SECURITIES AND EXCHANGE BOARD OF INDIAversusAJAY AGARWAL

                          [2010] 3 S.C.R. 70


A       SECURITIES AND EXCHANGE BOARD OF INDIA
                                    v.
                           AJAY AGARWAL
                   (Civil Appeal No. 1697 of 2005)
                         FEBRUARY 25, 2010·
B
       [G.S. SINGHVI AND ASOK KUMAR GANGULY, JJ.]

       Securities and Exchange Board of India Act, 1992 -
  Enactment of - Purpose - Held: The Act was enacted to
C achieve the twin purposes of promoting orderly and healthy
  growth of securities market and for protecting the interest of
  investors - The Act is pre-eminently a social welfare
  legislation.

D        Securities and Exchange Board of India Act, 1992:

        s. 11 - Amendment of - Done on several occasions - To
    keep pace with "felt necessities of time" - Amendment made
    in sub-section (4) of s. 11 in 2002 - Objects and reasons
    discussed.
E
        s. 11 B - Introduction of - Vide amendment made in 1995
    - Objects and reasons discussed.

          s. 11 B - Applicability of- With retrospective effect - Held:
F   s. 11-B being procedural in nature can be applied
    retrospectively - If law affects matters of procedure, then
    prima facie it applies to all actions, pending as well as future
    - On facts, entire basis of the order of Appellate Tribunal that
    s. 11-B cannot be applied retrospectively, was passed on an
    erroneous basis.
G
         Constitution of India, 1950 - Art. 20(1) - Protection
    under, against ex-post facto law - When available - Held: It
    is available only where the person concerned is held guilty

H                                   70
 SECURITIES AND EXCHANGE BOARD OF INDIA v.                 71
               AJAY AGARWAL
of having committed an "offence" and is subjected to             A
''penalty".

    Words and Phrases - "offence" - Meaning of -
Discussed - Code of Criminal Procedure, 1973 - s.2(n) -
General Clauses Act, 1897.
                                                                 B
     Interpretation of Statutes - Social welfare legislation -
Interpretation of -Duty of the Court - Held: When Court is
called upon to interpret provisions of a social welfare
legislation, paramount duty of the Court is to adopt an
interpretation to further the purposes of law and if possible    C
eschew the one which frustrates it.

      Based upon a complaint received from a member of
the Bombay Stock Exchange, the appellant-Board
initiated preliminary investigation into affairs relating to D
public issue of a company. The complaint was to the
effect that there was mis-statement in the prospectus filed
by the company at the time of the public issue and that
the investors were misguided.
     Show cause notice was issued to respondent, Joint           E
Managing Director of the company, asking it to show
cause why directions should not be issued uls.11 B of the
Securities and Exchange Board of India Act, 1992
restraining the company and its Directors from accessing
the capital market for a suitable period.                        F

    After considering the reply of the respondent, the
appellant-Board, in exercise of its powers under s.4(3) rl
w s.11 and s.11-B of the Act, passed order dated 31st
March, 2004, restraining the respondent from associating         G
with any corporate body in accessing the securities
market and also prohibiting him from buying, selling or
dealing in securities, for a period of five years.

    Respondent filed appeal contending that on the date,
                                                                 H
    ,, 72      SUPREME COURT REPORTS           [2010] 3 S.C.R.


A the violations were alleged against him, the appellant-
  Board did not have the power either under s.11 B or under
  s.11 (4)(b) of the Act since the enabling provisions came
  by way of amendment in 1995 and 2002 respectively,
  while the alleged violations surfaced prior to coming into
B effect of those amendments. This contention weighed
  with the Appellate tribunal and the respondent was given
  the protection against ex-post facto law. Hence the
  present appeal.

            Allowing the appeal, the Court
c
         HELD: 1. The order of the Appellate Tribunal is
     quashed and the order of the appellant-Board is upheld.
     [Para 54] (90-B]

D        Govinddas and others v. Income Tax Officer and another
     - 1976 (103) ITR 123 (S.C.), distinguished.

       Mis Reliance Jute and Industries Ltd. v C. I. T West
   Bengal, Calcutta 1980 (1) SCC 139 and Controller·of Estate
 . Duty, Gujarat-I, Ahmedabad v. M.A. Merchant and etc. AIR
E 1989 SC 1710, refer.red to.

