{"id":58906,"date":"2023-07-28T15:45:33","date_gmt":"2023-07-28T10:15:33","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=58906"},"modified":"2024-11-19T12:19:56","modified_gmt":"2024-11-19T06:49:56","slug":"ravi-parthasarathy-v-deputy-superintendent-of-police-economic-offence-wing-ii","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/ravi-parthasarathy-v-deputy-superintendent-of-police-economic-offence-wing-ii\/","title":{"rendered":"Ravi Parthasarathy v. Deputy Superintendent of Police Economic Offence Wing-II"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/ravi-parthasarathy-v-deputy-superintendent-of-police-economic-offence-wing-ii\/#Issuance_of_NCDs_to_a_selected_group_via_private_placement_couldnt_be_termed_as_deposits_us_22_of_TNPID_Act_High_Court\" >Issuance of NCDs to a selected group via private placement couldn\u2019t be termed as deposits u\/s 2(2) of TNPID Act: High Court<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/ravi-parthasarathy-v-deputy-superintendent-of-police-economic-offence-wing-ii\/#What_are_Non-convertible_Debentures\" >What are Non-convertible Debentures?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/ravi-parthasarathy-v-deputy-superintendent-of-police-economic-offence-wing-ii\/#What_is_Private_Placement\" >What is Private Placement?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/ravi-parthasarathy-v-deputy-superintendent-of-police-economic-offence-wing-ii\/#Facts_of_the_Case\" >Facts of the Case<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/ravi-parthasarathy-v-deputy-superintendent-of-police-economic-offence-wing-ii\/#High_Court_Held\" >High Court Held<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/ravi-parthasarathy-v-deputy-superintendent-of-police-economic-offence-wing-ii\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Issuance_of_NCDs_to_a_selected_group_via_private_placement_couldnt_be_termed_as_deposits_us_22_of_TNPID_Act_High_Court\"><\/span>Issuance of NCDs to a selected group via private placement couldn\u2019t be termed as deposits u\/s 2(2) of TNPID Act: High Court<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In this case, ITNL issued non-convertible debentures (NCDs) to a specific group of individuals through private placement without soliciting deposits from the general public. The argument presented is that since there was no public solicitation or advertisement for deposits, the debentures cannot be classified as &#8216;deposits&#8217; under the TNPID Act. Additionally, the private placement scheme used by ITNL does not meet the criteria to be considered a &#8216;financial establishment&#8217; per the Act&#8217;s definition.<\/p>\n\n\n\n<p>The High Court ruled in favour of the defendants, stating that the privately placed debentures were not subject to the Act. The Court also noted that another authority was already investigating the matter, preventing the Economic Offence Wing from conducting a parallel investigation. Consequently, the case was dismissed.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_Non-convertible_Debentures\"><\/span>What are Non-convertible Debentures?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Non-convertible debentures (NCDs) are debt instruments issued by companies in order to raise long-term funds. Unlike convertible debentures, NCDs cannot be converted into equity shares. Instead, they represent a company&#8217;s obligation to repay the principal amount along with a specified interest rate. NCDs provide companies with a means to raise capital without diluting ownership. Investors who purchase NCDs receive regular interest payments until the maturity of the debentures when the principal amount is repaid. NCDs are considered less risky due to their fixed returns and asset-backed security. Overall, NCDs enable companies to secure funds while providing investors a stable income and repayment assurance.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Private_Placement\"><\/span>What is Private Placement?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The private placement, as defined in Section 42 of the <a href=\"https:\/\/corpbiz.io\/learning\/types-of-companies-under-companies-act-2013\/\"><strong>Companies Act<\/strong><\/a> and Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014, is a method of offering securities by a company to a select group of individuals, known as &#8220;identified persons,&#8221; without making a public offer. It involves issuing a private placement offer-cum-application letter to the identified persons, specifying the terms and conditions of the offer. Private placement enables companies to raise funds from targeted investors while maintaining the confidentiality and addressing specific investor requirements, with the regulatory framework ensuring transparency and investor protection.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Facts_of_the_Case\"><\/span>Facts of the Case<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li>R2, as a purchaser of non-convertible debentures from ITNL, lodged a complaint with the Economic Offence Wing (EOW) under the Tamil Nadu Protection of Investment of Depositors (in Financial Establishments) Act (TNPID Act).<\/li>\n\n\n\n<li>The complaint was directed against ITNL, its directors, and the individuals currently petitioning the Court.<\/li>\n\n\n\n<li>The basis of R2&#8217;s complaint stemmed from the non-receipt of the interest that ITNL had committed to paying during the issuance of the debentures.