Case: Sebi Through its Chairman Vs. Roofit Industries Ltd

AND SURVEILLANCE DEPARTMENT email : sujitp@sebi.gov.in tel.no.:282981 M/s. Roofit Industries Ltd. 501, Sangli Bank Bldg. 296, Perin Nariman Street, Fort, Mumbai – 400001. Dear Sirs, Please refer to our summons dated July 23, 2002 advising you to 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. 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. 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 cooperate in the ongoing investigation in the scrip of M/s. Roofit Industries Ltd. 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 would be entertained from your end. It is thus abundantly clear from a perusal of the letter that the 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 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 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 445 , 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 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 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 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 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 consider the default a continuing one.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 SCC 890 , which distinguished between continuing offences and offences committed once and for all: 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 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 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 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) In that case, Regulation 3 read with Section 66 of the Mines Act made the failure to file an Annual 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 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. 16.9.2002. Had the Respondent furnished the information sought by the 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 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. 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.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]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 theSummons to furnish the required documents was prior to this date and the Respondent failed to do so till well after it, the question before us is when 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 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.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. 16.9.2002. Had the Respondent furnished the information sought by the 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 imposedpenalty not exceeding one lakh fifty thousand rupees for each suchThe 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 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