       2..Though s.11 B and s.11 (4)(b) of the Securities and
  Exchange Board of India Act, 1992 came by way of
  amendment in 1995 and 2002 respectively, by the time
F the appeilant-Board passed ttie order on 31st March 2004,
  all the amendments wer~ on the statute. Even if the said
  amendments to the;:-Act were allowed to operate
  prospectively, by the 'time the order was passed by the
  Board, it was empowered by the said amendments to do
G so. Therefore, without giving any retrospective operation
  to those provisions, the imp,ugned order could be passed
  by the Board inasmuch as the amendments in question
  empowered the Board to pass such ~:!'~ or~er when it
  passed the order. [Paras 21, 22 and 23] (83-E; 83-F; 83-
H G]
 SECURITIES AND EXCHANGE BOARD OF INDIA v.             73
               AJAY AGARWAL
    3.1. In the present case, s.11-B of the Act was          A
invoked even at the show cause stage. Therefore, it
cannot be said that any provision has been invoked in
the midst of any pending proceeding initiated by the
Board. The respondent was, thus, put on notice that the
Board is invoking its power under s.11-B which was           B
available to it under the law on the date of issuance of
show cause notice. [Para 25] [84-B]

     3.2. In the premises, it cannot be said that any new
provision has been invoked in connection with any C
pending proceeding. Nor can it be contended by the
respondent that there was any unfairness in the
proceeding. Respondent was given adequate notice of
the charges in the show cause notice. He was given an
opportunity to reply to the show cause notice and,
thereafter, a fair opportunity of hearing was given before D
the order was passed by the Board. The entire gamut of
a fair procedure was thus observed. [Para 26] [84-C-D]

     3.3. Also, there is no challenge to the amended
provisions of the law. Even if the law applies               E
prospectively, the Board could not be prevented from
acting in terms of the law which existed on the day the
Board passed its order. [Para 27] [84-E]

    4.1. It cannot be held that protection under Article
                                                             F
20(1) of the Constitution in respect of ex-post facto laws
is available to the respondent. [Para 38] [87-B]

    4.2. The right of a person of not being convicted of
any offence except for violation of a law in force at the
time of the commission of the act charged as an offence G
and not to be subjected to a penalty greater than that
which might have been inflicted under the law in force at
the time of the commission of the offence, is a
Fundamental Right guaranteed under our Constitution
only in a case where a person is charged of having H
    74      SUPREME COURT REPORTS               [2010] 3 S.C.R.


A   committed an "offence" and is subjected to a "penalty".
    [Para 29] [84-H; 85-A-B]

      4.2. In the instant case, the respondent has not been
  held guilty of committing any offence nor has he been
8 subjected  to any penalty. He has merely been restrained
  by an order for a period of five years from associating
  with any corporate body in accessing the securities
  market and also has been prohibited from ~uying, selling
  or dealing in securities for a period of five years. The
C order of restrain for a specified period cannot be equated
  with punishment for an offence, as defined under the
  General Clauses Act, 1897. On a comparison of the two
  definitions of "offence", one under s.2(n) of the Code of
  Criminal Procedure, 1973 and the other under the General
  Clauses Act, it is found that there are common links
D between the two. An offence would always mean an act
  of omission or commission which would be punishable
  by any law for the time being in force. [Paras 30, 32, 33
  and 34] [85-C; 85-F; 85-H; 86-A]

E        Rao Shiv Bahadur Singh and another v. State of Vindhya
    Pradesh AIR 1953 SC 394; State of West Bengal v. S.K.
    Ghosh AIR 1963 SC 255 and Director of Enforcement v.
    M.C. T.M. Corporation Pvt. Ltd. and others (1996) 2 SCC 471,
    relied on.
F
      5.1. From the legislative intent for enacting the
  Securities and Exchange Board of India Act, 1992, it
  transpires that the same was enacted to achieve the twin
  purposes of promoting orderly and healthy growth of
  securities market and for protecting the interest of the
G investors. The requirement of such an enactment was felt
  in view of substantial growth in the capital market by
  increasing participation of the investors. In fact such
  enactment was necessary in order to ensure the
  confidence of the investors in the capital market by
H
 SECURITIES AND EXCHANGE BOARD OF INDIA v.              75
               AJAY AGARWAL
giving them some protection. The said Act is pre-             A
eminently a social welfare legislation seeking to protect
the interests of C'>mmon men who are small investors.
[Paras 39 and 40] [87-C; 87-D]

