LexDUSHYANT N. DALAL AND ANOTHER versus SECURITIES AND EXCHANGE BOARD OF INDIA
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
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(2017] ll S.C.R. 448
DUSHYANT N. DALAL AND ANOTHER
v.
SECURITIES AND EXCHANGE BOARD OF INDIA
(Civil Appeal No. 5677 of2017)
OCTOBER 04, 2017
[R. F. NARIMAN AND SANJAY KISHAN KAUL, JJ.J
Interest:
Whether i/1/erest can be recovered on orders uf penalzv issued
under SEBI Act and/or orders of disgorgement of unlawful gains
when the said amounts have remained unpaid - Held: Interest Act
enables the Tribunals such as Securities Appellate Tribunal to mvard
interest in equity, ji·om the date on which cause of action arose, till
the date of commencement of proceedings for recovery of such
interest - In the present case, interest was payable in equity, because
all the penalties collected by SEBI were to be credited to the
Consolidatedfimd uls. 15JA ofSEBI Act i.e. public purpose - Such
interest would be chargeable uh. 28A of SEBI Act rlw. s.220(2) of
Income Tax Act only prospectively - Interest Act, 1978 - Securities
and Exchange Board of India Act. 1992 - ss.28A and J 5JA -Income
Tax Act, 1961 - s.220 - Equity.
Interest - Levy of - Whether can have retrospective operation
- Held: Interest belongs to the field uf substantive law and nut
JJroceclural lalV - There.fore, cannot have retrospective operation.
Securities and Exchange Board of India Act, 1992:
s.28A - Nature of and whether can have retrospective
operation - Held: s.28A belongs to the realm of procedural law
and would originally be retrospective - But when this provision
seeks to levy interest, which belongs to the realm of substantive law.
such interest would be chargeable only prospective(v.
Disposing of the appeals, the Court
HELD: I. The Interest Act of 1978 would enable Tribunals
such as Securities Appellate Tribunal 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
448
DUSHYANT N. DALAL v. SECURITIES AND EXCHANGE
449
BOARD OF INDIA
equity. The present is a case where interest would be payable in
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equity for the reason that all penalties collected by SEBI would
be credited to the Consolidated Fund under Section l5JA of the
SEBI Act. There is no greater equity than such money being
used for public purposes. Despite the fact that Section 28A of
SEBI Act belongs to the realm of procedural law and would
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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
of SEBI Act read with Section 220(2) of the Income Tax Act only
prospectively. However, since it has not taken into account the
I ntcrcst Act, 1978 at all, the Tribunal's findings that no interest
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could be charged from the date on which penalty became due is
set aside. [Para 28]{466-F-H; 467-A]
2. If there is default in payment of Rs. 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 D
was instead imposed. 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 Rs.4.05 crores
till payment. [Para 32)(469-D-E]
Clariant International Limited and Another v. Securities
and Exchange Board of India (2004) 8 SCC 524 :
(2004] 3 Suppl. SCR 843; Tahazhathe Purayil Sarabi
& Ors. v. Union of India & Am: (2009) 7 SCC 372 :
(2009] 10 SCR 70; Ferro Alloys Corpn. Ltd. v. A.P. State
Electricity Board and Anr. (1993) Suppl. 4 SCC 136 :
(1993] 3SCR199; South Eastern Coalfield~ Ltd.~: State
of MP. and Or.~. (2003) 8 SCC 648 : (2003) 4 Suppl.
SCR 651; Indian Council For Enviro-Legal Action v.
Union of India (2011) 8 SCC 161 : (2011] 9 SCR 146;
Union of India v. Tata Chemicals Limited (2014) 6 SCC
335 : (2014] 3 SCR 298; Life Insurance Corporation
of India and Another v. Smt. S. Sindhu (2006) 5 SCC
258 : (2006) 1 Suppl. SCR 854 - relied on.
Prabhavati Ramgarih B. v. Divisional Railway Manager
(2010) 4 Mah LJ 691 - approved.
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SUPREME COURT REPORTS
[2017] II S.C.R.
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Raghunath Rai Bareja and Am: v. Punjab National Bank
and Ors. (2007) 2 SCC 230 : [2006) 10 Suppl. SCR
287; J.K. Synthetics Ltd. v. Commercial Taxes Officer
(1994) 4 SCC 276; India Carbon Limited v. The State
of Assam (1997) 6 SCC 479 : [1997) 3 Suppl. SCR 1;
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Purbanchal Cables & Conductors Pvt. Ltd. v. Assam
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