TaxTMI 
TaxTMI 
2015 (2) TMI 735
X X X X Extracts X X X X
X X X X Extracts X X X X
....curities; the power to suspend any office-bearer of any stock exchange or self-regulatory organization from holding such position; the power to impound and retain the proceeds or securities in respect of any transaction which is under investigation; the power to attach after passing of an order on an application made for approval (by the Judicial Magistrate of First Class having jurisdiction) for a period not exceeding one month, one or more bank account(s) of any intermediary or any person associated with the securities market in any manner involved in violation of any of the provisions of the SEBI Act, or the rules/regulations framed thereunder; and the power to direct any intermediary or any person associated with the securities market in any manner not to dispose of or alienate an asset forming part of any transaction which is under investigation. If the Board finds (on investigation), that a person has violated (or is likely to violate) any provision of the SEBI Act, or any rules/regulations made thereunder, the Board is authorized under Section 11D of the SEBI Act, to pass an order requiring the person concerned, to cease and desist from committing or causing such violation. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to above), is being extracted hereunder:- "15Z. Appeal to High Court- Any person aggrieved by any decision or order of the Securities Appellate Tribunal may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Securities Appellate Tribunal to him on any question of fact or law arising out of such order." (emphasis is ours) A perusal of Section 15Z reveals, that when the second appellate remedy was made available to an aggrieved party for the first time, the forum for the second appeal was the High Court. And second appellate remedy was available on questions of fact, as also, questions of law. 5. Section 15Z of the SEBI Act as originally enacted, was amended with retrospective effect, from 29.10.2002. The above amendment to Section 15Z, was brought into force by the Securities and Exchange Board of India (Amendment) Ordinance, 2002. The Ordinance was replaced by the Securities and Exchange Board of India (Amendment) Act, 2002. Section 15Z, as amended is reproduced hereunder:- "15Z. Appeal to Supreme Court- Any person aggrieved by any decision or order of the Securities Appellate Tribunal may file an appeal to the S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erence to the appeals which have been held as maintainable by the High Court. According to the learned counsel for the appellant, where the repealing Act provides for a new forum (as in the instant case), the original remedy (or legal proceedings) cannot be pursued after the repeal, the remedy before the new forum alone would be available. 9. Insofar as the factual aspect of the present matter is concerned, the impugned order which was assailed before the High Court, under the unamended Section 15Z was disposed of before 29.10.2002. And therefore it was felt, that the remedy available at the time when the impugned order was passed, had to be pursued. Therefore, the pointed question to be determined by this Court, in the present appeal would be, whether an order passed by the Securities Appellate Tribunal before 29.10.2002 would be appealable under the unamended provision of Section 15Z of the SEBI Act before the High Court, or alternatively, whether the same would be appealable under the amended provision of Section 15Z of the SEBI Act before the Supreme Court. And also, whether the date on which the Board had preferred the appeals, was a relevant consideration, in the facts and c....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of Section 15Y of the SEBI Act, debarred a civil court from even granting an injunction in respect of any action taken (or to be taken) in pursuance of any power conferred by or under the SEBI Act. It was the contention of the learned counsel, that Section 15Z of the SEBI Act, should be examined in the background of the intent expressed by the legislature through Section 15Y. 12. In conjunction with the above submission, learned counsel for the appellant invited the Court's attention to Sections 27 and 32 of the Securities and Exchange Board of India (Amendment) Act, 2002, which are reproduced hereunder:- "27. Substitution of new Section for Section 15Z- For Section 15Z of the principal Act, the following section shall be substituted, namely:- "15Z. Appeal to Supreme Court - Any person aggrieved by any decision or order of the Securities Appellate Tribunal may file an appeal to the Supreme Court within sixty days from the date of communication of the decision or order of the Securities Appellate Tribunal to him on any question of law arising out of such order: Provided that the Supreme Court may, if it is satisfied that the applicant was prevented by sufficient cause from filin....