B.P.Plc (Formerly B.P.Amoco Plc) ... vs The Securities And Exchange Board ...
2002 Latest Caselaw 476 Bom

JUDGMENT

S. Radhakrishnan, J.

1. By this Appeal both the Appellants herein

are challenging the order dated 5th September, 2001

passed by the Securities Appellate Tribunal, Mumbai

in Appeal No.37 of 2001. Both the Appellants in

this Appeal are public limited companies

incorporated in the United Kingdom. Burma Castrol

Plc is also a public limited company incorporated

in United Kingdom. It appears that pursuant to an

offer by Appellant No.1 viz. Burma Castrol Plc

became its wholly owned subsidiary. Burma Castrol

Plc has a subsidiary viz. Burma Castrol Holdings

Ltd. which in turn has a subsidiary viz. Castrol

Limited. The said Castrol Limited is Appellant

No.2 in this Appeal. The Appellant No.2 Castrol

Limited has a subsidiary company viz. Castrol India

Ltd. with 51% share holding. Castrol India Ltd.

is also a public limited company which is

incorporated in India. The Equity shares of

Castrol India Ltd. are listed on the Stock Exchange

of Bombay and are also permitted to be traded on

the National Stock Exchange. The main challenge by

the Appellants to the said order of Securities

Appellate Tribunal is on three grounds. Firstly,

the Appellants contend that the Securities &

Exchange Board of India (for short hereinafter

referred to as "SEBI") has no express statutory

power to award interest as awarded. Secondly, the

Appellants contend that the interest could not have

been awarded from 14.7.2000 and at the most it

could have been awarded only from 7.11.2000.

Thirdly, the challenge is that the award of

interest at the rate of 15% p.a. to be is

exhorbitant and the award ought to be at 5-6% as

prevalent in United Kingdom.

2. We have heard both the learned Counsel at

length. Perused the record as well as the impugned

order dated 5th September, 2001 passed by the

Securities Appellate Tribunal. As far as the first

issue is concerned i.e. the SEBI has no statutory

power to award interest, Mr.Setalvad, the learned

Senior Advocate, appearing for the Appellants

brought to our notice that the only Regulations

viz.Regulation 22(12) of SEBI (Acquisition of

Shares) Regulations, 1997 provides for award of

interest if there is a delay beyond 30 days.

Therefore, Mr.Setalvad contended that the only

provision in the said Regulation empowers the SEBI

to award interest is under Regulation 22 and there

is no other provision which expressly empowers the

SEBI to award such interest. Mr.Setalvad contended

that the Respondents contention that such an

interest could be awarded under Section 11(1) of

the SEBI Act is totally untenable inasmuch as the

said provisions were by way of general provisions

and the same cannot justify award of interest.

Mr.Setalvad also contended that such an award of

interest almost amounts to a levy of penalty and as

such SEBI relying on Section 11(1) of the said Act

would not be fair and proper. In that behalf

Mr.Setalvad contended that as the only provision

for award of interest as mentioned hereinabove was

under Regulation 22(12) of the said SEBI

(Acquisition of Shares) Regulation 1997 and hence

he relied on a maxim "expressio unis est exclusio

alterius" to contend that the SEBI cannot refer to

and rely on any other mode other than Regulation

22(12) as such SEBI could not have awarded any

interest whatsoever.

3. With regard to first contention that

there is no express power to award interest

Mr.Setalwad referred to and relied on a judgment of

the Apex Court in Satinder Singh and Ors. v. Amrao Singh and Ors and in the aforesaid

judgment the Apex Court has held in very clear

terms that the Court can allow interest in cases

specified therein. The Court has also held that

the power to allow interest on equitable ground or

under any other provision is expressly saved by

proviso to Section 1 of Interest Act, 1839. In the

said judgment the Apex Court has also referred to a

Privy Council decision in Bengal Nagpur Rly.Co.Ltd.

v. Rattanji Ramji wherein

the Privy Council has clearly held that the Court

of equity exercises its jurisdiction to allow

interest. Thereafter Mr.Setalvad referred to and

relied on a decision of the House of Lords in Swit

and Co. Vs. Board of Trade, [(1925) AC 520],

wherein the House of Lords have observed in the

said Judgment that unless the Regulation itself

authorises the award of interest, no interest can

be given. That is to say unless there is an

express provision for awarding of interest no such

interest can be awarded. Mr.Setalvad thereafter

referred to a judgment of Privy Council in New Port

Borough Council Vs. Monmouthshire Country Council

[(1947) AC 520]. Wherein also the Privy Council

has held that as a matter of construction there

must be found in section a power express or implied

given to the Arbitrator to award interest.

