The main legal point established in the judgment is the interpretation and application of the pre-amended and amended provisions of Section 24 of the SEBI Act in determining the guilt and imposition of fines on the appellants.

JUDGMENT :

(Prayer: Criminal Appeal filed u/s.374(2) of the Code of Criminal Procedure, 1973, praying to call for the records in the judgment dated 25.04.2017 passed by the learned XIX Additional Sessions Judge, Chennai – 1 in Sessions Case 356 of 2010, set it aside by acquitting the Appellants.)

1. The first appellant is a Company incorporated under the Companies Act, namely Kunnamkulam Paper Mills Ltd., and the appellants 2 to 7 are its Directors.

2. On 28.03.2001, they made an allotment of 1,73,995 equity shares of Rs.10/- each to 163 persons. The said allotment is directly in violation of the provisions of SEBI (Disclosure and Investor Protection) Guidelines 2000. Therefore, the matter was taken up by SEBI and by an order dated 10.04.2003, the appellants were directed to refund the money collected under the issue made by the offer document dated 15.02.2001 to the investors with interest not below the bank rate charged by the commercial bank for long term fixed deposits. The appellants were directed to refund the money within a period of 30 days from the date of the order and to file compliance report within a period of 15 days there from. It is mentioned that, on failure to comply with the above, the appellants will firstly, will not access the capital market for a period of 5 years and secondly, will invite penalty under Section 15HB of the SEBI Act and also prosecution under Section 24 of the SEBI Act.

3. The said direction was not complied and therefore, under the authority of SEBI, its Assistant Legal Advisor, one G.V. Chitra presented a private complaint under Section 200 of Cr.P.C. for the offences under Section 24(1) r/w Section 27 of Securities and Exchange Board of India Act, 1992 (in short 'the SEBI Act'), before the XXIII Metropolitan Magistrate, Saidapet. Even though was initially taken on file as C.C.No.8959 of 2003, as per Section 26 of the SEBI Act, the offence is triable by Sessions Judge. Therefore, after furnishing the copies to the accused under Section 207 of Cr.P.C., committed the case under Section 209 of Cr.P.C. to the Principal Sessions Judge, Chennai. The case was taken on file as S.C.No.356 of 2010 and thereafter, was made over to the learned XIX Additional Sessions Court, Chennai. After considering the materials on record, the Trial Court framed charge under Section 24(1) read with 27 of the SEBI Act. Upon being questioned, accused denied the charges and stood trial. Thereafter, the prosecution examined one Pradeep Ramakrishnan as P.W.1 and Ex.P-1 to Ex.P-23 were marked on behalf of the prosecution. Upon questioned about the material evidence on record and incriminating circumstances, the second accused examined himself as D.W.1 and Ex.D-1 to Ex.D-3 were marked on behalf of the second appellant/accused.

4. The Trial Court thereafter, proceeded to hear the learned Counsel on either side and the learned Central Government Public Prosecutor for the prosecution and the Counsel for the respondents/accused and by a judgment dated 25.04.2019, found A1, A2, A5, A6, A7, A10 and A13 guilty for the offence under Section 24(1) of SEBI Act and imposed a fine of Rs.50,00,000/- on each of the accused and in default of payment of fine, to undergo simple imprisonment for a period of one year. Aggrieved by the same, present appeal is laid before this Court.

5. Heard Mr.R.Yashod Vardhan, learned Senior Counsel on behalf of the appellants and Mr. N.P.Kumar, learned Special Public Prosecutor on behalf of the respondent.

6. The learned Senior Counsel would submit that, in this case, the petitioner/Company had issued 1,73,995 equity shares of Rs.10/- each to 163 persons on 28.03.2001, which was in violation of the guidelines and hence the violation of the Act. He would submit that the offence is said to have been committed on 28.03.2001. As on the said date, the unamended Section 24 was in force.

7. Similarly, under Section 26 of the pre-amended Act, the offence was triable by the Magistrate. Therefore, the maximum penalty th