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of <h1>SEBI recovery certificate upheld as IBC moratorium periods had expired before issuance under Section 28A</h1> <h3>Mr. G. Bala Reddy Versus Securities Exchange board of India</h3> Mr. G. Bala Reddy Versus Securities Exchange board of India - TMI Issues Involved: The judgment involves the challenge against the order of Securities Exchange Board of India (SEBI) directing payment of a penalty under Section 28A of the SEBI Act and the Income Tax Act, 1961. The main issues include the applicability of the Insolvency and Bankruptcy Code, 2016 (IBC) and the distinction between penalty and fine under the relevant laws.Summary of Judgment:Issue 1: Challenge against SEBI's Order: The appellants and respondents filed a writ petition against SEBI's order imposing a penalty, which was dismissed. The impugned certificate for payment of the penalty was challenged on the grounds of pending insolvency proceedings under IBC and the 1920 Act.Issue 2: Applicability of IBC Over SEBI Act: The learned Single Judge held that IBC overrides SEBI Act, but noted that no interim moratorium orders were in favor of the appellants except for one appellant. The penalty sought to be recovered was considered as a 'fine' under IBC, not covered by the moratorium.Issue 3: Penalty vs. Fine Distinction: The appellants argued that the penalty imposed by SEBI is different from a fine under IBC. They contended that the penalty was levied for violations under SEBI Act's Chapter VIA, not as a fine. Reference was made to legal definitions and Supreme Court decisions to support this argument.Issue 4: Moratorium under IBC: The Court analyzed the provisions of interim moratorium under IBC Sections 96 and 101, concluding that no moratorium was in effect during the relevant period for the appellants. Therefore, SEBI was justified in issuing the impugned certificate for penalty recovery.Conclusion: The Court found no grounds to differ with the Single Judge's view, dismissing the appeal. The issue of whether the penalty is a fine or not was left open for future adjudication. The judgment emphasized the absence of a moratorium during the relevant period and upheld SEBI's right to recover the penalty.
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