ORDER :

1. This Criminal Original Petition has been filed seeking to quash the proceedings in C.C. No. 6430 of 2004 on the file of the learned XXIII Metropolitan Magistrate, Saidapet, Chennai.

2. The brief facts leading to filing of this Criminal Original petition is that the 1st petitioner is a company. The petitioners 2 and 3 are the Directors of the Company. The Securities and Exchange Board of India (SEBI) has preferred a complaint under Section 200 of the Code of Criminal Procedure, 1973 read with Section 24 ad 27 of Securities and Exchange Board of India Act, 1992 read with Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999 as amended, alleging therein that the Accused Company has been operating a collective investment scheme and had collected an aggregate amount of Rs. 14 lakhs from the General public. 1st Petitioner/Company filed information details with SEBI regarding its collective investment Schemes pursuant to SEBI's press release dated 26th November, 1997 and Public Notice dated 18th December, 1997 issued by the Board.

3. Chapter IX of the said regulations, any person who had been operating as collective investment Scheme at the time of commencement of the said regulations shall be deemed to be an existing collective investment scheme and shall comply with the provisions of the said Chapter IX. Further, in terms of the said Chapter IX, any person who immediately prior to the commencement of the said Regulations was operating as collective investment scheme shall make an application to SEBI for grant of registration within a period of two months from the date of notification of the said regulations.

4. The Accused No. 1 did not file information with SEBI pursuant to the public Notice dated 18.12.1997 whereby, SEBI had directed all the existing entities engaged in Collective Investment Schemes to file certain information about their schemes with it by 15.01.1998. After the letter dated 21.04.1998 from SEBI asking the petitioner company to show cause as to why appropriate action should not be taken against the said company for not furnishing such information.

5. Consequent to the said Regulations dated October 15, 1999, every person who, immediately prior to the commencement of the said Regulations, operating a Collective Investment Schemes, was required to make an application to SEBI for the grant of registration within a period of two months from the date of notification, under the provisions of the said Regulations.

6. In terms of Regulation 73 of the said Regulations, an existing Collective Investment Scheme, which has failed to make an application for registration with SEBI was required to wound up its scheme and repay is investors in the manner specified therein. Further as per Regulation 74, an existing Collective Investment Scheme, which is not desirous of obtaining provisional registration from SEBI, is required to formulate a scheme for repayment and make repayment to the exiting investors in the manner specified in Regulation 73.

7. SEBI by way of Public Notice dated December 10, 1999 had intimated the accused company that if in case, the accused company is not desirous of obtaining registration from SEBI, to send an information Memorandum to all the investors detailing the state of affairs of the Schemes, the amount repayable to each investor and the manner in which, such amount is determined, latest by February 28, 2000.

8. Meanwhile, SEBI, having regard to the interest of the investors and requests received from various entities extended the last date for submitting applications for grant of registration by existing entries up to March 31, 2000. Though the same was intimated to the accused company, it did not apply for grant of registration in terms of the said Regulations.

9. Inspite of repeated notifications, the Accused company neither applied for registration under the said regulation nor has taken any steps for winding of the scheme and made payment to the investors in