<\/li>\n\n\n\n<li>Dissatisfied with the registration of the case against them, the petitioners responded by filing a criminal petition.<\/li>\n\n\n\n<li>The primary argument presented by the petitioners was that the provisions of the TNPID Act should not be applicable to the debentures issued by ITNL.<\/li>\n\n\n\n<li>Their contention was based on two key points: first, the debentures in question did not meet the criteria to be classified as &#8216;deposits&#8217;; and second, ITNL did not fit the definition of a &#8216;financial establishment&#8217; as outlined in sections 2(2) and 2(3) of the <strong>TNPID Act<\/strong>.<\/li>\n\n\n\n<li>The petitioners asserted that ITNL, a subsidiary of IL&amp;FS, primarily engaged in activities related to infrastructure rather than finance and banking operations.<\/li>\n\n\n\n<li>ITNL had issued non-convertible debentures to a limited group of individuals, guaranteeing the payment of interest on those debentures.<\/li>\n\n\n\n<li>Until January 21, 2019, the petitioners had been receiving regular interest payments on the debentures as promised by ITNL.<\/li>\n\n\n\n<li>However, due to a moratorium imposed by the National Company Law Appellate Tribunal (NCLAT), ITNL encountered difficulties fulfilling its obligation to pay interest.<\/li>\n\n\n\n<li>Consequently, the complainants in the case registered a complaint under the TNPID Act, citing ITNL&#8217;s defaults in interest payment as the reason for their grievance.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"High_Court_Held\"><\/span>High Court Held<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The High Court observed that there was no public solicitation or collection of funds from the public through advertisements by ITNL. The issuance of debentures was limited to a specific group of individuals through private placement. Given these circumstances, the Court concluded that the issuance of debentures could not be considered &#8216;deposits&#8217; as defined in Section 2(2) of the relevant law. Furthermore, the Court stated that the company&#8217;s private placement scheme did not qualify as a &#8216;financial establishment&#8217; as defined in Section 2(3). As a result, the provisions of the TNPID Act could not be applied in this case, and the registration of the case by the EOW against ITNL and the petitioners exceeded its <a href=\"https:\/\/corpbiz.io\/legal-services\"><strong>legal<\/strong><\/a> jurisdiction.<\/p>\n\n\n\n<p>Additionally, the Court noted that the issue was already being investigated by the Serious Fraud Investigation Office (SFIO) under Section 212. Consequently, the EOW&#8217;s authority to conduct a parallel investigation under the TNPID Act was prohibited. Therefore, the Court determined that the crime registered against the petitioners and ITNL by the EOW should be quashed.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In this case, the High Court concluded that the non-convertible debentures (NCDs) issued by ITNL through private placement to a specific group of individuals did not qualify as &#8216;deposits&#8217; under the TNPID Act. The Court determined that since there was no public solicitation or advertisement for deposits and the debentures were privately placed, they did not fall within the purview of the Act. Additionally, the Court found that ITNL&#8217;s private placement scheme did not meet the criteria to be considered a &#8216;financial establishment&#8217; as defined in the Act. The Court also noted that another authority was already investigating the issue, preventing the Economic Offence Wing from conducting a parallel investigation. As a result, the case against the petitioners and ITNL was dismissed.<\/p>\n\n\n\n<p><strong>Read our Article<\/strong>: <mark><a href=\"https:\/\/corpbiz.io\/learning\/nirendra-nath-kar-v-gopal-navin-bhai-dave\/\">Nirendra Nath Kar V. Gopal Navin Bhai Dave<\/a><\/mark><\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Issuance of NCDs to a selected group via private placement couldn\u2019t be termed as deposits u\/s 2(2) of TNPID Act: High Court In this case, ITNL issued non-convertible debentures (NCDs) to a specific group of individuals through private placement without soliciting deposits from the general public. The argument presented is that since there was no [&hellip;]<\/p>\n","protected":false},"author":74,"featured_media":58907,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[272],"tags":[3823],"acf":{"service_id":"69"},"authorName":"Maithli Jha","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2023\/05\/MicrosoftTeams-image-1-22.jpg","authorDescription":"Maithli is a final-year law student at Guru Gobind Singh Indraprastha University (GGSIPU) with a keen interest in emerging legal fields. She is committed to constantly learning and utilizing her theoretical knowledge in practical ways within the field of law.","postViews":2510,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/58906"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/74"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=58906"}],"version-history":[{"count":7,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/58906\/revisions"}],"predecessor-version":[{"id":67257,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/58906\/revisions\/67257"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/58907"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=58906"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=58906"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=58906"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}