     5.2. It is a well known canon of construction that       8
when Court is called upon to interpret provisions of a
social welfare legislation the paramount duty of the Court
is to adopt such an interpretation as to further the
purposes of law and if possible eschew the one which
frustrates it. [Para 41] [81-E]
                                                              c
     6.1. A perusal of s.11, sub-section 2(a) of the Act
 makes it clear that the primary function of the Board is
 to regulate the business in stock exchanges a~d any
 other securities markets and in order to do so it has been
 entrusted with various powers. Section 11 had to be          D
 amended on several occasions to keep pace with the 'felt
 necessities of time'. One such amendment was made in
Sub Section (4) of s.11 of the Act, which gives the Board
the power to restrain persons from accessing the
securities market and to prohibit such persons from           E
being associated with securities market to buy and sell
or deal in securities. Such an amendment came in 2002.
From the statement of objects and reasons of the
Amendment Act of 2002, it appears that the Parliament
thought that in view of growing importance of stock           F
market in national economy, SEBI will have to deal with
new demands in terms of improving organisational
structure and strengthening institutional capacity.
Therefore, certain shortcomings which were in the
existing struc.ture of law were sought to be amended by       G
strengthening the mechanisms available to SEBI for
investigation and enforcement, so that it is better
equipped to investigate and enforce against market
malpractices. [Paras 43, 44, 45 and 46] [87-G-H; 88-A-B;
88-C; 88-D-E]
                                                              H
    76      SUPREME COURT REPORTS              [2010] 3 S.C.R.


A      6.2. s.11-B of the Act which empowers the Board to
  issue certain directions also came up by way of
  amendment in 1995 by Act 9 of 1995. The Statements of
  Objects and Reasons of such amendment show one of
  the objects is to empower the Board to issue regulations
B without the approval of the Central Government. s.11-B
  of the Act thus empowers the Board to give directions in
  the interest of the investors and for orderly development
  of securities market, which is one of the twin purposes
  to be achieved by the said Act. Therefore, by the 1995
c amendment by way of s.11-B, the appellant Board has
  been empowered to carry out the purposes of the said
  Act. [Para 47] [88-E-G]

          7 .1. In the absence of an,y challenge to the
    provisions, which came by way of amendment, it cannot
D   be said that even though Board is statutorily empowered
    to exercise functions in accordance with the amended
    law, its power to act under the law, as amended, will stand
    frozen in respect of any violation which might have taken
    place prior to the enactment of those provisions. It is
E   nobody's case that Board has exercised those powers
    in respect of a proceeding which was initiated prior to the
    enactment of those provisions. In fact Board issued the
    show cause notice in terms of s.11-8 and considered the
    reply of the respondent. In such a situation, there has
F   been no infraction in the procedure. Therefore, the entire
    basis of the order of the Appellate Tribunal that provision
    of s.11-8 cannot be applied retrospectively has been
    passed on an erroneous basis. Provisions of s.11-B
    being procedural in nature can be applied retrospectively.
G   It is a time honoured principle if the law affects matters
    of procedure, then prima facie it applies to all actions,
    pending as well as future. [Paras 48, 49, 50, 51] [88-H; 89-
    A-C; 89-D; 89-D-F]

         7.2. No one has a vested right in any course of
H
 SECURITIES AND EXCHANGE BOARD OF INDIA v.                  77
               AJAY AGARWAL
procedure. A person's right of either prosecution or A
defence is conditioned by the manner prescribed for the
time being by the law and if by the Act of Parliament, the
mode of proceeding is altered, and then no one has any
other right than to proceed under the alternate mode.
[Para 52] (89-G-H]                                         B

     K.Eapan Chako v. The Provident Investment Company
(P.) Ltd. AIR 1976 SC 2610 and Union of India v. Sukumar
Pyne AIR 1966 SC 1206, relied on.

     Maxwell's Interpretation of Statutes, 11th Edition, p.216, C
referred to.
                     Case Law Reference:
    1976 (103) ITR 123 (S.C.) distinguished        Para 13
                                                                 D
    1980 (1) sec 139         referred to           Para 16
    AIR 1989 SC 1710         referred to           Para 16
    AIR 1953 SC 394          relied on             Para 35
    AIR 1963 SC 255          relied on             Para 36       E

    (1996) 2 sec 471          relied ori           Para 37
    AIR 1976 SC 2610         relied on             Para 5
    AIR 1966 SC 1206         relied on             Para 53       F
    CIVIL APP ELLATE JURISDICTION: Civil Appeal No(s).
1697 of 2005.

