Securities and Exchange Board of India Act, 1992 – s.15-J, Cl. (a), (b) & (c) – Whether conditions stipulated in Clauses (a), (b) and (c) of s.15-J are exhaustive to govern the discretion in the Adjudicating Officer to decide on the quantum of penalty or the said conditions are merely illustrative – Held: Provisions of Clauses (a), (b) and (c) of s.15-J are illustrative in nature and have to be taken into account whenever such circumstances exist – But this is not to say that there can be no other circumstance(s) beyond those enumerated in Clauses (a), (b) and (c) of s.15-J that the Adjudicating Officer is precluded in law from considering while deciding on the quantum of penalty to be imposed – A narrow view would be in direct conflict with the provisions of s.15-I(2) which vests jurisdiction in the Adjudicating Officer, who is empowered on completion of the inquiry to impose “such penalty as he thinks fit in accordance with the provisions of any of those sections.”– The above apart, the circumstances enumerated in Clauses (a), (b) and (c) of s.15-J may have no relevance and may never arise in case of contraventions contemplated by certain provisions of the SEBI Act, for instance s.15-A, 15-B or 15-C – Therefore, to understand the conditions stipulated in Clauses (a), (b) and (c) of s.15-J to be exhaustive and admitting of no exception or vesting any discretion in the Adjudicating Officer would be virtually to admit / concede that in adjudications involving penalties u/ss.15-A, 15-B and 15-C, s.15-J will have no application – Such a result could not have been intended by the legislature – Conditions stipulated in Clauses (a), (b) and (c) of s.15-J are not exhaustive and in the given facts of a case, there can be circumstances beyond those enumerated by Clauses (a), (b) and (c) of s.15-J which can be taken note of by the Adjudicating Officer while determining the quantum of penalty. Securities and Exchange Board of India Act, 1992 – s.15-J, Cl. (a), (b) & (c) and ss.15-A to 15-HA – Whether conditions stipulated in Clauses (a) to (c) of s.15-J (which enumerates the “factors to be taken into account by the Adjudicating Officer” while adjudging the quantum of penalty) are mandatory conditions which must be read into ss.15-A to 15-HA (the penalty provisions) in the sense that unless the conditions specified in Clauses (a) to (c) are satisfied, penalty cannot be imposed by the Adjudicating Officer under the substantive provisions of ss.15-A to 15-HA – Held: The argument is too far-fetched to be accepted – s.15-J enumerates by way of illustration(s) the factors which the Adjudicating Officer should take into consideration for determining the quantum of penalty imposable – Imposition of penalty depends upon satisfaction of the substantive provisions as contained in s.15-A to s.15-HA.
Securities and Exchange Board of India Act, 1992 – s.15-J, Cl. (c) – Default under – Nature of – Continuing or repetitive – Held: Clause(c) of s.15-J refers to repetitive nature of default and not a continuing default – The word “repetitive” as used therein would refer to a recurring or successive default – This dictum, however, does not mean that factum of continuing default is not a relevant factor as Clauses (a) to (c) in s.15-J of the Act are merely illustrative and are not the only grounds/factors which can be taken into consideration while determining the quantum of penalty – Words and Phrases – “repetitive”.
