2017 (8) TMI 540 - SC - Companies Law

Penalty imposed by SAT - Held that - In the appeal(s) filed by the aggrieved person(s) against the order(s) of the Adjudicating Officer the learned Appellate Tribunal was expected to record its own independent findings and arrive at its own conclusions for holding the respondent liable for the penalty imposed. It seems that the learned Appellate Tribunal has proceeded on the basis that the case of the respondent is same and similar to the case of Kanaiyalal Baldev Patel and Dipak Patel which evidently is not. In the aforesaid circumstances we set aside the order of the learned Appellate Tribunal dated 9th November 2012 qua the respondent and remand the matter to the learned Appellate Tribunal for a de novo consideration. All contentions of both the sides are left open to be urged before the learned Appellate Tribunal.

Summary

Issues:

1. Discrepancy in penalty imposition among individuals involved in trading activities.
2. Lack of specific finding of front running against the respondent.
3. Disagreement on the merging of Adjudication Order with the Appellate Tribunal's order.
4. Need for a fresh consideration by the Appellate Tribunal.

Discrepancy in Penalty Imposition:
The judgment highlighted a significant issue regarding the penalty imposition on the respondent compared to other individuals involved in trading activities. While penalties of five crore rupees each were imposed on two individuals, the respondent faced a penalty of one crore rupees. The court noted that the findings against all three individuals were common, raising the question of why the respondent was treated differently. The absence of a specific conclusion that the respondent engaged in front running, as found against the other individuals, further complicated the matter.

Lack of Specific Finding Against the Respondent:
The court pointed out that the Appellate Tribunal did not explicitly conclude that the respondent was involved in front running, unlike the clear findings against the other individuals. Instead, the tribunal determined that the respondent aided and abetted the primary traders. This lack of a specific finding against the respondent contributed to the confusion surrounding the penalty imposition and the differentiation in treatment among the involved parties.

Disagreement on Merging of Orders:
The judgment addressed the contention raised by SEBI's counsel regarding the merging of the Adjudication Order with the Appellate Tribunal's order. The court disagreed with this assertion, emphasizing that the Appellate Tribunal was expected to conduct an independent assessment and reach its conclusions. The tribunal's failure to provide distinct findings for the respondent's case, separate from the other individuals, underscored the need for a fresh consideration of the matter.

Need for Fresh Consideration:
In light of the discrepancies and lack of specific findings against the respondent, the court set aside the Appellate Tribunal's order concerning the respondent. The judgment remanded the matter back to the Appellate Tribunal for a fresh and comprehensive review. All arguments from both sides were left open for consideration during the new assessment, ensuring a fair and thorough examination of the case.

The detailed analysis of the judgment highlighted the issues surrounding penalty imposition, the absence of specific findings against the respondent, the disagreement on the merging of orders, and the necessity for a fresh consideration by the Appellate Tribunal to address the discrepancies and ensure a fair and just outcome.