TMI Blog2016 (3) TMI 765X X X X Extracts X X X X X X X X Extracts X X X X ..... vestor or group of investors as a result of the default; and there is in fact, no repetitive 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 ₹ 1 lakh per day as the minimum mandatory penalty under the provisions, which would culminate in the appellants herein having to pay ₹ 1 crore in each of the three appeals. We do not think that this could have been the intention of the Parliament in enacting Section 15A, as amended in 2002. We also feel that on the assumption that paragraph 5 of the judgment is correct, it would be very difficult for Section 15A to be construed as a reasonable provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was violation of mandatory regulations, and that in any case, a penalty of Rs.one crore could have been imposed on facts, whereas, in fact, the Adjudicating Officer penalised the appellants with a penalty of ₹ 5 lacs, 7 lacs and 11 lacs respectively, which cannot be said to be excessively harsh or unreasonable. 5. It is these judgments of the Securities Appellate Tribunal, Mumbai that have come up before us in these appeals. 6. Learned counsel appearing on behalf of the appellants has argued that Section 15A, after its amendment in 2002, which was the law until the section was further amended in the year 2014, would undoubtedly apply to the present facts of the case. However, learned counsel submitted that Section 15A would, at all times, have to be read with Section 15J of the SEBI Act and 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 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 us, the appellant has imposed a penalty of ₹ 75 lakhs despite the failure having continued for substantially more than 75 days. Learned senior counsel for the appellant has contended that the appellant has discretion to impose a penalty below the number of days of default regardless of the words whichever is less . He has argued that there would be no purpose to Section 15J if the Adjudicating Officer's discretion to fix the quantum of penalty did not exist, and that such an interpretation would render certain Sections of the SEBI Act as expropriatory legislation due to the crippling penalties they would impose. We do not agree with these submissions. The clear intention of the amendment is to impose harsher penalties for certain offences, and we find no reason to water them down. The wording of the statute clarifies that the penalty to be imposed in case the offence continued for over one hundred days is restricted to ₹ 1 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stive provision on the subject matter covered by the provision. This Court has also clearly held that Section 15J would suffer an eclipse for the period 2002 to 2014 inasmuch as the intention of the Legislature, by amending Section 15A, seems to be that no scope for any discretion for this period is to be exercised, if in fact, there is any infraction of Rules or Regulations. This Court clearly held that the discretionary 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 clauses set out in Section 15J, or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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