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that, in accordance with a long line of authorities extending from the time of Lord Coke to the present day, the appellants would be entitled to succeed. The Judiciary Act is not retrospective by express enactment or by necessary intendment. And therefore the only question is, was the appeal to His Majesty in Council a right vested in the appellants at the date of the passing of the Act, or was it a mere matter of procedure? It seems to their Lordships that the question does not admit of doubt. To deprive a suitor in a pending action of an appeal to a superior tribunal which belonged to him as the right is a very different thing from regulating procedure. In principle, their Lordships see no difference between abolishing an appeal altogether and transferring the appeal to a new tribunal. In either case there is an interference with existing rights contrary to the well-known general principle that statutes are not to be held to act retrospectively unless a clear intention to that effect is manifested." (emphasis is ours) 14. Learned counsel for the appellant pointed out, that the decision rendered by the Privy Council in Colonial Sugar Refining Co. Ltd. case (supra) was followed ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....not a mere matter of procedure but is a substantive right. (iii) The institution of the suit carries with it the implication that all rights of appeal then in force are preserved to the parties there to till the rest of the career of the suit. (iv) The right of appeal is a vested right and such a right to enter the superior Court accrues to the litigant and exists as on and from the date the lis commences and although it may be actually exercised when the adverse judgment is pronounced such right is to be governed by the law prevailing at the date of the institution of the suit or proceeding and not by the law that prevails at the date of its decision or at the date of the filing of the appeal. (v) This vested right of appeal can be taken away only by a subsequent enactment, if it so provides expressly or by necessary intendment and not otherwise." (emphasis is ours) The aforesaid conclusions, came to be applied in Garikapati Veeraya's case (supra), as is apparent from an extract of the judgment, which is being reproduced hereunder:- "24. In the case before us the suit was instituted on April 22, 1949, and on the principles established by the decisions referred to above the r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e for consideration: Are the provisions of the Portuguese Civil Code relating to reclamacao merely matters of procedure? Or, do they create or affect vested rights and remedies? That is to say, does a reclamacao have all the attributes of a substantive right of appeal existing at the commencement of the suit? Did the superior Court of Appeal at Lisbon stand abolished as an appellate forum in relation to Goa, Daman and Diu from December 20, 1962? If so, what is its effect on the right of appeal given by Articles 677 and 722 of the Portuguese Civil Code and their application to the present case? Was the Portuguese Supreme Court at Lisbon succeeded by the Supreme Court of India for the purpose of the aforesaid Articles 677 and 722 of the Portuguese Code? If so, did this position hold good after June 15, 1966? Does the Central Act 30 of 1965 read with Notification No. S.O. 1597, issued thereunder, expressly or impliedly, make inapplicable the provisions of the Portuguese Civil Code in the matter of reclamacao in respect of a decision or Judgment rendered by the Court of Judicial Commissioner after June 15, 1966? That is to say, have the rights, remedies or obligations arising out of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....endered." On the instant proposition, learned counsel for the appellant last of all, placed reliance on Shyam Sunder v. Ram Kumar, (2001) 8 SCC 24, wherein after relying on the conclusions drawn by this Court in Dayawati v. Inderjit, AIR 1966 SC 1423, and Hitendra Vishnu Thakur v. State of Maharashtra, (1994) 4 SCC 602, as also, on K.S. Paripoornan v. State of Kerala, (1994) 5 SCC 593, and noticing extracts therefrom, in paragraphs 25, 26 and 27 respectively, this Court recorded its conclusions in paragraph 28. Paragraphs 25 to 28 are accordingly being extracted hereunder:- "25. In Dayawati v. Inderjit, AIR 1966 SC 1423, it is held thus: "10. Now as a general proposition, it may be admitted that ordinarily a court of appeal cannot take into account a new law., brought into existence after the judgment appealed from has been rendered, because the rights of the litigants in an appeal are determined under the law in force at the date of the suit. Even before the days of Coke whose maxim - a new law ought to be prospective, not retrospective in its operation - is oft-quoted, courts have looked with disfavour upon laws which take away vested rights or affect pending cases. Matters of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e determination of the substantive rights and in the absence of a clear indication of a contrary intention in an amending enactment, the substantive rights of the parties to an action fall to the determined by the law as it existed when the action was commenced and this is so whether the law is change before the hearing of the case at the first instance or while an appeal is pending (See Halsbury's Laws of England, 4th Edn., Vol. 44, para 922)". 