SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992
(1) This Act may be called the Securities and Exchange Board of India Act, 1992."
(2) It extends to the whole of India.
(3) It shall be deemed to have come into force on the 30th day of January, 1992.
Section 1 of the SEBI Act, 1992, lays down the short title, extent, and commencement of the Act, serving as the foundational provision establishing the scope and application of the legislation. It signifies the formal beginning of the statutory framework aimed at regulating securities markets in India and protecting investor interests.
Section 1 primarily states:- The Act may be called the Securities and Exchange Board of India Act, 1992.- It extends to the whole of India, including the Union territories.- It shall come into force on such date as the Central Government may, by notification, appoint.
In conclusion, Section 1 of the SEBI Act, 1992, functions as the foundational clause that establishes the name, territorial extent, and commencement of the Act, thereby providing the legal and administrative basis for the regulation of securities markets in India. It ensures the Act’s nationwide applicability, grants the Central Government authority to notify the enforcement date, and underpins SEBI’s regulatory powers, forming the bedrock of securities law in India.
Note: All references are based on the provided sources and standard legal understanding of the SEBI Act, 1992.
(1) In this Act, unless the context otherwise requires,—
(a) “Board” means the Securities and Exchange Board of India established under section 3;
(b) “Chairman” means the Chairman of the Board;
1[(ba) “collective investment scheme” means any scheme or arrangement which satisfies the conditions specified in section 11AA;]
(c) “existing Securities and Exchange Board” means the Securities and Exchange Board of India constituted under the Resolution of the Government of India in the Department of Economic Affairs No. 1(44)SE/86, dated the 12th day of April, 1988;
(d) “Fund” means the Fund constituted under section 14;
(e) “member” means a member
Section 2 of the Securities and Exchange Board of India (SEBI) Act, 1992, lays down the definitions crucial for interpreting the provisions of the Act. It establishes the scope of key terms such as "securities," "market," "intermediary," and "regulations," which form the foundation for SEBI's regulatory authority and functions. Understanding these definitions is essential for grasping the extent and limits of SEBI's powers and responsibilities.
Section 2 provides the definitions of important terms used throughout the SEBI Act, including:- "securities" (Section 2(h))- "stock exchange" (Section 2(j))- "intermediary" (Section 2(hi))- "market" (Section 2(i))- "regulations" (Section 2(ka))- "board" (Section 2(b))- "person" (Section 2(d))- "issuer" (Section 2(e))- "control" (Section 2(l))- "collective investment scheme" (Section 2(ba))
These definitions clarify the scope of SEBI's jurisdiction and the entities it regulates.
Note: The references are based on the provided sources, which include judicial orders, legal commentaries, and authoritative interpretations. The analysis emphasizes the importance of Section 2 as the interpretative backbone of the SEBI Act, guiding the scope of regulation and enforcement.
(1) With effect from such date as the Central Government may, by notification, appoint, there shall be established, for the purposes of this Act, a Board by the name of the Securities and Exchange Board of India.
(2) The Board shall be a body corporate by the name aforesaid, having perpetual succession and a common seal, with power subject to the provisions of this Act, to acquire, hold and dispose of property, both movable and immovable, and to contract, and shall, by the said name, sue or be sued.
(3) The head office of the Board shall be at Bombay.
(4) The Board may establish offices at other places in India.
(1) The Board shall consist of the following members, namely\:—"
(a) a Chairman;
(b) two members from amongst the officials of the 1[Ministry] of the Central Government dealing with Finance 2[and administration of the Companies Act, 1956 (1 of 1956)];
(c) one member from amongst the officials of 3[the Reserve Bank];
4[(d) five other members of whom at least three shall be the whole-time members,]
to be appointed by the Central Government.
(2) The general superintendence, direction and management of the affairs of the Board shall vest in a Board of members, which may exercise all powers and do all acts and things which may be exercised or done by th
Section 4 of the Securities and Exchange Board of India (SEBI) Act, 1992, deals with the management and powers of the SEBI Board, establishing its structure, authority, and functions necessary to regulate and develop the securities market in India. It forms the foundational legal framework for SEBI's governance.
In conclusion, Section 4 establishes SEBI as an autonomous statutory body with a well-defined management structure, empowering the Board and Chairman to execute functions necessary for effective regulation, development, and protection of investors in the securities market, subject to the provisions and regulations framed under the Act. The section’s design ensures operational efficiency, accountability, and independence, fundamental to SEBI’s role as India’s securities market regulator.
Note: The references are based on the provided sources and the general understanding of the SEBI Act, 1992.
(1) The term of office and other conditions of service of the Chairman and the members referred to in clause (d) of sub-section (1) of section 4 shall be such as may be prescribed."
(2) Notwithstanding anything contained in sub-section (1), the Central Government shall have the right to terminate the services of the Chairman or a member appointed under clause (d) of sub-section (1) of section 4, at any time before the expiry of the period prescribed under sub-section (1), by giving him notice of not less than three months in writing or three months’ salary and allowances in lieu thereof, and the Chairman or a member, as the case may be, shall also have the right to relinquish his office, at any time before the expiry of the period prescribed under sub-section (1), by giving to the Central Government notice of not less than three months in writing.
[***] The Central Government shall remove a member from office if he—"
(a) is, or at any time has been, adjudicated as insolvent;
(b) is of unsound mind and stands so declared by a competent court;
(c) has been convicted of an offence which, in the opinion of the Central Government, involves a moral turpitude;
2[***]
(e) has, in the opinion of the Central Government, so abused his position as to render his continuation in office detrimental to the public interest:
Provided that no member shall be removed under this clause unless he has been given a reasonable opportunity of being heard in the matter.
