Saturday, March 25, 2017

Can trustees contract out of fiduciary liabilities?

[The following post is contributed by Shreya Rao and Vakasha Sachdev at Rao Law Chambers]

Trust law in India has not kept up with the times. The last few years have seen an increase in the incidence of sophisticated trust structures, particularly in the private wealth and fund industries. However, changes to the law governing trusts have substantially been introduced in ad hoc form by tax legislations, securities and other regulators and on occasion the courts. This has led to disharmonious, often confused positions on fundamental questions regarding the nature of a trust, the transactions of settlement/ management/ distribution by trustees and the status of beneficiaries in the trust structure.

Some examples of this vacuum & dissonance are as follows: The last amendment to the Indian Trust Act, 1882 (“Trusts Act”), in 2016, related to the list of “permissible investments” that may be made by a trust. Although the amended provision was certainly wider than the previously applicable Indian provision, it failed to ask why (if at all) the law should restrict the list of permissible investments for trustees. The UK, Canada and Australia, for example, had rules similar to ours, but amended their trust acts to allow trustees to invest as any other prudent investor.

In another case, the Supreme Court held last year that disputes arising out of trust deeds are not arbitrable, reversing a Bombay High Court ruling that they are. These two rulings swung on the question of whether the beneficiaries were party to the “arbitration agreement” contained in the trust deed to which the beneficiaries were not a party. However, neither case asked deeper questions regarding the status of beneficiaries in relation to a trust. More recently, the Finance Bill 2017 includes provisions which have been interpreted to result in a tax on the act of settlement in favour of a trustee, treating such settlements as any other transfer. This position ignores the fact that a trustee does not receive an asset, but the fiduciary obligation to manage/ apply the asset. These questions are all fascinating from a practical, legal as well as philosophical perspective.

One such question, which we will examine today, relates to the enforceability of trustee exculpation provisions. Simply put, the issue is as follows: does a trustee (i.e., a fiduciary of a trust) have the ability to disown fiduciary liabilities by entering into a contractual understanding with the settlor? This question is particularly relevant today, because of the increase in institutional trusteeship arrangements. Institutional trustees typically include exculpatory clauses (referred to hereafter as trustee exemption clauses) which protect them from liabilities arising from breach of trust, except in situations where such liabilities arise from gross negligence or fraud of the trustee. What should be the validity of such trustee exemption clauses?

We share some thoughts below.

Limitation of Liability Under Trust Law

The Indian Trusts Act, 1882 (“Trusts Act”) imposes a number of duties upon trustees, and also sets out the liability of a trustee for breaches of their duties (a “breach of trust”). However, it contains no express provisions regarding contractual limitation of liabilities. There is also no case law in this regard. Therefore, we need to derive a position from other parts of the Trust Act, which are discussed below.

- Acceptance of Trust: Under section 10 of the Trusts Act, a trustee is not bound to accept a trust. It is only valid if the trustee consents, which implies autonomy of a trustee and a contractual understanding. Further under section 11, a trustee must fulfil the purpose of the trust in accordance with the directions of the author of the trust. These directions are given at the time of the creation of the trust, i.e., in the trust instrument / trust deed. If the settlor agrees to certain limitations on liability in the trust deed, the trustee would only be bound to that extent, and the exculpation terms should govern the scope of the trustee’s liability in relation to the trust.

- Modifications of duties by contract: Further, certain provisions of the Trusts Act acknowledge that there may be modifications by contract or otherwise to the trust deed, even to change the nature of the duties of the trustee. For instance, section 15 of the Trusts Act, which imposes a duty on the trustee to deal with the trust property with prudence. This section expressly mentions the possibility of changing the duty of care applicable to a trustee, by way of contract. This implies that the broader underlying arrangement can be modified by means of contract.

- Scholarly commentary on the Trusts Act suggests that a trust deed may contain a trustee exemption clause that only allows for liability of the trustee when they have acted in bad faith. As a result, the insertion of trustee exemption clauses should validly exempt the trustees from a breach of trust when they have acted in good faith.[1]

- Liability of Trustee: On the other hand, under section 23, if a trustee commits a breach of trust, he is liable to “make good the loss which the trust-property or the beneficiary has sustained as a result”. This section does not refer to limitation of such liability by agreement. There is also some case law which suggests that a trustee’s liability cannot be absolved merely because he took sufficient care or acted in good faith.[2] However, this leaves open the question regarding whether the extent of the liability can be contractually agreed to.

