S.E.B.I versus SAIKALA ASSOCIATES LTD.

Citation: [2009] 6 S.C.R. 798 · Decided: 21-04-2009 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Appeal(s) allowed
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Judgment (excerpt)

[2009] 6 S.C.R. 798 
A 
S.E.B.I 
v. 
SAIKALA ASSOCIATES LTD. 
(Civil Appeal No. 3696 of 2005) 
B 
APRIL 21, 2009. 
[DR. ARIJIT PASAYAT AND LOKESHWAR SINGH 
PANTA, JJ.] 
Securities and Exchange Board of India Act, 1992 - ss. 
c 12(1) and 15T(4) - Power of Securities Appellate Tribunal -
To modify penalty imposed by SEBI - Penalty of suspension 
of cerlificate of registration by SEBI for violation of s. 12(1) rl 
w r.3of1992 Rules - Modification of, to monetary penalty by 
the Tribunal - Held: Tribunal was not right in modifying the 
D penalty · - The statute provides penalty only of suspension 
.. 
or cancellation of cerlificate of registrat'on - Tribunal being a 
statutory body could not have travelled beyond the scope of 
the statute taking shelter under a discretionary power -
Securities and Exchange Board of India, (Stock Brokers and 
E Sub Brokers) Rules,· 1992 - r.3 - Securities and Exchange 
Board of India (Prucedure for Holding Enquiry by Enquiry 
Officer and Imposing Penalty) Regulation, 2002 -
Regulations 13(1)(a) (iv)/13(4) and 13(1)(b)(i) - Securities 
Appellate Tribunal (Procedure) Rules, 2000 - r.21. 
F 
The respondents had respectively acted as sub-
brokers without registration in breach of s. 12 of 
Securities and Exchange Board of India Act, 1992, rlw r. 
3 of Securities and Exchange Board of India (Stock 
Brokers and Sub Brokers) Rules, 1992, and Securities 
G and Exchange Board of India Regulations and Circulars 
~ 
4 
of SEBI (Stock Brokers and Sub Brokers). SEBI imposed 
penalty of suspension of certificate of registration. 
Securities Appellate Tribunal modified the\penalty holding 
that the proved charges were not serious enough ~o 
H 
798 
S.E.B.I v. SAi KALA ASSOCIATES LTD. 
799 
warrant suspension of certificate of registration and 
A 
imposed monetary penalty. Hence the present appeals. 
( 
Allowing the appeals, the Court 
HELD: 1. As per provisions of Regulations 13 (1) (a) 
(iv) r/w Regulation, 13(4) of Securities and Exchange 
B 
Board of India (Procedure for Holding Inquiry by Inquiry 
Officer and Imposing Penalty) Regulation, 2002 SEBI can 
·'-
impose a minor penalty of suspension of the certificate 
of registration of the concerned Stock Broker or Sub-
Broker upto three months and can impose major penalty c 
under Regulation 13(1)(b)(i) of cancellation of the 
certificate of registration and suspension of the certificate 
of registration of the concerned Stock Broker or Sub- · 
Broker exceeding three months. From the above 
provisions, it is clear that in case of contravention of D 
• 
Section 12(1) of Securities and Exchange Board of India 
Act, 1992 and/or Rule 3 of Securities and Exchange 
Board of India (Stock Brokers and Sub Brokers) Rules, 
1992 the only penalty provided under the Act and the 
Regulations is of either suspension or cancellation of the 
E 
certificate of registration as set out in Section 12(3) of the 
Act. There is no power even on the Board to impose any 
monetary penalty. [Para 11] [807-D-G] 
2. The Tribunal has been constituted u/s. 15K of 
Securities and Exchange Board of India Act, 1992 and is 
F 
thus a creation of the said statute and as such the 
Tribunal is to exercise the jurisdiction, powers and 
t 
authority conferred on it by or under the Act or any other 
law for the time being in force. Under Secticn 15 T(4) of 
~he Act Tribunal has been empowered to pass such 
G 
.. .. 
orders on the appeal as it thinks fit, confirming, modifying 
or setting aside the order appealed against. Under Rule 
21 of Securities Appellate Tribunal (Procedure) Rules, 
2000, the Tribunal may make such orders or such 
directions as may .be necessary or expedient to give effect 
H 
800 
SUPREME COURT REPORTS 
[2009) 6 S.C.R. 
A to its orders or to prevent abuse of its process or to seek 
the ends of justice. [Para 13, 14 and 15) [808-A-D] 
3. In the instant case, the position of Broker/sub-
Broker in case of violation, is statutorily provided u/s. 12 
B of the Act, which has to be read along with Rule 3 of 
Securities and Exchange Board of India (Stock Brokers 
and Sub-Brokers) Rules, 1992. No power is conferred on 
the Tribunal to travel beyond the areas covered by 
Section 12 and Rule 3. When something is to be done 
c 
statutorily in a particular way, it can only be done that 
way. There is no scope for taking shelter under a 
discretionary power. [Para 16) [808-D-E] 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 
3696 of 2005. 
D 
From the Judgment & Order dated 21.04.20
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