New Delhi: The Supreme Court Friday held that the consent of the market regulator Sebi is not mandatory for the compounding of offences under section 24A of the Sebi Act but taking views of the expert body is necessary.
A bench of Justices D Y Chandrachud and M R Shah said though Sebi is not conferred with any authority to veto a decision for proceeding in trial offences, it is a regulatory and prosecuting agency and the Securities Appellate Tribunal (SAT) and the courts must obtain its views since it is an expert body.
The apex court said eliciting of views of Sebi is necessary in the interest of the stability of the securities market and protection of investors.
“Before taking any decision to compound an offence punishable under section 24 A,T or the court must obtain views of Sebi for furnishing guidance to its decision. These views unless manifestly mala fide must be accorded high degree of deference. The court must be wary of substituting its own wisdom on the gravity of the offence or the impact on the markets while discarding the expert opinion,” the bench said.
Section 24A in The Securities and Exchange Board of India Act, 1992 states that, “Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), any offence punishable under this Act, not being an offence punishable with imprisonment only, or with imprisonment and also with fine, may either before or after the institution of any proceeding, be compounded by a Securities Appellate Tribunal or a court before which such proceedings are pending.”
The apex court’s judgment came on an appeal filed against the Delhi High Court order by which application of one Prakash Gupta under Section 24A of the Sebi Act for compounding of offences was dismissed.
The petitioner is 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.