Securities and Exchange Board of India Act, 1992 – s.15-J, Cl. (a), (b) & (c) and ss.15-A to 15-HA – Whether power and discretion vested by s.15-J to decide on the quantum of penalty, stands eclipsed by the penalty provisions contained in s.15-A to s.15-HA – Held: ss.15-A(a) to 15-HA have to be read along with s.15-J in a manner to avoid any inconsistency or repugnancy – Need to avoid conflict and head-on-clash and construe the said provisions harmoniously – Explanation to s.15-J added by Amendment Act No.7 of 2017, has clarified and vested in the Adjudicating Officer a discretion u/s.15-J on the quantum of penalty to be imposed while adjudicating defaults u/ss.15-A to 15-HA – Explanation to s.15-J, which was introduced / added in 2017 for removal of doubts created as a result of pronouncement in M/s. Roofit Industries Ltd. case, also states that the Adjudicating Officer shall always have deemed to have exercised and applied the provision – Therefore, provisions of s.15-J were never eclipsed and had continued to apply in terms thereof to the defaults u/s.15-A(a). Securities and Exchange Board of India Act, 1992 – s.15-J and s.15A(e) – Applicability of s.15J, in context of s.15A(a) as it was between 29th October, 2002 till 7th September, 2014 – Expression “whichever is less” therein – Meaning and effect – Legislative intent behind s.15A(a) as amended by Amendment Act No.7 of 2014 and Clarificatory Explanation added by Act No.7 of 21017 to s.15J explained – Held: M/s Roofit Industries Ltd. case had erroneously held that s.15-J would not be applicable after s.15-A(a) was amended with effect from 29th October, 2002 till 7th September, 2014 when s.15-A(a) of the SEBI Act was again amended – Insertion of Explanation to s.15-J added by Amendment Act No.7 of 2017 would reflect that the legislative intent, in spite of the use of the expression “whichever is less” in s.15-A(a) as it existed during the period 29th October 2002 till 7 th September 2014, was not to curtail the discretion of the Adjudicating Officer u/s.15J on the quantum of penalty to be imposed while adjudicating defaults – The legislative intent is also clear as s.15A(a) was amended by Amendment Act No.27 of 2014 to state that the penalty could extend to Rs.1 lakh for each day during which the failure continues subject to a maximum penalty of Rs. 1 crore – This amendment in 2014 was not retrospective and therefore, clarificatory and for removal of doubt Explanation to s.15-J was added by Act No. 7 of 2017 – Normally the expression “whichever is less” would connote absence of discretion by prescribing the minimum mandatory penalty, but in the context of s.15A(a) as it was between 29th October,2002 till 7th September, 2014, read along with Explanation to s.15-J added by Act No.7 of 2017, the legislative intent was not to prescribe minimum mandatory penalty of Rs.1 lakh per day during which the default and failure had continued – s.15-A(a) as it was between 25 th October, 2002 and 7th September, 2014 has to be read and interpreted in line with the Amendment Act 27 of 2014 as giving discretion to the Adjudicating Officer to impose minimum penalty of Rs.1 lakh subject to maximum penalty of Rs.1 crore, keeping in view the period of default as well as aggravating and mitigating circumstances including those specified in s.15-J.
Criminal Law – Offence – “Continuing offence” and “Repeat offence” – Distinction between – Held: The continuing offence is a one which is of a continuous nature as distinguished from one which is committed once and for all – In case of continuing offence, the liability continues until the rule or its requirement is obeyed or complied with – On every occasion when disobedience or noncompliance occurs and reoccurs, there is an offence committed – Continuing offence constitutes a fresh offence every time or occasion it occurs – A recurring or successive wrong, on the other hand, are those which occur periodically with each wrong giving rise to a distinct and separate cause of action.
Interpretation of Statutes – Doctrine of Harmonious construction – Invocation of – Held: Provision of one section cannot be used to nullify and obtrude another unless it is impossible to reconcile the two provisions.
Interpretation of Statutes – Explanation to provision – Clarificatory Explanation – Explanation to s.15-J was introduced /added by Amendment Act No.7 of 2017 for removal of doubts created as a result of pronouncement in M/s. Roofit Industries Ltd. case – Explanation to s.15-J so added by Amendment Act No.7 of 2017 has clarified and vested in the Adjudicating Officer a discretion u/s.15-J on the quantum of penalty to be imposed while adjudicating defaults u/ss.15-A to 15-HA – Securities and Exchange Board of India Act, 1992 – s.15-J, Explanation to.
Securities and Exchange Board of India through its Chairman v. Roofit Industries Limited (2016) 12 SCC
125 – overruled.
State of Bihar v. Deokaran Nenshi & Ors. (1972) 2 SCC
890 : [1973] 3 SCR 1004 and Union of India & Anr. v. Tarsem Singh (2008) 8 SCC 648 : [2008] 12 SCR 104 – relied on.
Siddharth Chaturvedi v. Securities and Exchange Board of India (2016) 12 SCC 119; Securities and Exchange Board of India v. Rakhi Trading (P) Ltd. (2018) 13 SCC 753; and Securities and Exchange Board of India v. Kishore R. Ajmera (2016) 6 SCC 368: [2016] 1 SCR 1118 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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