Trial Court Must Understand the Factors for Compounding of Offence While Evaluating Plea for Compounding u/s 24A of SEBI Act | HC

Case Details: Sanjay Kumar v. SEBI - [2025] 170 taxmann.com 572 (HC-Delhi)

Judiciary and Counsel Details

• Subramonium Prasad, J.
• Jagdeep Singh Bakshi, Sr. Adv., Ms Anshika Maheshwari, Ms Varada Bhutani, Mudit Jain, Amitesh Singh Bakshi, Navroop Singh Bakshi, Ms Mahima Malhotra & Neetej, Advs. for the Petitioner.
• Ms Pinky Anand, Sr. Adv., Ashish Aggarwal & Ms Asees Jasmine Kaur, Advs. for the Respondent.

Facts of the Case

In the instant case, a criminal complaint was filed by the SEBI before the Trial Court against the petitioner for violation of section 11C (6) of the SEBI Act, 1992. During the pendency of the complaint, the petitioner filed an application under section 24A of the Act seeking compounding of offences.

A High Powered Advisory Committee (HPAC) was constituted under section 11C (6) of the Act. The HPAC, after considering the compounding application, recommended that the offence should not be compounded. The Whole Time Members of the SEBI concurred with the recommendation of HPAC not to compound the offence.

The petitioner moved an application under section 91 of the CrPC seeking directions from the Court to the SEBI to place on record all the statements/documents/findings considered by the HPAC and Whole Time Members of the SEBI, while advising/recommending upon the compounding application of the petitioner. However, the said application was rejected by the Trial Court.

It was noted that while considering an application for compounding offence, it would be necessary for the Court to understand factors that have to be taken into account for compounding the offence. Further, for considering an application for compounding of offences, it would be necessary for the Court to summon documents under section 91 of the CrPC.

High Court Held

The High Court held that the materials sought by the petitioner became exceedingly important for the Court to make a decision as to whether to allow or not allow the compounding application of the petitioner. Thus, SEBI was directed to produce all the documents before the Court.

List of Cases Reviewed

• Prakash Gupta v. SEBI, (2021) 17 SCC 451 (SC) [Para 7]; followed.

List of Cases Referred to

• Prakash Gupta v. SEBI (2021) 17 SCC 451 (para 4)
• T. Takano v. SEBI (2022) 8 SCC 162 (para 4).