Mr. K. Natarahjan vs Sebi
- CitationAppeal No. 159 of 2016
Ratio decidendi
The rule this decision rests on
Where a penalty order under the SEBI Act does not itself impose any liability for interest on the delayed payment of the penalty, interest may be demanded under Section 28A of the SEBI Act only for the period from July 18, 2013, the date from which that provision operates, and not for any period before that date. Where the Tribunal has already decided, in a connected appeal, that Section 28A cannot be applied to the period before July 18, 2013, and that decision is in force, a recovery officer's communication demanding interest for the earlier period is liable to be quashed and set aside, and the matter restored to the recovery officer for fresh decision on the merits in accordance with law. The fact that the earlier decision has been stayed by the Supreme Court does not affect this result, because the earlier decision's interest determination turned on the presence of an interest term in the disgorgement order, which is not present in the present cases.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Date of Decision : 05.06.2017
Appeal No. 159 of 2016
K.S. Kasiraman through his daughter and next friend Ms. Jayshree Iyer, residing at 1147 Heavensgate, Lake In The Hills, IL 60156, USA ...Appellant
Versus
Securities and Exchange Board of India Southern Regional Office, Overseas Towers, 7th Floor, 756-L, Anna Salai, Chennai - 600002. ...Respondent
Mr. Rohan Shrivastava, Advocate with Mr. Tushar Shah, Advocate i/b Vaish Associates for the Appellant.
Mr. Rajesh Nagory, Advocate with Mr. Mihir Mody and Mr. Nishant Upadhyay and Mr. Nirav Parmar, Advocates i/b K. Ashar & Co. for the Respondent.
WITH Appeal No. 160 of 2016
Mr. G. Ramakrishnan No. 53, R-Block, 1st Floor, 15th Road, Anna Nagar, Chennai - 600040. ...Appellant
Versus
The Recovery Officer, Securities and Exchange Board of India, SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051. ...Respondent
Mr. K.C. Jacob, Advocate with Mr. Ayush Agarwal, Advocate i/b Corporate Law Chambers India for the Appellant.
Mr. Rajesh Nagory, Advocate with Mr. Mihir Mody and Mr. Nishant Upadhyay and Mr. Nirav Parmar, Advocates i/b K. Ashar & Co. for the Respondent. 2
WITH Appeal No. 187 of 2016
Mr. K. Natarahjan F2, Gurukrupa, 10/11, Rajaji Colony, Virugambakkam, Chennai - 600092. ...Appellant
Versus
The Recovery Officer, Securities and Exchange Board of India, SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051. ...Respondent
Mr. K.C. Jacob, Advocate with Mr. Ayush Agarwal, Advocate i/b Corporate Law Chambers India for the Appellant.
Mr. Rajesh Nagory, Advocate with Mr. Mihir Mody and Mr. Nishant Upadhyay and Mr. Nirav Parmar, Advocates i/b K. Ashar & Co. for the Respondent.
CORAM : Justice J.P. Devadhar, Presiding Officer Dr. C.K.G. Nair, Member
Per : J.P. Devadhar (Oral)
1.
Appellants in all these appeals are aggrieved by the communications
issued by the Recovery Officer ('RO' for short) of Securities and Exchange
Board of India ('SEBI' for short) all dated January 14, 2016. By the said
communications, the RO has demanded interest from each appellant on the
delayed payment of penalty from the date of the penalty order till payment.
Since the issue raised in these appeals are common, all these appeals are
heard and disposed of by this common order.
3
2. Basic dispute in all these appeals is, where the penalty order does not
contemplate interest liability for the delayed payment of penalty, whether
the RO of SEBI can demand interest under Section 28A of SEBI Act even
for the period prior to the insertion of Section 28A to SEBI Act.
3. This Tribunal in a group of cases, the lead matter being the case of
Mr. Dushyant N. Dalal & Anr. vs. SEBI (Appeal No. 41 of 2014 decided on
March 10, 2017) has, inter alia, held that where the disgorgement order /
penalty order does not contemplate any interest liability, then interest would
be mandatorily leviable u/s. 28A of the SEBI Act, 1992 only from July 18,
2013 and not for the period prior thereto. In all these cases the penalty
orders did not contain any interest liability and the RO by invoking Section
28A has demanded interest for the period prior to July 18, 2013. In these
circumstances, we set aside the impugned communications issued by the RO
of SEBI and restore the matters for fresh decision on merits and in
accordance with law.
4. It is brought to our notice by counsel for SEBI that the decision of
this Tribunal in case of Mr. Dushyant N. Dalal & Anr. (supra) has been
stayed by the Apex Court. Decision of this Tribunal in case of Mr. Dushyant
N. Dalal & Anr. (supra) has no relevance to the present case, because in that
case interest liability has been upheld on ground that the disgorgement order
itself contained interest liability. In fact applicability of Section 28A of
SEBI Act was considered in other cases decided along with the case of
Dushyant Dalal, for example in the case of M/s Alka Securities Ltd. vs.
SEBI (Appeal No. 313 of 2014 decided on March 10, 2017) and it has been
held that interest under Section 28A cannot be imposed for the period prior
to July 18, 2013. Therefore, fact that our decision in case of Mr. Dushyant 4
N. Dalal & Anr. (supra) has been stayed by the Apex Court has no bearing
on the facts of present cases.
5. Accordingly, for the reasons stated above, the impugned
communications issued by the RO of SEBI in all these appeals are quashed
and set aside and the matters are restored to the file of RO for fresh decision
on merits and in accordance with law. All contentions of both sides are kept
open.
6. All the appeals are disposed of in the aforesaid terms with no order as
to costs.
Sd/-
Justice J.P. Devadhar Presiding Officer
Sd/-
Dr. C.K.G. Nair Member
05.06.2017 Prepared and compared by:
msb
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