Retrospective penal market restraint and minority incapacity barred debarment for a completed public issue.

Penal regulatory directions under the fraudulent and unfair trade practices framework could not be applied to a public issue that was completed before those regulations came into force, so the debarment could not stand on that basis. The Court also held that minors, lacking contractual capacity, could not be subjected to a capital market restraint as if they had personally undertaken an enforceable market act; any misuse of their names or participation had to be attributed to the person controlling the transaction. The restraint on the minors was therefore set aside, while action against the other concerned persons was maintained.

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Issues: (i) whether the fraudulent and unfair trade practices regulations could be applied to a public issue completed before those regulations came into force; (ii) whether the appellants who were minors at the relevant time could validly be subjected to the directions restricting access to the capital market.

Issue (i): whether the fraudulent and unfair trade practices regulations could be applied to a public issue completed before those regulations came into force

Analysis: The public issue had opened and closed before the regulations governing fraudulent and unfair trade practices became operative. The directions debarring access to the capital market were founded on those regulations. A penal provision or a punitive consequence cannot be applied to conduct which stood completed before the provision came into force. The Board's powers under the Act may support remedial directions, but the regulations themselves could not be invoked to impose a punitive restraint for prior conduct.

Conclusion: The regulations were not applicable to the completed public issue and the debarment could not be sustained against the appellants on that basis.

Issue (ii): whether the appellants who were minors at the relevant time could validly be subjected to the directions restricting access to the capital market

Analysis: A person who is a minor lacks competency to contract under the Contract Act. On the material before the Court, the minors could not be treated as having personally undertaken an enforceable contractual or market-related act for the purpose of penal consequences under the regulations. The responsibility for any fraudulent use of their names or participation in the subscription arrangement lay with the person who controlled the transaction. The direction restraining the minors from accessing the capital market was therefore unsupported.

Conclusion: The directions could not be sustained against the appellants on the ground of minority.

Final Conclusion: The appeal succeeded to the limited extent that the restraint on the minors was set aside, while the remaining directions and action against the other concerned persons were upheld.

Ratio Decidendi: Penal regulatory provisions cannot be applied retrospectively to completed conduct, and a minor lacking contractual capacity cannot be subjected to a penal market restraint on the footing of personal participation in the transaction.

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