15A. Penalty for failure to furnish information, return, etc.—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, 2
[or who
furnishes or files false, incorrect or incomplete information, return, report, books or other documents]
he shall be liable to 3
[a penalty 4
[which shall not be less than one lakh rupees but which may extend to
one lakh rupees for each day during which such failure continues subject to a maximum of one crore
rupees]];
(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 2
[or who furnishes or files false, incorrect or incomplete information,
return, report, books or other documents], he shall be liable to 5
[a penalty 3
[which shall not be less
than one lakh rupees but which may extend to one lakh rupees for each day during which such failure
continues subject to a maximum of one crore rupees]];
(c) to maintain books of account or records, fails to maintain the same, he shall be liable to 6
[a
penalty 3
[which shall not be less than one lakh rupees but which may extend to one lakh rupees for
each day during which such failure continues subject to a maximum of one crore rupees]].
15B. Penalty for failure by any person to enter into agreement with clients.—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 7
[a
1. Ins. by Act 9 of 1995, s. 9 (w.e.f. 25-1-1995).
2. Ins. by Act 13 of 2018, s. 181 (w.e.f. 8-3-2019).
3. Subs. by Act 59 of 2002, s. 9, for “a penalty not exceeding one lakh and fifty thousand rupees for each such failure”
(w.e.f. 29-10-2002).
4. Subs. by Act 27 of 2014, s. 6, for certain words (w.e.f. 8-9-2014).
5. Subs. by Act 59 of 2002, s. 9, for “a penalty not exceeding five thousand rupees for every day during which such failure
continues” (w.e.f. 29-10-2002).
6. Subs. by s. 9, ibid., for “a penalty not exceeding ten thousand rupees for every day during which such failure continues”
(w.e.f. 29-10-2002).
7. Subs. by s. 10, ibid., for “a penalty not exceeding five lakh rupees for every such failure” (w.e.f. 29-10-2002).
16
penalty 1
[which shall not be less than one lakh rupees but which may extend to one lakh rupees for each
day during which such failure continues subject to a maximum of one crore rupees]].
2
[15C. Penalty for failure to redress investors’ grievances.—If any listed company or any person
who is registered as an intermediary, after having been called upon by the Board in writing
3[including by any means of electronic communication], 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 4[which shall not be less than one lakh rupees but which may extend to
one lakh rupees for each day during which such failure continues subject to a maximum of one
crore rupees].]
15D. Penalty for certain defaults in case of mutual funds.—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 5
[a penalty
6
[which shall not be less than one lakh rupees but which may extend to one lakh rupees for each day
during which he sponsors or carries on any such collective investment scheme including mutual funds
subject to a maximum of one crore rupees]];
(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 7
[a penalty 8
[which shall not be less than one lakh rupees
but which may extend to one lakh rupees for each day during which such failure continues subject to a
maximum of one crore rupees]];
(c) registered with the Board as a collective investment scheme including mutual funds, fails to
make an application for listing of its schemes as provided for in the regulations governing such listing,
he shall be liable to 9
[a penalty 7
[which shall not be less than one lakh rupees but which may extend to
one lakh rupees for each day during which such failure continues subject to a maximum of one crore
rupees]];
(d) registered as a collective investment scheme, including mutual funds, fails to despatch unit
certificates of any scheme in the manner provided in the regulation governing such despatch, he shall
be liable to 10[a penalty 7
[which shall not be less than one lakh rupees but which may extend to one
lakh rupees for each day during which such failure continues subject to a maximum of one crore
rupees]];
(e) registered as collective investment scheme, including mutual funds, fails to refund the
application monies paid by the investors within the period specified in the regulations, he shall be
liable to 11[a penalty 7
[which shall not be less than one lakh rupees but which may extend to one lakh
rupees for each day during which such failure continues subject to a maximum of one crore rupees]];
(f) registered as a collective investment scheme, including mutual funds, fails to invest money
collected by such collective investment schemes in the manner or within the period specified in the
regulations, he shall be liable to 12[a penalty 7
[which shall not be less than one lakh rupees but which
may extend to one lakh rupees for each day during which such failure continues subject to a
maximum of one crore rupees]].
1. Subs. by Act 27 of 2014, s. 7, for certain words (w.e.f.8-9-2014).
2. Subs. by Act 59 of 2002, s. 11, for section 15C (w.e.f. 29-10-2002).
3. Ins. by Act 23 of 2019, s. 183 (w.e.f. 20-1-2020).
4. Subs. by Act 27 of 2014, s. 8, for certain words (w.e.f. 8-9-2014).
5. Subs. by Act 59 of 2002, s. 12, for “a penalty not exceeding ten thousand rupees for each day during which he carries on any
such collective investment scheme including mutual funds, or ten lakh rupees, whichever is higher” (w.e.f. 29-10-2002).
6. Subs. by Act 27 of 2014, s. 9, for certain words (w.e.f. 8-9-2014).
7. Subs. by Act 59 of 2002, s. 12, for “a penalty not exceeding ten thousand rupees for each day during which such failure
continues or ten lakh rupees, whichever is higher” (w.e.f. 29-10-2002).