    From the Judgment & Order dated 09.12.2004 as
modified by order dated 03.02.2005 by the Securities G
Appellate Tribunal Mumbai in Review Application No. 122 of
2004 in Appeal No. 85 of 2004.

    Altaf Ahmed, Bhargava V. Desai, Rahul Gupta, Nikhil
Sharma for the Appellant.                                        H
    78       SUPREME COURT REPORTS                  [2010] 3 S.C.R.


A
         lndrajeet Das (for Klildip Singh, NP) for the Respondent(s).

         The Judgment of the Court was delivered by:

         GANGULY, J. 1. The question which arises for
B   consideration in this appeal is whether Section 11-B of the
    Securities and Exchange Board of India Act, 1992 (for short,
    'the Act') could be invoked by the Chairman. of the Securities
    and Exchange Board of India (for short, 'SEBI') in conjunction
    with Sections 4(3) and 11 for restraining the respondent from
C   associating with any corporate body in accessing the securities
    market and prohibiting him from buying, selling or dealing in
    securities.

        2. The factual background in which the present appeal
    adses is noted as under.
D
         3. The respondent was appointed the Joint Managing
    Director of Trident Steel Limited (hereafter referred to as "the
    said Con:ipany) on or about 20th May 1993. The Board initiated
    certain preliminary investigations about the affairs relating to
E   public issues by the said Company on the basis of a complaint
    received from a member of Bombay Stock Exchange (for short
    B.S.E.). The public issue of the said Company was of 52 lacs
    shares of Rs.10 each at a premium of Rs.3.50 per share
    aggregating to Rs.7 crore 2 lacs. The Lead Managers to the
    issue were Bank of Baroda and Apple Industries Limited. Such
F
    issues opened on 26th November, 1993 and closed on
    December 1993 and one of the Directors of the Company
    appeared to be the chief promoter of the same.

         4. The complaint was to the effect that there was
G   misstatement in the prospectus filed by the company at the time
    of the public issue with regard to alleged non-disclosure of
    pledge of 7 lac 50 thousand shares held in the company by
    directors of the company to avail of working capital from Bank
    of Baroda. The second aspect of the complaint was that the
H
SECURITIES AND EXCHANGE BOARD OF INDIA v.                     79
  AJAY AGARWAL [ASOK KUMAR GANGULY, J.]
Directors of the company had also given a non-disposal              A
undertaking to Bank of Baroda in respect of the same shares
and that the prospectus does not mention the same. The further
complaint is that 2000 investors complained regarding non-
receipt of dividend and the such complaint was filed before the
Investor Service Cell, B.S.E. The company while replying to the     s
investors stated that it had not declared any dividend during the
preceding year in respect of which complaint has been made.
Therefore, prima facie, a case of misstating the facts in the
prospectus and misguiding the investors was made out. It
appears that the company had deliberately not dispatched            c
share certificates to investors based in Jalgaon and failed to
produce the share transfer records and proof of records of the
applicants in Jalgaon.

     5. In the course of investigation it appeared that the
 Directors of the company had pledged their personal holding D
of 7 lac 50 thousand shares with the Bank of Baroda and its
Director, namely, Mr. A.A. Kazi and Dowell Leasing and
Financing Limited had given non-disposal undertaking to Bank
of Baroda. This was not disclosed in the prospectus of the
company. This appears to be, prima facie, a case of violation E
of SEBI guidelines for disclosure for investor protection. Thus
an important aspect of the capital structure of the company had
not been disclosed in the prospectus as a result of which the
investors were misguided. In view of such complaint having
been received investigation was undertaken. Ultimately, a show F
cause notice dated 22.12.99 was issued to the respondent
asking it to show cause why directions under Section 11-B of
the Act restraining the company and its Directors from
accessing the capital market for a suitable period will not be
issued. A reply was demanded within 15 days from the receipt G          '
of the show cause notice.

    6. Pursuant to such show cause notice the respondent
gave his reply on 1.3.2000 and 10.7.2002. Thereafter, an
opportunity of personal hearing was granted to the respondent       H
    80       SUPREME COURT REPORTS                  [2010) 3 S.C.R.


A   on 14.5.2002 and the same was adjourned to 5.7.2002 and on
    that date the Board made its submissions. Ultimately, on 31st
    March, 2004 Chairman of the Board passed an order, the
    concluding portion whereof is as under:

         "Therefore, in exercise of the powers conferred upon me
B
         by virtue of Section 4(3) read with Section 11 and Section
         11 B of SEBI Act, I hereby direct that Shri Ajay Agarwal be
         restrained from associating with any corporate body in
         accessing the securities market and also be prohibited
         from buying, selling or dealing in securities for a period of
c        five years.

