LexSIDDHARTH CHATURVEDI versus SECURITIES AND EXCHANGE BOARD OF INDIA
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A B [2016] 2 S.C.R.412 SIDDHARTH CHATURVEDI v. SECURITIES AND EXCHANGE BOARD OF INDIA (Civil Appeal No.14730 of2015 etc.) MARCH 14, 2016 [KURIAN JOSEPH AND ROHINTON FALi NARIMAN, JJ.] Securities and·Exehange Board of India Act, 1992 - ss. 15A (as amended in the year 2002) and I 5J - The questions whether s. C I 5A can be construed, in isolation, without regard to S.'J 5J - Whether the expression 'namely 'fixes the discretion only to the circumstances mentioned in the three clauses set out in s. I 5J, or whether it would also take into account other relevant circumstances - The questions referred to larger Bench for consideration. D E SEBI Through its Chairman vs. Roofit Industries Limited 2015 (12) SCALE 642; Julius v. Bishop of Oxford (19~0) LR 5 AC 21 (HL) - referred to. Case Law Reference 2015 (12) SCALE 642 (1980) LR 5 AC 21 (HL) referred to Para 7 referred to Para 10 CIVIL APPELLATE JURISDICTION: Civil Appeal No. 14730 of2015 From the Judgment and Order dated 04.08.2015 of the Securities F Appellate Tribunal, Mumbai in Appeal No. 436 of20 !'4 G H WITH C. A. Nos. 14728 & 14729 0f2015 Purvish Jitendra Malkan, Jitendra M. Malkan, Ms. Dharita Malkan, Ms. Arunima Singh, Ms. Sangya Arora, Advs., for the Appellant. Chander Uday Singh, Sr. Adv., Pratap Venugopal, Ms. Surekha Raman, Purushottam Kumar Jha, Ms. Niharika (For Mis. K. J. John & Co.), Advs., with him for the Respondent. 412 SIDDHARTH CHATURVEDI v. SECURITI~S AND 413 EXCHANGE BOARD OF INDIA The following order of the Court was delivered A ORDER I. These appeals rai~e an interesting question of the interplay between section 15A, as amended in the year 2002, and Section I 5J of th<; Securities and Exchange Board of India Act, 1992 (in short 'the SEBI Act'). 2. The brief facts necessary to understand the present contro~ersy are that the appellants before us made certain purchases of shares of the Brijlaxmi Leasing and Finance Company between October and December, 2012: On 16m June, 2014, in Civil Appeal No.14730 of2015, a show cause notice came to be issued by the respondent SEBI to the appellant under Rule 4( I) of the Securities and Exchange Board of India (Procedure for holding inquiry and imposing penalty by adjudicating officer) Rules, 1995 for the alleged violation of the provisions of Reirnlations 13( 4), 13( 4A) and 13(5) of the Securities and Exchange Poard oflndia (Prohibition oflnsider Trading) Regulations, 1992. 3. A detailed reply was filed by the appellant to the show cause notice, on 13'" August, 2014, submitting that there was no intention to violate any rule or regulation. The entire transaction value of purchases and sale of the shares did not exceed Rs.55,000/-. It was further submitted that the transaction was neither made with a view to make any disproportionate gain or unfair advantage nor was it for the purpose of causing any loss to investors. The default, if any, was a technical default that did not call for any penal action. 4. The Adjudicating Officer, by various orders imposed a penalty of Rs.5 lacs, 7 lacs and 11 lacs respectively, in the three civil appeals, . before us. An appeal made to the Securities Appellate Tribunal suffered the same fate, and was dismissed by the Tribunal stating that there is no dispute that there was violation of mandatory reg1,1Iations, and that in any case, a penalty of Rs.one crore could have been imposed on facts, whereas, iri fact, the Adjudicating Officer penalised the appellants with a penalty of Rs.5 lacs, 7 lacs and 11 lacs respectively, which cannot be said to be excessively harsh or unreasonable. 5. It is these judgments of the Securities Appellate Tribunal, Mumbai that have come up before us in these appeals. ' • B c D E F G H 414 A B c D E F G H SUPREME COURT REPORTS [2016) 2 S.C.R. 6. Learned counsel appearing on behalfof the appellants has argued that Section I SA, after its amendment in 2002, which was the law until the section was further amended in the year 2014, would undoubtedly apply to the present facts of the case. However, learned counsel ~ubmitted that Section ! SA would, at all times, have to be read with Section ! SJ of the SEBI Act and that, this 'being so, it is clear that the violation of the regulations being only technical, and not involving any disproportionate gain to the appellant, or unfair ail vantage or loss to any investor, SEBI was not, in the first instance,
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