Penalty against co-noticee ends after main noticee settles before Settlement Commission; Tribunal sets aside director's penalty.

Penalty proceedings against a director/co-noticee could not be sustained once the main noticee's dispute had been settled before the Settlement Commission. The Tribunal applied the settled principle that settlement of the principal noticee's case brings the penalty proceedings against co-noticees to an end, and held that any distinction between full waiver and reduction of the main noticee's penalty did not change that legal position. The observation that immunity does not automatically extend to other noticees was not allowed to override that principle. Penalty on the appellant was therefore set aside.

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Issues: Whether penalty could be sustained against a director/co-noticee after the main noticee's dispute was settled before the Settlement Commission.

Analysis: The Tribunal noted that the main noticee's dispute had been settled by the Settlement Commission and that the question whether the main noticee's penalty was fully waived or only reduced did not alter the legal position regarding co-noticees. Relying on the precedent that settlement of the main noticee's case brings the penalty proceedings against co-noticees to an end, the Tribunal held that the observation that immunity did not automatically extend to other noticees could not override the settled legal principle.

Conclusion: Penalty on the appellant was not sustainable and was set aside.

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