(1) The Board shall meet at such times and places, and shall observe such rules of procedure in regard to the transaction of business at its meetings (including quorum at such meetings) as may be provided regulation."
(2) The Chairman or, if for any reason, he is unable to attend a meeting of the Board, any other member chosen by the members present from amongst themselves at the meeting shall preside at the meeting.
(3) All questions which come up before any meeting of the Board shall be decided by a majority votes of the members present and voting, and, in the event of an equality of votes, the Chairman or in his absence, the person presiding, shall have a second or casting vote.
Any member, who is a director of a company and who as such director has any direct or indirect pecuniary interest in any matter coming up for consideration at a meeting of the Board, shall, as soon as possible after relevant circumstances have come to his knowledge, disclose the nature of his interest at such meeting and such disclosure shall be recorded in the proceedings of the Board, and the member shall not take any part in any deliberation or decision of the Board with respect to that matter.]"
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1. Ins. by Act 9 of 1995, sec. 4 (w.r.e.f. 25-1-1995).
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Section 7(a) of the Securities and Exchange Board of India (SEBI) Act, 1992, pertains to the procedural aspects of meetings held by the SEBI Board, establishing rules for its functioning and decision-making processes. It is essential for ensuring transparent and effective governance of SEBI.
Section 7(a) specifies that the SEBI Board shall meet at such times and places as determined by regulations, and it prescribes the rules of procedure, including quorum requirements, for conducting its business.
This section governs the internal procedural conduct of SEBI's Board meetings, ensuring orderly deliberation and decision-making. It does not deal with the substantive powers or functions of the Board but ensures these are exercised within a structured framework.
The section itself does not prescribe any punishment. However, failure to adhere to procedural rules may lead to invalid decisions or administrative consequences under general SEBI regulations or the Act.
Note: This commentary synthesizes information from the provided sources, emphasizing procedural and governance aspects of Section 7(a).
No act or proceeding of the Board shall be invalid merely by reason of—"
(a) any vacancy in, or any defect in the constitution of, the Board; or
(b) any defect in the appointment of a person acting as a member of the Board; or
(c) any irregularity in the procedure of the Board not affecting the merits of the case.
(1) The Board may appoint such other officers and employees as it considers necessary for the efficient discharge of its functions under this Act."
(2) The term and other conditions of service of officers and employees of the Board appointed under sub-section (1) shall be such as may be determined by regulations.
(1) On and from the date of establishment of the Board,—"
(a) any reference to the existing Securities and Exchange Board in any law other than this Act or in any contract or other instrument shall be deemed as a reference to the Board;
(b) all properties and assets, movable and immovable, of, or belonging to, the existing Securities and Exchange Board, shall vest in the Board;
(c) all rights and liabilities of the existing Securities and Exchange Board shall be transferred to, and be the rights and liabilities of, the Board;
(d) without prejudice to the provisions of clause (c), all debts, obligations and liabilities incurred, all contracts entered into and all matters and things engaged to be done by, with or for the existing Securiti
(1) Subject to the provisions of this Act, it shall be the duty of the Board to protect the interests of investors in securities and to promote the development of, and to regulate the securities market, by such measures as it thinks fit."
(2) Without prejudice to the generality of the foregoing provisions, the measures referred to therein may provide for—
(a) regulating the business in stock exchanges and any other securities markets;
(b) registering and regulating the working of stock brokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisers and such other intermediaries who may be associated with securities markets in any manner;
Section 11 of the SEBI Act, 1992, delineates the core functions, powers, and scope of authority of SEBI (Securities and Exchange Board of India). It establishes SEBI’s primary duty to protect investors' interests, regulate the securities market, and promote its development. The section confers wide-ranging powers enabling SEBI to undertake investigations, issue directions, impose penalties, and regulate intermediaries and market practices to ensure fair, transparent, and orderly functioning of the securities market.
Section 11 mandates that SEBI’s duties include:- Protecting the interests of investors in securities.- Promoting the development of, and regulating, the securities market.- Enacting measures as it deems fit for these purposes.It authorizes SEBI to regulate various market participants, including stock exchanges, brokers, merchant bankers, depositories, and intermediaries, through registration, regulation, inspection, inquiry, and enforcement actions.
"Scope of Authority" - Section 11 confers comprehensive powers upon SEBI to regulate, investigate, and enforce market rules, ensuring investor protection and market development [DIPAK DEWAN VS UNION OF INDIA].
"Duties of SEBI" - The section mandates SEBI to protect investors’ interests and promote market growth, establishing its primary objectives [DIPAK DEWAN VS UNION OF INDIA].
"Investigation Powers" - SEBI’s authority to conduct investigations under Sections 11(1) and 11(C) is broad and retrospective, allowing inquiry into past transactions if grounds exist [Vimal Kumar Gupta VS National Stock Exchange of India].
"Enforcement and Directions" - SEBI can issue cease and desist orders, attach assets, and restrain market participants from dealing, under Sections 11(4) and 11B, to prevent market abuse [CHANCHAL JAIN VS SECURITIES AND EXCHANGE BOARD OF INDIA].
"Regulation of Intermediaries" - The section empowers SEBI to regulate brokers, depositories, mutual funds, and collective schemes, including issuing show-cause notices and debarment orders [Ashok Surendra Upadhyay VS Stock Exchange, Mumbai & others].