Therefore, if such power was not to be there no

interest could be levied. Mr.Setalwad referred to

a judgment in Radio Companies Ltd. Vs. Phonographic

Performance Ltd. [(1994) RPC 143], wherein also it

is held that unless thereis an express provision

for award of interest the same cannot be awarded.

4. Mr.Setalvad referred to the Halsburys

Laws of England, 4th Edition, Reissue of 1999 and

in clause -109 it is held that the Court always has

a right of award interest which is by way of an

equitable right.

5. Mr.Setalvad also referred to and relied

on a Clause 35 of SEBI (Mutual Funds) Regulations,

1996 wherein there is a provision for payment of

interest at 15% in the event of failure to refund

the amount with regard to mutual fund. Similarly

Mr.Setalvad referred to clause 31 of SEBI

(Collective Investment Schemes) Regulation, 1999

wherein also it is provided that in the event of

failure to refund the amount within a period

specified, the Applicants are entitled to 15%

interest p.a. on the expiry of six weeks from the

date of closure of the subscription list. After

referring to the aforesaid two provisions

Mr.Setalvad referred to the abovementioned Latin

maxim "expressio unis est exclusio alterius" to

contend that as the mode of levy of interest was

provided in the aforesaid two regulations, the SEBI

was precluded from awarding interest other than

what is provided in the aforesaid Regulations.

That is to say, as per the principle, when a mode

is prescribed, only such a mode can be exercised

and no other mode can be adopted. In that behalf

Mr.Setalvad referred a Judgment of the Privy

Council in William Blackburn Vs. John Flavelle,

[(1881)6 AC 628]. In the said Judgment the Privy

Council has clearly held that adopting the above

principle of "expressio unis est exclusio

alterius" when a particular mode is prescribed no

other mode can be adopted. Similarly, Mr.Setalvad

referred to another judgment in Moore Vs.

Assignment Courier Ltd., [(1977)2 All ER 841]

wherein it is held that unless there is an express

provision for awarding of interim payment the same

cannot be done without such a power. Mr.Setalvad

thereafter referred to Felix Vs. Shiva [(1983) QB

82] wherein the Queens Bench has held that if the

power is given by a statute and the statute lays

down the way in which the power is brought in to

existence and it must be brought into existence

only by that method and by none other.

6. Mr.Setalvad contended that the aforesaid

award of interest at the rate of 15% p.a. almost

amounted to levy of penalty and in that behalf he

referred to one unreported judgment of Securities

Appellate Tribunal in Appeal No.20 of 2001 in

Sterlite Industries (India) Ltd. Vs. SEBI, wherein

the Securities Appellate Tribunal has held that

under Section 11(1) a direction cannot be issued to

cover imposition of penalties therefore Mr.Setalvad

contended that this award of interest almost

amounted to levy of penalty and as such SEBI could

not have done the same as has been held in the

above case.

7. Mr.Setalvad also referred to a judgment

of the Apex Court in Ahmedabad Urban Development

Authorities Vs. Sharad Kumar, to

contend that unless there is an express provision

for compulsory exaction of any money, there is no

room for intendment. He also referred to another

judgment of the Apex Court in Khemka and Co.Vs.

State of Maharashtra, wherein

also it was held that in the absence of any express

provision there cannot be any imposition of penalty

for non payment of tax within the prescribed

period.

8. Mr.Setalvad also contended that interest

could not have been awarded even assuming such a

power existed from 14.7.2000 and at the most it

could have been awarded from 7.11.2000 and not from

7.7.2000 when the minimum acquisition of 50% had

taken place. Therefore, he contended that award

of interest at the most could be from 7.11.2000 and

not from 7.7.2000. Mr.Setalvad also contended that

Appellants are from United Kingdom and there the

prevalent rate of interest was of 5-6% p.a. and the

award of interest at 15% p.a. to be highly

exhorbitant which almost amounted to levy of

penalty.

