The judgment established the liability of the company and its directors for contravening the SEBI Act and Regulations, emphasizing the continuous nature of the offence until full compliance with SEBI's regulations and directions.

V.K. Jain, J.

1. The appellant No.1 in Crl. A. No.567/2010, Glitter Gold Plantation Limited (hereinafter referred to as ‘the Company‘), came to be incorporated on 31.1.1997 and appellants 2 & 3, Pankaj Jain & Deepak Jain are its Directors. The appellant in Crl. A. No.563/2010, namely Sachin Gupta and the appellant in Crl. A. No.573/2010, Yashwant Jain, are stated to be the subscribers to the memorandum of the aforesaid Company though they are not its Directors. The Company, as per the history provided to Securities & Exchange Board of India (for short ‘SEBI‘), vide communication (Ex.CW1/1), was engaged in Teak plantation activities and it offered opportunity to the members of the public to invest in Teak saplings on the land owned or leased directly or on behalf of others. The Company commenced its business on 9.2.1997. It came out with the schemes named as Glitter Teak Unit 1 and Glitter Teak Unit II and collected Rs.14.06 lakh from the investors till 30.11.1997. It was stated in the Brochure that the Company shall give Teak trees to the unit holders after 20 years and the share per unit, which at the time of offer was 2,500/-, was likely to be Rs.3.00 lakh per unit at the time Teak trees are given to the investors. Thus, it was represented to the investors that investment of Rs.2,500/- was likely to grow to Rs.3.00 lakh in 20 years.

2. Section 12 (1B) of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as ‘the Act‘), which came to be inserted w.e.f. 25.1.1995, provides that no person shall sponsor or cause to be sponsored or carry on or cause to be carried on any venture capital funds or collective investment scheme (for short ‘CIS‘) including mutual funds, unless he obtains a certificate of registration from the Securities and Exchange Board of India (for short ‘SEBI) in accordance with the regulations. The proviso to the aforesaid sub-section, permits any person, sponsoring or causing to be sponsored, carrying or causing to be carried on any such fund or scheme operating in the security market immediately before 25.1.1995, for which no certificate of registration was required prior to the said date, to continue to operate till such time Regulations are made under clause (d) of sub-section (2) of Section 30.

3. Vide press release dated 18.11.1997, the Government of India conveyed that instruments such as agro bonds, plantation bonds, etc. shall be treated as CIS coming under the Act and SEBI was asked to formulate its Regulations for such schemes.

Pursuant to the SEBI press release dated 26.11.1997 and/or notice 18.12.1997, the Company furnished information with respect to its above-referred scheme to SEBI. Vide aforesaid information, the Company informed SEBI about Rs.14.06 lakh raised by it by way of its Glitter Teak Unit 1 and Glitter Teak Unit II which according to SEBI are Collective Investment Schemes (CIS). The information sent to SEBI was signed by the appellant S.K. Jain, Managing Director of the Company and the appellant Pankaj Jain, who was stated to be a whole time Director of the Company.

Vide letter received by SEBI on 29.4.1998, the Company, through Shri Pankaj Jain, whole time Director, furnished additional information to SEBI which included the copies of its balance sheet, a compliance certificate and a statement of deployment of funds mobilized under various schemes. The balance sheet was signed by the Managing Director Shri S.K. Jain and the while time Director Shri Pankaj Jain. It was also stated in the said information that Shri Deepak Jain was also a Director of the Company and that he was a businessman. The compliance certificate submitted to SEBI was signed by Shri Pankaj Jain.

4. The Securities and Exchange Board of India Regulations, 1999 (hereinafter referred to as =the Regulations‘) came to be notified on 15.10.1999. In terms of the requirement of the Regulations, SEBI vide its letters dated 15.12.1999/29.12.1999 and by way of a public notice dated 10.12.1999, req