"Penalties and Enforcement" - SEBI’s powers include levying fines, attaching assets, and recovering dues for violations, with penalties up to Rs. 25 crore or imprisonment .
"Extra-territorial Jurisdiction" - Judgments affirm that SEBI’s jurisdiction extends to acts outside India if they impact Indian investors or securities, based on the doctrine of effect [Nimish H. Shah VS Securities & Exchange Board of India].
"Retrospective and Procedural Nature" - Circulars and investigation orders issued by SEBI under Section 11-C are procedural and retrospective, valid even for past transactions, as upheld by courts [Vimal Kumar Gupta VS National Stock Exchange of India].
"Power to Impose Penalties" - Under Sections 11(1), 11B, and 15A, SEBI can impose penalties for non-compliance, failure to furnish information, or market misconduct, ensuring deterrence [DBS Cholamandalam Securities Ltd. VS Swati Emish Mali].
"Regulation of Market Practices" - SEBI’s authority under Section 11 includes regulating insider trading, fraudulent practices, substantial share acquisitions, and takeovers to maintain market integrity [Securities & Exchange Board of India Rep. by its Chairman VS Kunnamkulam Paper Mills Ltd Road].
"Investigation and Inquiry" - Section 11(1) and 11(C) authorize SEBI to initiate inquiries based on reasonable belief, with the power to summon, inspect, and order investigations, including in cases of suspected violations [Nimish H. Shah VS Securities & Exchange Board of India].
"Natural Justice and Fair Process" - Orders and investigations must adhere to principles of natural justice, providing affected parties an opportunity to respond and be heard, as emphasized in judicial pronouncements [India Infoline Limited VS Shyamlal Daulatram Vachhani].
"Penalties for Non-compliance" - Non-compliance with SEBI orders or failure to furnish information can lead to penalties, fines, and even imprisonment, reinforcing regulatory discipline .
"Market Surveillance" - SEBI’s powers include surveillance, moving securities to trade-to-trade segments, and imposing restrictions to prevent manipulation and protect small investors [01400014223].
"Extra-territorial Acts" - Courts have affirmed that SEBI’s jurisdiction extends to acts outside India if they impact Indian securities or investors, based on the doctrine of effect and the global nature of securities markets [Nimish H. Shah VS Securities & Exchange Board of India].
"Legal Validity of Circulars" - Circulars issued under Section 11(1), especially those relating to default recognition, are valid and binding, provided they are issued in exercise of powers conferred and in compliance with procedural requirements [Hansraj Sohanlal Gouthi VS Standard Chartered STCI Capital Markets Ltd. ].
"Power to Debar and Remove" - SEBI can debar professionals like Chartered Accountants or market intermediaries from practicing or operating if found violating norms, without infringing constitutional rights, as upheld in judicial rulings [Price Waterhouse & Co. VS Securities and Exchange Board of India].
"Jurisdiction and Limitations" - The scope of SEBI’s powers is wide but confined to securities market regulation; actions outside this scope may be challenged but are generally upheld if within powers conferred [Numetal Limited VS Satish Kumar Gupta].
"Natural Justice and Fair Play" - Orders and investigations must follow principles of natural justice; failure to do so renders orders liable to challenge, but SEBI’s procedural powers are well established [India Infoline Limited VS Shyamlal Daulatram Vachhani].
"Retrospective Application" - Laws and circulars issued under Section 11 are generally retrospective and applicable to past transactions, as courts have consistently held [Vimal Kumar Gupta VS National Stock Exchange of India].
"Legal Framework and Enforcement" - SEBI’s powers under Section 11 are supported by the Act, Rules, and regulations, with judicial backing affirming its authority to investigate, penalize, and regulate market conduct [DIPAK DEWAN VS UNION OF INDIA].
Section 11 of the SEBI Act, 1992, provides a robust legal framework empowering SEBI to regulate the securities market comprehensively. Its wide scope encompasses investigation, enforcement, regulation of intermediaries, and penalties, all aimed at safeguarding investor interests and ensuring market integrity. Judicial pronouncements affirm the legality and scope of these powers, including their retrospective and extraterritorial application, reinforcing SEBI’s vital role in the Indian securities ecosystem.
Note: All references are drawn from the provided sources and case law summaries, formatted in square brackets.
(1) Without prejudice to the provisions of the Companies Act, 1956 (1 of 1956), the Board may, for the protection of investors,—"
(a) specify, by regulations—
(i) the matters relating to issue of capital, transfer of securities and other matters incidental thereto; and
(ii) the manner in which such matters shall be disclosed by the companies;
(b) by general or special orders—
(i) prohibit any company from issuing of prospectus, any offer document, or advertisement soliciting money from the public for the issue of securities;
(ii) specify the conditions subject to which the prospectus, such offer document or advertisement, if not prohibited, m
(1) Any scheme or arrangement which satisfies the conditions referred to in sub-section (2) shall be a collective investment scheme."