28. From the aforesaid decisions the legal position that emerges is that when a repeal of an enactment is followed by a fresh legislation, such legislation does not effect the substantive rights of the parties on the date of suit or adjudication of suit unless such a legislation is retrospective and a court of appeal cannot take into consideration a new law brought into existence after the judgment appealed from has been rendered because the rights of the parties in an appeal are determined under the law in force on the date of the suit. However, the position in law would be different in the matters which relate to procedural law but so far as substantive rights of parties are concerned they remain unaffected by the amendment in the en....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... amendment to Section 15Z of the SEBI Act does not deprive the appellant, of the right to second appeal. In this behalf it was submitted, that the right of first appeal is before the Securities Appellate Tribunal, whereas, the right to second appeal was before the High Court, prior to the amendment under consideration. Consequent upon the amendment of Section 15Z (with effect from 29.10.2002), the right to second appeal, which earlier lay before the High Court, has now been vested with the Supreme Court. According to learned counsel the right of second appeal, which was a vested substantive right, remains preserved, even after the amendment. It was therefore pointed out, that only the forum of the second appeal, had been altered, from the High Court (where it lay, under the unamended provision) to the Supreme Court of India (where it now lies, after the amendment). It was contended, that whilst the right of second appeal was a vested substantive right; the forum before which an appeal lies had a procedural perspective, and had no similar connotation. 17. In support of his above submission, learned counsel for the appellant, in the first instance, placed reliance on Maria Cristina ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e such appeal can be lodged is indubitably a procedural matter and, therefore, the appeal, the right to which has arisen under a repealed the Act, will have to be lodged in a forum provided for by the repealing Act. That the forum of appeal, and also the limitation for it, are matters pertaining to procedural law will be clear from the following passage appearing at page 462 of Salmond's Jurisprudence (12th Edn.): Whether I have a right to recover certain property is a question of substantive law, for the determination and the protection of such rights are among the ends of the administration of justice; but in what courts and within what time I must institute proceedings are questions of procedural law, for they relate merely to the modes in which the courts fulfill their functions. It is true that under Clause (c) of the proviso to Section 4 of Central Act XXX of 1965 (which corresponds to Section 6(e) of the General Clauses Act, 1897) it is provided that a remedy or legal proceeding in respect of a vested right like a right to an appeal may be instituted, continued or enforced as if this Act (meaning the repealing Act) had not been passed. But this provision merely saves th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as not complete on the date on which the Amendment Act came into force and the challan had not till then been filed in the court. From the law settled by this Court in various cases, the illustrative though not exhaustive, principles which emerge with regard to the ambit and scope of an Amending Act and its retrospective operation may be culled out as follows: (i) A statute which affects substantive rights is presumed to be prospective in operation, unless made retrospective, either expressly or by necessary intendment, whereas a Statute which merely affects procedure, unless such a construction is texturally impossible, is presumed to be retrospective in its application, should not be given an extended meaning, and should be strictly confined to its clearly defined limits. (ii) Law relating to forum and limitation is procedural in nature, whereas law relating to right of action and right of appeal, even though remedial, is substantive in nature. (iii) Every litigant has a vested right in substantive law, but no such right exists in procedural law. (iv) A procedural Statute should not generally speaking be applied retrospectively, where the result would be to create new disabil....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... appellate forum was changed from the High Court to the Supreme Court, would necessarily have to be treated as a procedural amendment. Having so inferred, it was the contention of the learned counsel, based on the judgments referred to above, that the amendment under reference, was liable to be treated as procedural. And as such, the amendment to Section 15Z had to be treated as if, the same was a part of the SEBI Act from the very beginning. 18. We have recorded hereinabove, the submissions advanced on behalf of the appellant. We shall record hereinafter, the response of the learned counsel for the respondent. 