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M/s. SPML Infra Limited & Another v/s The Chief Manager, Canara Bank & Others


Company & Directors' Information:- SPML INFRA LIMITED [Active] CIN = L40106DL1981PLC012228

Company & Directors' Information:- J T L INFRA LIMITED [Active] CIN = L27106CH1991PLC011536

Company & Directors' Information:- SPML INDIA LIMITED [Active] CIN = U51109WB1988PLC092362

Company & Directors' Information:- SPML INDIA LIMITED [Active] CIN = L51109WB1988PLC092362

Company & Directors' Information:- H N COMPANY INFRA PRIVATE LIMITED [Active] CIN = U45201NL2005PTC007743

Company & Directors' Information:- N A R INFRA PRIVATE LIMITED [Active] CIN = U45209TG2010PTC066556

Company & Directors' Information:- T AND T INFRA PRIVATE LIMITED [Active] CIN = U45200PN2012PTC144893

Company & Directors' Information:- S R C INFRA PRIVATE LIMITED [Active] CIN = U45200KA2014PTC073052

Company & Directors' Information:- S G F INFRA PRIVATE LIMITED [Active] CIN = U45400JK2013PTC003837

Company & Directors' Information:- R E INFRA PRIVATE LIMITED [Active] CIN = U74999MH2007PTC175255

Company & Directors' Information:- M Y C INFRA PRIVATE LIMITED [Active] CIN = U45400UP2013PTC055996

Company & Directors' Information:- A R INFRA PRIVATE LIMITED [Active] CIN = U45202AS2008PTC008561

Company & Directors' Information:- R K INFRA(INDIA) PRIVATE LIMITED [Active] CIN = U45201KA2010PTC054009

Company & Directors' Information:- I V INFRA PRIVATE LIMITED [Active] CIN = U45309PB2008PTC031932

Company & Directors' Information:- M & B INFRA LIMITED [Active] CIN = U70109PB2012PLC036738

Company & Directors' Information:- A H INFRA LIMITED [Active] CIN = U31501WB2010PLC155151

Company & Directors' Information:- V & H INFRA PRIVATE LIMITED [Active] CIN = U45203MH2008PTC181787

Company & Directors' Information:- S R U INFRA PRIVATE LIMITED [Active] CIN = U70102UP2014PTC065614

Company & Directors' Information:- S G U INFRA PRIVATE LIMITED [Active] CIN = U70102UP2015PTC071682

Company & Directors' Information:- N. S. INFRA PRIVATE LIMITED [Active] CIN = U45200UP2021PTC142424

Company & Directors' Information:- M G D INFRA PRIVATE LIMITED [Active] CIN = U45400UP2015PTC069886

Company & Directors' Information:- K R D INFRA PRIVATE LIMITED [Active] CIN = U45400TZ2020PTC034945

Company & Directors' Information:- I AND L INFRA PRIVATE LIMITED [Active] CIN = U45309AP2021PTC117723

Company & Directors' Information:- Z INFRA LIMITED [Strike Off] CIN = U45201OR2009PLC010795

Company & Directors' Information:- S B M INFRA PRIVATE LIMITED [Strike Off] CIN = U45201TR2010PTC008299

Company & Directors' Information:- S INFRA PRIVATE LIMITED [Under Process of Striking Off] CIN = U45201OR2012PTC016064

Company & Directors' Information:- J D C INFRA PRIVATE LIMITED [Strike Off] CIN = U45209HR2012PTC045407

Company & Directors' Information:- S S P L INFRA PRIVATE LIMITED [Strike Off] CIN = U45201OR2011PTC013469

Company & Directors' Information:- Y. M. INFRA PRIVATE LIMITED [Active] CIN = U45400MH2010PTC211055

Company & Directors' Information:- V V INFRA PRIVATE LIMITED [Active] CIN = U45200TG2008PTC059111

Company & Directors' Information:- R V G INFRA PRIVATE LIMITED [Strike Off] CIN = U70200DL2011PTC219732

