2023 (6) TMI 1252 - SCH - SEBI

Penalty for violation of Section 15HB of SEBI Act, 1992 - justification for the Tribunal to reduce the penalty below Rs. 1,00,000/- which is the minimum as permissible - HELD THAT - Tribunal has not taken into consideration the effect and mandate of Section 15HB of the SEBI Act, 1992. Taking into consideration the facts and circumstances of this case, there appears no justification in calling upon the respondent and we modify the order impugned and the penalty of Rs.75,000/- as inflicted upon noticee no.5 (Mr. Sandip Ray) and noticee no.6 (Mr. Rajkumar Sharma), as referred to in para no. 13 of the order impugned, is modified and substituted to Rs.1,00,000/- in terms of Section 15HB of SEBI Act, 1992 and with this modification the present appeals stand disposed of. We make it clear that if the respondents have any objection in reference to the modification made by this Court, they are always at liberty to make an application, if so advised.

Summary

Issues: Violation of Section 15HB of SEBI Act, 1992

Analysis:
The Supreme Court addressed the grievance raised by the appellant regarding the reduction of penalty below the minimum prescribed under Section 15HB of the SEBI Act, 1992. The appellant argued that once a finding of violation of Section 15HB had been established, there was no justification for the Tribunal to lower the penalty below Rs. 1,00,000, which is the minimum penalty specified by the Act. The Court noted the mandatory nature of the penalty provisions under Section 15HB, emphasizing that the penalty for contravention should not be less than one lakh rupees but could extend up to one crore rupees.

The Court observed that the Tribunal had failed to consider the effect and mandate of Section 15HB while reducing the penalty from Rs. 3,00,000 to Rs. 75,000. The appellant had also filed a review application seeking correction in the order, highlighting that reducing the penalty below the prescribed minimum was impermissible under the Act. Considering the facts and circumstances of the case, the Court found no justification for the reduced penalty and modified the penalty imposed on the concerned parties from Rs. 75,000 to Rs. 1,00,000 in line with Section 15HB of the SEBI Act, 1992. Consequently, the appeals were disposed of with this modification.

The Court clarified that if the respondents disagreed with the modification made by the Court, they were free to file an application. Additionally, any pending applications were deemed disposed of by the Court. The judgment emphasized the importance of upholding the statutory provisions regarding penalties for contravention under the SEBI Act, 1992, ensuring that the penalties imposed align with the prescribed minimum threshold set by the legislation.