9. Mr.Goolam Vahanvati, the learned Advocate

General on behalf of the Respondent contended that

as far as the date is concerned for award of

interest, the correct date would be 14.7.2000

inasmuch as the decision to acquire took place on

14.3.2000 and thereafter giving a period of four

months for the procedural formalities the date

would be 14.7.2000. In that behalf Mr.Vahanvati

pointed that the Securities Appellate Tribunal in

the earlier order had categorically held that the

relevant date for the purposes of computation of

the price of the shares was 14.3.2000 and which was

also accepted by this Court in Appeal No.582 of

2001 in a judgment dated 8th August, 2001. The

above order was also accepted by the Appellants and

did not challenge the same before the Honble Apex

Court. Under these circumstances Mr.Vahanvati

contended that the computation from 14.7.2000 for

the purpose of award of interest was the correct

date and that no one can find fault with the same.

10. Mr.Vahanvati dealing with the first issue

regarding power to award interest by SEBI brought

to our notice that under Section 11(1) of SEBI Act,

SEBI has been mandated to protect the interest of

investors by "taking such measures as it thinks

fit". Mr.Vahanvati contended that Section 11(2)

does not render Section 11(1) nugatory. In fact

Section 11(2) makes it clear that notwithstanding

what is contended in Section 11(1), Section 11(2)

has been enacted. Mr.Vahanvati contended that in

view of Section 11(1) read with SEBI Regulation 44,

SEBI had all the authority to award such interest.

The said power is inherent in Section 11(2) read

with Regulation 44 and if such a power were not to

be construed then severe prejudice will be caused

to investors. He further pointed out that as per

Section 11(1) it was the duty of SEBI to protect

the interest of the investors and securities and

promote the development of and to regulate the

securities market by taking measures as it thinks

fit. He also brought to our notice that under

Section 11(2) which clearly mentions that without

prejudice to the generality of the foregoing

provisions the following measures were taken. He

also laid emphasis on said Regulation 44 there are

various powers conferred on the Board to protect

the interest of the investors to ensure that the

companies function within certain parameters. In

that behalf Mr.Vahanvati referred to and relied on

a judgment of the Gujarat High Court in SEBI Vs.

Alka Synthetics Ltd.(Guj.) [1999 Company Cases 772]

wherein Gujarat High Court has clearly held that

SEBI has to protect the interest of the investors

in securities and the measures referred to in

Section 11(2) does not mean that such measures will

have to be laid down in advance. The High Court

has also held that it is a matter of common

knowledge that the SEBI has to regulate a

speculative market and in the case of a speculative

market varied situations may arise and all such

exigencies and situations cannot be contemplated in

advance and, therefore, looking to the exigencies

and the requirement, SEBI has been entrusted with

the duty and function to take such measures as it

thinks fit. Thus, the measures cannot be laid down

as a one time exercise to be followed in defined

cases. The SEBI has to rise to the occasion for

taking appropriate measures to combat even such

situations in the speculative market, which may or

may not be conceived in advance.

11. Mr.Vahanvati referred to and relied on a

Division Bench judgment of our High Court in Anand

Rathi Vs. SEBI (Bom) [2001 Vol.32 SCL 227], wherein

our Division Bench in para 18 has in unequivocal

terms held that the Court has to adopt a

construction that gives force and life to the

legislative intention rather than the one which

would defeat the same and render the protection

illusory. The said paragraph 18 reads as under:-

"18. While considering the question as to

whether the SEBI has augthority of law under

sections 11 and 11B to order interim

suspension, we have to bear in mind that SEBI

is invested with statutory powers to regulate

securities market with the object of ensuring

investors protection, orderly and healthy

growth of securities market so as to make

SEBIs control over the capital market to be

effective and meaningful. It cannot be

gainsaid that SEBI has to regulate speculative

market and in case of speculative market

varied situations may arise and looking into

the exigencies and requirements, it has been

entrusted with the duty and functions to take

such measures as it thinks fit. Section 11B

is an enabling provision enacted to empower

the SEBI Board to regulate securities market

in order to protect the interests of the

investors. Such an enabling provision must be

so construed as to subserve the purpose for

which it has been enacted. It is well settled

principle of statutory construction that it is

the duty of the Court to further Parliaments

aim of providing of a remedy for the mischief

against which enactment is directed and the

Court should prefer construction which will

supress the mischief and advance remedy and

avoid evasions for the continuance of the

mischief. We may quote the words of Denning,

L.J. in Seaford Court Estates Ltd. v. Asher

[1949] 2 All E.R.155, at page 164, namely :-

"... when a defect appears, a Judge cannot

simply fold his hands and blame the draftsmen.

