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2017 (10) TMI 149 - SC - Companies LawInterest recovered on orders of penalty issued - Section 28A of the Securities and Exchange Board of India Act, 1992 - whether interest can be recovered on orders of penalty issued under the Act and/or orders of disgorgement of unlawful gains, when the said amounts have remained unpaid? - Held that:- The Interest Act of 1978 would enable Tribunals such as the SAT to award interest from the date on which the cause of action arose till the date of commencement of proceedings for recovery of such interest in equity. The present is a case where interest would be payable in equity for the reason that all penalties collected by SEBI would be credited to the Consolidated Fund under Section 15JA of the SEBI Act. There is no greater equity than such money being used for public purposes. Deprivation of the use of such money would, therefore, sound in equity. This being the case, it is clear that, despite the fact that Section 28A belongs to the realm of procedural law and would ordinarily be retrospective, when it seeks to levy interest, which belongs to the realm of substantive law, the Tribunal is correct in stating that such interest would be chargeable under Section 28A read with Section 220(2) of the Income Tax Act only prospectively. This is a positive indication that Section 28A was intended only to have prospective application. It must be clarified, however, that interest is chargeable only with effect from 25.8.2014, as Section 220 was not referred to, while enacting Section 28A, in any of the three Ordinances preceding the Amendment Act of 2014.) However, since it has not taken into account the Interest Act, 1978 at all, we set aside the Tribunal’s findings that no interest could be charged from the date on which penalty became due. The Civil Appeals 10410- 10412 of 2017 are allowed insofar as the penalty cases are concerned. Going to the facts in Civil Appeal No. 5677 of 2017 Shri Subramonium Prasad is correct in his submission. If there is default in payment of ₹ 6 crores within the stipulated time, no future interest is payable inasmuch as a much severer penalty of being debarred from the market for 7 years was instead imposed. We have noticed how the appellant has, in fact, suffered the aforesaid debarment and how he made payment of ₹ 6 crores on 6.1.2014 from the sale of shares. The SAT was incorrect in stating that the order dated 21.7.2009 contained an obligation to pay interest at the rate of 12% per annum on the unlawful gain of ₹ 4.05 crores till payment.
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