| Headnote |
Securities and Exchange Board of India Act, 1992 – ss. 11C (3), 15A(a), 15J – Penalty of rupees one crore levied by the Adjudicating Officer (AO), upheld by the Securities Appellate Tribunal (SAT) – Justification of – Held: Appellants had first violated the summons in August, 2001 and in June, 2002 – Thereafter, SEBI issued numerous summons, giving the appellants opportunities to appear and produce the documents and furnish the information as required – But, the appellants failed to respond to any of the summons issued during the period of 2001-2002, during the course of the investigation – Thereafter, SEBI issued fresh summons on 1.04.2003 in respect of the appellant in C.A.No. 1742 of 2009 and on 09.04.2003 in respect to the appellant in C.A.No. 5833 of 2009 for the appellants to cooperate with the investigation –Thereafter, the AO passed its order levying penalty on the appellants on 28.11.2003 and on 31.12.2003 respectively – Non-compliance of the aforesaid fresh summons constituted a fresh offence committed by the appellants – Thus, the amended provisions of s. 15A(a) as amended w.e.f. 29.10.2002 would apply when levying the penalty on the appellants in respect of the summons issued subsequent to the aforesaid amendment –Also, since the duration of the default of non-compliance committed by both the appellants was over a period of 100 days from the date of issue of the summons in each case, the AO rightly applied s. 15A(a), more specifically in regard to the maximum limit of penalty that could be imposed under the provision, i.e. rupees one crore – Penalty of rupees one crore as levied by the AO and upheld by the SAT is justified–Further, investigation by SEBI which had concluded that the appellants and other entities were involved in aiding and abetting ‘KP’ and his companies in rigging the securities market in the years 2000 and 2001 had not been challenged, at any point, by the appellants – Thus, the relevant order of SEBI had attained finality – Taking into consideration the severity of offences found to have been committed by the appellants and other entities, and the non-cooperative attitude of the appellants during the course of the investigation in attempting to obstruct the same, the quantum of penalty imposed u/s. 15A(a) is justified and with effective consideration of the factors listed in s. 15J.Securities and Exchange Board of India Act, 1992 – Explanation to s. 15J – Held: A bare reading of the Explanation in the context of the present case creates a presumption in favor of the Adjudicating Officer that he passed the Orders dated 28.11.2003 and 31.12.2003 against the appellants after due consideration of the factors mentioned in s. 15J.Securities and Exchange Board of India Act, 1992 – s. 11C(3) – “persons associated with the securities market in any manner” – Held: A bare reading of s. 11C(3) makes it clear that an Investigating Authority appointed by SEBI to investigate the affairs of any persons may require such person “associated with the securities market in any manner to furnish such information to, or produce such books, or registers, or other documents, or record before him or any person authorized by it, in this behalf as it may consider necessary, if the furnishing of such information or the production of such books, or registers, or other documents, or record is relevant or necessary for the purposes of its investigation” – In the present case, the appellants were under investigation by SEBI for its alleged involvement in aiding and abetting ‘KP’ and his companies in manipulating the securities market –Thus, the appellants would squarely fall under the scope of “persons associated with the securities market in any manner” u/s. 11C(3) –The authority of the Investigating Authority to direct such persons to appear before him and furnish information or produce documents as is required for an investigation is provided in s. 11C (3). Securities and Exchange Board of India Act, 1992 – ss. 19, 15A(a), 11C(3) – Held: s.19 provides that the SEBI may delegate to any member, officer of the SEBI or any other person, such of its powers and functions under this Act (except the powers u/s. 29) as it may deem necessary – Thus, when the appellants failed to comply with the directions issued u/s. 11C(3) and failed to produce the required documents and information, the Investigating Authority, being a delegated Authority of SEBI, was empowered to levy the penalty as provided in s. 15A(a). |