Limitation of Liability under Contract Law

It is also apposite to examine whether contract law itself limits the ability of a person to limit liability. This question is particularly important since institutional trusteeship arrangements typically arise from an underlying contract.

- There is no general prohibition on the insertion of limitation of liability clauses in contracts under Indian law. However, under section 23 of the Indian Contract Act 1872 (“ICA”), any limitation of liability clauses must not defeat the provision of any law, be fraudulent in themselves, or be opposed to public policy.

- There has been no definitive case on the enforceability of trustee exemption provisions. While such clauses, if not fraudulent, should not defeat any provision of law (as discussed above), their position vis-à-vis public policy is tougher to predict. Indian courts have long refused to lay down any hard and fast guidelines on public policy, noting that what may be viewed as opposed to public policy is not constant,[3] and it is unlikely which of the generally established precedents (opposed to morality, or the interests of the state) would apply to trustee exemption provisions. 

International position

United Kingdom (UK)

Trustee exemption provisions have been held to be enforceable in English case law. For instance, the judgment in the leading case of Armitage v. Nurse[4] upheld a clause that excluded a trustee’s liability for damage caused to the beneficiary except where caused by the trustee’s actual fraud. Usefully, in this case, it was held that the enforcement of such a clause would not be contrary to public policy. This case should hence have persuasive value in arguing that the test of public policy under section 23 of the ICA is also satisfied. Armitage continues to be good law despite the introduction of the Trustee Act 2000 (which seeks to codify the duties of trustees) in England and Wales, as confirmed in subsequent case law.[5] Also see Bogg v Raper.[6]

- There is also a STEP UK guidance note that acknowledges that trustee exemption clauses are valid in the UK, although this advises that the settlor of the trust be made aware of the existence of such a clause and its implications.[7]

- We should note that UK trust law is not exactly similar to Indian trust law. However, the differences should not impact our ability to derive persuasive value from UK material in this regard.

United States (US)

- Most American states and the federal American model trust law take a similar view. Trustee exemption clauses are widely considered enforceable in the US, as long as they do not affect liability for fraud, bad faith, and wilful recklessness, and the insertion of the clauses themselves are not a result of fraud or bad faith.[8]

- The position adopted in the American Uniform Trust Code (the federal model law) is that trustee’s duties are default rules generally, including the duties of prudence, loyalty and impartiality. At the same time, it also recognises certain mandatory rules which are immutable, including the duty to act in good faith and in accordance with the terms and purposes of the trust.[9]

- Here, it is relevant to mention that certain states in the US have seen substantial litigation in the context of waiver of fiduciary duties of directors of corporations versus limited liability companies, where the question has been framed in terms of the difference between a common law fiduciary duty of good faith versus a contractual duty of good faith. If these questions are carried into trust law, it would suggest that fiduciary standards of good faith are different from (possibly wider than?) contractual duties.  

Some philosophical questions

We cannot ignore the philosophical questions regarding the nature of fiduciary responsibilities and their source.

- If they derive from a voluntary understanding (as argued by Edelman, for example), it is theoretically possible that the understanding can be modified by an agreement to limit the liability of a fiduciary. If on the other hand a fiduciary obligation derives from a broader duty of care (as argued by Miller, for example), liability cannot be limited by agreement. We would then need to identify the nature of that duty of care and delineate its boundaries.

- Unfortunately, private law philosophy is yet to reach a consensus on these issues due to the peculiar complexities of the fiduciary relationship. These complexities may also manifest themselves differently depending on the kind of trust – an express trust for instance, is voluntarily accepted by the trustee and would therefore suggest proximity to a contractual relationship. However, a constructive trust (created by circumstance) suggests that the fiduciary is governed by a broader duty of care. 

Concluding Thoughts

Based on the analysis above, existing Indian law, read with the persuasive weight of international precedents, suggests that trustee exemption provisions should be valid, to the extent that the trustee continues to be held responsible for the more serious forms of breaches (gross negligence, fraud etc.). However, it is likely that an analysis will be necessarily dependent on the specific kind of trust and the nature of the exculpation provision. Thus, the specific question, and Indian trust law in general, continues to provide fertile ground for both legal and philosophical debates. We hope to continue to draw more attention to this space through subsequent posts.

