SEBI THROUGH ITS CHAIHMANversusROOFIT INDUSTRIES LTD.

                      [2015] 12 S.C.R. 190


A               SEBI THROUGH ITS CHAIHMAN
                             . v.
                   ROOFITINDUSTRIES LTD.
              (Civil Appeal Nos.1364-1365 of 2005)
B
                      NOVEMBER 26, 2015
       [VIKRAMAJIT SEN AND SHIVA KIRTI SINGH, JJ.]

       Securities and Exchange Board of India Act, 1992 - s.
c 15A - Allegations of share-price rigging by respondent -
  Issuance of summons on 23. 07. 2002 by appellant to
  respondent requiring it to produce certain documents -
  However, non-compliance of summons and information
  required not provided by respondent till the extended date-
D 16.9.2002 - In terms of amended s. 15A(a}, Adjudicating
  Officer imposed penalty of Rs 1 crore on respondent and in
  connected appeal imposed Rs 75,00,000- Tribunal reduced
  the penalty payable by respondent uls. 15A from Rs 1 crore
  to Rs 60, 0001- and from Rs 75, 00, 000 to Rs 15, 000 and Rs
E 60,000!- On appeal, held: Date on which the failure occurred
  was relevant not the date on which the penalty was imposed,
  to apply amended s. 15A - Respondent failed to furnish the
  information by the extended date, thus the failure was
  complete on 16.9.2002, resulting in penalty prior to the
F amendmenttos. 15A becoming applicable, i.e. Rs. 1.5 lakhs
  - Order passed by the tribunal set aside.

        Allowing the appeals, the Court

G      HELD: The amendment to Section 15A of the
  Securities and Exchange Board of India Act, 1992 did
  not indicate that the amended Section would apply to ...
  penalties imposed after 29.10.2002. The amendment was
  merely made with effect from that date, indicating that
H the change would be applicable for failures occurring
                            190
SEBI THROUGH ITS CHAIRMAN v. ROOFIT INDUSTRIES 191
                     LTD.

after that date. The date on which the failure occurred        A
was thus relevant for deciding the applicable law, not
the date on which the penalty was imposed. The relevant
version of the Act to consider would therefore, be that
before 29.10.2002, the language of which did not indicate
a legislative intent to consider the default a continuing      B
one. The default was clearly complete on the failure to
submit the requisite information by the date set by the
appellant, i.e. 16.9.2002, resulting in the penalty u/s. 15A
becoming applicable, i.e. Rs. 1.5 lakhs. Had the
respondent furnished the information sought by the             C
appellant by that date, undoubtedly there would have
been no culpability against it. Thus, the penalty first
became applicable under the pre-amendment Section,
which imposed "a penalty not exceeding Rs. 1.5 lakhs           D
for each such failure". The intention of the Section as. it
then stood was clearly not to consider it a continuing
default. Such an intention can be read into the provision
as it currently stands, as it imposes a penalty for each
d~y for which the breach continues, but this was not the       E
case prior to 29.10.2002. Facially, this was the reason
and necessity for the amendment. As the failure was
complete on 16.9.2002, the penalty to be imposed on the
respondents is Rs. 1.5 lakhs. The judgment of the SAT
is set aside. [Para 7, 8, 10, 11) [199-B, F-H; 200-H; 201-A-   F
DJ
     State of Bihar v. Deokar:an Nenshi 1973
     (3) SCR 1004: (1972) 2 sec 890 - relied on.
     Maya Rani Punj vs Commissioner of Income Tax,             G
     Delhi 1985 (3) Suppl. SCR 827: (1986) 1 sec
     445 - distinguished.
     Chitturi Subbanna vs Kudapa Subbanna (1965)
     2 SCR 661 - referred to.
                                                               H
192        SUPREME COURT REPORTS                  (2015) 12 S.C.R.


A          Black's Law Dictionary- referred to.

