- 3 times gain made/loss avoided
- Rs. 25 crores (Rs. 250 million)
Since this is the minimum fine, SEBI, the petitioner alleged has shortchanged the country by 50,000 crores in penalties not charged. Taking a literal meaning would mean that SEBI is obliged to charge a mimumum penalty of Rs. 25 crores per violation irrespective of the nature and flavour of the violation. So where a person forgets to file a disclosure document under takeover regulations, a mimum penalty of this quantum should apply. This is of course silly and absurd. Yes it was a typo introduced by parliament. But to read it literally would be like using nuclear weapons on mosquitoes and hostile countries equally.
Secondly, there are ample number of supreme court cases which hold that a person deciding disciplinary cases can refuse to impose the minimum penalty prescribed based on circumstances.
The high court needs to focus on more susbtantive cases.
1 comment:
Let the government clarify that it was a typo and amend it with retrospective effect. In the absence of it, law is law and no one has discretion to do anything contrary to law. Legislative intent will have to be looked into.
Let us see what SEBI and Government say in the matter to the high court.
Penalty may have been enhanced in the interest of meaningful investor protection and to be deterrent to the violators and others.
Unless contrary is proved the estimated loss as contemplated by the petitioner would make this , in my opinion, a substantive issue.
While indeed nuclear weapons cannot be used to kill mosquitoes, the violators of capital market discipline contemplated in securities laws cannot also be punished like a class teacher punishing a student for violating class discipline.
Let us wait and watch. In case Hon. Court finds it frivolous, vexatious or without any sense or substance, based on submissions of various parties, it will of course deal with it accordingly.
V.T.Gokhale
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