He must set to work on the constructive tasks

of finding the intention of Parliament, and he

must do this, nor only from the language of

the statute, but also from a consideration of

the social conditions which give rise to it,

and of the mischief which it was passed to

remedy, and then he must supplement the

written word so as to give force and life to

the intention of the Legislature."

We have,

therefore, to adopt the construction that

gives force and life to the legislative

intention rather than the one which would

defeat the same and render the protection

illusory. In the matter of construction of

enabling statute, the principle applicable is

that if the Legislature enable something to be

done, it gives power at the sametime, by

necessary implication, to do everything which

is indispensable for the purpose of carrying

out the purpose in view. We thus find that the

SEBI has ample authority in law to take the

action under Section 11B as has been taken by

it."

12. Therefore, Mr.Vahanvati contended that in

view of the Section 11(1) of SEBI Act read with

SEBI Regulations 44, the SEBI has the authority to

award such an interest all the more because the

main objective and purpose for which SEBI was

constituted was to protect the interest of the

investors and if such a power were not to be

construed under Section 11 read with Regulations

44, the main objective of setting up of SEBI would

be defeated therefore Mr.Vahanvati contended that

the award of interest was to protect interests of

the shareholders otherwise the companies may hold

the investors to ransom. As has been held in both

the aforesaid judgments the power to award interest

is inherent in the aforesaid provisions of SEBI Act

and the Regulations.

13. As far as the second issue is concerned

that is the award of interest from 14.7.2000 is

concerned it has been held by the Securities

Appellate Tribunal which was confirmed by this

Court in Appeal No.582 of 2001 that the relevant

date for fixing the price was 14.3.2000 and if that

was so then 14.7.2000 could be appropriate date and

in any event the Securities Appellate Tribunal has

construed the date to be 8th August, 2000 by the

impugned order holding that the formal letter of

offer to shareholders from Burma Castrol was dated

8.6.2000 and the payment of consideration was to be

on 8.6.2000 and accordingly the Tribunal has held

that the relevant date would be 8.8.2000.

Mr.Vahanvati contended that though 14.7.2000 would

be the appropriate date however, as the Securities

Appellate Tribunal has held that the relevant date

would be 8.8.2000, the SEBI is not contesting the

same and are accepting the same.

14. As far as the third issue with regard to

the rate of interest at the rate of 15% p.a.

Mr.Vahanvati pointed out that as provided under

various provisions of the Regulations as referred

to by the learned Counsel for the Appellant that

15% p.a. has been provided at the time of refund

and what one has to see is the conditions in India

and not U.K. and the award of interest at the rate

of 15% p.a. is not at all exhorbitant and nothing

penal about the same. The learned Counsel also

submitted that the award of 15% interest was in

consonance with various SEBI Regulations providing

for interest at 15% per annum for delayed refund of

amounts. Under these circumstances the learned

Advocate General contended that this Court ought

not to interfere with the order passed by the

Securities Appellate Tribunal.

15. Our attention was drawn to the following

cases by the learned Counsel for the Appellants to

contend that no interest could have been awarded in

this case, but they will not apply in the facts and

circumstances of this case, for the following

reasons :-

i) In Laxmichand Vs. Indore Improvement

Trust, , the argument was

that the compensation was inadequate

because there was no interest awarded.

In this case it was held that the scheme

of the Act itself was self contained and

in the absence of any provisions to

authorise the Tribunal to award interest

it did not have the power to do so. The

Petitioners in this case did not claim

any interest - they wanted the order of

acquisition to be quashed. This judgment

is in no way relevant to the present

case.

ii) The judgment of the Supreme Court in

Charan Singh Vs. Birla Textiles, was again a case where it was

conceded that there was no provision in

the Act for payment of interest. This

judgment has no application as in the

instant case, as the Respondents contend

that Sec.11(1) of SEBI Act and

Regulation 44 empowers the Board to award

interest.

iii) The same applies to the Allahabad High

Court in the case of Presstige

Engineering India Pvt.Ltd. Vs. Union of

India, where it

was held that since the Act did not

provide for rules for payment of interest

in case of refund of duty, the

authorities under the Act including CEGAT

had no power to award interest. The

court was really dealing with whether the

Court in writ jurisdiction could award

such an interest in the absence of any

legal provision. This judgment will not

apply in the instant case.

iv) With regard to the judgment of the CEGAT

in the case of Sachin Textiles Private

Ltd. Vs. Commissioner of Central Excise,

Surat-I, the

judgment merely follows the judgment of

the Allahabad High Court in Prestige

Engineerings case, hence has no

application here.