(2) Any scheme or arrangement made or offered by any company under which,—
(i) the contributions, or payment made by the investors, by whatever name called, are pooled and utilized for the purposes of the scheme or arrangement;
(ii) the contributions or payments are made to such scheme or arrangement by the investors with a view to receive profits, income, produce or property, whether movable or immovable, from such scheme or arrangement;
(iii) the property, contribution or investment forming part of scheme or arrangement, whether identifiable or not, is managed on behalf of the investors;
&nb
Save as otherwise provided in section 11, if after making or causing to be made an enquiry, the Board is satisfied that it is necessary—"
(i) in the interest of investors, or orderly development of securities market; or
(ii) to prevent the affairs of any intermediary or other persons referred to in section 12 being conducted in a manner detrimental to the interests of investors or securities market; or
(iii) to secure the proper management of any such intermediary or person,
it may issue such directions,—
(a) to any person or class of persons referred to in section 12, or associated with the securities market; or
(b) to any company in respect o
(1) Where the Board has reasonable ground to believe that—"
(a) the transactions in securities are being dealt with in a manner detrimental to the investors or the securities market; or
(b) any intermediary or any person associated with the securities market has violated any of the provisions of this Act or the rules or the regulations made or directions issued by the Board thereunder,
it may, at any time by order in writing, direct any person (hereafter in this section referred to as the Investigating Authority) specified in the order to investigate the affairs of such intermediary or persons associated with the securities market and to report thereon to the Board.
(2) Without prejudice to the provisions of sections 235 to 241 of the Companie
If the Board finds, after causing an inquiry to be made, that any person has violated, or is likely to violate, any provisions of this Act, or any rules or regulations made thereunder, it may pass an order requiring such person to cease and desist from committing or causing such violation\:"
Provided that the Board shall not pass such order in respect of any listed public company or a public company (other than the intermediaries specified under section 12) which intends to get its securities listed on any recognised stock exchange unless the Board has reasonable grounds to believe that such company has indulged in insider trading or market manipulation.]
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1. Ins. by Act 59 of 2002, sec. 6 (w.r.e.f. 29-10-2002).
(1) No stock-broker, sub-broker, share transfer agent, banker to an issue, trustee of trust deed, registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser and such other intermediary who may be associated with securities market shall buy, sell or deal in securities except under, and in accordance with, the conditions of a certificate of registration obtained from the Board in accordance with the 2[regulations] made under this Act\:"
Provided that a person buying or selling securities or otherwise dealing with the securities market as a stock-broker, sub-broker, share transfer agent, banker to an issue, trustee of trust deed, registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser and such other intermediary who may be associated with securities market immediately before the establishment of the Board for which
No person shall directly or indirectly—"
(a) use or employ, in connection with the issue, purchase or sale of any securities listed or proposed to be listed on a recognised stock exchange, any manipulative or deceptive device or contrivance in contravention of the provisions of this Act or the rules or the regulations made thereunder;
(b) employ any device, scheme or artifice to defraud in connection with issue or dealing in securities which are listed or proposed to be listed on a recognised stock exchange;
(c) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person, in connection with the issue, dealing in securities which are listed or proposed to be listed on a recognised stock exchange, in contravention of the provisions
The Central Government may, after due appropriation made by Parliament by law in this behalf, make to the Board grants of such sums of money as that Government may think fit for being utilised for the purposes of this Act.
(1) There shall be constituted a Fund to be called the Securities and Exchange Board of India General Fund and there shall be credited thereto—"
(a) all grants, fees and charges received by the Board under this Act; 1[***]
2[***]
(b) all sums received by the Board from such other sources as may be decided upon by the Central Government.
(2) The Fund shall be applied for meeting—
(a) the salaries, allowances and other remuneration of the members, officers, and other employees of the Board;
(b) the expenses of the Board in the discharge of its functions under section 11;
(c) the expenses on objects and f
(1) The Board shall maintain proper accounts and other relevant records and prepare an annual statement of accounts in such form as may be prescribed by the Central Government in consultation with the Comptroller and Auditor-General of India."
(2) The accounts of the Board shall be audited by the Comptroller and Auditor-General of India at such intervals as may be specified by him and any expenditure incurred in connection with such audit shall be payable by the Board to the Comptroller and Auditor-General of India.
(3) The Comptroller and Auditor-General of India and any other person appointed by him in connection with the audit of the accounts of the Board shall have the same rights and privileges and authority in connection with such audit as the Comptroller and Auditor-General generally has in connection with the audit of the Gover
If any person, who is required under this Act or any rules or regulations made thereunder,—"
(a) to furnish any document, return or report to the Board, fails to furnish the same, he shall be liable to 1[a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less];
(b) to file any return or furnish any information, books or other documents within the time specified therefor in the regulations, fails to file return or furnish the same within the time specified therefor in the regulations, he shall be liable to 2[a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less];
(c) to maintain books of account or records, fails to m
If any person, who is registered as an intermediary and is required under this Act or any rules or regulations made thereunder to enter into an agreement with his client, fails to enter into such agreement, he shall be liable to 1[a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less].
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* Section 15B ins. by Act 9 of 1995, sec. 8 (w.r.e.f. 25-1-1995).
1. Subs. by Act 59 of 2002, sec. 10, for “a penalty not exceeding five lakh rupees for every such failure” (w.r.e.f. 29-10-2002).
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If any listed company or any person who is registered as an intermediary, after having been called upon by the Board in writing, to redress the grievances of investors, fails to redress such grievances within the time specified by the Board, such company or intermediary shall be liable to a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less.]
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* Section 15C ins. by Act 9 of 1995, sec. 8 (w.r.e.f. 25-1-1995).
