Case Note & Summary
The petitioners, who are husband, wife, and their son, were founder-directors of Sai Prasad Properties Ltd and other companies in the Sai Group. They filed a writ petition under Article 32 of the Constitution seeking directions to SEBI to liquidate attached assets within six months and distribute the proceeds to genuine investors. The background involves SEBI receiving complaints about illegal mobilization of funds through collective investment schemes by the companies. SEBI passed interim and final orders restraining the companies from collecting money and directing refunds. Properties and jewellery were attached, and recovery proceedings for over Rs. 30,561 crore were initiated. Multiple FIRs were registered across several states under the Prize Chits Act, IPC, and MPID Act. The petitioners were arrested and some were granted bail. The Supreme Court noted that the parties agreed that the liability could be extinguished from sale proceeds of some immovable properties. The Court directed SEBI to take steps for time-bound liquidation and refund, and to coordinate with the MPID Court and other authorities. The Court also noted that petitioner No. 3 was protected from arrest in fresh cases on the same issues.
Headnote
A) Securities Law - Collective Investment Scheme - Section 11AA SEBI Act, 1992 - Refund to Investors - Petitioners, directors of companies that raised funds through collective investment schemes, sought direction to SEBI to liquidate attached assets and refund investors - Court noted that the companies owed substantial amounts to investors and that assets were attached - Held that SEBI should expedite liquidation and refund process, and coordinate with MPID Court and other authorities (Paras 3-5). B) Constitutional Law - Writ Jurisdiction - Article 32 of the Constitution of India - Mandamus - Petitioners invoked Article 32 seeking direction to SEBI to liquidate assets and refund investors - Court entertained the petition and issued directions to SEBI to take steps for time-bound liquidation and refund - Held that Article 32 can be invoked for enforcement of fundamental rights, including right to property and right to livelihood of investors (Paras 1, 5). C) Criminal Law - Money Circulation Scheme - Prize Chits and Money Circulation Scheme (Banning) Act, 1978, Sections 3, 4, 5 - Multiple FIRs registered against petitioners across states - Petitioners were arrested and some were granted bail - Court noted the multiplicity of proceedings and directed that petitioner No. 3 shall not be arrested in fresh cases on same issues (Para 2(j)).
Issue of Consideration
Whether SEBI should be directed to liquidate attached assets in a time-bound manner and disburse the sale proceeds to genuine investors, and whether the petitioners should be allowed to assist in the process.
Final Decision
The Court directed SEBI to take steps for time-bound liquidation of attached assets and refund to genuine investors, and to coordinate with the MPID Court and other authorities. The Court also noted that petitioner No. 3 shall not be arrested in any fresh case on the same or related issues.
