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Weird Infrastructures Corporation Limited, represented through its one of Director, namely, Avijit Chatterjee, West Bengal & Another v/s The State of Jharkhand & Others

    W.P.(C) No. 2866 of 2013

    Decided On, 17 March 2021

    At, High Court of Jharkhand

    By, THE HONOURABLE MR. JUSTICE SUJIT NARAYAN PRASAD

    For the Petitioners: M/s. Mahesh Tewari, Ankur Anand, Advocate. For the Respondents: Anil Kumar Sinha, Sr. Advocate, Pandey Neeraj Rai, Akshansh Kishore, Advocates.



Judgment Text

1. The matter has been heard through video conferencing with the consent of the learned counsel for the parties.

2. The prayers have been made in this writ petition for direction in the nature of writ of mandamus to unseal/unlock the business premises of thepetitioners’ company at Nirsa, Chirkunda and Deoghar and not to interfere with in any manner in continuing the lawful business which had been sealed by the concerned authority without giving any opportunity to the petitioner to place their defence.

3. The brief facts of the case as per the pleading made in the writ petition are required to be enumerated, which reads as hereunder:-

The petitioner company having registered under the Companies Act, doing different business of Packaged Drinking Water, Hotel & Resort, Travel & Tourism Entertainment, Alloy Steel, Sponge Iron, Flexible Hose, Real Estate, IT Outlets, Tea Estatye, Pharmaceuticals and the proposal for upcoming industry in relation to creation of Pharmacy Retail Chain, Hospital, Education, Retail Chain of FMCG, Power Plant and Beverage Plant etc.

The petitioners after getting necessary licenses were carrying out the business throughout the country but without any complaint whatsoever and without providing opportunity of hearing to the petitioners, the authorities have taken restrainment measures by sealing the office and restraining the petitioners’ units in carrying out their business and therefore, the writ petition has been filed.

4. It has been contended by the learned counsel appearing for the petitioners that in absence of any complaint from any quarter, the action which has been taken by sealing the office, is not proper and such decision has been taken without providing any opportunity of hearing to the petitioners, hence, the action of the respondents being arbitrary, therefore, the direction may be passed for allowing the writ petitioners to carry out their business.

5. The State of Jharkhand has filed affidavit, wherein letter dated 20.03.2012 has been annexed which is a letter written by Joint Secretary, Departmental of Institutional Finance, and Programme Implementation, Jharkhand addressed to all the Deputy Commissioners/Senior Superintendents of Police/Superintendents of Police whereby and whereunder it has been stated that Reserve Bank of India has sent the list of such companies which have been declared vanished and they are required to be sealed immediately. Again the Joint Secretary, Departmental of Institutional Finance, and Programme Implementation, Jharkhand wrote letter dated 07.11.2012 (Annexure-A) to the D.C., Dhanbad and S.P., Dhanbad whereby and whereunder request has been made to take steps against the illegal and unauthorized so called non-banking finance companies within the district of Dhanbad. It was also requested to make an enquiry under Section 120B and 420 of the I.P.C. and if the allegation is found correct, F.I.R. be registered.

It has further been stated that in pursuance of aforesaid letter dated 07.11.2012 of the Joint Secretary, the Deputy Commissioner, Dhanbad constituted a team for raid/enquiry of such firms whose names appear in the list provided by the Reserve Bank of India. The aforesaid team has initiated an inquiry and finding that the petitioner company is involved in non-banking activities and is illegally doing its business without NBFC of Reserve Bank of India, the offices were sealed and thereafter FIR was lodged against the company.

The respondent-Securities and Exchange Board of India (S.E.B.I) has also filed affidavit, wherein it has been stated that according to the S.E.B.I., prima-facie it appears that there is violation of S.E.B.I. Act, 1992 but final decision could only be taken after scrutiny of relevant document and for production of relevant document notice was issued to the petitioner at the registered address available on the website of Ministry of Corporate Affairs but the letter was returned undelivered. It has further been stated that the address which has been mentioned in the writ petition has been changed by the petitioner without informing SEBI and RBI which clearly shows the intention of the petitioner.

The respondent-Reserve Bank of India has filed affidavit stating inter-alia therein that the petitioner company has violated several provisions of the R.B.I. Act and directions/guidelines issued therein including unauthorized acceptance of public deposits. On examination of audited balance sheets of the petitioner-company it has been revealed that the petitioner company was engaged in the business of giving short term loans and advances to the corporate bodies and others which are defined as financial assets. It has further been stated that since the petitioner company has not fulfilled the principal business criteria of a NBFC as prescribed by the Reserve Bank, the petitioner company may not be qualified to be registered with the Reserve Bank. It has also been stated that the Reserve Bank received anonymous complaint in June 2013 stating that the petitioner company was accepting deposits with a promise to pay high rate of interest. Since the petitioner company is a non NBFC, the Reserve Bank vide letter dated 10.06.2013 forwarded the case to Economic Offences Wing, Patna for investigation in the matter.

