Securities and Exchange Board of India vs V Shankar

Court

Supreme Court of India

Date

8 February 2023

Case No.

Civil Appeal No. 527 of 2023

Result

Allowed

Bench

D.Y. Chandrachud, Pamidighantam Sri Narasimha, J.B. Pardiwala

Citation

[2023] 6 S.C.R. 419 : 2023 INSC 719

Headnote

SEBI (Buyback of Securities) Regulations, 1998 – Regulation 19(3) – Interpretation of – Notice to show cause was issued by the Whole Time Member (WTM) of SEBI to Deccan Chronicle Holdings Limited (DCHL), its Chairperson, Vice-chairperson and Company Secretary-respondent herein – A penalty of Rs.10 lakhs was imposed on the respondent – Respondent was held liable on the ground that he was the Company Secretary when a buyback offer worth Rs.270 crores was made by the company in violation of regulatory provisions – Order set aside by the Securities Appellate Tribunal – On appeal, held: Regulation 19(3) requires the company to nominate a compliance officer and an investors’ service centre – The purpose of the nomination is twofold- to ensure compliance with the buyback Regulations; and to redress the grievances of investors – There is a patent error on the part of the Tribunal in interpreting the Regulations – The Tribunal held that the role of the respondent, who was a Company Secretary, compliance officer, was limited to redressing the grievances of investors – In arriving at the finding, the Tribunal relied upon the latter part of Regulation 19(3) which deals with redressal of the grievances of investors – However, the Tribunal missed the crucial point that the compliance officer is also required to ensure compliance with the buyback regulations, as expressly stipulated in Regulation 19(3) – Interpretation of Regulation 19(3) by the Tribunal is contrary to its plain terms – Impugned order set aside – Proceedings remitted back to the Tribunal for fresh consideration in the light of the interpretation as aforesaid– Securities and Exchange Board of India Act 1992 – s.12A(a), (b) & (c), s.15HA – Companies Act 1956 – ss.68, 77A – Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities Market) Regulations 2003 – Regulations 3(a)-(d), 4(1), 4(2)(f), (k) and (r). Mr Bhuwaneshwar Mishra v. SEBI (decision of

Securities Appellate Tribunal dtd. 31st July 2014 in Appeal No 7 of 2014); Brooks Laboratories Limited & Ors v. SEBI (decision of Securities Appellate Tribunal dtd. 21 March 2018 in Appeal No 266 of 2016) –

referred to.

The Judgment of the Court was delivered by DR. DHANANJAYA Y CHANDRACHUD, CJI 1. Admit. 2. The appeal by the Securities and Exchange Board of India 1 under Section 15Z of the Securities and Exchange Board of India Act 19922 arises from a judgment dated 1 November 2022 of the Securities Appellate Tribunal3. 3. The Tribunal, while allowing the appeal by the respondent, set aside an order dated 22 March 2022 of the Whole Time Member4 under Section 15HA of the SEBI Act by which a penalty of Rs Ten lakhs was imposed on the respondent for violating of Sections 68 and 77A of the Companies Act 1956

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