- Shreya Rao & Vakasha Sachdev


[1] Aiyar, Commentary on Indian Trusts Act (8th edition) at 247.

[2] Tirupathirayadu Naidu v. Lakshminarsamma, (1989) 2 Mad LJ 385, cf Aiyar, Commentary on Indian Trusts Act (8th edition) at 275.


[4] [1998] Ch 241, 250. The case also includes an analysis of Scottish law that comes to the same conclusion.

[5] Barraclough v Mell, (2005) EWHC 3387; Baker v JE Clark & Co (Transport) UK Ltd, [2006] EWCA Civ 464.

[6] (1999/2000) 1 ITELR 267.




[9] Louise L. Hill, Fiduciary Duties and Exculpatory Clauses: Clash of the Titans or Cozy Bedfellows, 45 U. Mich. J. L. Reform 829 (2012) at 837.

Friday, March 24, 2017

Supreme Court on DRT’s Jurisdiction for Small Debts

[Guest post by Yudhvir Dalal, 5th Year B.A.LL.B. (Hons.), The National University of Advanced Legal Studies (NUALS), Kochi.]

The Supreme Court late last year in State Bank of Patiala v. Mukesh Jain[i] held that under section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’) a Debt Recovery Tribunal (‘DRT’) is entitled to entertain a matter even if the debt involved less than rupees ten lakhs (Rs. 1,000,000). 

Statutory Position

Section 1(4) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 ( ‘RDB Act’) provides that the provisions of the RDB Act shall not apply where the amount of debt due to any bank or financial institution or to a consortium of banks or financial institutions is less than rupees ten lakhs or such other amount, being not less than rupees one lakh (Rs. 100,000), as the Central Government may, by notification, specify. The DRT and the Debt Recovery Appellate Tribunal (‘DRAT’) have been constituted under section 3 and section 8 respectively of RDB Act. If the borrower fails to fully discharge its liability, then section 13(4) of the SARFAESI Act empowers the secured creditor to recover its secured debt by any of the measures mentioned therein.

Moreover, if any person (including borrower) is aggrieved by recovery measures taken under section 13(4) of the SARFAESI Act, then under section 17 that party can appeal to the DRT. Section 34 of the SARFAESI Act stipulates that no civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a DRT or a DRAT is empowered by or under SARFAESI Act and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under SARFAESI Act or under the RDB Act. Section 31(h) of the SARFAESI Act provides that the provisions of that Act shall not apply to any security interest for securing repayment of any financial asset not exceeding rupees ten lakhs.         

The legality and constitutional validity of RDB Act as a whole and the Central Government’s power to constitute DRT and DRAT, tribunals other than tribunals constituted under Articles 323A and 323B have been upheld in Delhi High Court Bar Association v. Union of India[ii].The constitutional validity of the SARFAESI Act except then section 17 (2) has been upheld by the Supreme Court in Mardia Chemicals Ltd. v. Union of India[iii]. 

Factual matrix

In the present case under discussion, the appellant (State Bank of Patiala) lent rupees eight lakhs (Rs. 800,000) to the respondent no. 1 as secured debt. Upon the respondent committing a default in repayment of the said loan, the appellant issued notice under section 13(2) of the SARFAESI Act and sought further proceedings. The respondent challenged the said proceedings before the civil court. The appellant filed an application for rejection of the said civil suit under order 7 rule 11 of the Civil Procedure Code by contending that in light of section 34 read with section 13(2) of SARFAESI Act, the civil court is restricted from entertaining any matter arising under the provisions of SARFAESI Act. The said application of the appellant was rejected by the trial court, as the subject-matter of the suit i.e. the amount sought to be recovered was less than rupees ten lakhs and in accordance with section 1(4) of the RDB Act the provisions of RDB Act would not apply if the subject-matter is less than rupees ten lakhs. Therefore, the DRT had no jurisdiction to entertain the present matter. The High Court of Delhi by way of its judgment[iv] dated April 16, 2005 confirmed the view of trial court and rejected the appellant’s application.    