                        Case Law Reference
  (1965) 2 SCR 661        referred to.                 Para 6
  1985 (3) Suppl. SCR 827 distinguished.               Para 8, 9
B 1973 (3) SCR 1004 ·     relied on.                   Para 10
          CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.
      1364-1365 of 2005

       From the Judgment and Order dated 09.08.2004 of the
C Securities Appellate Tribunal, Mumbai in Appeal No. 92 of
  2004

                                WITH

D          C. A. NOS. 1366-1367, 1368-1369, 1370-1371, 1372-
      1373, 1374-1375, 1376-1377, 1378-1379 OF 2005

      Arvind P. Datar, Pratap Venugopal, Gaurav Nair, Niharika,
  Surekha Raman, Anuj Sarma, M/s. K. J. John & Co. for
E Appellant.

           Jayant Bhushan, Shridhar Y. Chitale, Varun Mohan,
      Abhijat P. Medh for the Respondent.

          The Judgment of the Court was delivered by
F
        VIKRAMAJIT SEN, J. 1. These Appeals lay siege to
  the decision of the Securities Appellate Tribunal (SAT) which
  modified the order of the Adjudicating Officer under SEBI,
  reducing the penalty payable by the Respondent, Roofit
G Industries Ltd., under Section 15A of the Securities And
  Exchange Board of India Act, 1992 (SEBIAct) from Rs. 1 crore
  to Rs. 60,000. In the connected matters, the penalty imposed
  by the Appellant SEBI was reduced from Rs. 75,00,000 to Rs.
  15,000 in five cases and Rs. 60,000 in one case. What
H formulae, if any, has been followed in these reductions is not
 SEBI THROUGH ITS CHAIRMAN v. ROOFIT INDUSTRIES 193
            LTD. [VIKRAMAJITSEN, J.]

forthcoming, making the exercise pregnant to the possibility A
of arbitrariness if not inconsistency or caprice.

         2. The Appellant, having noticed allegations of share-
 price rigging by the Respondent, initiated an investigation into
 the shareholder pattern of the Respondent and price B
 manipulation thereof. During the investigation, the Appellant
 issued Summons on 23. 7.2002 to the Respondent requiring it
 to procure and produce certain documents and also for
 submitting additional information. The Respondent sought time ·
 till 20.8.2002 to provide the documents and information sought C
 by the Appellant, and thereafter sought further time till
 31.8.2002 and then 30.9.2002. After a reminder dated
 5.9.2002, since the Summons were still not complied with and
 the information required was not provided by the Respondent,
 an Adjudicating Officer was appointed on 23.6.2003 under D
 Section 151 of the SEBI Act to conduct an enquiry. By Show-
 Cause Notice dated 1.9.2003 for non-compliance of Summons
 dated 23.7.2002, the Adjudicating Officer granted the
 Respondent two opportunities of personal hearing on
 25.2.2004 and 8.3.2004. The Respondent did not appear E
 before the Adjudicating Officer despite these opportunities.
 TheAdjudicating Officertherefore held, on 29.3.2004, thatthere
 was no material to suggest that the Respondent had complied
 with the Summons or had given the information sought for by F
 SEBI despite extensions of time. In terms of Section 15A{a)
 of the SEBI Act, a penalty of Rs. 1 crore was imposed on the
 Respondent. In the connected appeals, a penalty of Rs. 75
 lakhs was imposed on each of the various Respondent
 companies. Aggrieved, the Respondent moved an Appeal G
·before the SAT.

     3. The SAT, on 9.8.2004, came to the conclusion that there
was no dispute that the Respondent was liable to answer the
summons and produce whatever information was available with, · . H
194         SUPREME COURT REPORTS                  [2015] 12 S.C.R.


A  it. It noted that the penalty under Section 15A had been
   enhanced in 2002 to Rs. 1 lakh for each day of failure to furnish
  the required document, return or report, or Rs. 1 crore,
  whichever is less. It noted the submission of the Respondent
  that it had suffered deep financial setbacks and was on the
B verge of bankruptcy, and therefore most of its staff had left the
  service of the Company. The SAT held that given that the
  business of the Respondent had come to a dormancy, there
  would be no point in imposing high penalties which would
  remain paper orders, and never be implemented. It considered
C impecuniosity an additional factor to those listed under Section
  15J in adjudicating the quantum of penalty, and found it fit to
  reduce the penalty to Rs. 60,000. The quantum of penalty in
  the connected appeals was also reduced forthe same reasons,
  from Rs. 75 lakh to Rs. 15,000 in five cases and Rs. 60,000 in
0
  one case. The Appellant's application for review was
  dismissed on 8.11.2004. The Appellant has now filed the
  presentAppeal, contending that the SAT erred in reducing the
  penalty imposed by the Adjudicating Officer on wholly
E extraneous grounds including the inability of the Respondent
  to pay the penalty, a contingency which is not mentioned or
  featured in Section 15J of the SEBI Act.