         This direction shall come into force with immediate effect".

         7. Against the said order an appeal being Appeal No.85
0   of 2004 was filed before the Tribunal.

         8. Before the Appellate Forum the only point argued is that
    Section 11-B of the Act came by way of amendment to the said
    Act with effect from 25th January, 1995 whereas the public issue
    in respect of which the impugned order was passed was of
E   November 1993 and the prospectus was of October 1993. Both
    public issue and prospectus were prior to 1995. The shares
    were listed with effect from 15.2.1994. Therefore, it was urged
    on behalf of the appellant that the alleged misconduct if any was
    for a period of time when Section 11-B was not on the statute
F   book. Thus, the question arose whether any direction can be
    issued under Section 11-B for the alleged misconduct said to
    have been committed prior to introduction of Section 11-B= The
    Appellate Tribunal was of the view that the provision of Section
    11-8 cannot be invoked in respect of the alleged misconduct
G   which took place at a point of time when Section 11-B was not
    on the statute book. While passing the said order the Appellate
    Forum recorded that the respondent before the said Forum, the
    appellant herein, wants to withdraw the impugned order.

         9. In fact, against the said recording a review was filed for
H
 SECURITIES AND EXCHANGE BOARD OF INDIA v.                       81
   AJAY AGARWAL [ASOK KUMAR GANGULY, J.]
reviewing the contents of paragraphs 13 and 14 of the order            A
passed by the Appellate Tribunal.

    10. Paragraphs 13 and 14 of the order passed by the
Appellate Tribunal are set out below:

     "13. We have heard the learned counsel for the                    B
     respondent. The learned counsel fairly conceded that such
     wide powers as in section 11-B cannot be retrospectively
     applied.

     14. The learned counsel for the respondent seeks leave            c
     of this court to withdraw the impugned order".

     11. After reviewing the said order the Appellate Tribunal
ultimately deleted paragraph 14 by the order dated 9.12.04.

     12. Again in the order dated 9.12.04 it was unfortunately         D
mentioned that the order was passed with the consent of the
parties. Subsequently the said recital in the order, as noted
above, was deleted.

     13. Assailing order of the Appellate Tribunal, the learned        E
counsel for the appellant-Board mainly urged that the finding
given by the Tribunal that the powers under Section 11-B can
only be used prospectively and not retrospectively had been
given on an erroneous appreciation of the legal provision under
the said Act. It appears that the Appellate Tribunal passed its
                                                                       F
order by relying on the decision of this Court in the case of
Govinddas and others v. Income Tax Officer and another -
1976 (103) ITR 123 (S.C.).

     14. The decision of this Court in Govinddas (supra) was
on totally different facts and legal questions.                        G

     15. It is well known that the substantive laws to be applied
for determination of tax liability must be the law which is in force
in the relevant assessment year.
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    82       SUPREME COURT REPORTS                  (2010] 3 S.C.R.


A         16. It is well settled that law to be applied for assessment
    is the one which is extant in the assessment year unless there
    is an amendment which is made retrospective either expressly
    or by necessary implication. See Mis Reliance Jute and
    Industries Ltd. v C.I. T West Bengal, Calcutta [1980 (1) SCC
B   139 at p.141 para 6]. Same principles have been followed in
    the case of Controller of Estate Duty, Gujarat-I, Ahemadabad
    v. M.A. Merchant and etc., [AIR 1989 SC 1710 at p.1713 para
    8].

C        . 7. In Govinddas (supra}, this Court held that Subsections
   (1; ·:o (5) of Section 171 of the 1961 Act provide for the
   machinery of assessment of Hindu Undivided Family after
  par':tion. Subsection (6) of Section 171of1961 Act is the
  substantive provision imposing tax liability- on the members
  which is payable by the joint family. But these provisions are,
D rightly held to be, not applicable for recovery of tax assessed
  on the Hindu Undivided Family for a period prior to the
  enactment of those provisions. Therefore, this Court held that
  the income tax officer was not correct in taking recourse to sub-
  sections (6) to (7) of Section 171 of the Income Tax Act, 1961
E for the purpose of recovery of tax assessed on the Hindu
  Undivided Family for assessment in respect of the years 1950-
  1951 and 1956-1957 since the relevant provisions of 1961 Act
  were not given any retrospective operation. It is not in dispute
  that the assessment of tax in respect of the assessment year
F for the Hindu Undivided Family was completed under the
  corresponding provisions of the 1922 Act. Therefore, the
  Supreme Court held that such a case would be governed by
  Section 25-A of the old Act which does not impose any liability
  on members of the Hindu Undivided Family in case of partial
G partition since no such liability existed under Section 25-A of
  the old Act.