Issue Involved

Whether the DRT can entertain an appeal under Section 17 of the SARFAESI Act even when the debt amount is less than rupees ten lakhs?

Judgment

The Supreme Court held that the DRT has jurisdiction to entertain an appeal in accordance with section 17 of the SARFAESI Act even if the amount involved is less than rupees ten lakhs. But, the said appellate jurisdiction need not be misunderstood with the original jurisdiction of the DRT. The Court was of the opinion that the application submitted by the appellant under order 7 rule 11 should have been granted by the trial court as, according to Section 34 of the SARFAESI Act, a civil court has no jurisdiction to entertain any appeal arising under the Act. Consequently, the impugned judgment as well as the order rejecting the application filed under order 7 rule 11 were set aside.  

Comments

The Supreme Court in this judgment has carried harmonious construction of provisions of RDB Act and the SARFAESI Act. However, in doing so the court has filled in a gap where there existed lacunae in the two legislation. On a perusal of section 1(4) of the RDB Act, it is explicit that it restricts the jurisdiction of the DRT and the DRAT constituted under it to matters having a subject-matter above rupees ten lakhs unless notified to the contrary by the Central Government. Neither the RDB Act nor the SARFAESI Act distinguishes between original and appellate jurisdiction of DRT.

On one hand, from a reading of section 31(h) of the SARFAESI Act it is implied that the provisions of SARFAESI Act can be applied for securing repayment of any financial asset exceeding rupees one lakh and there is no other provision in the SARFAESI Act restricting the jurisdiction of the legislation only to matters above rupees ten lakhs. This view has been explicitly upheld by the High Court of Kerala in Joseph George v. Joint Registrar[v]. The Kerala High Court further held that the power conferred on the DRT under the provisions of the SARFAESI Act are over and above that Tribunal’s powers conferred on it under the RDB Act. Hence, basically under Section 13 of the SARFAESI Act, a secured creditor can recover its secured debt if the secured debt exceeds rupees one lakh. Furthermore, if any party is aggrieved by the proceedings under section 13(4), then in terms of section 17 it can appeal to DRT. Hence, an appeal to the DRT can lie even from the disputes where subject-matter is above rupees one lakh but less than rupees ten lakhs. However, on the other hand, section 1(4) of the RDB Act forbids the DRT from entertaining any matter involving debts below rupees ten lakhs. In the present case, in order to harmonize these two provisions, the Court distinguished between the appellate and original jurisdiction of DRT. In doing so the Court filled the gap left by the Parliament.

There is a need for the legislature to fill the void left by it and to harmonize the provisions of both statutes. The apt step would be that Parliament inserts an explanation to section 17 of the SARFAESI Act which categorically stipulates that the appellate jurisdiction of DRT under this provision can be availed for any subject-matter above rupees one lakh. In doing so, the legislature would also be able to ensure that no aggrieved debtor is left remediless. If a party would not be able to approach a civil court in the light of section 34 then that aggrieved party would have the option of approaching the DRT.    

- Yudhvir Dalal




[i] (2017) 1 SCC 53
[ii] AIR 1995 Del 323
[iii] (2004) 4 SCC 311
[iv] SBI v. Mukesh Jain, 2005 SCC OnLine Del 1522
[v] AIR 2005 Ker 305

Thursday, March 23, 2017

Hush of the Whistleblower

[Guest post by Malek Shipchandler, who practices law with a firm in Mumbai. Views are personal and do not necessarily represent those of the firm.]

The ongoing controversy at one of India’s most celebrated companies, built on high standards of corporate governance, raises some interesting issues for consideration from a whistleblower perspective. It was earlier reported that the Indian securities regulator, the Securities and Exchange Board of India (SEBI) is examining a letter from a whistleblower at Infosys alleging that the CEO agreed to a gargantuan payout to a resigning chief financial officer, without any formal approval of the board, governance committees or the shareholders. The payout, the size of which is apparently unprecedented at Infosys, was riddled as “hush money” by one of the prominent founders of Infosys in an interview.

