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TMI Blog2010 (2) TMI 600X X X X Extracts X X X X X X X X Extracts X X X X ..... ve taken place prior to the enactment of those provisions. It is nobody’s case that Board has exercised those powers in respect of a proceeding which was initiated prior to the enactment of those provisions. In fact Board has issued the show-cause notice in terms of section 11B and considered the reply of the respondent. In such a situation, there has no infraction in the procedure. - CIVIL APPEAL NO. 1697 OF 2005 - - - Dated:- 25-2-2010 - ASOK KUMAR GANGULY AND G.S. SINGHVI, JJ. Altaf Ahmed, Bhargava, V. Desai, Rahul Gupta and Nikhil Sharma for the Appellant. Indrajeet Das for the Respondent. JUDGMENT G.S. Ganguly, J. - The question which arises for consideration in this appeal is whether section 11B of the Securities and Exchange Board of India Act, 1992 (for short, the Act ) could be invoked by the Chairman of the Securities and Exchange Board of India (for short, SEBI ) in conjunction with sections 4(3) and 11 for restraining the respondent from associating with any corporate body in accessing the securities market and prohibiting him from buying, selling or dealing in securities. 2. The factual background in which the present appeal arises is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestor protection. Thus an important aspect of the capital structure of the company had not been disclosed in the prospectus as a result of which the investors were misguided. In view of such complaint having been received investigation was undertaken. Ultimately, a show- cause notice dated 22-12-1999 was issued to the respondent asking it to show-cause why directions under section 11B of the Act restraining the company and its Directors from accessing the capital market for a suitable period will not be issued. A reply was demanded within 15 days from the receipt of the show-cause notice. 6. Pursuant to such show-cause notice the respondent gave his reply on 1-3-2000 and 10-7-2002. Thereafter, an opportunity of personal hearing was granted to the respondent on 14-5-2002 and the same was adjourned to 5-7-2002 and on that date the Board made its submissions. Ultimately, on 31-3-2004 Chairman of the Board passed an order, the concluding portion whereof is as under : "Therefore, in exercise of the powers conferred upon me by virtue of section 4(3) read with section 11 and section 11B of SEBI Act, I hereby direct that Shri Ajay Agarwal be restrained from associating with any corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal that the powers under section 11B can only be used prospectively and not retrospectively had been given on an erroneous appreciation of the legal provision under the said Act. It appears that the Appellate Tribunal passed its order by relying on the decision of this Court in the case of Govinddas v. ITO [1976] 103 ITR 123 (SC). 14. The decision of this Court in Govinddas ( supra ) was on totally different facts and legal questions. 15. It is well known that the substantive laws to be applied for determination of tax liability must be the law which is in force in the relevant assessment year. 16. It is well settled that law to be applied for assessment is the one which is extant in the assessment year unless there is an amendment which is made retrospective either expressly or by necessary implication. See Reliance Jute and Industries Ltd. v. CIT [1980] (1) SCC 139. Same principle have been followed in the case of CED v. M.A. Merchant AIR 1989 SC 1710. 17. In Govinddas s case ( supra ), this Court held that sub-sections (1) to (5) of section 171 of the 1961 Act provide for the machinery of assessment of Hindu Undivided Family after partition. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso came by way of amendment in 2002. It should, however, be noted that by the time the Board passed the order on 31-3-2004 all the amendments were on the statute. 22. Therefore, the question here is not of retrospective operation of the amendments. Even if the amendments to the said Act are allowed to operate prospectively by the time the order was passed by the Board, it was empowered by the aforesaid amendments to do so. 23. Therefore, without giving any retrospective operation to those provisions, the impugned order can be passed by the Board inasmuch as the amendments in questions empowered the Board to pass such an order when it passed the order. So, the question that survives is whether the Board could pass the order in respect of allegations which surfaced prior to the coming into effect of those amendments in 1995 and 2002. 24. It is here that question of protection against ex-post facto laws fall for consideration. 25. In this connection it may be noticed that section 11B of the Act was invoked even at the show-cause stage. Therefore, it cannot be said that any provision has been invoked in the midst of any pending proceeding initiated by the Board. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle 367 of the Constitution states that unless the context otherwise requires, the General Clauses Act, 1897 shall apply for the interpretation of the Constitution as it does for the interpretation of an Act. 32. If we look at the definition of offence under General Clauses Act, 1897 it shall mean any act or an omission made punishable by any law for the time being in force. Therefore, the order of restrain for a specified period cannot be equated with punishment for an offence as has been defined under the General Clauses Act. 33. Under Criminal Procedure Code, offence has been defined under section 2( n ) as follows : "2( n ) offence means any act or omission made punishable by any law for the time being in force and includes any act in respect of which a complaint may be made under section 20 of the Cattle-trespass Act, 1871 (1 of 1871);" 34. On a comparison of the aforesaid two definitions we find that there are common links between the two. An offence would always mean an act of omission or commission which would be punishable by any law for the time being in force. 35. Article 20(1) was interpreted by the Court in Rao Shiv Bahadur Singh v. State of Vindhy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors in the capital market by giving them some protection. 40. The said Act is pre-eminently a social welfare legislation seeking to protect the interests of common men who are small investors. 41. It is a well known canon of construction that when Court is called upon to interpret provisions of a social welfare legislation the paramount duty of the Court is to adopt such an interpretation as to further the purposes of law and if possible eschew the one which frustrates it. 42. Keeping this principle in mind if we analyse some of the provisions of the Act it appears that the Board has been established under section 3 as a body corporate and the powers and functions of the Board have been clearly stated in Chapter IV and under section 11 of the said Act. 43. A perusal of section 11, sub-section 2( a ) of the said Act makes it clear that the primary function of the Board is to regulate the business in stock exchanges and any other securities markets and in order to do so it has been entrusted with various powers. 44. Section 11 had to be amended on several occasions to keep pace with the felt necessities of time . One such amendment was made in sub-section (4) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the procedure. 49. Therefore, the entire basis of the order of the Appellate Tribunal that provision of section 11B cannot be applied retrospectively has been passed on an erroneous basis, as discussed hereinabove. 50. Provisions of section 11B being procedural in nature can be applied retrospectively. 51. The Appellate Tribunal made a manifest error by not appreciating that section 11B is procedural in nature. It is a time honoured principle if the law affects matters of procedure, then prima facie it applies to all actions, pending as well as future. See K. Eapen Chako v. Provident Investment Co. (P.) Ltd. AIR 1976 SC 2610 wherein Chief Justice A.N. Ray laid down those principles. 52. Maxwell in his "Interpretation of Statutes" also indicated that no one has a vested right in any course of procedure. A person s right of either prosecution or defence is conditioned by the manner prescribed for the time being by the law and if by the Act of Parliament, the mode of proceeding is altered, and then no one has any other right than to proceed under the alternate mode. [ Maxwell Interpretation of Statutes, 11th Edition, p. 216]. 53. These principles, enunciate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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