The defense of the accused regarding their knowledge of the company's activity cannot be adjudicated at the time of framing of charge and should be considered during trial. The onus of proof on the accused persons under section 27(1) of the SEBI Act was discussed, along with the applicability of certain legal principles to the case.

JUDGMENT

Ananda Kumar Mukherjee, J. - Both the revisional applications under sections 397, 401 of the Code of Criminal Procedure 1973, read with section 26C of Securities and Exchange Board of India Act, 1992 stem out from the impugned order dated 20.08.2018 passed by Learned Judge, 5th Special Court, Calcutta in Special Case No. 18 of 2016 (SEBI/16/17), whereby the applications filed by the petitioners for their discharge under section 245 of Cr. P.C were rejected, imposing a cost of Rs.2,000/-. By these applications legality and propriety of the order has been challenged praying for setting aside the order and quashing of the proceeding against the petitioners.

2. The fact of the case, in gist is that, the petitioners are three of the directors of the accused company, M/s Just Reliable Projects India Limited, which was incorporated on 16th December, 2009 under the Companies Act, 1956, having its registered office at C-19, Uday Shankar Bithi, City Centre, Durgapur-713216.

3. A duty having been cast upon SEBI under section 11(1) of the SEBI Act to protect the interests of investors in Securities and to promote the development of and regulate the securities market through appropriate measures, the Securities Exchange Board of India conducted an enquiry in respect of alleged illegal fund mobilization by the accused company and its directors. It came to light that during the financial year 2010-2013, M/S Just- Reliable Projects India Limited had raised an amount of Rs.11.426 Crores through issuance of redeemable preference shares to 3,558 entities without complying with the regulatory provisions applicable to the public issue norms.

4. The accused company issued public shares without filing any offer documents in violation of section 56 of the Companies Act, 1956. Whenever any offer is made by any company to 50 or more persons, it is deemed to be a public issue and the company has to comply with the disclosure requirements of SEBI. The accused company has issued shares to the investors without making any application for listing of the shares in the stock exchanges, and thereby violated provisions of section 73 of the Companies Act. The accused company further did not comply with the provisions related to issuance of public shares and also violated the provisions of section 56,60 read with section 2(36), 73 of the Companies Act and the SEBI (disclosure and investor protection) guidelines, 2000 read with SEBI (issue of capital and disclosure requirements) Regulation 2009.

5. Due to such violations of the extant laws by the accused persons SEBI issued an order bearing no. WTM/PS/66/ERO/IMD/OCT/2015 dated October 13, 2015, directing the accused company to comply with the SEBI directions and make repayments to the investors. As the accused company did not comply with the said Regulations and with dishonest intentions evaded repayment of the amounts collected by it from the investors, a Complaint case has been lodged against the accused company and its directors/promoters/managers/key management/personnel and persons in charge of the business of accused company's scheme who are responsible for the day to day affairs of the company for offence punishable under section 24 and 27 of the SEBI Act, 1992, tribal under section 26A, 26B and sections 26E of the SEBI Act for violation of section 56, 60 and 73 of the Companies Act, 1956.

6. For such violations the Whole Time Member of Securities and Exchange Board of India held an enquiry under section 11(1), 11(4), 11A and 11B of the SEBI Act, 1992 and in its order dated 13.10.2015 the Whole Time Member of SEBI found that noticees like Virendra Kumar, Gajendra Pal Singh and Kanwal Prakash Singh, the petitioners have contended that they have never managed the affairs of the company. However, having assumed position as directors of the company during the relevant period, they are under legal mandate to comply with the applicable laws. It was found that they cannot claim ignorance of the manner in which