v) The judgment of the Supreme Court in

Mahabir Prasad Vs. Durga Datta, dealt with the question of

entitlement of interest in a suit and

whether interest was awardable by way of

damages. This case is not applicable to

the present case.

vi) The judgment in the case of Bhishamber

Dayal Vs. State of U.P. and Ors., reiterates the well settled

proposition of law namely that all

executive action must be routed under

some provision of law. It is SEBIs

contention that SEBI has the power to

award interest by reason of the

provisions quoted hereinabove. If this

is so, the action cannot be characterised

as being unauthorised by law or not

having the force of law, hence this

judgment has no application in the

instant case.

vii) Even the judgment of the Supreme Court in

Thawardas Pherumal Vs. Union of India,

does not take the matter

any further as what the Court had held

was that the arbitrator there was not "a

court" and was hence not entitled to

award interest. This view has not been

accepted by the Constitution Bench of the

Apex Court in Secretary, Irrigation

Department Vs. G.C.Roy, .

viii) As far as Satinder Singh & Ors. Vs. Umro

Singh & Anr., is

concerned, in the said case, the Apex

Court had considered Bengal Nagpur

Railway Co. Ltd. Vs. Ruttanji Ramji,

(1937) 66 I.A. 66 AND ALSO Thawardas

Pherumal Vs. Union of India, , and had held that the power to award

interest on equitable grounds or under

any other provisions of law is expressly

saved, hence the above case will be of no

assistance to the Appellants.

ix) As we have construed Sec.11(1) of SEBI

Act read with SEBI Regulations 44, to

empower SEBI to award interest, the

authorities cited by the learned Counsel

for the Appellants, viz. Swift & Co. Vs.

Board of Trade (1925 AC 520), New Port

Borough Council Vs. Monmouthshire County

Council (1947 AC 520) and Radio Companies

Ltd. Vs. Phonographic Performance Ltd.

                           (1994    R.P.C.143)    will    have    no            
                                                                                
                           application.                                           
                                                                                
                                                                                
                                                                                
 

x) Similarly the maxim "expressio unis est

exclusio alterius" has no application in

this case, in view of our interpretation

of Sec.11(1) of SEBI Act, read with

Regulation 44. On the same lines, in

view of our interpretation of Sec.11(1)

of SEBI Act read with Regulation 44, the

Apex Court judgments in Ahmedabad Urban

Development Authorities Vs. Sharad Kumar

and Khemka & Co. Vs.

State of Maharashtra

also will have no application.

xi) Similarly also we do not find any

substance in the contention that the

award of interest would amount to

penalty.

16. In the context of arbitral proceedings,

with regard to the power to grant of interest,

Honble Supreme Court in the case of Secretary,

Irrigation Department Vs. G.C.Roy, ,

has held as under :

"43. The question still remains whether

arbitrator has the power to award interest

pendente lite, and if so on what principle.

We must reiterate that we are dealing with the

situation where the agreement does not provide

for grant of such interest nor does it

prohibit such grant. In other words, we are

dealing with a case where the agreement is

silent as to award of interest. On a

conspectus of aforementioned decisions, the

following principles emerge:

(i) A person deprived of the use of

money to which he is legitimately

entitled has a right to be compensated

for the deprivation, call it by any name.

It may be called interest, compensation

or damages. This basic consideration is

as valid for the period the dispute is

pending before the arbitrator as it is

for the period prior to the arbitrator

entering upon the reference. This is the

principle of Section 34, C.P.C., and

there is no reason or principle to hold

otherwise in the case of arbitrator.

(ii) An arbitrator is an alternative

form of resolution of disputes arising

between the parties. If so, he must have

the power to decide all the disputes or

differences arising between the parties.

If the arbitrator has no power to award

interest pendente lite, the party

claiming it would have to approach the

court for that purpose, even though he

may have obtained satisfaction in respect

of their claims from the arbitrator.

This would lead to multiplicity of

proceedings.

(iii) An arbitrator is the creature

of an agreement. It is open to the

parties to confer upon him such powers

and prescribe such procedure for him to

follow, as they think fit, so long as

they are not opposed to law. (The

proviso to Section 41 and Section 3 of

Arbitration Act illustrate this point).

All the same, the agreement must be in

conformity with law. The arbitrator must

also act and make his award in accordance

with the general law of the land and the

agreement.

