SECURITIES AND EXCHANGE BOARD OF INDIA versus GAURAV VARSHNEY & ANR.

Citation: [2016] 7 S.C.R. 1 · Decided: 15-07-2016 · Supreme Court of India · Bench: J.S. KHEHAR · Disposal: Disposed off
Cited by 1 judgment(s) · cites 1 · see the full citation network in Lexace
Open in Lexace · Ask the AI about this case
Judgment (excerpt)

[2016] 7 S.C.R. I 
SECURITIES AND EXCHANGE BOARD OF INDIA 
A 
v. 
GAURAV VARSHNEY & ANR. 
(Criminal Appeal Nos. 827-830 of2012) 
JULY 15,2016 
(JAGDIGH SINGH KHEHAR AND C. NAGAPPAN, JJ.] 
Securities and Exchange Board Act, 1992: 
s.12(1 B) - Interpretation of - Held: Persons governed by 
substantive provision of s.12(JB) (Non-proviso category), that is, 
those who had not commenced the activity of sponsoring or carrying 
on a collective investment scheme prior to 25.01.1995 are permitted 
to commence activities only after obtaining a certificate of 
registration - While, persons covered under the proviso category, 
B 
c 
that is, those who were already carrying on such activities were 
D 
permitted to continue their activities and after the framing of 
concerned regulations, they could continue the said activities only 
after obtaining a certificate of registration - In other words, a new 
· entrepreneur desirous of sponsoring or carrying on any activity in 
the nature of collective investment for the first time after 25.1.1995, 
could do so only after he/it had obtained a certificate of registration 
from 'the Board', in accordance with the Collective Investment 
Regulations - Therefore, till such time the Regulations were framed 
by 'the Board' uls.12(1 B), and a certificate of registration was 
obtained, no fresh entry could be made in the field of collective 
investment, by a per.>onlentity not already carrying on such activity -
Securities and Exchange .Board of India (Collective Investment 
Schemes) Regulations, 1999. 
s. 12(1 B) - Bar under - Held: Any person/entity not falling in 
the proviso category (an "existing" operator, of a collective 
investment scheme) was barred from coi11111e11cing to sponsor or carry 
on any collective investment activity, after the insertion of s.12(1 B) 
into the SEBI Act, till such time as he/it had obtained a certificate of 
registration from 'the Board', in accordance with the Collective 
Investment Regulations - The said bar would, therefore, undoubtedly 
extend till the framing of the regulations - The bar, would further 
extend, even beyond the framing of the above regulations, till the 
I 
E 
F 
G 
H 
2 
A 
B 
c 
E 
F 
G 
H 
SUPREME COURT REPORTS 
[2016] 7.S.C.R. 
concerned new entrepreneur was successful in obtaining a certificate 
of registration - Therefore, the period during which the concerned 
activities were barred (for the non-proviso category) u/s.12(1 B) 
co111111enced fro111 the date of insertion of s.12(1 B) into the SEBI Act 
(25.1.1995), and subsisted upto, the actual date when the new 
entrepreneur obtained a certificate of registration. 
s.12(1B) - Mandatory or directory provision - Held: Use of 
negative words in conjunction with the word "shall" makes the 
legislative intent absolutely clear, and also mandatory with reference 
to those not already engaged in collective investment operations -
Further, contravention of s.12(1 B) entails penal consequences, and 
therefore, cannot be construed as directory - The bar created for 
new operators, of a collective investment initiative, was, therefore, 
absolute and manda_tory. 
Securities and Exchange Board of India (Collective Investment 
Sche111es) Regulations, 1999: Regn. 5 - "existing collective 
invest111ent scheme" - Connotation of - Held: An existing collective 
investment scheme, at the time of notification of the regulations, 
could only be one which had com111enced its activities prior to 
25.1.1995 - A collective investment scheme, which commenced after 
25.1.1995, could not be described as an "existing" collective 
investment scheme, because the same was statutorily barred, and 
wholly impermissible in law. 
Criminal jurisprudence: Held: There can be no doubt 
whatsoever, that the particulars of the offeni;e, of which an accused 
is charged, have to be clearly stated to him - No amount of evidence 
can be looked into, for an accusation not levelled or m,vfe out, in a 
complaint - This is one of the basic tenets of the criminal 
;urisprudence. 
Code of Criminal Procedure, 1973: 
s.251 - Scope of- Where implications of various proviso to a 
section are different, mere mention of section in complaint would 
not amount to disclosing to the accused, the particulars of the offence 
of which they were accused - In the instant case, in the complaint, 
director of the company was accused of violating s.12(1 B) of SEBI 
Act - s.12(1 BJ has two categories for two class of persons -
Implications for proviso cat
Excerpt shown. Read the full judgment & AI analysis in Lexace.