The Indian whistleblower norms for listed companies are relatively straitened, in comparison with jurisdictions such as the United States, where India often derives regulatory inspiration from. The Dodd-Frank Wall Street Reform and Consumer Protection Act of the United States established a whistleblower program to be overseen by the U.S. Securities and Exchange Commission (SEC) in 2010. The relevant norms, inter alia, make it a violation of law to take any action to impede an individual from communicating directly with the SEC about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement. In the contrasting Indian scenario, while the SEBI listing norms and Companies Act, 2013 mandate the company to establish a vigil and whistleblower mechanism which, inter alia, is to provide for adequate safeguards against victimization of the employees and their direct access to the audit committee of the company, they appear to envisage the umpiring and first go-to authority to be the board of directors and/or the audit committee, rather than a regulator such as SEBI. While the audit committee is statutorily required to be constituted (in majority) and helmed by ‘independent directors’ – considering that a majority of Indian listed companies are promoter driven, with independent directors spending less than nine days per year on board related work, and voicing that their company wants them to “toe the line” (according to the India Board Report 2015-16) – the moot point is whether, in reality, independent directors are truly independent and effective.

Questions therefore ensue: what if the whistleblower’s information pertains to the action of the board of directors or members of the audit committee? Is the board or the audit committee then expected to take action on incriminating information presented against it? Moreover, from a practical viewpoint, particularly when the mechanism does not adequately protect the identity of the whistleblower from the board or governance committee, is the whistleblower going to be protected from or become a prey of victimization by the very persons being incriminated?

The extant law, while requiring the company to establish a whistleblower mechanism and safeguarding against victimization, does not provide any guidance on how the mechanism ought to function or how victimization can be mitigated (if not avoided). Curiously enough, SEBI has not specifically touched upon whistleblowing in its recent guidance note on board evaluation, despite the guidance note being released in the aftermath of a high profile board-room battle. An option may perhaps lie in setting up a whistleblower hotline – managed by a professional third party who would in-turn verify the credibility of the complaint and the whistleblower. The idea of a third party managed hotline would however depend on the company’s willingness to spend extra currency and moreover, how thoroughly it is able to sensitize its employees about using such a hotline.

Further, employment/severance agreements often encapsulate boilerplate clauses that restrict a current or former employee from disclosing, voluntarily, any confidential information which may disparage the company or its officers. To reiterate the keyword in such clause(s): voluntarily. While the SEC has statutorily prohibited this (and taken enforcement actions against companies using such clause(s)), SEBI is yet to burgeon in this department. From the employees’ perspective, it is understandable why they would not resist signing off on such clause(s): one, boilerplate clauses by their very nature are not negotiated upon as enthusiastically as remuneration or notice period related clauses; and two, which may perhaps be the most crucial reason, voluntary whistleblowing is not, statutorily, monetarily incentivized in India. The SEC’s whistleblower program envisages paying awards to whistleblowers that provide the SEC with credible information about a securities law violation that leads to a successful SEC enforcement action resulting in monetary sanctions over $1 million – the award can range between 10% and 30% of the amount recovered in the enforcement action. In the Indian context, while it can be argued that monetary incentives may encourage frivolous and vexatious complaints, statutorily adopting a bounty system where an award is given only when the information is credible enough to bring about a successful enforcement action, can be food for thought. In fact, one of India’s steel giants is said to be rewarding its employees (including contract workers) up to INR 100,000 for whistleblowing – this is a welcome cue taken from the SEC’s bounty program.

Be that as it may, while SEBI may have its reasons for not having implemented a statutorily robust whistleblower program, it would be fair to acknowledge that SEBI does take cognizance of complaints and incrimination information against entities violating securities laws, through its SCORES (SEBI COmplaints REdress System) platform and otherwise. As regards the bounty mechanism for credible whistleblowers, the SEC Annual Report 2016 states that SEC has, since the inception of its whistleblower program, levied over $500 million worth of enforcement actions based on information received from whistleblowers, and awarded over $100 million to credible whistleblowers. Clearly, Benjamin Franklin, the founding father of the United States, said something which appears to resonate with the SEC: “An investment in knowledge pays the best interest.” Will it with SEBI?

-          Malek Shipchandler


Monday, March 20, 2017

SAT on Interest Payment Obligations under the SEBI Act

Readers may recall that the securities law were amended in 2013 in order to confer significant enforcement powers on SEBI. This was done initially by the Securities Laws (Amendment) Ordinance, 2013 that was promulgated with effect from 18 July 2013. The Ordinance had to be re-promulgated before the amendments finally took shape by way of the Securities Laws (Amendment) Act, 2014.