(iv) Over the years, the English and

Indian Courts have acted on the

assumption that where the agreement does

not prohibit and a party to the reference

makes a claim for interest, the

arbitrator must havet the power to award

interest pendente lite. Thawardas has not been followed in the

later decisions of this Court. It has

been explained and distinguished on the

basis that in that case there was no

claim for interest but only a claim for

unliquidated damages. It has been said

repeatedly that observations in the said

judgment were not intended to lay down

any such absolute or universal rule as

they appear to, on first impression.

Until Jenas case almost all the courts in the

country had upheld the power of the

arbitrator to award interest pendente

lite. Continuity and certainty is a

highly desirable feature of law.

(v) Interest pendente lite is not a

matter of substantive law, like interest

for the period anterior to reference

(pre-reference period). For doing

complete justice between the parties,

such power has always been inferred.

44. Having regard to the above

considerations, we think that the following is

the correct principle which should be followed

in this behalf :

45. Where the agreement between the

parties does not prohibit grant of interest

and where a party claims interest and that

dispute (alongwith the claim for principal

amount or independently) is referred to the

arbitrator, he shall have the power to award

interest pendente lite. This is for the

reason that in such a case it must be presumed

that interest was an implied term of the

agreement between the parties and therefore

when the parties refer all their disputes- or

refer the disputes as to interest as such- to

the arbitrator, he shall have the power to

award interest. This does not mean that in

every case the arbitrator should necessarily

award interest pendente lite. It is a matter

within his discretion to be exercised in the

light of all the facts and circumstances of

the case, keeping the ends of justice in

view."

17. The Apex Court in State of Orissa Vs.

B.N.Agarwalla, has held that

interest can be awarded even during the pre-

reference period, and observed as under :-

" 18. In view of the aforesaid decisions

there can now be no doubt with regard to

the jurisdiction of the Arbitrator to

grant interest. The principles which can

now be said to be well settled are that

the Arbitrator has the jurisdiction to

award pre-reference interest in cases

which arose after the Interest Act, 1978

has become applicable. With regard to

those cases pertaining to period prior to

the applicability of the Interest Act,

1978, in the absence of any substantive

law, contract or usage, the Arbitrator

has no jurisdiction award interest. For

the period during which the arbitration

proceedings were pending in view of the

decision in G.C.Roys case (1992 AIR SCW

389) (supra) and Hindustan Construction

Ltd. case (1992 AIR SCW 2647)(supra), the

Arbitrator has the power to award

interest. The power of the Arbitrator to

award interest for the post award period

also exists and this aspect has been

considered in the discussion relating to

Civil Appeal No.9234 of 1994 in the later

part of this judgment."

18. Similarly in Hindustan Construction

Co.Ltd. Vs. State of Jammu & Kashmir, , the issue of award of interest during the

period of post award till realisation was dealt

with by the Supreme Court as under :-

" 5. The question of interest can be

easily disposed of as it is covered by recent

decisions of this Court. It is sufficient to

refer to the latest decision of a five judge

Bench of this Court in Secretary Irrigation

Department of Orissa v. G.C.Roy . Though the said

decision deals with the power of the

Arbitrator to award interest pendente lite,

the principle of the decision makes it clear

that the arbitrator is competent to award

interest for the period commencing with the

date of award to the date of decree or date of

realisation, whichever is earlier. This is

also quite logical for, while award of

interest for the period prior to a arbitrator

entering upon the reference is a matter of

substantive law, the grant of interest for the

post-award period is a matter of procedure.

Section 34 of Code of Civil Procedure provides

both for awarding of interest pendente lite as

well as for the post-decree period and the

principle of Section 34 has been held

applicable to proceedings before the

arbitrator, though the section as such may not

apply. In this connection, the decision in

Union of India v. Bango Steel Furniture

(P.)Ltd. may be seen as also the decision

in Gujarat Water Supply and Sewarage Board v.

Unique Erectors, which upholds the said power though on a

somewhat different reasoning. We, therefore,

think that the award on item No.8 should have

been upheld."