6. This Court has heard the learned counsel for the parties at length and after appreciating their arguments found the fact which is admitted to the extent that though the petitioners are claiming that they are doing the business of Packaged Drinking Water, Hotel & Resort, Travel & Tourism Entertainment, Alloy Steel, Sponge Iron, Flexible Hose, Real Estate, IT Outlets, Tea Estatye, Pharmaceuticals and the proposal for upcoming industry in relation to creation of Pharmacy Retail Chain, Hospital, Education, Retail Chain of FMCG, Power Plant and Beverage Plant etc. but from the counter affidavits filed by the respondents it appears that they are also involved in non-banking activities like collecting money from the customers without NBFC of Reserve Bank of India.

7. It requires to refer herein the objects and intents of the Reserve Bank of India Act 1934 which is an Act to constitute a Reserve Bank of India to regulate the issue of Bank notes and the keeping of reserves with a view to securing monetary stability in (India) and generally to operate the currency and credit system of the country to its advantage.

The amendment Act has come in the year 1997 being Amendment Act 23 of 1997 keeping the objects and reasons to regulate the activities of the non-banking institutions and unincorporated bodies receiving deposits are regulated in terms of the provisions of Chapters III-B and III-C of the Reserve Bank of India Act, 1934 respectively.

8. The reference of the Securities and Exchange Board of India Act, 1992 is also required to be made herein which has been enacted in order to provide for the establishment of a Board to protect the interests of investors in securities and to promote the development of, and to regulate, the securities market and for matters connected therewith or incidental thereto.

The legislation has been made by way of amendment being Amendment Act 59 of 2002 with the objects and reasons for establishment of a Board to protect the interests of investors in securities and to promote the development of, and to regulate, the securities market and for matters connected therewith or incidental thereto.

9. This Court, therefore, is of the view after going through the objects and intents of the Reserve Bank of India Act, 1934 which stipulates about the operation of the non-banking institutions and unincorporated bodies receiving deposits are regulated in terms of the provisions of Chapters III-B and III-C while on the other hand, the objects and intents of the Securities and Exchange Board of India Act, 1992 is to protect the interests of investors in securities and to promote the development of, and to regulate, the securities market and for matters connected therewith or incidental thereto, meaning thereby, if any non-banking financial companies has been created that must be within the scope of the Reserve Bank of India Act, 1934 and only after its creation in terms of the provision of Reserve Bank of India Act, 1934, the question of protecting the interests of the investors in securities and to promote the development, will come into play.

10. This Court, on the basis of the aforesaid legal position has proceeded to examine the factual aspects in order to come to the conclusion about the legality and propriety of the impugned decision of the authorities, therefore, this Court is of the opinion to first look into the creation of the petitioner company as to whether the same have been created in pursuance to the provision of Reserve Bank of India Act, 1934 or not?

11. It would be evident from the counter affidavit filed on behalf of the respondent-Reserve Bank of India that the certificate of registration has not been obtained under the provision as contained under Section 45-IA of the Reserve Bank of India Act, 1934 rather the company has been registered under the Companies Act and therefore, this Court is of the considered view that in absence of any certificate of registration (CoR) under the Reserve Bank of India, Act 1934, the institution cannot be allowed to run the activities by accepting the deposits etc.

12. Mr. Anil Kumar Sinha, learned senior counsel appearing for the respondent-S.E.B.I. has submitted that since the petitioner company is not running in pursuance to the provision of Reserve Bank of India Act, 1934, therefore, keeping the objects and intents of the Securities and Exchange Board of India Act, 1992, even if any inquiry would be conducted the factual scenario pertaining to non-registration under the Reserve Bank of India Act, 1934, will not be changed.

13. This

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Court after considering the aforesaid submission is in agreement thereto as because so long as the institution is not registered under the provision of Reserve Bank of India Act 1934, there cannot be any meaning of regulating by virtue of S.E.B.I. Act, 1992. The reason being that when the constitution of the company itself dehors the rule, there is no question of regulating it under the S.E.B.I. Act, 1992. It has also been informed that with respect to the affairs of this company, FIR has been instituted and now the matter is being looked into by the Central Bureau of Investigation. 14. This court in view of the entirety of the facts and circumstances and as per the discussion made hereinabove, is of the considered view that the prohibitory order passed by the authority in pursuance to the raid/enquiry conducted by the concerned authority and if such decision has been taken, the same cannot be faulted with. 15. In view of such finding, this Court is not inclined to pass any positive direction. 16. Accordingly, the instant writ petition fails and is dismissed.
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