Company & Directors' Information:- S P G N INFRA PRIVATE LIMITED [Active] CIN = U45200AP2015PTC096326

Company & Directors' Information:- Y. C. INFRA PRIVATE LIMITED [Active] CIN = U45400WB2010PTC151352

Company & Directors' Information:- J K S INFRA (INDIA) LIMITED [Active] CIN = U45209PB2012PLC036363

Company & Directors' Information:- J S N INFRA (INDIA) LIMITED [Active] CIN = U45400UP2012PLC050189

Company & Directors' Information:- R V J INFRA PRIVATE LIMITED [Active] CIN = U45200DL2013PTC249181

Company & Directors' Information:- J J INFRA INDIA PRIVATE LIMITED [Active] CIN = U45209AP2011PTC078174

Company & Directors' Information:- A R INFRA (INDIA) PRIVATE LIMITED [Active] CIN = U70109MP2007PTC020049

Company & Directors' Information:- G K V INFRA PRIVATE LIMITED [Strike Off] CIN = U45200PN2011PTC141814

Company & Directors' Information:- M R K INFRA PRIVATE LIMITED [Active] CIN = U45209TG2012PTC080558

Company & Directors' Information:- L G INFRA PRIVATE LIMITED [Strike Off] CIN = U45400TN2014PTC095310

Company & Directors' Information:- J G INFRA PRIVATE LIMITED [Active] CIN = U45209CH2012PTC034095

Company & Directors' Information:- E & P INFRA PRIVATE LIMITED [Strike Off] CIN = U74999DL2014PTC271401

Company & Directors' Information:- T & T INFRA INDIA PRIVATE LIMITED [Strike Off] CIN = U70109DL2015PTC276336

Company & Directors' Information:- K T INFRA PRIVATE LIMITED [Strike Off] CIN = U70200DL2010PTC199408

Company & Directors' Information:- A 4 INFRA PRIVATE LIMITED [Strike Off] CIN = U70100DL2012PTC233921

Company & Directors' Information:- K & H INFRA PRIVATE LIMITED [Active] CIN = U45209AP2013PTC090417

Company & Directors' Information:- C D E F INFRA PRIVATE LIMITED [Active] CIN = U45200KA2011PTC057888

Company & Directors' Information:- M M D INFRA PRIVATE LIMITED [Strike Off] CIN = U70101GJ2013PTC075444

Company & Directors' Information:- P M D INFRA PRIVATE LIMITED [Active] CIN = U45201GJ2007PTC050762

Company & Directors' Information:- V & T INFRA PRIVATE LIMITED [Strike Off] CIN = U70100TG2008PTC061671

    W.P. No. 125 of 2013

    Decided On, 06 February 2018

    At, High Court of Judicature at Calcutta

    By, THE HONOURABLE MR. JUSTICE DEBANGSU BASAK

    For the Petitioners: Jayanta Mitra, Sr. Advocate, Prithwiraj Sinha, Soumen Sen, Snehashis Sen, Advocates. For the Respondents: Rupak Ghosh, Samak Sengupta, Debasish Chakraborty, Susanta Ghosh, Advocates.



Judgment Text

Debangsu Basak, J.

1. Demands for payment of 2% penal interest made by the debenture trustees are under challenge in the present writ petition at the instance of the company issuing the debentures.