1. Subs. by Act 59 of 2002, sec. 11, for section “15C. Penalty for failure to redress investors’ grievances.—It any person, who is registered as an intermediary, after having been called upon by the Board in writing to redress the grievances
If any person, who is—"
(a) required under this Act or any rules or regulations made thereunder to obtain a certificate of registration from the Board for sponsoring or carrying on any collective investment scheme, including mutual funds, sponsors or carries on any collective investment scheme, including mutual funds, without obtaining such certificate of registration, he shall be liable to 1[a penalty of one lakh rupees for each day during which he sponsers or carries on any collective investment scheme including mutual funds or one crore rupees, whichever is less];
(b) registered with the Board as a collective investment scheme, including mutual funds, for sponsoring or carrying on any investment scheme, fails to comply with the terms and conditions of certificate of registration, he shall be liable to 2[a penalty of one lakh rup
Where any asset management company of a mutual fund registered under this Act fails to comply with any of the regulations providing for restrictions on the activities of the asset management companies, such asset management company shall be liable to 2[a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less].
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* Section 15E ins. by Act 9 of 1995, sec. 8 (w.r.e.f. 25-1-1995).
1. Subs. by Act 59 of 2002, sec. 13, for “a penalty not exceeding five lakh rupees for each such failure” (w.r.e.f. 29-10-2002).
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If any person, who is registered as a stock broker under this Act,—"
(a) fails to issue contract notes in the form and manner specified by the stock exchange of which such broker is a member, he shall be liable to a penalty not exceeding five times the amount for which the contract note was required to be issued by that broker;
(b) fails to deliver any security or fails to make payment of the amount due to the investor in the manner within the period specified in the regulations, he shall be liable to 1[a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less].
(c) charges an amount of brokerage which is in excess of the brokerage specified in the regulations, he shall be liable to 2[a penalty of one lakh rupees] or five time
If any insider who,—"
(i) either on his own behalf or on behalf of any other person, deals in securities of a body corporate listed on any stock exchange on the basis of any unpublished price sensitive information; or
(ii) communicates any unpublished price sensitive information to any person, with or without his request for such information except as required in the ordinary course of business or under any law; or
(iii) counsels, or procures for any other person to deal in any securities of any body corporate on the basis of unpublished price sensitive information,
shall be liable to a penalty 1[of twenty-five crore rupees or three times the amount of profits made out of insider trading, whichever is higher].
If any person, who is required under this Act or any rules or regulations made thereunder, fails to—"
(i) disclose the aggregate of his share holding in the body corporate before he acquires any shares of that body corporate; or
(ii) make a public announcement to acquire shares at a minimum price,
1[(iii) make a public offer by sending letter of offer to the shareholders of the concerned company; or
(iv) make payment of consideration to the shareholders who sold their shares pursuant to letter of offer,]
he shall be liable to a penalty 2[of twenty-five crore rupees or three times the amount of profits made out of such failure, whichever is higher].
If any person indulges in fraudulent and unfair trade practices relating to securities, he shall be liable to a penalty of twenty-five crore rupees or three times the amount of profits made out of such practices, whichever is higher.]
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1. Ins. by Act 59 of 2002, sec. 17 (w.r.e.f. 29-10-2002).
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Whoever fails to comply with any provision of this Act, the rules or the regulations made or directions issued by the Board thereunder for which no separate penalty has been provided, shall be liable to a penalty which may extend to one crore rupees.]"
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1. Ins. by Act 59 of 2002, sec. 17 (w.r.e.f. 29-10-2002).
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(1) For the purpose of adjudging under sections 15A, 15B, 15C, 15D, 15E, 15F, 15G 1[15H, 15HA and 15HB], the Board shall appoint any officer not below the rank of a Division Chief to be an adjudicating officer for holding an inquiry in the prescribed manner after giving any person concerned a reasonable opportunity of being heard for the purpose of imposing any penalty.
(2) While holding an inquiry the adjudicating officer shall have power to summon and enforce the attendance of any person acquainted with the facts and circumstances of the case to give evidence or to produce any document which in the opinion of the adjudicating officer, may be useful for or relevant to the subject matter of the inquiry and if, on such inquiry, he is satisfied that the person has failed to comply with the provisions of any of the sections specified in sub-section (1), he may impose such penalty
While adjudging the quantum of penalty under section 15-I, the adjudicating officer shall have due regard to the following factors, namely\:—"
(a) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default;
(b) the amount of loss caused to an investor or group of investors as a result of the default;
(c) the repetitive nature of the default.]
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* Section 15J ins. by Act 9 of 1995, sec. 8 (w.r.e.f. 25-1-1995).
(1) The Central Government shall by notification, establish one or more Appellate Tribunals to be known as the Securities Appellate Tribunal to exercise the jurisdiction, powers and authority conferred on such Tribunal by or under this Act 1[or any other law for the time being in force].
(2) The Central Government shall also specify in the notification referred to in sub-section (1) the matters and places in relation to which the Securities Appellate Tribunal may exercise jurisdiction.
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* Section 15K ins. by Act 9 of 1995, sec. 9 (w.r.e.f. 25-1-1995).
1. Ins. by Act 32 of 1999, sec. 8 (w.e.f. 16-12-1999).
A Securities Appellate Tribunal shall consist of a Presiding Officer and two other members, to be appointed, by notification, by the Central Government\:"
Provided that the Securities Appellate Tribunal, consisting of one person only, established before the commencement of the Securities and Exchange Board of India (Amendment) Act, 2002, shall continue to exercise the jurisdiction, powers and authority conferred on it by or under this Act or any other law for the time being in force till two other Members are appointed under this section.]
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* Section 15L ins. by Act 9 of 1995, sec. 9 (w.r.e.f. 25-1-1995).
