Conditional quashing of SEBI penalty prosecution followed payment of penalty and further interest in the peculiar facts

Where a penalty imposed under the SEBI Act had already attained finality and been paid during the proceedings, the Court treated the remaining issue as confined to interest. In the peculiar facts and after the long lapse of time, it directed the petitioner to pay an additional sum towards interest, and on such compliance the pending criminal proceedings would stand quashed. The decision reflects that consequential prosecution for non-payment of penalty may be brought to an end where the substantive penalty liability has been discharged and the residual obligation is satisfied by further monetary payment.

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Issues: Whether the criminal proceedings initiated for non-payment of the penalty imposed under the SEBI Act deserved to be quashed upon payment of the penalty amount and an additional sum towards interest.

Analysis: The adjudicating authority had imposed a penalty of Rs. 1 crore under Section 15HA of the Securities and Exchange Board of India Act, 1992, and that order had attained finality. During the pendency of the matter, the petitioner deposited the penalty amount. The Court then proceeded on the footing that only the question of interest remained and, having regard to the long lapse of time and the peculiar facts of the case, considered it appropriate to bring the matter to a close by directing further payment towards interest, after which the pending criminal proceedings would be terminated.

Conclusion: The petitioner was directed to deposit Rs. 10 lakhs towards interest, and upon such deposit the criminal proceedings stood quashed.

Final Conclusion: The proceedings were disposed of by granting conditional relief to the petitioner and terminating the prosecution upon compliance with the monetary direction.

Ratio Decidendi: In the peculiar facts of the case, where the penalty had already been paid and the remaining liability was confined to interest, the Court may terminate the consequential criminal proceedings on compliance with a further monetary direction.

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