2. Learned Senior Advocate for the petitioners submits that, the first petitioner had issued a letter of offer dated September 19, 1995 in respect of issuance of 17 % secured non-convertible redeemable debentures of Rs. 150/- each for cash at par. Such debentures were allotted on December 12, 1995. Canara Bank was appointed as the debenture trustees. The first petitioner had executed a debenture trustee deed on December 11, 1996. In terms of Section N of SEBI Guidelines for Disclosures and Investor Protection issued by the Security and Exchange Board of India on June 11, 1992 and the clarification issued thereon, the first petitioner was required to create security within 6 months from the date of issuance of the debentures. The first petitioner could not do so within time fixed under such guidelines. A meeting of the debenture holders was convened on October 17, 1997 by a notice dated September 24, 1997. He refers to the resolutions adopted in such meeting and submits that, the debenture holders had agreed and permitted the company to create and complete full security as mentioned in the letter of offer of September 19, 1995 within June 30, 1998. The first petitioner had, thereafter, created the mortgage within June 30, 1998. Another meeting of the debenture holders was held on September 7, 1998 where it was resolved that, no additional interest was required to be paid by the petitioners for the default in creating the mortgage within 6 months of the date of issue of debentures. The debenture holders had agreed not to accept the penal interest in terms of the guidelines. Such resolution was adopted unanimously. The first petitioner had paid the agreed interest in respect of the debentures. The debenture holders had accepted such payment without any demur. The debenture holders did not demand penal interest. He submits that, the right to receive penal interest being a right in personam and limited to the debenture holders, such debenture holders are entitled to waive such rights. The debenture holders had done so. There is no contemporaneous complaint by any of the debenture holders as to the non-receipt of the penal interest. All debenture holders had received the interest agreed without any demur. None of the debenture holders has raised any grievance with regard to the so-called non-payment of penal interest. Therefore, the debenture trustee and SEBI are acting without any basis in demanding payment of 2% penal interest for the default in creation of the security within the time stipulated. Such demands of the debenture trustee should be quashed. In support of the contention that, a right in personam can be waived, learned Senior Advocate for the petitioners relies upon 2002 (Volume 4) Supreme Court Cases page 316 (Commissioner of Customs, Mumbai v. Virgo Steels, Bombay and Anr.).

3. Learned Advocate appearing for the respondent submits that, the debenture trustees were acting in terms of the guidelines of SEBI. The debenture trustees did not take any decision unilaterally in demanding the penal interest. Such penal interest is payable in terms of the guidelines framed by SEBI. The guidelines of SEBI are in public interest. A penal provision in such guidelines of SEBI is in public interest and, therefore, a person cannot waive the same. The so-called waiver by the debenture holders is of no consequence. The first petitioner is liable to pay the penal interest as imposed by the guidelines of SEBI. In support of the contention that, the so-called waiver of the debenture holders is of no consequences, learned Advocate for the respondents relies upon 2006 Volume 5 Supreme Court Cases page 361 (Chairman, SEBI v. Shriram Mutual Fund and Anr.) and 2016 Volume 14 Supreme Court Cases page 161 (Galada Power and Telecommunication Limited v. United India Insurance Company Limited and Anr.). He refers to the correspondence exchanged between the debenture trustees and SEBI and submits that, the debenture trustees had enquired from SEBI as to whether penal interest is payable or not. He submits that, SEBI is of the view that, the first petitioner is liable to pay penal interest under the investor guidelines. The debenture trustees had consequently demanded payment from the first petitioner. The demands of the debenture trustees are, therefore, founded upon just and valid grounds. He submits that, the letter of SEBI by which SEBI had opined that, the first petitioner is liable to pay penal interest is not under challenge. The first petitioner is aware of such stand of SEBI. He draws the attention of the Court to the fact that, on the two dates of the meeting of the debenture holders, 100% of the debenture holders were not present. Therefore, a resolution of the majority of the debenture holders ought not to bind the debenture holders who were not present in the meeting. Such resolution in the meeting cannot override SEBI guidelines. Such resolution adopted by a section of the debenture holders cannot be pressed into service to say that, all the debenture holders have waived their rights. He submits that, in the event, the Court is pleased to hold that, the debenture holders can waive provisions of the SEBI guidelines, the same would tantamount to allowing a party in a security transaction to waive the penal provisions governing the securities transactions. SEBI guidelines are in public interest. Therefore, it is not open to the debenture holders to claim that, they are in a position to waive their rights and that, the first petitioner need not pay the penal interest. He submits that, admittedly there was a default in creation of the security within the time stipulated. The provisions for penal interest are applicable in the facts scenario of present case. There is no dispute with regard to that. Incidents leading to the attraction and application of the penal interest provisions having happened and penal interest becoming payable, it is not open to the debenture holders to waive the same.