1. Subs. by Act 59 of 2002, sec. 20, for section “15L.
(1) A person shall not be qualified for appointment as the Presiding Officer of a Securities Appellate Tribunal unless he is a sitting or retired Judge of the Supreme Court or a sitting or retired Chief Justice of a High Court\:"
Provided that the Presiding Officer of the Securities Appellate Tribunal shall be appointed by the Central Government in consultation with the Chief Justice of India or his nominee.
(2) A person shall not be qualified for appointment as Member of a Securities Appellate Tribunal unless he is a person of ability, integrity and standing who has shown capacity in dealing with problems relating to securities market and has qualification and experience of corporate law, securities laws, finance, economics or accountancy:
Provided that a member of the Board or any person hol
The Presiding Officer and every other Member of a Securities Appellate Tribunal shall hold office for a term of five years from the date on which he enters upon his office and shall be eligible for re-appointment\:"
Provided that no person shall hold office as the Presiding Officer of the Securities Appellate Tribunal after he has attained the age of sixty-eight years:
Provided further that no person shall hold office as a Member of the Securities Appellate Tribunal after he has attained the age of sixty-two years.]
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* Section 15N ins. by Act 9 of 1995, sec. 9 (w.r.e.f. 25-1-1995).
1. Subs. by Act 59 of 2002, sec. 2
The salary and allowances payable to, and the other terms and conditions of service (including pension, gratuity and other retirement benefits) of, the 2[Presiding Officer and other Members of a Securities Appellate Tribunal] shall be such as may be prescribed\:"
Provided that neither the salary and allowances nor the other terms and conditions of service of the 2[Presiding Officer and other Members of a Securities Appellate Tribunal] shall be varied to their disadvantage after appointment.
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* Section 15-O ins. by Act 9 of 1995, sec. 9 (w.r.e.f. 25-1-1995).
1. Subs. by Act 59 of 2002, sec. 22, for “Presiding Officer of a Securities Appellate Tribunal” (w.r.e.
If, for reason other than temporary absence, any vacancy occurs in 1[the office of the Presiding Officer or any other Member,] of a Securities Appellate Tribunal, then the Central Government shall appoint another person in accordance with the provisions of this Act to fill the vacancy and the proceedings may be continued before the Securities Appellate Tribunal from the stage at which the vacancy is filled.
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* Section 15P ins. by Act 9 of 1995, sec. 9 (w.r.e.f. 25-1-1995).
1. Subs. by Act 59 of 2002, sec. 23, for “office of the Presiding Officer” (w.r.e.f. 29-10-2002).
(1) The 2[Presiding Officer or any other Member of a Securities Appellate Tribunal] may, by notice in writing under his hand addressed to the Central Government, resign his office\:"
Provided that 2[the Presiding Officer or any other Member] shall, unless he is permitted by the Central Government to relinquish his office sooner, continue to hold office until the expiry of three months from the date of receipt of such notice or until a person duly appointed as his successor enters upon his office or until the expiry of his term of office, whichever is the earliest.
(2) The 3[Presiding Officer or any other Member] of a Securities Appellate Tribunal shall not be removed from his office except by an order by the Central Government on the ground of proved misbehaviour or incapacity after an inquiry made by a Judge of the Supreme Court, in wh
No order of the Central Government appointing any person as the 1[Presiding Officer or a Member] of a Securities Appellate Tribunal shall be called in question in any manner, and no act or proceeding before a Securities Appellate Tribunal shall be called in question in any manner on the ground merely of any defect in the constitution of a Securities Appellate Tribunal.
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* Section 15R ins. by Act 9 of 1995, sec. 9 (w.r.e.f. 25-1-1995).
1. Subs. by Act 59 of 2002, sec. 24, for “Presiding Officer” (w.r.e.f. 29-10-2002).
(1) The Central Government shall provide the Securities Appellate Tribunal with such officers and employees as that Government may think fit."
(2) The officers and employees of the Securities Appellate Tribunal shall discharge their functions under general superintendence of the Presiding Officer.
(3) The salaries and allowances and other conditions of service of the officers and employees of the Securities Appellate Tribunal shall be such as may be prescribed.
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* Section 15S ins. by Act 9 of 1995, sec. 9 (w.r.e.f. 25-1-1995).
[(1) Save as provided in sub-section (2), any person aggrieved,—"
(a) by an order of the Board made, on and after the commencement of the Securities Laws (Second Amendment) Act, 1999, under this Act, or the rules or regulations made thereunder, or
(b) by an order made by an adjudicating officer under this Act,
may prefer an appeal to a Securities Appellate Tribunal having jurisdiction in the matter.]
2 [(2) No appeal shall lie to the Securities Appellate Tribunal from an order made—
(a) by the Board on and after the commencement of the Securities Laws (Second Amendment) Act, 1999;
(b) by an adjudicating officer,
&
(1) The Securities Appellate Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1980), but shall be guided by the principles of natural justice and, subject to the other provisions of this Act and of any rules, the Securities Appellate Tribunal shall have powers to regulate their own procedure including the places at which they shall have their sittings.
(2) The Securities Appellate Tribunal shall have, for the purposes of discharging their functions under this Act, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following matters, namely:—
(a) summoning and enforcing the attendance of any person and examining him on oath;
(b) requiring the discovery a
The appellant may either appear in person or authorise one or more chartered accountants or company secretaries or cost accountants or legal practitioners or any of its officers to present his or its case before the Securities Appellate Tribunal."