            4. We find merit in the contentions of Learned Senior
F     Counsel for the Appellant that the penalty imposed by the
      Adjudicating Officer should not have been reduced on wholly
      extraneous grounds not mentioned in Section 15,J of the SEBI
      Act. Section 15J reads thus:

           15J; While adjudging quantum of penalty under Section
G          15-1, the adjudicating officer shall have due regard to the
           following factors, namely:-
           (a) the amount of disproportionate gain or unfair
               advantage, wherever quantifiable, made as a result
H              of the default;
SEBI THROUGH ITS CHAIRMAN v. ROOFIT INDUSTRIES 195
           LTD. [VIKRAMAJITSEN, J.]

     (b) the amount of loss caused to an investor or group of A
         investors as a result of the default;
     (c) the repetitive nature of the default.
The use of the word "namely" indicates that these factors alone
are to be considered by the Adjudicating Officer. Black's Law B
Dictionary defines "namely" as "by name or particular mention.
The term indicates what is to be included by name. By contrast,
including implies a partial list and indicates something that is
not listed." In this context, we find no reason to read "namely"
as "including", as Learned Senior Counsel for the Respondent C
would have us do.

     5. It would be apposite for us to begin our analysis of the
penalty to be imposed by laying out Section 15A(a) as it stood
subsequent to the 2002 amendment, for the facility of reference: D

     15A. If any person, who is required under this Act or any
     rules or regulations made thereunder,-

      a) to furnish any document, return or report to the Board, E
          fails to furnish the same, he shall be liable to a penalty
       · of one lakh rupees for each day during which such
          failure continues or one crore rupees; whichever is
          less;
                                                                  F

      In the connected appeals before us, the Appellant has
imposed a penalty of Rs. 75 lakhs despite the failure having
continued for substantially more than 75 days. Learned Senior
Counsel for the Appellant has contended that the Appellant G
has discretion to impose a penalty below the number of days
of default regardless of the words "whichever is less". He has
argued that there would be no purpose to Section 15J if the
Adjudicating Officer's discretion to fix the quantum of penalty
                                                                H
196       SUPREME COURT REPORTS                   [2015] 12 S.C.R.


A did not exist, and that such an interpretation would render
  certain Sections of the SEBI Act as expropriatory legislation
  due to the crippling penalties they would impose. We do not
  agree with these submissions. The clear intention of the
  amendment is to impose harsher penalties for certain
B offences, and we find no reason to water them down. The
  wording of the statute clarifies that the penalty to be imposed
  in case the offence continued for over one hundred days is
  restricted to Rs. 1 crore. No scope has been given for
  discretion. Prior to the amendment, the Section provided for a
C penalty "not exceeding one lakh fifty thousand rupees for each
  such failure", thus giving the Appellant the discretion to decide
  the appropriate amount of penalty. In this context, the change
  to language which does not repose any discretion is even more
D significant, as it indicates a legislative intent to recall and
  remove the previously provided discretion. Additionally,
  Section 15J existed prior to the amendment and was relevant
  at that time for adjudging quantum of penalty. Once this
  discretionary power of the adjudicating officer was withdrawn,
E the scope of Section 15J was drastically reduced, and it
  became relevant only to the Sections where the Adjudicating
  Officer retained his prior discretion, such as in Section 15F(a)
  and .Section 15HB. This ought to have been reflected in the
  language of Section 151, but was clearly overlooked. Section
F 15J has become relevant once again, subsequent to the
  Securities Laws (Amendment) Act, 2014, which changed
  Section 15A(a), with effect from 8.9.2014, to read as follows:

         15A. Penalty for failure to furnish information,
G        return, etc. - If any person, who is required under this
         Act or any rules or regulations made thereunder,-