      18. It is clear from the aforesaid discussion that the ratio
  in Govinddas's case does not apply to this case in as much
H as no tax liability has been created under the order of the
  Board.
 SECURITIES AND EXCHANGE BOARD OF INDIA v.                      83
   AJAY AGARWAL [ASOK KUMAR GANGULY, J.]
     19. The appellate Tribunal without at all discussing the facts   A
and law involved in Govinddas erroneously applied its ratio in
the impugned order.

     20. It may be noted in this connection that the impugned
order was passed by the Board in exercise of its power under          B
Section 4(3) read with Section 11 and Section 11-B of the said
Act. Under Section 11 of the said Act the Board has the power
of restraining a person from accessing the securities market
or prohibiting any person associated with securities market to
buy, sell or deal in securities. Such power is given to the Board     C
under Section 11(4)(b) of the said Act. Section 11(4)(b) of the
said Act is as follows:

     "11 (4)(b) restrain persons from accessing the securities
     market and prohibit any person associated with securities
     market to buy, sell or deal in securities"                       D

      21. Therefore, restrain order passed on the respondent
strictly speaking was not under Section 11-B of the said Act.
However, the provisions of Section 11 (4)(8) of the said Act also
came by way of amendment ir) 2002. It should, however, be             E
noted that by the time the Board passed the order on 31st
March 2004 all the amendments were on the statute.

     22. Therefore, the question here is not of retrospective
operation of the amendments. Even if the amendments to the
said Act are allowed to operate prospectively by the time the         F
order was passed by the Board, it was empowered by the
aforesaid amendments to do so.

     23. Therefore, without giving any retrospective operation
to those provisions, the impugned order can be passed by the          G
Board in as much as the amendments in questions empowered
the Board to pass such an order when it passed the order. So,
the question that survives is whether the Board could pass the
order in respect of allegations which surfaced prior to the
coming into effect of those amendments in 1995 and 2002.
                                                                      H
    '84      SUPREME COURT REPORTS                 [2010] 3 S.C.R.


A        24. It is here th~t question of protection against ex-post
    facto laws fall for consideration .

      . 25. In this connection it may be noticed that Section 11-B
  of the Act was invoked even at the show cause stage.
B Therefore, it cannot be said that any provision has been invoked
  in the midst of any pending proceeding initiated by the Board.
  The respondent was, thus, put on notice that the Board is
  invoking its power under Section 11-B which was available to
  it under the law on the date of issuance of show cause notice.

C      26. In the premises, it cannot be said that any new provision
  has been invoked in connection with any pending proceeding.
  Nor can it be contended by the respondent that there was any
  unfairness in the proceeding. Respondent was given adequate
  notice of the charges in the show cause notice. He was given
D an opportunity to reply to the show cause notice and, thereafter,
  a fair opportunity of hearing was given before the order was
  passed by the Board. The entire gamut of a fair procedure was
  thus observed.

E        27. This Court also finds that there is no challenge to the
     amended provision of the law. Even if the law applies
     prospectively, the Board cannot be prevented from acting in
     terms of the law which exists on the day the Board passed its
    .order.

F      28. It was urged on behalf of the respondent that on the
  date when the violations were alleged against him, the Board
  did not have the power either under Section 11-B or under
  Section 11 (4)(b) as those provisions came subsequently by
  way of amendment. This contention weighed with the appellate
G forum and the respondent was given the protection against ex
  post facto law even though it was not clearly mentioned in the
  order of the Appellate Forum.                  ··

       29. The right of a person of not being convicted of any
H offence except for violation of a law in force at the time of the
 SECURITIES AND EXCHANGE BOARD OF INDIA v.                     85
   AJAY AGARWAL [ASOK KUMAR GANGULY, J.]
commission of the act charged as an offfince and not to be           A
subjected to a penalty greater than that which might have been
inflicted under the law in force at the time of the commission
of the offence, is a Fundamental Right guaranteed under our
Constitution only in a, case where a person is charged of having
committed an "offence" and is subjected to a "penalty".              8
      30. In the instant case, the respondent has not been held
guilty of committing any offence nor has he been subjected to
any penalty. He has merely been restrained by an order for a
period of five years from associating with any corporate body
in accessing the securities market and also has been                 C
prohibited from buying, selling or dealing in securities for a
period of five years.