19. After considering the rival contentions

of both the parties we find as far as the first

issue is concerned i.e. whether SEBI has statutory

power to award interest or not one has to see the

main objective of the said Act which is to protect

the interest of the investors securities and also

to promote the development of and to regulate the

securities market. Section 11(1) of SEBI Act

clearly provides that it is the duty of the Board

to protect the interest of investors in securities

and they have been empowered to take such measures

and regulations as it thinks fit. Section 11(2)

also makes it clear that without prejudice to the

generality of the above provisions in Section 11(1)

certain measures have been mentioned in Section

11(2). That is to say Section 11(2) does not

preclude SEBI from taking such measures as and when

need arises. If one were to read Section 11(1)

with Regulation 44 it is clear that SEBI has ample

power to award such interest when SEBIs main duty

is to protect the interests of the investors.

There is no regulation or statutotry provision

which debars SEBI from awarding such an interest.

Section 11(1) r/w Regulation 44, it is abundantly

clear that SEBI has inherent power to award such an

interest.

20. This is all the more clear from the

Division Bench judgment of our High Court in Anand

Rathi Vs.SEBI (supra) which mentions that the

Court has to interpret the provisions in consonance

with the legislative intention so as to give life

to the said legislation. Over and above, the

Appellants were held liable to pay the investors as

per our judgment in First Appeal No.582 of 2001 in

SEBI Appeal No.11 of 2001, which judgment was not

challenged by the Appellants in the Supreme Court

and the Appellants have acted on the same.

Applying the principles regarding award of interest

as has been held by the Apex Court in Secretary,

Irrigation Department Vs. G.C.Roy (supra) to the

effect "a person deprived of the use of money to

which he is legitimately entitled to has a right

to be compensated for the deprivation, call it by

any name. It may be called "interest, compensation

or damages," the investors are entitled to be

compensated by way of interest for delayed payment.

Under these circumstances we find no substance that

there is no power to award such an interest.

21. As far as second issue is concerned

whether interest could be levied from 14.7.2000 or

rather 8.8.2000 as has been held by the Securities

Appellate Tribunal. As was held earlier by the

Securities Appellate Tribunal and confirmed by this

Court in Appeal No.582 of 2001 that the relevant

date for the purposes of fixing the price was

14.3.2000 if that be so the Appellant cannot now

turn around and argue the same was wrong inasmuch

as the Appellants have accepted the said judgment

delivered by this Court in the aforesaid Appeal,

since Appellants have not challenged the same in

the Apex Court. That is to say the Appellants have

accepted 14.3.2000 to be the relevant date for the

purpose of fixing the price viz. the date on which

the public announcement was made and decision was

taken to acquire. Once the decision was taken to

acquire from this very date a period of four months

can be given so as to complete the formalities,

i.e. 14.7.2000 for the purpose of fixing the

liability of interest to be calculated from that

date. However, the Tribunal has held that the date

would be 8th August, 2000 inasmuch as the formal

letter of offer was posted on 8.6.2000 and the

period of two months counted therefrom comes to 8th

August, 2000. The SEBI is not contesting the date

of 8th August, 2000. Under these circumstances we

do not find anything erroneous in the said view

adopted by the Securities Appellate Tribunal. As

far as the third issue is concerned whether the

award of 15% p.a. interest to be exhorbitant or by

way of penalty we do not find substance in the said

contention inasmuch as the SEBI Regulations

themselves in certain provisions, very clearly

provide that in case of delay in refund 15% p.a.

interest can be awarded. Quantum of 15% interest

in the facts and circumstances of the case cannot

be said to be unjust, exhorbitant, arbitrary and in

no way the same can be construed as amounting to

penalty. The prevalent rate of interest in the

United Kingdom at 5-6% has no relevance here and as

such we do not find any substance in the third

ground of objection directing the Appellants to pay

the interest at the rate of 15% p.a.

22. Under these circumstances we do not find

anything erroneous, perverse or unjust in the

reasonings adopted by the Securities Appellate

Tribunal in the aforesaid Appeal by its judgment

dated 5th September, 2001. The Appeal is devoid of

merits and the same stands dismissed with costs.

23. After the above order was passed the

learned Counsel for Appellants prays for stay of

this order for a period of six weeks. He also

submitted that the Appellants have already

furnished a bank guarantee for the entire amount of

interest awardable with the SEBI and the same bank

guarantee is still alive and he states that the

said bank guarantee will be kept alive for at least

a period of eight more weeks. In view of the

aforesaid facts and circumstances our order is

stayed for a period of six weeks.

24. Personal Assistant to issue an ordinary

copy of the order to the parties. Parties to act

on an ordinary copy of the order duly authenticated

by the Associate of this Court.

25. Issuance of certified copy expedited.