19. While responding to the submissions advanced at the hands of the learned counsel for the appellant, learned counsel for the respondent was satisfied, in merely relying upon judicial precedent, to contest the submissions advanced at the hands of the learned counsel for the appellant. It is therefore, that we will hereinafter systematically narrate the judgments referred to by the learned counsel for the respondent. 20. First of all, learned counsel placed reliance on Commissioner of Income Tax, Orissa v. Dhadi Sahu, 1994 Supp.(1) SCC 257. In the above judgment, the res....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... did not exceed Rs. 25,000.00. This supports the inference that in pending references the Inspecting Assistant Commissioner continued to have jurisdiction to impose penalty. The previous operation of Section 274(2) as it stood before April 1, 1971, and anything done thereunder continued to have effect under Section 6(b) of the General Clauses Act, 1897, enabling the Inspecting Assistant Commissioner to pass orders imposing penalty in pending references. In our opinion, therefore, what is material to be seen is as to when the references were initiated. If the reference was made before April 1, 1971, it would be governed by Section 274(2) as it stood before that date and Inspecting Assistant Commissioner would have jurisdiction to pass the order of penalty. 21. It is also true that no litigant has any vested right in the matter of procedural law but where the question is of change of forum it ceases to be a question of procedure only. The forum of appeal or proceedings is a vested right as opposed to pure procedure to be followed before a particular forum. The right becomes vested when the proceedings are initiated in the Tribunal or the court of first instance and unless the legisl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....efore the court on reference abate. 27. We are thus of the considered view that the advisory opinion given by the High Court to the question referred to it was wrong and the answer should be in favour of the appellant and it is held that the Inspecting Assistant Commissioner to whom the case was referred prior to April 1, 1971 had jurisdiction to impose the penalty. The view expressed by the Allahabad High Court in CIT v. Om Sons, [1979] 116 ITR 215 (All), and the Karnataka High Court in CIT v. M.Y. Chandragi, [1981] 128 ITR 256 (KAR), does not, therefore, lay down the correct law." (emphasis is ours) According to learned counsel, a perusal of the above judgment revealed, that change of forum could be substantive or procedural. It would be procedural when the remedy has yet to be availed of. But where the remedy had already been availed of (under an existing statutory provision), the right crystallized into a vested substantive right. In the latter situation, according to learned counsel, unless the amending provision, by express words or by necessary implication mandates, the transfer of pending proceedings to the forum introduced by the amendment, the forum postulated by the u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rative. It is operative over all the enactments under the General Clauses Act, Central Act or Regulations made after the commencement of General Clauses Act. It also clarifies in case of repeal of any provision under the aforesaid Act or regulation, unless a different intention appears from such repeal, it would have no affect over the matters covered in its sub-clauses, viz., (a) to (e). It clearly specifies that the repeal shall not revive anything not in force or in existence or effect the previous operation of any enactment so repealed or anything duly done or suffered or affect any right, privilege, obligation or liability acquired, accrued or incurred under the repealed statute, affect any penalty, forfeiture or punishment incurred in respect of any offence committed under the repealed statute and also does not affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid. Thus the Central theme which spells out is that any investigation or legal proceeding pending may be continued and enforced as if the repealing Act or Regulation had not come into force. 26. As a general r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....;. In such cases pending proceedings is to be continued as if the statute has not been repealed. 36. In view of the aforesaid legal principle emerging, we come to the conclusion that since proceeding for the eviction of the tenant was pending when the repealing Act came into operation, Section 6 of the General Clauses Act would be applicable in the present case, as it is Landlord's accrued right in terms of Section 6. Clause (c) of Section 6 refers to "any right" which may not be limited as a vested right but is limited to be an accrued right. The words 'any right accrued' in Section 6(c) are wide enough to include landlord's right to evict a tenant in case proceeding was pending when repeal came in. Thus a pending proceeding before the Rent Controller for the eviction of a tenant on the date when the repealing Act came into force would not be affected by the repealing statue and will be continued and concluded in accordance with the law as existed under the repealed statute." (emphasis is ours) Based on the above determination, it was the contention of the learned counsel, that in addition to the existence of a vested right, Section 6(c) and (e) make it abundant....