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2013 (4) TMI 539 - HC - Companies LawMaintainability of orders under section 11C of the SEBI Act - as according to the petitioners orders impugned in the writ petitions which have been issued under section 11C of the SEBI Act are not sustainable as the said provision is only prospective in nature and the same is not applicable to the petitioners since the transactions, which are said to have been done by the petitioners, were prior to the Amendment Act 59 of 2002 - whether section 11C is purely procedural in nature or it is a substantive provision creating rights and liabilities - The petitioners were in the business of buying, selling or dealing in shares of NEPC group of companies & SEBI by impugned order required the petitioner to furnish details/information relating to the transactions, which were done during the relevant period, for the purpose of completing the investigation under section 11C - Held that:- If a provision is held to be, pure and simple, procedural, it is always retrospective unless a different intention is shown in the statute itself. On the contrary, if the provision is substantive in nature, creating either rights or liabilities, unless a different intention is shown in the Act itself, the said provision shall, undoubtedly, be prospective in nature. Undoubtedly, as guaranteed under article 20(1) of the Constitution of India, no person shall be convicted for any offence except for violation of a law in force at the time of commission of the Act, nor be subjected to penalty greater than which might have been inflicted under the law in force at the time of commission of the offence. In the instant cases, if the petitioners fail to comply with the orders made under section 11C(1), for the said non-compliance or disobedience, they are liable to be punished as provided in section 11C(6). Such punishment is not for any violation or disobedience of any provision, then in force, i.e., prior to the introduction of section 11C(6). It is for non-compliance of the orders made under section 11C(1), that they are liable to be punished as the non-compliance which constitutes offence takes place after the introduction of section 11C(1). Thus, section 11C(6) is not attempted to be applied retrospectively in the instant cases as it is projected by the petitioners. Section 11C(6), which creates criminal liability, is substantive in nature and thus, it is prospective. As the investigation itself does not directly result in either penalty or punishment or any other civil consequences & after the investigation, the investigating authority has to submit a report to the Board under section 11C(1). On receipt of such report, the Board will consider the same and after affording sufficient opportunity to the persons concerned, the Board will have three options before it to do. The first option is to go in for prosecution under section 24; the second option is to impose a penalty under section 15A; and the third option is to issue any suitable direction under section 11B. Penalty under Chapter VI-A or any conviction under section 24 will be by means of appropriate adjudication by the competent authority/court after affording sufficient opportunity to the persons concerned. Thus, investigation is only a means to collect evidences by the investigating authority by following the prescribed procedure and such investigation by itself does not result in penal or civil consequences. Therefore, the investigation, as provided in section 11C(1), by itself is not substantive in nature. Per contra, it is purely procedural. Therefore, as per the settled law, section 11C(1) is retrospective in nature. The language used in section 11C(1)(b ) is not similar to the language used in section 11C(1)(a). In section 11C(1)(a), the language used is 'transaction in securities are being dealt', whereas the language in section 11C(1)(b ) is 'has violated any of the provisions of the Act or Rules or Regulations, etc.,'. This clearly shows that section 11C(1)(b) covers the past transactions. In other words, section 11C(1)(a) deals with the transactions, which are in progress, whereas, section 11C(1)(b) deals with the past transactions as well. Thus, section 11C(1)(a) and 11C(1)(b) are to be read disjunctively as they deal with different aspects. That is the reason why, Parliament has aptly used the word 'or' in between these two provisions. Therefore, the word 'or' as employed in between these two provisions should not be read as 'and' as it is contended by the petitioners. In other words, these two provisions should be read disjunctively and not conjunctively. No merit in the writ petitions and the same are to be dismissed. [Para 28]
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