         (a) to furnisl1 any document, return or report to the Board,
             fails to furnish the same, he shall be liable to a penalty
             which shall not be less than one lakh rupees but which
 H
 SEBI THROUGH ITS CHAIRMAN v. ROOFIT INDUSTRIES 197
            LTD. [VIKRAMAJIT SEN, J.)

         may extend to one lakh rupees for each day during A
         which such failure continues subject to a maximum of
         one crore rupees;

      The purpose of amendment was clearly to re-introduce
the discretion of the Adjudicating Officer which was taken away B
by the SEBI (Amendment) Act, 2002. Had the failure of the
Respondent taken place between 29.10.2002 and 8.9.2014,
the penalty ought to have been Rs. 1 crore, without the
possibility of any discretion for reduction.
                                                                   c
       6. However, before imposing such a penalty, we must
consider the date on which the amendment came into effect,
i.e. 29.10.2002. Since the Appellant's Summons to furnish the
required documents was prior to th.is date and the Respondent
failed to do so till well after it, the question before us is when D
the failure or default took place. While this question does not
appear to have been raised before the SAT, it is a question of
law and can therefore be raised at any point. As was held by
this Court in Chitturi Subbanna vs Kudapa Subbanna (1965)
2 SCR 661, a pure question of law, which is not dependent on E
the determination of any question of fact, may be raised for
the first time at the appellate or even the final stage, even though
no reference to it had been made in the Courts below.

     7. As previously discussed, the initial Summons to the F
Respondent was dated 23.7.2002. From this date onwards,
there was an obligation on the Respondent to produce the
documents and information sought by the Appellant, but it failed
to do so, even until the imposition of a penalty by the
Adjudicating Officer on 29.3.2004. Instead, the Respondent G
sought extensions of time vide three letters. After the third letter,
the Appellant sent a reminder letter dated 5.9.2002, which is
reproduced below:

                                                                   H
198         SUPREME COURT REPORTS                    [2015] 12 S.C.R.

A                                 URGENT
                                                  IES/ID9/SP/17502/02
                                                    September 5, 2002
      SUJIT PRASAD
      DY. GENERAL MANAGER
      INVESTIGATIONS, ENFORCEMENT AND
8     SURVEILLANCE DEPARTMENT
      email: sujitp@sebi.gov.in
      Tel.no.:282981

      Mis. Roofit Industries Ltd.
      501, Sangli Bank Bldg.
C     296, Perin Nariman Street,
      Fort, Mumbai -400001.

      Dear Sirs,

      Please refer to our summons dated July 23, 2002 advising you to
D     submit certain information specified at Annexure 'A' to the said
      summons, by August 01, 2002.

      In response, you had vide your letter dated July 26, 2002 requested
      for extension of time till August 20, 2002 for submission of the
      aforesaid information.
 E
      Further, vide you letter dated August 12, 2002 you had again
      requested for the extension of time till August 31, 2002 and now,
      vide your letter dated August 28, 2002 you have once again
      requested for extension of time till September 30, 2002 to furnish
      the information.
 F
      From the foregoing, it appears that you do not have any desire to
      submit the information, as sought by us, and/or do not wish to co-
      operate in the ongoing investigation in the scrip of M/s. Roofit
      Industries Ltd.

G     However, before initiating action in terms of prosecution under
      Section 24 of the SEBI Act, 1992 and/or levying penalty under
      Section 15A of the SEBI Act, 1992, you are once again advised to
      submit the information sought vide our above mentioned summons
      by September 16, 2002 failing which appropriate action(s) as
      mentioned above would be initiated and no further communication
 H    would be entertained from your end.
 SEBI THROUGH ITS CHAIRMAN v. ROOFIT INDUSTRIES 199
            LTD. [VIKRAMAJIT SEN, J.]