Explanation.—For the purposes of this section,—
(a) “chartered accountant” means a chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949) and who has obtained a certificate of practice under sub-section (1) of section 6 of that Act;
(b) “company secretary” means a company secretary as defined in clause (c) of sub-section (1) of section 2 of the Company Secretaries Act, 1980 (56 of 1980) and who has obtained a certificate of practice under sub-section (1) of section 6 of
The provisions of the Limitation Act, 1963 (36 of 1963), shall as far as may be, apply to an appeal made to a Securities Appellate Tribunal.
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* Section 15W ins. by Act 9 of 1995, sec. 9 (w.r.e.f. 25-1-1995).
The Presiding Officer, Members and other officers and employees of a Securities Appellate Tribunal shall be deemed to be public servants within the meaning of section 21 of the Indian Panel Code (45 of 1860).]
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* Section 15X ins. by Act 9 of 1995, sec. 9 (w.r.e.f. 25-1-1995).
1. Subs. by Act 59 of 2002, sec. 26, for section “15X. Presiding Officer and staff of Securities Appellate Tribunals to be public servants.—The Presiding Officer and other officers and employees of a Securities Appellate Tribunal shall be deemed to be public servants within the meaning of section 21 of the Indian Penal Code (45 of 1860).” (w.r.e.f. 29-10-2002).
No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which an adjudicating officer appointed under this Act or a Securities Appellate Tribunal constituted under this Act is empowered by or under this Act to determine 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 this Act."
----------------------------
* Section 15Y ins. by Act 9 of 1995, sec. 9 (w.r.e.f. 25-1-1995).
Any person aggrieved by any decision or order of the Securities Appellate Tribunal may file an appeal to the Supreme Court within sixty days from the date of communication of the decision or order of the Securities Appellate Tribunal to him on any question of law arising out of such order:
Provided that the Supreme Court may, if it is satisfied that the applicant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days.]
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* Section 15Z ins. by Act 9 of 1995, sec. 9 (w.r.e.f. 25-1-1995).
1. Subs. by Act 59 of 2002, sec. 27, for section “15Z. Appeal to High Court.—Any person aggrieved by any decision or order of the Secu
(1) Without prejudice to the foregoing provisions of 3[this Act or the Depositories Act, 1996], the Board shall, in exercise of its powers or the performance of its functions under this Act, be bound by such directions on questions of policy as the Central Government may give in writing to it from time to time\:"
Provided that the Board shall, as far as practicable, be given an opportunity to express its views before any direction is given under this sub-section.
(2) The decision of the Central Government whether a question is one of policy or not shall be final.
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1. Subs. by Act 22 of 1996, sec. 30 and Sch., for “this Act” (w.r.e.f. 20-9-1995).
(1) If at any time the Central Government is of opinion—"
(a) that on account of grave emergency, the Board is unable to discharge the functions and duties imposed on it by or under the provisions of this Act; or
(b) that the Board has persistently made default in complying with any direction issued by the Central Government under this Act or in the discharge of the functions and duties imposed on it by or under the provisions of this Act and as a result of such default the financial position of the Board or the administration of the Board has deteriorated; or
(c) that circumstances exist which render it necessary in the public interest so to do,
the Central Government may, by notification, supersede the Board for such period, not exceedi
(1) The Board shall furnish to the Central Government at such time and in such form and manner as may be prescribed or as the Central Government may direct, such returns and statements and such particulars in regard to any proposed or existing programme for the promotion and development of the securities market, as the Central Government may, from time to time, require."
(2) Without prejudice to the provisions of sub-section (1), the Board shall, within 1[ninety days] after the end of each financial year, submit to the Central Government a report in such form, as may be prescribed, giving a true and full account of its activities, policy and programmes during the previous financial year.
(3) A copy of the report received under sub-section (2) shall be laid, as soon as may be after it is received, before each House of Parliament.
&nbs
The Board may, by general or special order in writing delegate to any member, officer of the Board or any other person subject to such conditions, if any, as may be specified in the order, such of its powers and functions under this Act (except the powers under section 29) as it may deem necessary.
(1) Any person aggrieved by 1[an order of the Board made, before the commencement of the Securities Laws (Second Amendment) Act, 1999,] under this Act, or the rules or regulations made thereunder may prefer an appeal to the Central Government within such time as may be prescribed.
(2) No appeal shall be admitted if it is preferred after the expiry of the period prescribed therefor:
Provided that an appeal may be admitted after the expiry of the period prescribed therefor if the appellant satisfies the Central Government that he had sufficient cause for not preferring the appeal within the prescribed period.
(3) Every appeal made under this section shall be made in such form and shall be accompanied by a copy of the order appealed against and by such fees as may be prescribed.
No order passed by the 2[Board or the adjudicating officer] under this Act shall be appealable except as provided in 3[section 15T or section 20] and no civil court shall have jurisdiction in respect of any matter which the 2[Board or the adjudicating officer] is empowered by, or under, this Act to pass any order 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 order passed by the 2[Board or the adjudicating officer] by, or under this Act.]
----------------------------------
1. Ins. by Act 9 of 1995, sec. 11 (w.r.e.f. 25-1-1995).
2. Subs. by Act 32 of 1999, sec. 12, for “Board” (w.e.f. 16-12-1999).
3
Nothing in this Act shall exempt any person from any suit or other proceedings which might, apart from this Act, be brought against him."
All members, officers and other employees of the Board shall be deemed, when acting or purporting to act in pursuance of any of the provisions of this Act, to be public servants within the meaning of section 21 of the Indian Penal Code (45 of 1860)."
