Belated Payment of Dividend Didn’t Exonerate Co. from Non-Compliances | Rs. 25 Lakh Penalty Was to be Upheld | SC

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  • Last Updated on 2 February, 2024

Belated Payment of Dividend

Case Details: Kaveri Telecom Products Ltd. v. Securities and Exchange Board of India - [2024] 159 4 (SC)

Judiciary and Counsel Details

    • Vikram Nath & Satish Chandra Sharma, JJ.
    • Goutham Shivshankar, AOR for the Petitioner.
    • Niranjan Reddy, Sr. Adv. (V.C.) Ashish AggarwalAkhila PalemSatyajit Yadav, Advs. & Ms Shashi Kiran, AOR for the Respondent.

Facts of the Case

In the instant case, the appellant company committed default in depositing and disbursing the amount of dividend declared to its shareholders. Hence, a prosecution complaint came to be filed before the Special Judge.

A Criminal petition filed under section 482 of Cr.PC praying to quash proceedings against appellants was filed on the ground that there was a prima facie violation of statutory provisions of law, however, the entire amount due to shareholders had already been paid along with interest, and thus, the question of punishing the appellant did not arise.

High Court dismissed the said petition on the ground that even payment had been made after filing a complaint, penal provisions could not be exonerated and the appellants did not have an escape.

Supreme Court Held

On appeal, the Apex Court held that considering the facts and circumstances of the case, the interest of justice would be served if the appellants were put to terms of the violation committed by them instead of allowing the trial to proceed and accordingly, imposition of fine of Rs.25 lakh on the appellants was to be upheld.

With regard to the criminal petition filed under section 482 of Cr.PC praying to quash proceedings against appellants, the Court held that if appellants, after depositing said amount file proof of deposit with the registry of the instant court, criminal proceedings initiated by SEBI would stand closed. Thus, an appeal against the order of the High Court was to be allowed to the above extent.

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