DKG BUILDCON PRIVATE LTD versus THE ADJUDICATING & ENQUIRY OFFICER, S.E.B.I.

Citation: [2022] 19 S.C.R. 242 · Decided: 14-09-2022 · Supreme Court of India · Bench: AJAY RASTOGI · Disposal: Dismissed

cites 4 · see the full citation network in Lexace

Judgment (excerpt)

A
B
C
D
E
F
G
H
242
SUPREME COURT REPORTS
[2022] 19 S.C.R.
[2022] 19 S.C.R. 242
242
DKG BUILDCON PRIVATE LTD.
v.
THE ADJUDICATING & ENQUIRY OFFICER, S.E.B.I.
(Civil Appeal No. 1742 of 2009)
SEPTEMBER 14, 2022
[AJAY RASTOGI AND B. V. NAGARATHNA, JJ.]
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
A
B
C
D
E
F
G
H
243
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 fail

Excerpt shown. Read the full judgment & AI analysis in Lexace.