     31. The word 'offence' under·Article 20 sub-clause (1) of
the Constitution has not been defined under the Constitution.        o
But Article 367 of the Constitution states that unless the context
otherwise requires, the General Clauses Act, 1897 shall apply
for the interpretation of the Constitution as it does for the
interpretation of an Act.          ·

     32. If we look at the definition of 'offence' under General     E
Clauses Act, 1897 it shall mean any act or an omission made
punishable by any law for the time being in force. Therefore,
the order of restrain for a specified period cannot be equated
with punishment for an offence as has been defined under the
General Clauses Act.                                                 F·

     33. Under Criminal procedure code, 'offence' has been
defined under Section 2(n) as follows:

    "2(n) "offence" means any act or omission made                   G
    punishable by any law for the time being in force and
    includes any act in respect of which a complaint may be
    made under Section 20 of the Cattle-trespass Act, 1871
    (1 of 1871);"

    34. On a comparison of the aforesaid two definitions we          H·
    86       SUPREME COURT REPORTS                 [2010] 3 S.C.R.


A find that there are common links between the two. An offence
  would always mean an act of omission or commission which
  would be punishable by any law for the time being in force.

       35. Article 20(1) was interpreted by the Court in Rao Shiv
B Bahadur Singh and another v. State of Vindhya Pradesh (Al R
  1953 SC 394). Justice Jagannadhads speaking for
  Constitution Bench, on a comparison of similar provisions in
  English Law and American Constitution, opined that the
  language used in Article 20 is in much wider terms. This Court
  held that:
c
         "... what is prohibited is the conviction of a person or his
         subjection to a penalty under 'ex post facto' laws. The
         prohibition under the Article is not confined to the passing
         or the validity of the law, but extends to the conviction or
o        the sentence and is based on its character as an 'ex post
         facto' law"

        36.The ratio of this judgment has again been affirmed in
  State of West Bengal v. S.K. Ghosh, (AIR 1963 SC 255),
  wherein another Constitution Bench of this Court speaking
E through Justice Wanchoo, as His Lordship then was, held that
  a forfeiture by a District Judge under Section 13(3) of Criminal
  Laws Amendment Ordinance of 1944 cannot be equated to a
  forfeiture under Section 53 of IPC inasmuch as forfeiture under
  Section 13(3) of the Ordinance involved embezzlement of
F government money or property and the same is not punishment
  or penalty within the meaning otArticle 20(1) of Constitution
  (See paras 14 and 15 of the judgment).

       37. Even if penalty is imposed after an adjudicatory
G proceeding, persons on whom such penalty is imposed cannot
  be called an accused. It has been held that proceedings under
  Section 23(1A) of Foreign Exchange Regulation Act, 1947 are
  adjudicatory in character and not criminal proceedings (See
  Director of Enforcement v. M.C.T.M. Corporation Pvt. Ltd. and
H others, (1996) 2 sec 471). Persons who are subjected to such
 SECURITIES AND EXCHANGE BOARD OF INDIA v.                    87
   AJAY AGARWAL [ASOK KUMAR GANGULY, J.]
penalties are also not entitled to the protection under Article A
20(1) of the Constitution.

     38. Following the aforesaid ratio, this Court cannot hold
that protection under Article 20( 1) of the Constitution in respect
of ex-post facto laws is available to the respondent in this case. 8

     39. If we look at the legislative intent for enacting the said
Act, it transpires that the same was enacted to achieve the twin
purposes of promoting orderly and healthy growth of securities
market and for protecting the interest of the investors. The
requirement of such an enactment was felt in view of substantial C
growth in the capital market by increasing participation of the
investors. In fact such enactment was necessary in order to
ensure the confidence of the investors in the capital market by
giving them some protection.
                                                                    D
     40. The said Act is pre-eminently a social welfare
legislation seeking to protect the interests of common men who
are small investors.

     41. It is a well known canon of construction that when Court
is called upon to interpret provisions of a social welfare E
legislation the paramount duty of the Court is to adopt such an
interpretation as to further the purposes of law and if possible
eschew the one which frustrates it.

    42. Keeping this principle in mind if we analyse some of F
the provisions of the Act it appears that the Board has been
established under Section 3 as a body corporate and the
powers and functions of the Board have been clearly stated in
Chapter IV and under Section 11 of the said Act.

