Investor protection powers can support compensatory interest for delayed payment under securities regulation even without an express clause.

The statutory scheme under the Securities and Exchange Board of India Act, 1992 and the 1997 acquisition regulations was construed to permit compensatory interest on delayed payment in aid of investor protection, even without an express interest clause. Section 11(1) was treated as a broad enabling power, while section 11(2) was read as illustrative rather than exhaustive; read with Regulation 44, it supported directions for interest to prevent defeat of the regulatory object. The date from which interest runs was upheld because it had already been accepted in earlier proceedings, and 15 per cent per annum was held compensatory rather than penal.

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Issues: (i) whether the Securities and Exchange Board of India had power to award interest on delayed payment under the statutory scheme; (ii) whether interest could be directed to run from the date fixed by the Tribunal; and (iii) whether interest at 15 per cent per annum was excessive or penal.

Issue (i): whether the Securities and Exchange Board of India had power to award interest on delayed payment under the statutory scheme.

Analysis: Section 11(1) of the Securities and Exchange Board of India Act, 1992 obliges the Board to protect investors and authorises it to take such measures as it thinks fit. Section 11(2) is enabling and illustrative, and does not exhaust the Board's powers. Read with Regulation 44 of the Securities and Exchange Board of India (Acquisition of Shares) Regulations, 1997, the statutory framework was held to confer sufficient authority to direct payment of interest to compensate investors for delayed payment. The construction adopted was purposive, aimed at advancing investor protection and preventing the object of the legislation from being defeated.

Conclusion: the power to award interest existed, and the contention to the contrary failed.

Issue (ii): whether interest could be directed to run from the date fixed by the Tribunal.

Analysis: The relevant date for fixing liability had already been accepted in earlier proceedings as the date of public announcement and decision to acquire. On that footing, the Tribunal's choice of the date from which interest would run was not shown to be erroneous. The Board also did not dispute the date adopted by the Tribunal.

Conclusion: the date from which interest was directed to run was upheld.

Issue (iii): whether interest at 15 per cent per annum was excessive or penal.

Analysis: The rate was consistent with rates used in comparable SEBI regulations governing delayed refund. The Court held that the rate was compensatory, not punitive, and the prevalence of lower commercial rates in another jurisdiction was irrelevant to the statutory context governing the dispute.

Conclusion: the rate of 15 per cent per annum was not excessive or penal.

Final Conclusion: the statutory challenge to the award of interest failed in full, and the impugned order was sustained.

Ratio Decidendi: where the securities regulator is under a statutory duty to protect investors, an enabling provision authorising it to take such measures as it thinks fit may, read with the relevant regulations, sustain an award of compensatory interest for delayed payment even in the absence of an express interest clause.

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