TaxTMI 
TaxTMI 
2026 (8) TMI 733
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....nalty under Section 15HA of the SEBI Act, 1992^1. Hence, these appeals are heard together and disposed of by this common order. 2. We have heard Mr. Saurabh Bachawat, Mr. Vikas Bengani and Mr. Sachchida Nand Pandey, learned Advocates for the appellants and Shri Gaurav Joshi, learned Senior Advocate for the respondent. 3. Learned Advocates for the appellants urged following three contentions: • that in AO, SEBI v. Bhavesh Pabari^2, the Hon'ble Supreme Court of India has considered Section 15A to Section 15HA of the SEBI Act and held that Section 15J continues to apply; • SEBI is imposing lesser penalty in some cases; and • This Tribunal has reduced the penalty in V.B. Industries Ltd. & Ors. v. SEBI^3. SEBI had challenged the same in the Hon'ble Supreme Court of India and the said appeal has been dismissed. 4. In substance, appellants' case is that the adjudicating authority has discretion to impose lesser penalty than what is prescribed under Section 15HA of the SEBI Act. It was urged that the appellants have not earned higher profits and therefore, exercise of discretion to impose penalty less than Rs. 5 Lakhs is imperative. 5. In ....
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.... "4. Prima facie, the direction for substituting the penalty which has been imposed under Section 15HA with a warning is contrary to the statutory provisions. The SAT is not exercising the jurisdiction under Article 226 of the Constitution and is a creature of the statute. Even the jurisdiction under Article 226 has to be exercised in a manner consistent with law. Hence, there shall be a stay of the operation of the impugned judgment and order of the SAT dated 25 August 2020 in Appeal Nos. 159 and 160 of 2020." 11. Shri Joshi adverted to paragraph Nos.1 and 5 in Bhavesh Pabari and submitted that the sequitur is, Section 15J is applicable only with regard to penalty under Section 15-A(a) of the SEBI Act. 12. Section 15HA reads as follows: "15HA. Penalty for fraudulent and unfair trade practices. If any person indulges in fraudulent and unfair trade practices relating to securities, he shall be liable to a penalty which shall not be less than five lakh rupees but which may extend to twenty-five crore rupees or three times the amount of profits made out of such practices, whichever is higher." 13. A plain reading of paragraph No.5 in Bhavesh Pabari show....
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....ock options are pending. SEBI had brought settlement schemes earlier and this Tribunal may direct the SEBI to consider launching another settlement scheme. During the course of the argument, it transpired that there are about 1000 cases pending at various stages before the adjudicating authority or this Tribunal. It also transpired that there were 14,720 transactions out of which 10,980 entities availed the benefit of the settlement scheme. Several noticees have got their cases settled by making payment of Rs. 1 Lakh. I am of the view that adjudication of 1000 cases and the number of appeals which may arise therefrom will consume huge resources and judicial time. Having regard to the fact that SEBI had brought settlement schemes earlier, it may be desirable to launch one more such scheme and grant an opportunity to the entities whose cases are still pending. 18. Before concluding their arguments, Mr. Saurabh Bachawat, Mr. Vikas Bengani and Mr. Sachchida Nand Pandey, learned Advocates for the appellants made an 'alternative submission' that in case this Tribunal were to hold that penalty under Section 15HA cannot be reduced less than the prescribed Rs. 5 Lakhs, this Tribunal may ....
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....g the findings, by taking a lenient view and in the absence of any counter by the respondent, the delay in filing these appeals is condoned. 21. It was submitted at the bar that about 1000 cases of illiquid stock option cases are pending. SEBI had launched settlement schemes earlier. Keeping in view the spirit of Section 89 of Code of Civil Procedure, 1908, it is desirable for SEBI to consider launching another settlement scheme which may result in disposal of large number of cases. 22. In the result, the following : ORDER 1. Appeals are disposed of holding that the minimum penalty under Section 15HA of the SEBI Act, 1992 cannot be reduced less than Rs. 5 Lakhs in these proceedings. 2. The appeals are allowed in part by waiving the interest, subject to appellants depositing the penalty amount within eight weeks from today failing which SEBI shall be entitled to recover the penalty with interest. 3. SEBI shall consider launching another settlement scheme in respect of cases involving illiquid stock options. 4. Pending interlocutory application(s), if any, shall stand disposed of. 5. No costs. PER: DR. DHEERAJ BHATNAGAR, TECHNI....