     43. A perusal of Section 11, Sub-Section 2(a) of the said G
Act makes it clear that the primary function of the Board is to
regulate the business in stock exchanges and any other
securities markets and in order to do so it has been entrusted
with various powers.
                                                                   H
    88      SUPREME COURT REPORTS                  [2010] 3 S.C.R.


A        44. Section 11 had to be amended on several occasions
    to keep pace with the 'felt necessities of time'. One such
    amendment was made in Sub Section (4) of Section 11 of the
    said Act, which gives the Board the power to restrain persons
    from accessing the securities market and to prohibit such
B   persons from being associated with securities market to buy
    and sell or deal in securities. Such an amendment came in
    2002.

          45. From the statement of objects and reasons of the
    Amendment Act of 2002, it appears that the Parliament thought
C   that in view of growing importance of stock market in national
    economy, SEBI will have to deal with new demands in terms
    of improving organisational structure and strengthening
    institutional capacity.

D       46. Therefore, certain shortcomings which were in the
    existing structure of law were sought to be amended by
    strengthening the mechanisms available to SEBI for
    investigation and enforcement, so that it is better equipped to
    investigate and enforce against market malpractices. (See
E   Paragraph 3 of the Statement of objects and reasons).

       47. Section 11-B which empowers the Board to issue
  certain directions also came up by way of amendment in 1995
  by Act 9 of 1995. The Statements of Objects and Reasons of
  such amendments show one of the objects is to empower the
F Board to issue regulations without the approval of the Central
  Government. (See para 3(e) of the Statements of Objects and
  Reasons). Section 11-B of the Act thus empowers the Board
  to give directions in the interest of the investors and for orderly
  development of securities market, which, as noted above, is
G one of the twin purposes to be achieved by the said Act.
  Thefefore, by the 1995 amendment by way of Section 11-B
  Board has been empowered to carry out the purposes of the
  said Act.

H        48. As noted above, there is no challenge to t.hose
 SECURITIES AND EXCHANGE BOARD OF INDIA v.                     89
   AJAY AGARWAL [ASOK KUMAR GANGULY, J.]
provisions which came by way of amendment. In the absence             A
of any challenge to those provisions, it cannot be said that even
though Board is statutorily empowered to exercise functions in
accordance with the amended law, its power to act under the
law, as amended, will stand frozen in respect of any violation
which might have taken place prior to the enactment of those          B
provisions. It is nobody's case that Board has exercised those
powers in respect of a proceeding which was initiated prior to
the enactment of those provisions. In fact Board has issued the
show cause notice in terms of Section 11-B and considered
the reply of the respondent. In such a situation, there has been      c
no infraction in the procedure.

     49. Therefore, the entire basis of the order of the Appellate
Tribunal that provision of Section 11-B cannot be applied
retrospectively has been passed on an erroneous basis, as
discussed herein above.                                               D

    50. Provisions of Section 11-B being procedural in nature
can be applied retrospectively.

     51. The appellate Tribunal made a manifest error by not          E
appreciating that Section 11-B is procedural in nature. It is a
time honoured principle if the law affects matters of procedure,
then prima facie it applies to all actions, pending as well as
future. See K.Eapan Chako v. The Provident Investment
Company (P.) Ltd., [AIR 1976 SC 2610] wherein Chief Justice
                                                                      F
A.N. Ray laid down those principles.

     52. Maxwell in his "Interpretation of Statutes" also indicated
that no one has a vested right in any course of procedure. A
person's right of either prosecution or defence is conditioned
by the manner prescribed for the time being by the law and if         G
by the Act of Parliament, the mode of proceeding is altered,
and then no one has any other right than to proceed under the
alternate mode. [Maxwell Interpretation of Statutes, 11th
Edition, p.216].
                                                                      H
    90       SUPREME COURT REPORTS               [201 OJ 3 S.C.R.


A       53. These principles, enunciated by Maxwell, have been
    quoted with approval by the Supreme Court in its Constitution
    Bench judgment in Union of India v. Sukumar Pyne [AIR 1966
    SC 1206 at p.1209)

B       54. For the reasons discussed above, this Court is
    constrained ·to quash the order of the Appellate Tribunal and
    upholds the order of the Chairman of the Board.

        55. The appeal is allowed. There will be, however, no
    orders as to costs.
c
    B.B.B.                                      Appeal allowed.