LexSECURITIES AND EXCHANGE BOARD OF INDIA versus AJAY AGARWAL
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A B [2010] 3 S.C.R. 70 SECURITIES AND EXCHANGE BOARD OF INDIA v. AJAY AGARWAL (Civil Appeal No. 1697 of 2005) FEBRUARY 25, 2010· [G.S. SINGHVI AND ASOK KUMAR GANGULY, JJ.] Securities and Exchange Board of India Act, 1992 - Enactment of - Purpose - Held: The Act was enacted to C achieve the twin purposes of promoting orderly and healthy growth of securities market and for protecting the interest of investors - The Act is pre-eminently a social welfare legislation. D Securities and Exchange Board of India Act, 1992: E s. 11 - Amendment of - Done on several occasions - To keep pace with "felt necessities of time" - Amendment made in sub-section (4) of s. 11 in 2002 - Objects and reasons discussed. s. 11 B - Introduction of - Vide amendment made in 1995 - Objects and reasons discussed. s. 11 B - Applicability of- With retrospective effect - Held: F s. 11-B being procedural in nature can be applied retrospectively - If law affects matters of procedure, then prima facie it applies to all actions, pending as well as future - On facts, entire basis of the order of Appellate Tribunal that s. 11-B cannot be applied retrospectively, was passed on an erroneous basis. G H Constitution of India, 1950 - Art. 20(1) - Protection under, against ex-post facto law - When available - Held: It is available only where the person concerned is held guilty 70 SECURITIES AND EXCHANGE BOARD OF INDIA v. 71 AJAY AGARWAL of having committed an "offence" and is subjected to A ''penalty". Words and Phrases - "offence" - Meaning of - Discussed - Code of Criminal Procedure, 1973 - s.2(n) - General Clauses Act, 1897. B Interpretation of Statutes - Social welfare legislation - Interpretation of -Duty of the Court - Held: When Court is called upon to interpret provisions of a social welfare legislation, paramount duty of the Court is to adopt an interpretation to further the purposes of law and if possible C eschew the one which frustrates it. Based upon a complaint received from a member of the Bombay Stock Exchange, the appellant-Board initiated preliminary investigation into affairs relating to D public issue of a company. The complaint was to the effect that there was mis-statement in the prospectus filed by the company at the time of the public issue and that the investors were misguided. Show cause notice was issued to respondent, Joint E Managing Director of the company, asking it to show cause why directions should not be issued uls.11 B of the Securities and Exchange Board of India Act, 1992 restraining the company and its Directors from accessing the capital market for a suitable period. F After considering the reply of the respondent, the appellant-Board, in exercise of its powers under s.4(3) rl w s.11 and s.11-B of the Act, passed order dated 31st March, 2004, restraining the respondent from associating G with any corporate body in accessing the securities market and also prohibiting him from buying, selling or dealing in securities, for a period of five years. Respondent filed appeal contending that on the date, H ,, 72 SUPREME COURT REPORTS [2010] 3 S.C.R. A the violations were alleged against him, the appellant- Board did not have the power either under s.11 B or under s.11 (4)(b) of the Act since the enabling provisions came by way of amendment in 1995 and 2002 respectively, while the alleged violations surfaced prior to coming into B effect of those amendments. This contention weighed with the Appellate tribunal and the respondent was given the protection against ex-post facto law. Hence the present appeal. c D Allowing the appeal, the Court HELD: 1. The order of the Appellate Tribunal is quashed and the order of the appellant-Board is upheld. [Para 54] (90-B] Govinddas and others v. Income Tax Officer and another - 1976 (103) ITR 123 (S.C.), distinguished. Mis Reliance Jute and Industries Ltd. v C. I. T West Bengal, Calcutta 1980 (1) SCC 139 and Controller·of Estate . Duty, Gujarat-I, Ahmedabad v. M.A. Merchant and etc. AIR E 1989 SC 1710, refer.red to. 2 .. Though s.11 B and s.11 (4)(b) of the Securities and Exchange Board of India Act, 1992 came by way of amendment in 1995 and 2002 respectively, by the time F the appeilant-Board passed ttie order on 31st March 2004, all the amendments wer~ on the statute. Even if the said amendments to the;:-Act were allowed to operate prospectively, by the 'time the order was passed by the Board,
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