IMPORTANT POINT
When a Court differs from a coordinate Bench, matter should be referred to a larger Bench.

ORDER :

1. These appeals raise an interesting question of the interplay between section 15A, as amended in the year 2002, and Section 15J of the Securities and Exchange Board of India Act, 1992 (in short 'the SEBI Act').

2. The brief facts necessary to understand the present controversy are that the appellants before us made certain purchases of shares of the Brijlaxmi Leasing and Finance Company between October and December, 2012. On 16th June, 2014, in Civil Appeal No.14730 of 2015, a show cause notice came to be issued by the respondent SEBI to the appellant under Rule 4(1) of the Securities and Exchange Board of India (Procedure for holding inquiry and imposing penalty by adjudicating officer) Rules, 1995 for the alleged violation of the provisions of Regulations 13(4), 13(4A) and 13(5) of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992.

3. A detailed reply was filed by the appellant to the show cause notice, on 13th August, 2014, submitting that there was no intention to violate any rule or regulation. The entire transaction value of purchases and sale of the shares did not exceed Rs.55,000/-. It was further submitted that the transaction was neither made with a view to make any disproportionate gain or unfair advantage nor was it for the purpose of causing any loss to investors. The default, if any, was a technical default that did not call for any penal action.

4. The Adjudicating Officer, by various orders imposed a penalty of Rs.5 lacs, 7 lacs and 11 lacs respectively, in the three civil appeals, before us. An appeal made to the Securities Appellate Tribunal suffered the same fate, and was dismissed by the Tribunal stating that there is no dispute that there was violation of mandatory regulations, and that in any case, a penalty of Rs.one crore could have been imposed on facts, whereas, in fact, the Adjudicating Officer penalised the appellants with a penalty of Rs.5 lacs, 7 lacs and 11 lacs respectively, which cannot be said to be excessively harsh or unreasonable.

5. It is these judgments of the Securities Appellate Tribunal, Mumbai that have come up before us in these appeals.

6. Learned counsel appearing on behalf of the appellants has argued that Section 15A, after its amendment in 2002, which was the law until the section was further amended in the year 2014, would undoubtedly apply to the present facts of the case. However, learned counsel submitted that Section 15A would, at all times, have to be read with Section 15J of the SEBI Act and that, this being so, it is clear that the violation of the regulations being only technical, and not involving any disproportionate gain to the appellant, or unfair advantage or loss to any investor, SEBI was not, in the first instance, correct in imposing any penalty at all. According to the learned counsel for the appellants, the defaults that were made were technical, and were made on three days only, and there was no repetitive nature of any default as well.

7. Mr. C.U. Singh, learned senior counsel appearing on behalf of the respondent SEBI has placed before us a judgment of a Division Bench of this Court titled as SEBI Through its Chairman versus Roofit Industries Limited, reported in 2015 (12) SCALE 642. Mr. Singh has pointed out, one may say fairly, to us that observations made in paragraph 5 of the said judgment would completely foreclose the arguments made by the learned counsel for the appellants in the present cases, but that these observations may not constitute the ratio of the judgment for the reason that the judgment ultimately construed Section 15A prior to its amendment in the year 2002.

8. It is necessary at this juncture to set out paragraphs 4 and 5 of the aforesaid judgment in order to first ascertain as to what this Court has stated :-

“4. We find merit in the contentions of learned senior counsel for the appellant that the penalty imposed by the Adjudicating Officer should not have been reduced on wholly extraneous g