Aishwarya Rathore-
The Supreme Court decided on Friday that the SEBI’s consent for the compounding of offences under section 24A of the SEBI Act is not mandatory and that the Security Appellate Tribunal (SAT) or the court before which the proceedings are pending has full discretion over compounding.
The Court has emphasised, however, that while the SEBI does not have the jurisdiction to reject a decision to compound any offences under the SEBI Act, the courts must elicit and obtain the opinions of the SEBI as an expert regulator in the interest of the securities market’s stability and investor safety.
The Court said, “Section 24A contains a departure from the modalities of Section 320, CrPC, the latter providing for compounding of offences under the IPC, with or without the leave of the Court, but with the consent of a particular person. The plain language of Section 24A makes it clear that in view of its non-obstante clause, the consent of SEBI is not intended to be mandatory for the compounding of offences in terms of section 24(1) of the SEBI Act. For this Court to read the same into section 24A, in a case of casus omissus, would tantamount to introducing language not intended by the legislature.”
The bench of Justices D. Y. Chandrachud and M. R. Shah was hearing an appeal from a Delhi High Court Order in April 2019 that denied the petitioner’s application for compounding of offences under Section 24A of the SEBI Act (where the allegations against the petitioner are of artificially jerking the price of the petitioner’s company’s share).
It should be emphasised that when the SEBI notified the petitioner that it did not consent to the offence being compounded.
The Trial Court in this instance dismissed the petitioner’s motion under Section 24A, based on the Supreme Court’s ruling in JIK Industries Ltd., (2012), a two-judge bench held that getting the complainant’s consent to compound an offence of cheque dishonour is sacrosanct.
The Court further held that Section 147 of the Negotiable Instrument Act cannot be wished away (which says that notwithstanding anything contained in the CrPC, every offence punishable under this Act shall be compoundable).