Title: Landmark SEBI CIS Judgment: Sagar Green Gold Plantations Case

---

1. Introduction

The adjudication of SEBI v. Sagar Green Gold Plantations Group Pvt. Ltd. & Ors. (SEBI Spl. Case No. 27/2014) by the SEBI Special Court in Mumbai, delivered on 6th May 2025, marks a watershed moment in India’s securities jurisprudence. The judgment highlights SEBI's firm stance on unlawful Collective Investment Schemes (CIS) and reiterates the consequences of non-compliance with regulatory provisions.

This article deciphers the judgment, traces the regulatory contours, and unpacks its implications for stakeholders in the securities ecosystem, particularly companies, directors, compliance officers, and investors.

---

 2. Legal Framework Governing CIS

Legal Provision	Key Summary
Section 12(1B) - SEBI Act, 1992	Bars any entity from launching or operating CIS without obtaining registration from SEBI.
SEBI (Collective Investment Schemes) Regulations, 1999	Provides a framework for registration, compliance, and winding up of CIS.
Section 24(1) - SEBI Act, 1992	Penal clause for contraventions, punishable with imprisonment or fine or both.
Section 27 - SEBI Act, 1992	Establishes liability of directors/officers in charge of a company for offenses committed under the Act.
Section 468 - CrPC	Provides limitation period for prosecution; overridden in case of continuing offenses.

---

3. Background of the Dispute

In the late 1990s, SEBI was grappling with a proliferation of CIS entities, many masquerading as agro or plantation ventures. Investors were enticed with promises of exorbitant returns on investments in teak, sandalwood, and similar agricultural projects.

Sagar Green Gold Plantations Pvt. Ltd., incorporated on 28th March 1995, launched a CIS without registration and allegedly mobilized Rs. 29.49 lakhs from the public. SEBI contended that despite multiple reminders, the company neither wound up its scheme nor refunded investors.

Case Title	SEBI Special Case No. 27/2014
Complainant	Securities and Exchange Board of India (SEBI)
Accused	1. Sagar Green Gold Plantations Group Pvt. Ltd.2. Kamal Kumar Jain (Managing Director)3. Manoj Kumar Jain (Director)4. Anoop Kumar Jain (Director, deceased)
Period of Offense	1995–1999 (with continuing violation until complaint in 2001)
Legal Representation	SEBI: Ms. Sabiha Ansari (SPP)Accused: Adv. Mayura Kale, Adv. S. K. Tiwari
Judgment Date	6th May 2025

---

4. Charges and Allegations

4.1 Unauthorized Collective Investment Scheme

The accused company floated a plantation investment scheme without obtaining the mandatory certificate of registration from SEBI, in violation of Section 12(1B).

4.2 Non-Compliance with Winding Up Directions

Despite directives under Regulations 73 and 74 of the SEBI CIS Regulations to refund the investors and submit a winding-up report, the accused took no action.

4.3 Vicarious Liability of Directors

SEBI argued that Kamal and Manoj Jain were actively involved in the business operations and held accountable under Section 27 for corporate violations.

---

5. Summary of Prosecution Evidence

The prosecution presented a strong documentary and oral evidence base:

Exhibit No.	Document Description
Article A	SEBI Press Release dated 26.11.1997
Exh. 89 & 90	Letters and terms of CIS from the accused company
Exh. 91	Company’s letter dated 10.09.1998 enclosing scheme data
Exh. 92–95	Memorandum of Association, list of directors, compliance certificate
Exh. 96–97	AD cards and correspondence proving delivery of SEBI's notices
Article C, D, F	SEBI’s public notice and show cause letters

Witness CW-1 Sudip Mishra, Legal Officer at SEBI, corroborated SEBI’s efforts to compel compliance, including repeated reminders and notices to the accused.

---

6. Defense Strategy

The defense countered the prosecution primarily on technical and procedural grounds:

Ground	Defense Argument
Limitation	Offense was time-barred under CrPC as complaint filed beyond 1 year.
No Mens Rea	Claimed refund to investors between 1998 and 1999; denied any wrongdoing.
Passive Role	Manoj Jain denied knowledge of the company’s actions, claimed he was unaware of being made a director.
SEBI Inaction	SEBI didn’t conduct proper investigation or verify alleged refunds.

---

7. Court’s Analysis and Observations

7.1 Evidence of Scheme and Regulatory Violation

The Court found that the CIS was floated after the effective date of Section 12(1B) and without any SEBI registration. The evidence included:

• Acknowledged letters and compliance documents from accused (Exh. 89, 91)

• Admission by Kamal Jain during cross-examination

7.2 Continuing Offense Doctrine

Relying on Samarpan Agro v. SEBI, the Court ruled that since the company failed to wind up or refund, the violation continued until the complaint was filed in 2001. Hence, Section 468 CrPC limitation was inapplicable.

7.3 Director Liability under Section 27

The Court held:

• Kamal Jain, being Managing Director, was clearly in charge.

• Manoj Jain's denial was not supported by evidence; complaint by him came only in 2021.

• Both had failed to prove "due diligence" or lack of knowledge as required for exemption under Section 27.

---

8. Verdict and Sentencing

The SEBI Special Court convicted all surviving accused:

Accused	Offense	Sentence
Sagar Green Gold Plantations Pvt. Ltd.	Section 24(1) r/w 27 SEBI Act	?5,00,000 fine
Kamal Kumar Jain	Section 24(1) r/w 27 SEBI Act	?5,00,000 fine or 1-month SI on default
Manoj Kumar Jain	Section 24(1) r/w 27 SEBI Act	?2,00,000 fine or 1-month SI on default

The Court exercised discretion by not awarding custodial sentences due to the age of the accused and absence of investor complaints, but upheld financial penalties for deterrence.

---

9. Broader Implications

9.1 Reinforcement of SEBI’s Powers

This judgment reaffirms SEBI’s authority to enforce compliance, even decades later, in cases of ongoing violations.

9.2 Accountability of Directors

Company directors cannot escape liability merely by denying involvement. The burden shifts to them to prove lack of knowledge or due diligence.

9.3 Compliance Takeaways

• Companies must seek registration prior to operating CIS.

• Even voluntary refund to investors does not absolve legal liability unless properly reported to SEBI.

• Ignorance or delay in reacting to regulatory obligations may invite penal action.

---

10. Conclusion

This landmark decision serves as a warning to those operating financial schemes without regulatory oversight. It makes clear that SEBI's mandate is not time-bound, and compliance cannot be retrofitted after violations are exposed.

For directors, especially in closely-held companies, the ruling emphasizes the need to be vigilant about the company's actions and ensure proactive legal compliance.

In the age of increasing regulatory scrutiny, this case illustrates how the combination of statutory framework, judicial reasoning, and enforcement strategy can converge to protect investor interest and maintain the integrity of capital markets.

---

Disclaimer:

This article is intended for academic and informational purposes only. It does not constitute legal advice. Readers are encouraged to refer to the full judgment and seek professional counsel where necessary.

---

Reference: Judgment in SEBI Spl. Case No. 27/2014, decided on 06.05.2025 by Hon'ble Judge R. M. Jadhav, SEBI Special Court, Mumbai.

Mayank Garg (LegalMantra.net)

Print