Analysis of High Court of Delhi Judgement in Prakash Gupta vs. SEBI

Compounding at the initial stage has to be encouraged, but not at the final stage since it will not be in the interest of justice to discharge the accused without the consent of SEBI as it will defeat the objective of the SEBI Act.

Compounding at the initial stage has to be encouraged, but not at the final stage. The object of the SEBI Act has to be kept in mind. A stable and orderly functioning of the securities market has to be ensured. It will not be in the interest of justice to discharge the accused at the final stage of the proceedings by allowing the application for compounding without the consent of SEBI Act as it will defeat the objective of the SEBI Act. Though the Adjudicating Officer has found that the alleged violation committed by petitioner has not resulted in any loss to the investors, but this by itself would not justify discharge of accused at the fag end of trial. After considering the ratio of Supreme Court’s decision in Meters and Instruments Private Limited (Supra), and the view expressed by High Court of Bombay in N.H. Securities Ltd.(Supra) as well as the facts and circumstances of this case, I find no justification to allow petitioner’s application under Section 24A of the SEBI Act, 1992.

Judgement link : http://lobis.nic.in/ddir/dhc/SUG/judgement/08-04-2019/SUG01042019CRLR10762018.pdf