than ten lakh rupees or 1% of the turnover of the Company, whichever is lower, and where the fraud in question does not involve public interest: Imprisonment for a term which may extend to five years or with fine which may extend to fifty lakh rupees or with both. The offence is compoundable only if the value of the fraud is less than Rs.10 Lakhs or 1% of the turnover of the company and the fraud does not involve any public interest. [The above punishment is without prejudice to any liability including repayment of any debt under this Act or any other law for the time being in force]

Others

Treatise on contraventions under Companies Act, Securities Laws & FEMA

Section

450

451

452(1)

452(2)

Sl. No

76.

77.

78.

79.

Failure to deliver up or refund the property or cash wrongfully obtained or wrongfully withheld or knowingly mis-applied, despite order of the court to do so

Wrongful withholding of any property of a company by any officer or employee of the company

Punishment where the same offence punishable either with fine or with imprisonment and if such an offence is committed for the second or subsequent occasions (repeated defaults)

Punishment for contravening any of the provisions of this Act or the rules made thereunder, or any condition, limitation or restriction subject to which any approval, sanction, consent, confirmation, recognition, direction or exemption in relation to any matter has been accorded, given or granted, and for which no penalty or punishment is provided elsewhere in this Act.

Subject

_______

The person who commits such a default is punishable with imprisonment which may extend to two years. Not Compoundable.

Any officer or employee who does so is punishable with Fine, of not less than one lakh rupees but which may extend to five lakh rupees. Compoundable. (This punishment is without prejudice to the court ordering the person concerned to deliver up or refund the property or cash wrongfully obtained or wrongfully withheld or knowingly mis-applied).

_______

Twice the amount of fine for such offence in addition to any imprisonment provided for that offence. Compoundable.

Twice the amount of fine for such offence in addition to any imprisonment provided for that offence. Compoundable. _______

_______

Fine which may extend to ten thousand rupees, and where the contravention is continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues. Compoundable.

_______

Others

Punishment for Officers in Default

Punishment for Company

Ready Reckoner to compoundable and non-compoundable offences underâ&#x20AC;Ś

RR-29

Section

453

454(8)

464(3)

Sl. No

80.

81.

RR-30

82.

Without being registered under the Companies Act or any other law for the time being in force, an association or partnership, exceeding the prescribed number of members carrying on any business.

Failure of a company or an officer who is in default or any other person to pay penalties adjudged by Adjudicating Officer or Regional Director (Appellate Authority against orders of Adjudicating Officer) within a period of ninety days from the date of the receipt of the copy of the order.

Punishment for improper use of “Limited” or “Private Limited”.

Subject

_______

Fine, of not less than twenty five thousand rupees but which may extend to five lakh rupees Compoundable

_______

Punishment for Company

_______

Imprisonment which may extend to six months or with Fine, of not less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both. Compoundable

_______

Punishment for Officers in Default

Every member of an association or partnership carrying on business in contravention of sub-section (1) shall be punishable with fine which may extend to one lakh rupees and shall also be personally liable for all liabilities incurred in such business. Not compoundable. Section 441 permits compounding of offences only for officers of the Company.

Imprisonment which may extend to six months or with Fine, of not less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both. Compoundable.

Any person who does so is punishable with Fine, of not less than five hundred rupees but may extend to two thousand rupees for every day for which that name or title has been used. Compoundable if the person who has violated this provision is the company or any officer of the company.

Others

Treatise on contraventions under Companies Act, Securities Laws & FEMA