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TMI Blog2015 (11) TMI 1387X X X X Extracts X X X X X X X X Extracts X X X X ..... nsider the default a continuing one. As in Deokaran Nenshi, the default was clearly complete on the failure to submit the requisite information by the date set by the Appellant, i.e. 16.9.2002. Had the Respondent furnished the information sought by the Appellant by that date, undoubtedly there would have been no culpability against it. Thus the penalty first became applicable under the pre-amendment Section, which imposed "a penalty not exceeding one lakh fifty thousand rupees for each such failure". The intention of the Section as it then stood was clearly not to consider it a continuing default. Such an intention can be read into the provision as it currently stands, as it imposes a penalty for each day for which the breach continues, but this was not the case prior to 29.10.2002. Facially, this was the reason and necessity for the amendment. As the failure herein was complete on 16.9.2002, the penalty to be imposed on the Respondent in C.A. No. 1364-65 of 2015 and on each of the Respondents in the connected Appeals is ₹ 1.5 lakhs. The impugned judgment of the SAT is set aside and the Appeals are allowed in these terms. The interim stay order dated 18.2.2005 is vacate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Respondent had complied with the Summons or had given the information sought for by SEBI despite extensions of time. In terms of Section 15A(a) of the SEBI Act, a penalty of ₹ 1 crore was imposed on the Respondent. In the connected appeals, a penalty of ₹ 75 lakhs was imposed on each of the various Respondent companies. Aggrieved, the Respondent moved an Appeal before the SAT. 3 The SAT, on 9.8.2004, came to the conclusion that there was no dispute that the Respondent was liable to answer the summons and produce whatever information was available with it. It noted that the penalty under Section 15A had been enhanced in 2002 to ₹ 1 lakh for each day of failure to furnish the required document, return or report, or ₹ 1 crore, whichever is less. It noted the submission of the Respondent that it had suffered deep financial setbacks and was on the verge of bankruptcy, and therefore most of its staff had left the service of the Company. The SAT held that given that the business of the Respondent had come to a dormancy, there would be no point in imposing high penalties which would remain paper orders, and never be implemented. It considered impecuniosi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nected appeals before us, the Appellant has imposed a penalty of ₹ 75 lakhs despite the failure having continued for substantially more than 75 days. Learned Senior Counsel for the Appellant has contended that the Appellant has discretion to impose a penalty below the number of days of default regardless of the words whichever is less . He has argued that there would be no purpose to Section 15J if the Adjudicating Officer's discretion to fix the quantum of penalty did not exist, and that such an interpretation would render certain Sections of the SEBI Act as expropriatory legislation due to the crippling penalties they would impose. We do not agree with these submissions. The clear intention of the amendment is to impose harsher penalties for certain offences, and we find no reason to water them down. The wording of the statute clarifies that the penalty to be imposed in case the offence continued for over one hundred days is restricted to ₹ 1 crore. No scope has been given for discretion. Prior to the amendment, the Section provided for a penalty not exceeding one lakh fifty thousand rupees for each such failure , thus giving the Appellant the discretion to deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the appellate or even the final stage, even though no reference to it had been made in the Courts below. 7 As previously discussed, the initial Summons to the Respondent was dated 23.7.2002. From this date onwards, there was an obligation on the Respondent to produce the documents and information sought by the Appellant, but it failed to do so, even until the imposition of a penalty by the Adjudicating Officer on 29.3.2004. Instead, the Respondent sought extensions of time vide three letters. After the third letter, the Appellant sent a reminder letter dated 5.9.2002, which is reproduced below: URGENT IES/ID9/SP/17502/02 September 5, 2002 SUJIT PRASAD DY. GENERAL MANAGER INVESTIGATIONS, ENFORCEMENT AND SURVEILLANCE DEPARTMENT email : [email protected] tel.no.:282981 M/s. Roofit Industries Ltd. 501, Sangli Bank Bldg. 296, Perin Nariman Street, Fort, Mumbai - 400001. Dear Sirs, Please refer to our summons dated July 23, 2002 advising you to submit certain information specified at Annexure `A' to the said summons, by August 01, 2002. In response, you had vide your letter dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered an infraction as long as the default continued. The facts before us are significantly different. The amendment to Section 15A did not indicate that the amended Section would apply to penalties imposed after 29.10.2002. The amendment was merely made with effect from that date, indicating that the change would be applicable for failures occurring after that date. The date on which the failure occurred was thus relevant for deciding the applicable law, not the date on which the penalty was imposed. The relevant version of the Act for us to consider would therefore be that before 29.10.2002, the language of which did not indicate a legislative intent to consider the default a continuing one. 9 We find that the situation before us is more akin in its factual matrix to that in State of Bihar v. Deokaran Nenshi (1972) 2 SCC 890, which distinguished between continuing offences and offences committed once and for all. 5. A continuing offence is one which is susceptible of continuance and is distinguishable from the one which is committed once and for all. It is one of those offences which arises out of a failure to obey or comply with a rule or its requirement and which involve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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