Del HC | Object of SEBI Act to be kept in mind while discharging an accused; application under S. 24-A declined

Delhi High Court: Sunil Gaur, J., declined an application filed under Section 24-A of the Securities and Exchange Board of India Act, 1992, for compounding offence, without commenting on merits of the case.

The petitioner was an undertrial in a case registered for violation of provisions of SEBI Act. The trial court had rejected the petitioner’s application under Section 24-A relying on the Supreme Court decision in JIK Industries Ltd. v. Amarlal V. Jumani, (2012) 3 SCC 255.

Jagdeep Singh Bakshi and Abhishek Mohan Sinha, Advocates for the petitioner relied on Meters and Instruments (P) Ltd. v. Kanchan Mehta, (2018) 1 SCC 560 to submit that the respondent’s consent to permit compounding of the offence was not required. Per contra, Sanjay Mann and Simran, Advocates representing SEBI relied on Bombay High Court decision in N.H.Securities Ltd. v. SEBI, 2018 SCC OnLine Bom 4040 to submit that object of SEBI Act would be lost if compounding was allowed.

The High Court noted that the petitioner had filed the compounding application way back in 2013 which remained pending, but now, the proceedings before the trial court had reached the final arguments stage. The Court said: “The object of the SEBI Act has to be kept in mind. A stable and orderly functioning of the securities market has to be ensured. It will not be in the interest of justice to discharge the accused at the final stage of the proceedings by allowing the application for compounding without the consent of SEBI Act as it will defeat the objective of the SEBI Act. Though the Adjudicating Officer has found that the alleged violation committed by the petitioner has not resulted in any loss to the investors, but this by itself would not justify discharge of accused at the fag end of trial.”

Considering the cited cases, the High Court found no justification for allowing petitioner’s application under Section 24-A. [Prakash Gupta v. SEBI, 2019 SCC OnLine Del 7930, Order dated 01-04-2019]

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