 It is thus abundantly clear from a perusal of the letter that the A
 Appellant had declined the request for a further extension of
 time beyond 16.9.2002. The Respondent had failed to furnish
 the information by that date, resulting in the penalty under
 Section 15A becoming applicable. It would thus be palpable
 that the penalty prior to the amendment to Section 15A would , B
 be applicable, i.e. Rs. 1.5 lakhs.
        8. Learned Senior Counsel for the Appellant, however,
  has argued that this is a continuing default, as it did not end till
  well after the amendment, with the result that penalties both          C
  prior to and post the amendment would apply. He has relied
  on the decision of the Three-Judge bench in Maya Rani Punj
  vs Commissioner of Income Tax, Delhi (1986) 1 SCC 44~,
  wherein it was held that where "a duty continues from day to
. day, the non-performance of that duty from day to day is a             D
  continuing wrong. Having perused Maya Rani Punj, we find
  that the facts therein were significantly different from those
  before us. In that case, the Income Tax Act, 1961 applied
  instead of the Income Tax Act, 1922 because the former statute.
  stated that it would apply if the Assessment was made                  E
  subsequent to 1.4.1962. On an analysis of the language in the
  1961 Act, it is clear that the Legislature intended for non-
  compliance with the obligation of making a Return to be
  considered an infraction as long as the default continued. The
  facts before us are significantly different. The amendment to          F
  Section 15A did not indicate that the amended Section would
  apply to penalties imposed after 29.10.2002. The amendment
  was merely made with effect from that date, indicating that the
  change would be applicable for failures occurring after that
  date. The date on which the failure occurred was thus relevant         G
  for deciding the applicable law, not the date on which the
  penalty was imposed. The relevant version of the Act for us to
  consider would therefore be that before 29.10.2002, the
  language of which did not indicate a legislative intent to             H
  consider the default a continuing one.
200         SUPREME COURT REPORTS                  [2015] 12 S.C.R.


A          9. We find that the situation before us is more akin in its
      factual matrix to that in State of Bihar v. Deokaran Nenshi
      (1972) 2 sec 890, which distinguished between continuing
      offences and offences committed once and for all.

8          5.A continuing offence is one which is susceptible of
           continuance and is distinguishable from the one which
           is committed once and for all. It is one of those offences
           which arises out of a failure to obey or comply with a rule
           or its requirement and which involves a penalty, the
c          liability for which continues until the rule or its
           requirement is obeyed or complied with. On every
           occasion that such disobedience or non-compliance
           occurs and recurs there is the offence committed. The
           distinction between the two kinds of offences is between
D          an act or omission which constitutes an offence once
           and for all and an act or omission which continues and
           therefore, constitutes a fresh offence every time or
           occasion on which it continues. In the case of a continuing
           offence, there is thus the ingredient of continuance of the
E          offence which is absent in the case of an offence which
           takes place when an act or omission is committed once
           and for all.
                                                  (emphasis added)

F In that case, Regulation 3 read with Section 66 of the Mines
  Act made the failure t~ file anAnnual Return by the appropriate
  date an offence. It was held that since the failure was to file the
  Returns by the stipulated date, the infringement occurred on
G that date and became complete on that date. Significantly, this
  case was discussed in Maya Rani Punj but was not overruled.

        10. On the facts at hand, as in Deokaran Nenshi, the
  default was clearly complete on the failure to submit the
  requisite information by the date set by the Appellant, i.e.
H 1,6.9.2002. Had the Respondent furnished the information
SEBI THROUGH ITS CHAIRMAN v. ROOFIT INDUSTRIES 201
           LTD. [VIKRAMAJIT SEN, J.]

sought by the Appellant by that date, undoubtedly there would A
have been no culpability against it.. Thus the penalty first
became applicable under the pre-amendment Section, which
imposed "a penalty not exceeding one lakh fifty thousand
rupees for each such failure". The intention of the Section as it
then stood was clearly not to consider it a continuing default. B
Such an intention can be read into the provision as it currently
stands, as it imposes a penalty for each day for which the
breach continues, but this was not the case prior to 29.10.2002.
Facially, this was the reason and necessity for the amendment.
                                                                  c
      11. As the failure herein was complete on 16.9.2002,
the penalty to be imposed on the Respondent in C.A. No. 1364-
65 of 2015 and on each of the Respondents in the connected
Appeals is Rs. 1.5 lakhs. The impugned judgment of the SAT
is set aside and the Appeals are allowed in these terms. The D
interim stay order dated 18.2.2005 is vacated. No orders as
to costs.

Nidhi Jain                                     Appeals allowed.