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....t trade in the illiquid stock options segment. The Tribunal came across several ISO cases, where the SEBI had issued show cause notices to delinquent Brokers, other intermediaries, investment advisors, as also petty investors which included housewives, illiterate and poor people devoid of financial and legal literacy. 29. Considering the heavy load of these small cases, this Tribunal in its order in the case of R.S. Ispat case v. SEBI (Appeal No.25 of 2019 decided on 14.10.2019), recommended SEBI to hold a Lok Adalat or adopt other alternate dispute resolution process with regard to the illiquid stock options. Consequently, SEBI introduced a Settlement scheme in 2020. This was followed by 2 more such schemes. However, a significant number of such cases are under litigation. Mr. Chhangani, learned advocate for SEBI submitted that in some of these cases, the SEBI has filed appeal before Hon'ble Supreme Court against reduction of penalty below minimum prescribed by this Tribunal. He furnished a list of such cases before us. 30. During the course of hearing in the case of the 3 appellants and several other ISO cases, this Tribunal advised the SEBI to consider another settlement s....
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.... penalty under section 15-I or section 11, or section 11B, the Board or 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." Hon'ble Apex Court in Bhavesh Pabari case has further expanded the scope of this beneficial provision, by holding that the conditions specified under Section 15J are not exhaustive and there could be other circumstances, which may be considered under Section 15J for determining the amount of penalty. 34. On careful consideration, we find that, various provisions for levy of penalty are harmoniously placed in chapter VIA of the SEBI Act, 1992. Section 15-I provides powers in this regard and lays down the procedure. Various provisions with respect to specific violations provide for the quantum of penalty leviable under specific sections. E.g. Section 15HA provides for amount of penalty as under: Penalty for fraudulent and unfair trade pract....
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.... We do not find any precedence of this Tribunal holding compulsory levy of minimum amount of penalty. In several cases, this Tribunal, on applying 15J factors, has reduced the amount of penalty to below the minimum amount. In some of these cases, SEBI has approached Hon'ble Apex Court. As recently as in August 18, 2025, we had passed an order in the matter of Nirmal Kumar Bhura Vs. SEBI (Appeal No. 385 of 2025), where on considering the request of the appellant, the amount of penalty for PFUTP violation was reduced to Rs. 75,000, after recording the following submissions of the SEBI: "Shri Suraj Choudhary, learned advocate for the SEBI submitted that if the findings are upheld, the Tribunal may exercise its discretion so far as quantum of penalty concerned. It is also not disputed that the facts in the case of Mahendra Gopal Gorivale (supra) are similar to the case in hand except that, in that case the appellant had not responded to the summons and in this case the violation is of PFUTP Regulations.". 38. We have not been provided with any authority of Hon'ble Apex Court in the matter, where the issue framed by us may have been considered. As rightly admitted by Mr. Jos....
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....d case is, that she had shifted her residence from Indore, Madhya Pradesh to Delhi on April 1, 2016. Thereafter, on July 21, 2023, the appellant along with her family shifted to Canada. The show cause notice was sent by the AO to the appellant on [email protected], whereas the correct email address was to be [email protected]. Later, the Certificate of Recovery was sent to the appellant on the correct email id on December 11, 2024. SEBI has not filed reply-affidavit in this appeal denying appellant's pleadings. We find that there is no evidence of proper service of show cause notice on the appellant. SEBI has not filed reply in the notice. In view of the above, the delay is condoned and the appeal is allowed for want of natural justice. (B) In the case of Rashmi Mishra vs SEBI (Appeal No. 89 of 2025) the delay in filing is 576 days. Appellant's pleaded case is that she is a widow who had shifted her residence from Kolkata to Odisha, Bhubaneshwar since 2017. The show cause notice was sent by the AO to the appellant through email. According to the appellant, she is unaware about the transactions executed by her late husband in her trading account in the year 2015. ....
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....ellant submitted that SEBI has not furnished the investigation report. All the transactions were executed through SEBI registered share broker and not by the appellant himself. The appellant had never indulged in any reversal trades or created any artificial volumes. All the trades were in anonymous order matching system of the exchange and it is impossible to know the identity of the counter party. There was a huge time gap between buy and sell orders. The appellant had never been informed that the scrips were illiquid scrips. Further, the appellant was not related or connected to any counter party. The alleged matching of the appellant's trades with the counter party trades was by coincidence. The trades of the appellant were insignificant in relation to market volume of trades. With these submissions, Shri Pandey prayed to set aside the impugned order. 45. Shri Manish Chhangani, learned advocate for SEBI submitted that the appellant has executed two non-genuine trades in one contract and generated an artificial volume of 1,04,000 units. The appellant has executed buy and sell trades of same quantity within a short span of time with the same counter party in one contract. On N....