Companies Act compounding does not bar independent SEBI for alleged securities law violations.

Compounding of offences under the Companies Act, 1956 was held to operate only within that Act and not to bar independent action under the SEBI Act, 1992 or the SEBI Regulations. The court noted that Section 621-A permits compounding only of Companies Act offences, so settlement before the Company Law Board did not extinguish the appellant's power to proceed for alleged SEBI violations or prevent appropriate proceedings in accordance with law. On that basis, the challenge to the compounding order was found meritless, and the order was upheld.

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Issues: Whether the order compounding the offences under the Companies Act, 1956 was liable to be set aside on the ground that such compounding did not affect the appellant's power to proceed for alleged violations under the SEBI Act, 1992 and the SEBI Regulations, and whether the impugned order called for interference.

Analysis: The composition accepted by the Company Law Board was confined to offences punishable under the Companies Act, 1956. The statutory scheme of Section 621-A permits compounding of offences under that Act and does not extend to barring action under other enactments. The Court noted that settlement of the Companies Act violations did not stifle the appellant's independent powers under the SEBI Act, 1992 or the regulations framed thereunder. The compounding also did not prevent the appellant from initiating appropriate proceedings in accordance with law for any alleged SEBI violations. In that view, the challenge to the compounding order did not disclose merit.

Conclusion: The compounding order was upheld and the challenge failed. The appeals were not entitled to interference.

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