2023 (10) TMI 357 - HC - SEBI

Penalty imposed by SEBI - petitioner's PAN No. given in the order does not belong to him, but to a third party - According to the first respondent, the petitioner is liable to pay interest on the penalty amount from 16.06.2017 till 11.05.2023 - HELD THAT - If the facts of this case is tested on the touchstone of Section 220 of the Income Tax Act, it will be evident that the first respondent cannot claim any interest, since the order of SEBI imposing the penalty carries a wrong PAN particulars. It may be that the petitioner might have chosen to challenge that order before the appellate Tribunal and also before this Court, but vis-a-vis the payment of interest, it must be fastened on the person satisfying all the features that goes to identify the person conclusively, argued the counsel. First respondent submitted that if the petitioner is aggrieved by the order of the appellate Tribunal, he ought to approach the Hon'ble Supreme Court u/s 15-Z and challenge it. And if it is against such other orders of the Board or the adjudicating officer, then the petitioner ought to approach the SEBI Appellate Tribunal u/s 15T. Hence, the present writ is not entertainable. Secondly, so far as the present dispute itself is concerned, the petitioner knew against whom the order of penalty was passed, and it is hence he has to approach the appellate Tribunal, and it is too late in the day for the petitioner to plea innocence. This Court concurs with the submission of the counsel for the first respondent on both the scores. It is not in dispute that the SEBI has imposed the penalty on the petitioner and he had also paid it. The interest is but incidental to it. Therefore, the petitioner cannot escape paying the interest component as is now demanded. The PAN particulars are, but one of the mode to identify an individual, and merely because a wrong PAN number is given, it does change the individual, more so when the petitioner had paid the penalty without demur. Turning to the maintainability, the petitioner ought to have challenged it in the manner provided under the Act.

Summary

Issues involved:
The issues involved in the judgment are the imposition of penalty by SEBI on the petitioner, the challenge to the penalty amount, and the claim of interest by the first respondent.

Imposition of Penalty:
The Adjudicating Officer of SEBI imposed a penalty on the petitioner, which was challenged by the petitioner before the Securities Appellate Tribunal. The Tribunal dismissed the appeal, following which the first respondent attached the petitioner's bank accounts. The petitioner challenged this action in a writ petition before the High Court.

Claim of Interest:
The main issue in the case was the payment of interest on the penalty amount imposed by SEBI. The first respondent claimed that the petitioner owed Rs. 17,34,791 as interest from a certain period. The petitioner, however, contested this claim, stating that he had already paid the penalty amount and limited his challenge to the interest claim.

Legal Arguments:
The petitioner's counsel argued that the interest claimed by the first respondent was based on Explanation 4 of Section 28A of the SEBI Act, which refers to Section 220 of the Income Tax Act. The counsel contended that since the penalty order had incorrect PAN details, interest should not be applicable. The counsel emphasized that interest should be imposed only on the person conclusively identified.

Court's Decision:
The High Court agreed with the first respondent's counsel that the petitioner should have approached the appropriate forums for challenging the penalty order and the interest claim. The Court noted that the penalty had been paid without objection, and the PAN details were not crucial in this context. Therefore, the Court dismissed the petition, stating that the petitioner must pay the interest component as demanded. The Court emphasized that the petitioner's challenge should have been made following the procedures outlined in the Act.

Conclusion:
In conclusion, the High Court dismissed the petition, with no costs imposed. The Court upheld the claim for interest on the penalty amount, emphasizing that the petitioner's actions did not absolve him from paying the interest. The Court closed the connected miscellaneous petition as well.