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sted right which inhered in a party from the commencement of the action in the Court of first instance and such right could not be taken away except by an express provision or by necessary implication. 5. In Sardar Ali v. Dolimuddin, AIR 1928 Cal. 640 (FB) (E), the suit out of which the appeal arose was filed in the Munsiff's Court at Alipore on the 7.10.1920. The suit having been dismissed on the 17.7.1924, the plaintiffs appealed to the Court of the District Judge but the appeal was dismissed. The plaintiffs then preferred a second appeal to the High Court on the 4.10.1926. That second appeal was heard by a Single Judge and was dismissed on the 4.4.1928. In the meantime Cl. 15 of the Letters Patent was amended on the 14.1.1928 so as to provide that no further appeal should lie from the decision of a Single Judge sitting in second appeal unless the Judge certified that the case was a fit one for appeal. In this case the learned Judge who dismissed the second appeal on the 4.4.1928, declined to give any certificate of fitness. The plaintiffs on the 30.4.1928, filed an appeal on the strength of Cl. 15 of the Letters Patent as it stood before the amendment. The contention of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....The contention of the petitioner was that the amended provision which came into force on 21.2.1929, could not affect the right of appeal from a decision on an application made on 19.12.1928, for setting aside the sale. Mitter J. said at pp. 101-102:- "We think the contention of the petitioner is well-founded and must prevail. That a right of appeal is a substantive right cannot now be seriously disputed. It is not a mere matter of procedure. Prior to the amendment of 1928, there was an appeal against an order refusing to set aside a sale (for that is the effect also where the application to set aside the sale is dismissed for default) under the provisions of O. 43, R. (1), Civil PC. That right was unhampered by any restriction of the kind now imposed by S. 174(5), Proviso. The Court was bound to admit the appeal whether appellant deposited the amount recoverable in execution of the decree or not. By requiring such deposit as a condition precedent to the admission of the appeal, a new restriction has been put on the right of appeal, the admission of which is now hedged in with a condition. There can be no doubt that the right of appeal has been affected by the new provision and in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....epelled this argument with the remark at p. 643 :- "Unless the contrary can be shown, the provision which takes away jurisdiction is itself subject to the implied saving of the litigants' right." In our view the above observation is apposite and applies to the case before us. The true implication of the above observation as of the decisions in the other cases referred to above is that the pre-existing right of appeal is not destroyed by the amendment if the amendment is not made retrospective by express words or necessary intendment. The fact that the pre-existing right of appeal continues to exist must, in its turn, necessarily imply that the old law which created that right of appeal must also exist to support the continuation of that right. As the old law continues to exist for the purpose of supporting the pre-existing right of appeal that old law must govern the exercise and enforcement of that right of appeal and there can then be no question of the amended provision preventing the exercise of that right. The argument that the authority has no option or jurisdiction to admit the appeal unless it be accompanied by the deposit of the assessed tax as required by the amended....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rishes no doubt. We have therefore to examine whether the Constitution which brought the Supreme Court into being makes any provision for an appeal from a reversing decree of the High Court prior to the date of the Constitution respecting properties of the value of Rs. 10,000 and more being entertained and heard by the Supreme Court." (emphasis is ours) The issue raised in paragraph 4, extracted hereinabove, came to be answered by this Court in the following manner: "8. Though Art. 133 does not apply, we have still to see whether it is a matter as regards which jurisdiction and powers were exercisable by the Federal Court immediately before the commencement of the Constitution. It is unnecessary to refer in detail to the earlier enactments defining the jurisdiction of the Privy Council, and the Government of India Act, 1935 establishing the Federal Court and conferring a limited jurisdiction on the same. It is sufficient to point out that as the law then stood, the Federal Court had jurisdiction to