4. The issues that arise for consideration in the factual matrix may be adumbrated as follows:-

(1) Is a debenture holder entitled to waive receipt of penal interest imposed by reason of Section N of the SEBI Guidelines for Disclosures and Investor Protection?

(2) If the answer to the first issue is in the affirmative, have the debenture holders done so in the facts of the present case?

(3) To what relief or reliefs, are the parties entitled to?

5. Few facts are admitted. The first petitioner had issued debentures on September 19, 1995 and had allotted the same on December 12, 1995. It had failed to create securities within 6 months from the date of issue. It had become liable to pay penal interest at the rate of 2% to the debenture holders under Section N of SEBI Guidelines for Disclosures and Investor Protection.

6. The applicability of SEBI Guidelines for Disclosures and Investor Protection is admitted. The petitioner claims that, it need not pay in view of the waiver granted by the debenture holders.

7. Virgo Steels, Bombay and Anr. (supra) is of the view that, a person can waive a statutory right emanating out of a provision of law, even if mandatory, but dealing with individual rights and for the benefit of such person.

8. Galada Power and Telecommunication Limited (supra) is of the view that, waiver is an intentional relinquishment of right. Waiver is not made out unless person waiving the right is fully informed about his rights and does so with the full knowledge and with the intention to abandon such right. A statutory right can be waived provided no public interest is involved. It considers Halsbury's Law of England and few judgments of the Supreme Court in expressing such a view.

9. Shriram Mutual Fund and Anr. (supra) deals with the penal provisions of Security and Exchange Board of India, 1992 and is of the view that, SEBI was set up to promote orderly and healthy growth of securities market and for investors' protection. SEBI is vested with the power of monitoring and regulating the activities of stock exchanges, mutual funds, merchant bankers and the securities market. In order to instill investors' confidence and bring about transparency in securities transaction, SEBI has been empowered to make Rules and Regulations. The provisions of penalty for non-compliance of the mandate of the Act are with an object to have an effective deterrent to ensure better compliance with the provisions of the SEBI Act and the Regulation which is crucial for SEBI to protect investors' interest in securities and promote the development of the securities market. Mens-rea is not required to be established where the Regulation or the statute mandatorily provide for imposition of monitory penalty for breach or non-compliance of the provisions of the SEBI Act and Regulations. They are defaults of statutory civil obligation. Penalty is attracted as soon as the contravention of the statutory obligation is established. Intentions of the parties committing the violation are wholly irrelevant.

10. SEBI Guidelines for Disclosures and Investor Protection has been issued by SEBI. They have statutory flavour. Its breach or noncompliance visits the defaulter with the penalty imposed therein. The Guidelines are in public interest. The Guidelines imposes certain obligations on the identified parties. These obligations are to be adhered to by the parties indulging in securities t

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ransaction so as to maintain transparency and instill investors' confidence in the securities market. A stake holder in the securities market cannot plead ablution of statutory obligation on the holy water of waiver, as an obligation imposed by SEBI is not in personam to such stake holder. A public element is involved. Such an obligation cannot be waived. 11. Demands raised by the debenture trustee, therefore, in the facts of the present case are justified. The defaults having happened and the provisions of the SEBI Guidelines for Disclosures and Investor Protection being attracted, the first petitioner is liable to pay the penalty imposed by Section N of such Guidelines. 12. In view of the discussions above, the first issue is answered in the negative. The answer to the first issue being in the negative, the second issue is answered accordingly. The third issue is answered by holding that, the first petitioner is not entitled to the relief as claimed in the petition. 13. W.P. No. 125 of 2013 is dismissed. No order as to costs.
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