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D. Y. CHANDRACHUD, M. R. SHAH
Prakash Gupta – Appellant
Versus
Securities and Exchange Board of India – Respondent
JUDGMENT :
Dhananjaya Y. Chandrachud, J.
This judgment has been divided into sections to facilitate analysis. They are:
A The Appeal
B. The IPO, SEBI’s Investigation and the criminal complaint
C. Application for Compounding
D. Counsel’s submissions
E Analysis
E.1 Structure of the SEBI Act
E.2 SEBI Circulars in relation to Section 24A
E.3 Jurisprudential basis for ‘Compounding’
E.4 Compounding outside of CrPC
E.5 Regulatory role of SEBI
F Guidelines for Compounding under Section 24A
G. Analysis on facts and conclusion
A. The Appeal
1 The appellant is being prosecuted for an offence under Section 24(1) of the Securities and Exchange Board of India Act, 1992 (“SEBI Act”). The appellant sought the compounding of the offence under Section 24A. By an order dated 15 November 2018, the Additional Sessions Judge – 02 Central District at Tis Hazari Courts, Delhi (“Trial Judge”), rejected the application, upholding the objection of the Securities and Exchange Board of India that the offence could not be compounded without its consent. By a judgment of a Single Judge of the High Court of Delhi dated 1 April 2019 the order of the Trial Judge has been affirmed in revision. The High Court has held that the t
(1) Power of compounding must be expressly conferred by Statute which creates offence. (2) Section 147 of N.I. Act does not expressly incorporate permission of Court for compounding, conceivably beca....
The main legal point established in the judgment is that SEBI's consent is necessary for compounding the offense under Section 24A of the SEBI Act, and the court must obtain the views of SEBI for gui....
The court affirmed that the Special Judge has discretion in compounding offence penalties under the SEBI Act, and can determine interest rates independently of SEBI's recommendations.
A court may compel the SEBI to disclose documents relevant to compounding applications, reinforcing that while SEBI’s views are influential, they do not override judicial discretion in deciding these....
The main legal point established in the judgment is the interpretation and application of the pre-amended and amended provisions of Section 24 of the SEBI Act in determining the guilt and imposition ....
The compounding of offences under Section 138 of the N.I. Act requires the consent of the complainant, and the inherent powers of the High Court cannot be used to circumvent this requirement.
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