TaxTMI 
TaxTMI 
2016 (3) TMI 765
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....ts before us made certain purchases of shares of the Brijlaxmi Leasing and Finance Company between October and December, 2012. On 16th June, 2014, in Civil Appeal No.14730 of 2015, a show cause notice came to be issued by the respondent SEBI to the appellant under Rule 4(1) of the Securities and Exchange Board of India (Procedure for holding inquiry and imposing penalty by adjudicating officer) Rules, 1995 for the alleged violation of the provisions of Regulations 13(4), 13(4A) and 13(5) of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992. 3. A detailed reply was filed by the appellant to the show cause notice, on 13th August, 2014, submitting that there was no intention to violate any rule or....
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.... that, this being so, it is clear that the violation of the regulations being only technical, and not involving any disproportionate gain to the appellant, or unfair advantage or loss to any investor, SEBI was not, in the first instance, correct in imposing any penalty at all. According to the learned counsel for the appellants, the defaults that were made were technical, and were made on three days only, and there was no repetitive nature of any default as well. 7. Mr. C.U. Singh, learned senior counsel appearing on behalf of the respondent SEBI has placed before us a judgment of a Division Bench of this Court titled as SEBI Through its Chairman versus Roofit Industries Limited, reported in 2015 (12) SCALE 642. Mr. Singh has pointed out....
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....l list and indicates something that is not listed." In this context, we find no reason to read "namely" as "including", as learned senior counsel for the respondent would have us do. 5. It would be apposite for us to begin our analysis of the penalty to be imposed by laying out Section 15A(a) as it stood subsequent to the 2002 amendment, for the facility of reference: 15A. If any person, who is required under this Act or any rules or regulations made thereunder,- a. to furnish any document, return or report to the Board, fails to furnish the same, he shall be liable to a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less; ......... In the connected appeals before....
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....dging quantum of penalty. Once this discretionary power of the adjudicating officer was withdrawn, the scope of Section 15J was drastically reduced, and it became relevant only to the Sections where the Adjudicating Officer retained his prior discretion, such as in Section 15F(a) AND Section 15HB. This ought to have been reflected in the language of Section 15-I, but was clearly overlooked. Section 15J has become relevant once again, subsequent to the Securities Laws (Amendment) Act, 2014, which changed Section 15A(a), with effect from 8.9.2014, to read as follows :- 15A. Penalty for failure to furnish information, return, etc. - If any person, who is required under this Act or any rules or regulations made thereunder :- a. to furnish....
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....etionary power of the Adjudicating Officer having been withdrawn, the scope of Section 15J would correspondingly stand drastically reduced. 10. Prima facie, we find it a little difficult to subscribe to both the views contained in paragraph 4 as well as in paragraph 5 of the said judgment. The expression "shall have due regard to" is a very known legislative device used from the time of Julius v Bishop of Oxford (1880) LR 5 AC 214 (HL), and followed in many judgments both English as well as of our Courts as words vesting a discretion in an Adjudicating Officer. The question which arises in the present appeals is whether the expression "namely" fixes the discretion which can be exercised only in the circumstances mentioned in the three cl....
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....ve nature of default, no penalty at all ought to be imposed. What has been done by the appellants here is to fail to adhere to Regulation 13, as alleged in the show cause notice, which failure has occurred on three days and consequently, has allegedly not been repeated by the appellants anytime thereafter. If we were to read Section 15A, as amended in 2002, in the manner suggested by the Division Bench of this Court, it may lead to anomalous results in that the effect of continuing failure to adhere to statutory regulations alleged to have been continued well beyond the period of three days, and which continues till this day, has Rs. 1 lakh per day as the minimum mandatory penalty under the provisions, which would culminate in the appellant....