No suit, prosecution or other legal proceedings shall lie against the Central Government 1[or Board] or any officer of the Central Government or any member, officer or other employee of the Board for anything which is in good faith done or intended to be done under this Act or the rules or regulations made thereunder."
--------------------------------
1. Ins. by Act 9 of 1995, sec. 12 (w.r.e.f. 25-1-1995).
--------------------------------
(1) Without prejudice to any award of penalty by the adjudicating officer under this Act, if any person contravenes or attempts to contravene or abets the contravention of the provisions of this Act or of any rules or regulations made thereunder, he shall be punishable with imprisonment for a term which may extend to 3[ten years, or with fine, which may extend to twenty-five crore rupees or with both]."
(2) If any person fails to pay the penalty imposed by the adjudicating officer or fails to comply with any of his directions or orders, he shall be punishable with imprisonment for a term which shall not be less than one month but which may extend to 3[ten years or with fine, which may extend to twenty-five crore rupees or with both].]
--------------------------------
1. Subs. by Act 9 of
Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), any offence punishable under this Act, not being an offence punishable with imprisonment only, or with imprisonment and also with fine, may either before or after the institution of any proceeding, be compounded by a Securities Appellate Tribunal or a court before which such proceedings are pending.]
--------------------------------
1. Ins. by Act 59 of 2002, sec. 29 (w.r.e.f. 29-10-2002).
--------------------------------
(1) The Central Government may, on recommendation by the Board, if the Central Government is satisfied, that any person, who is alleged to have violated any of the provisions of this Act or the rules or the regulations made thereunder, has made a full and true disclosure in respect of the alleged violation, grant to such person, subject to such conditions as it may think fit to impose, immunity from prosecution for any offence under this Act, or the rules or the regulations made thereunder or also from the imposition of any penalty under this Act with respect to the alleged violation\:"
Provided that no such immunity shall be granted by the Central Government in cases where the proceedings for the prosecution for any such offence have been instituted before the date of receipt of application for grant of such immunity:
Provided further t
Notwithstanding anything contained in the Wealth-tax Act, 1957 (27 of 1957), the Income-tax Act, 1961 (43 of 1961), or any other enactment for the time being in force relating to tax on wealth, income, profits or gains—"
(a) the Board;
(b) the existing Securities and Exchange Board from the date of its constitution to the date of establishment of the Board,
shall not be liable to pay wealth-tax, income-tax or any other tax in respect of their wealth income, profits or gains derived.
(1) No court shall take cognizance of any offence punishable under this Act or any rules or regulations made thereunder, save on a complaint made by the Board 1[***]."
(2) No court inferior to that of 2[a court of session] shall try any offence punishable under this Act.
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1. The words, “with the previous sanction of the Central Government” omitted by Act 9 of 1995, sec. 14 (w.r.e.f. 25-1-1995).
2. Subs. by Act 59 of 2002, sec. 30 for “a Metropolitan Magistrate or a Judicial Magistrate of the first class” (w.r.e.f. 29-10-2002).
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(1) Where an offence under this Act has been committed by a company, every person who at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly\:"
Provided that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or conniv
[Rep. by the Securities Laws (Amendment) Act, 1995 (9 of 1995), sec. 15 (w.r.e.f. 25-1-1995).]"
(1) The Central Government may, by notification, make rules for carrying out the purposes of this Act."
(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:—
(a) the term of office and other conditions of service of the Chairman and the members under sub-section (1) of section 5;
(b) the additional functions that may be performed by the Board under section 11;
1[***]
(d) the manner in which the accounts of the Board shall be maintained under section 15;
2[(da) the manner of inquiry under sub-section (1) of section 15-I;
&n
(1) The Board may, 1[***] by notification, make regulations consistent with this Act and the rules made thereunder to carry out the purposes of this Act."
(2) In particular, and without prejudice to the generality of the forgoing power, such regulations may provide for all or any of the following matters, namely:—
(a) the times and places of meetings of the Board and the procedure to be followed at such meetings under sub-section (1) of section 7 including quorum necessary for the transaction of business;
(b) the term and other conditions of service of officers and employees of the Board under sub-section (2) of section 9;
2[(c) the matters relating to issue of capital, transfer of securities and other matters incidental thereto and the man
Every rule and every regulation made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation or both Houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation.
The provisions of this Act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force.
The enactments specified in Parts I and II of the Schedule to this Act shall be amended in the manner specified therein and such amendments shall take effect on the date of establishment of the Board.
(1) If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order, published in the Official Gazette, make such provisions not inconsistent with the provisions of this Act as may appear to be necessary for removing the difficulty\:"
Provided that no order shall be made, under this section after the expiry of five years from the commencement of this Act.
(2) Every order made under this section shall be laid, as soon as may be after it is made, before each House of Parliament.
(1) The Securities and Exchange Board of India Ordinance, 1992 (Ord. 5 of 1992), is hereby repealed."
(2) Notwithstanding such repeal, anything done or any action taken under the said Ordinance, shall be deemed to have been done or taken under the corresponding provisions of this Act.
The Schedule
(See section 33)
Part I
Amendment to the Capital Issues (Control) Act, 1947
(29 of 1947)
In section 10, for “to that Government” substitute “to that Government or the Securities and Exchange Board of India”.
Part II
Amendments to the Securities Contracts
(Regulations) Act, 1956
(42 of 1956)
1. Section 2, in clause (h), for sub-clause (ii), substitute the foll
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