“ 102 . While the statute has entrusted the powers of compounding offences to SAT or to the court, as the case may be, before which the proceedings are pending, the view of SEBI as an expert regulator must necessarily be borne in mind by SAT and the court, and would be entitled to a degree of deference. While SEBI does not have a veto, having regard to the language of Section 24-A, its views must be elicited. The view of SEBI, as envisaged in the FAQs accompanying SEBI's Circular dated 20-4-2007, must undoubtedly be sought by SAT or the court, to decide on whether an offence should be compounded. For SEBI can provide an expert view on the nature and gravity of the offence and its implication upon the protection of investors and the stability of the securities' market. These considerations and others which SEBI may place before SAT or the court, would be of relevance in determining as to whether an application for compounding should be allowed. We, therefore, hold that before taking a decision on whether to compound an offence punishable under Section 24(1), SAT or the court must obtain the views of SEBI for furnishing guidance to its ultimate decision. These views, unless manifestly arbitrary or mala fide, must be accorded a high degree of deference. The court must be wary of substituting its own wisdom on the gravity of the offence or the impact on the markets, while discarding the expert opinion of SEBI.”
