Team  SoOLEGAL

SUPREME COURT ANSWERS THE QUESTIONS REGARDING PENALTY UNDER SEBI ACT, 1992

Team SoOLEGAL 1 Jan 1970 5:30am

SUPREME COURT ANSWERS THE QUESTIONS REGARDING PENALTY UNDER SEBI ACT, 1992

The Supreme Court was to decide on the issue that whether for  the time period 2002-2014 there was any penalty of Rs. 1 Lakh per day or not. In this regard, two questions were put before the Court bench comprising of CJI Ranjan Gogoi, Justice Sanjiv Khanna and Justice Deepak Gupta. These were:
1. Factors mentioned in Section 15J: whether exhaustive or not?
2. Discretion under 15J: whether obliterated by the prescription of minimum penalty under Sections 15A-15HA?

The answer given by the bench for the first question was that the factors mentioned under Section 15J are merely illustrative, not exhaustive:
"We are inclined to take the view that the provisions of clauses (a), (b) and (c) of Section 15­J are illustrative in nature and have to be taken into account whenever such circumstances exist
This dictum, however, does not mean that factum of continuing default is not a relevant factor, as we have held that clauses (a) to (c) in Section 15­J of the SEBI Act are merely illustrative and are not the only grounds/factors which can be taken into consideration while determining the quantum of penalty."

While answering the second question, the Court specifically referred to Section 15A(a). It said that the provision would apply to small technical defaults of even small amounts. Prescribing penalty of minimum Rs. 1 Lakh per day, making it maximum Rs. 1 Crore would definitely make the Section disproportional and arbitrary.

Tagged: SEBI   Supreme Court   CJI Ranjan Gogoi   JusticeSanjivKhanna   JusticeDeepakGupta   Penalty  
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