In Brief
Three promoter-directors of a listed company were penalized by SEBI for insider trading violations in 2014. After their appeals were dismissed in 2015 and the Supreme Court upheld the penalties in 2019, SEBI in 2022 issued recovery notices demanding payment of penalties plus interest at 12% per annum calculated from the original adjudication date in 2014. The appellants challenged this, arguing interest should be computed only from the recovery notice date. The Supreme Court held that interest on unpaid penalties is compensatory, not penal, serving to compensate the government for loss of time value of money. The adjudication order itself, specifying a 45-day payment period, constitutes the statutory demand; subsequent recovery notices are merely reminders. Interest therefore accrues automatically from the expiry of the 45-day compliance period, not from later demand notices. The Court rejected retrospective application arguments, noting the enabling provision for interest existed when penalties were adjudicated.
The lawyer headnote and full judgment text are available to registered users.