entertain and hear appeals from a decree of a High Court which reversed the lower court's decree as regards properties of the value of more than Rs. 10,000. The aggrieved party ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....titution is a question that does not arise for decision now." (emphasis is ours) Based on the conclusions drawn by this Court, as have been extracted above, learned counsel vehemently contested the contention advanced on behalf of the appellant, that after the amendment of Section 15Z of the SEBI Act, the right of second appeal had not been fully preserved. In this behalf it was pointed out, that under the unamended Section 15Z, the appellate right extended to questions of law as well as fact, whereas, under the amended Section 15Z, the appellate right was limited to questions of law alone. As such, it was submitted, that the effect of the amendment under reference, could not be described as a mere change of forum. According to learned counsel for the respondent, the amendment affected the respondent's right to appeal as well. 24. We have given our thoughtful consideration to the submissions advanced at the hands of the learned counsel for the rival parties. We shall now venture to determine the controversy which has been debated hereinabove. So as not to be required to repeatedly express one foundational fact, it would be pertinent to mention, that our determination, insofar as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r order is passed. Such a vested substantive right can be taken away by an amendment, only when the amended provision, expressly or by necessary intendment, so provides. Failing which, such a vested substantive right can be availed of, irrespective of the law which prevails, at the date when the order impugned is passed, or the date when the appeal is preferred. For, it has repeatedly been declared by this Court, that the legal pursuit of a remedy, suit, appeal and second appeal, are steps in a singular proceeding. All these steps, are connected by an intrinsic unity, and are regarded as one legal proceeding. 27. Where the appellate package, as in the present case, is expressed differently at the "pre" and "post" amendment stages, there could only be two eventualities. Firstly, the pre-amendment appellate package, could have been decreased by the amendment. Or alternatively, the post-amendment package, could have been increased by the amendment. In the former situation, all that was available earlier, is now not available. In other words, the right of an individual to the appellate remedy, stands reduced or curtailed. In the latter situation, the amendment enhances the appellate p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....llate remedy, but merely alters the forum where the second appellate remedy would lie, is not acceptable. 29. Having concluded, that the remedy of second appeal vested in the respondent has not been preserved, in the same format as it was available to the respondent, at the time of initiation of the lis between the parties; and also having concluded, that the scope of the appellate remedy has been diminished by the amendment, we are satisfied in holding, that amendment to Section 15Z of the SEBI Act adversely affected the respondent, of a vested substantive appellate right, as was available to the respondent, at the commencement of the lis or dispute between the rival parties. Having recorded the aforesaid conclusion, based on the judgments relied upon by the learned counsel for the appellant, as also, by the learned counsel for the respondent, it is inevitable to conclude, that the appellate remedy available to the respondent prior to the amendment of Section 15Z of the SEBI Act, must continue to be available to the respondent, despite the amendment. We accordingly hold, that all the appeals preferred by the Board, before the High Court, were maintainable in law. 30. Having reco....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ld not be affected in any manner. Accordingly, for the same reasons as have been expressed in the above judgment (relevant extracts whereof have been reproduced above), we are of the view, that the instant contention advanced at the hands of the learned counsel for the appellant is wholly misconceived. Furthermore, the instant contention is wholly unacceptable in view of the mandate contained in Section 6(c) and (e) of the General Clauses Act, 1897. While interpreting the aforesaid provisions this Court has held, that the amendment of a statute, which is not retrospective in operation, does not affect pending proceedings, except where the amending provision expressly or by necessary intendment provides otherwise. Pending proceedings are to continue as if the unamended provision is still in force. This Court has clearly concluded, that when a lis commences, all rights and obligations of the parties get crystallized on that date, and the mandate of Section 6 of the General Clauses Act, simply ensures, that pending proceedings under the unamended provision remain unaffected. Herein also, therefore, our conclusion is the same as has already been rendered by us, in the foregoing paragra....