Among the statutory provisions introduced with effect from 18 July 2013 is section 28A of the Securities and Exchange Board of India Act, 1992 (the SEBI Act). This provision states that where a person fails to: (i) pay the penalty imposed by SEBI’s adjudicating officer, (ii) comply with SEBI’s direction for refund of monies, (iii) comply with a direction of a disgorgement order, or (iv) pay any fees due to SEBI, then various consequences follow. These include attachment of the defaulter’s movable property, bank accounts, immovable property, and also arrest of the person and detention in prison. The provision also states that, for this purpose, section 220 and other stipulated provisions of the Income Tax Act, 1961 (the IT Act) would apply. While section 28A of the SEBI does not mention anything about interest payments on defaulted obligations, section 220(2) of the IT Act provides for interest obligations on defaulted or delayed payments.

In this context, some legal questions arose before the Securities Appellate Tribunal (SAT) in Dushyant N. Dalal v. Securities and Exchange Board of India. These were paraphrased by the SAT as follows:

1. Whether Section 28A inserted to the Securities and Exchange Board of India Act, 1992 (“SEBI Act” for short) with effect from 18.07.2013 imposes interest liability on a person who fails to pay the amounts specified in Section 28A within the stipulated time and if so, whether Section 28A can be invoked for demanding interest on the amounts due to SEBI pursuant to the orders passed prior to 18.07.2013 is the question raised in all these appeals.

The above paragraph reflects two issues, and I summarize the findings and reasoning of SAT on each of them. The first, and the more lasting question, relates to whether section 28A imposes any interest payment obligations at all on any failure to make the payments required under the section. The thrust of the appellants’ arguments was that section 28A itself does not contain any specific obligation to pay interest on defaulted amounts and that, in the absence of any statutory provisions, interest cannot be levied. However, this argument was not accepted by SAT. It found that instead of specifying collection and recovery mechanism in section 28A, Parliament thought it fit to incorporate by reference the provisions of the IT Act in this regard. SAT noted:

Fact that Section 28A of SEBI Act does not specifically mention the interest liability for the delayed payment of the amounts specified therein cannot be a ground to hold that there is no substantive provision in the SEBI Act to demand interest on delayed payments. By incorporating Section 220 of the Income Tax Act in Section 28A of SEBI Act, the legislature has statutorily imposed interest liability on the delayed payment of the amounts set out in Section 28A of the SEBI Act. In other words, the liability to pay interest under Section 28A read with Section 220 is automatic and arises by operation of law. Therefore, the argument of the appellants that there is no substantive provision in the SEBI Act to demand interest and hence, the RO, could not demand interest for the delayed payment cannot be accepted.

Accordingly, SAT concluded that section 28A imposes interest liability on persons who fail to pay the amounts stipulated therein.

The second question was a more immediate one, and related to timing. More specifically, it was as follows: “when section 28A imposes the interest liability on the unpaid amounts due to SEBI from 18.07.2013, whether interest could be demanded under section 28A on the amounts due to SEBI for the period prior to 18.07.2013”. After reviewing the legal provisions, SAT concluded that the provisions relating to payment of interest can only apply prospectively, i.e., from 18 July 2013. It observed:

20. Thus, Section 28A, read with various provisions contained in Section 220 of the Income Tax Act makes it abundantly clear that the rights and obligations set out therein are prospective in nature. Accordingly, we hold that where the orders passed by SEBI prior to 18.07.2013 do not envisage interest liability for the delayed payment of the amounts specified in the respective orders, on insertion of Section 28A, the RO is authorised to demand interest on the amount remaining unpaid after expiry of 30 days from 18.07.2013 and not for the period prior to 18.07.2013.

Based on the facts of the individual cases before it, the SAT held that in all appeals, except one, interest liability could not be imposed on the parties for the period prior to the cut-off date above. In the one appeal though, since the adjudicating officer had previously ordered the payment of interest, it was sustained.

From a broader perspective, the SAT has clarified that section 28A imposes obligations on payment of interest even though the result is arrived at through incorporation of the specific provisions of the IT Act. This confirms the additional powers that were sought to be available to SEBI to enforce the securities laws in a more stringent manner, and further strengthens SEBI’s hands.