8. Subs. by Act 27 of 2014, s. 9, for certain words (w.e.f.8-9-2014).
9. Subs. by Act 59 of 2002, s. 12, for “a penalty not exceeding five thousand rupees for each day during which such failure
continues or five lakh rupees, whichever is higher” (w.e.f. 29-10-2002).
10. Subs. by s. 12, ibid., for “a penalty not exceeding five thousand rupees for each day during which such failure continues”
(w.e.f. 29-10-2002).
11. Subs. by s. 12, ibid., for “a penalty not exceeding one thousand rupees for each day during which such failure continue”
(w.e.f. 29-10-2002).
12. Subs. by s. 12, ibid., for “a penalty not exceeding five lakh rupees for each such failure” (w.e.f. 29-10-2002).
17
15E. Penalty for failure to observe rules and regulations by an asset management company.—
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 1
[a penalty 2
[which shall not be less than one lakh rupees
but which may extend to one lakh rupees for each day during which such failure continues subject to a
maximum of one crore rupees]].
3
[15EA. Penalty for default in case of alternative investment funds, infrastructure investment
trusts and real estate investment trusts.—Where any person fails to comply with the regulations made
by the Board in respect of alternative investment funds, infrastructure investment trusts and real estate
investment trusts or fails to comply with the directions issued by the Board, such person shall be liable to
penalty which shall not be less than one lakh rupees but which may extend to one lakh rupees for each
day during which such failure continues subject to a maximum of one crore rupees or three times the
amount of gains made out of such failure, whichever is higher.
15EB. Penalty for default in case of investment adviser and research analyst.—Where an
investment adviser or a research analyst fails to comply with the regulations made by the Board or
directions issued by the Board, such investment adviser or research analyst shall be liable to penalty
which shall not be less than one lakh rupees but which may extend to one lakh rupees for each day during
which such failure continues subject to a maximum of one crore rupees.]
15F. Penalty for default in case of stock brokers.—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 4
[a penalty which shall not be less than one lakh rupees
but which may extend to 5
[one crore rupees]] 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 6
[a penalty
7
[which shall not be less than one lakh rupees but which may extend to one lakh rupees for each
day during which 8
[such failure continues] subject to a maximum of one crore rupees]];
(c) charges an amount of brokerage which is in excess of the brokerage specified in the
regulations, he shall be liable to 9
[a penalty 10[[which shall not be less than one lakh rupees but which
may extend to five times the amount of brokerage]] charged in excess of the specified brokerage,
whichever is higher.
15G. Penalty for insider trading.—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 11[which shall not be less than ten lakh rupees but which may extend to
twenty-five crore rupees or three times the amount of profits made out of insider trading, whichever is
higher].
1. Subs. by Act 59 of 2002, s. 13, for “a penalty not exceeding five lakh rupees for each such failure” (w.e.f. 29-10-2002).
2. Subs. by Act 27 of 2014, s. 10, for certain words (w.e.f.8-9-2014).
3. Ins. by Act 13 of 2018, s. 182 (w.e.f. 8-3-2019).
4. Subs. by Act 27 of 2014, s. 11, for “a penalty not exceeding five times the amount” (w.e.f. 8-9-2014).
5. Ins. by Act 23 of 2019, s. 184 (w.e.f. 20-1-2020).
6. Subs. by Act 59 of 2002, s. 14, for “a penalty not exceeding five thousand rupees for each day during which such failure
continues” (w.e.f. 29-10-2002).
7. Subs. by Act 27 of 2014, s. 11, for certain words (w.e.f.8-9-2014).
8. Subs. by Act 13 of 2018, s. 183, for” he sponsors or carries on any such collective investment scheme including mutual funds”
(w.e.f. 8-3-2019).
9. Subs. by Act 59 of 2002, s. 14, for “a penalty not exceeding five thousand rupees” (w.e.f. 29-10-2002).
10. Subs. by Act 27 of 2014, s. 11, for “of one lakh rupees or five times the amount of brokerage” (w.e.f.8-9-2014).
11. Subs. by s. 12, ibid., for certain words (w.e.f.8-2-2014).
18
15H. Penalty for non-disclosure of acquisition of shares and takeovers.—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
[which shall not be less than ten lakh rupees but which may extend to
twenty-five crore rupees or three times the amount of profits made out of such failure, whichever is
higher].
3
[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 4
[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].
5
[15HAA. Penalty for alteration, destruction, etc., of records and failure to protect the
electronic database of Board.—Any person, who—
(a) knowingly alters, destroys, mutilates, conceals, falsifies, or makes a false entry in any
information, record, document (including electronic records), which is required under this Act or any
rules or regulations made there under, so as to impede, obstruct, or influence the investigation,
inquiry, audit, inspection or proper administration of any matter within the jurisdiction of the Board.
Explanation.—For the purposes of this clause, a person shall be deemed to have altered,
concealed or destroyed such information, record or document, in case he knowingly fails to
immediately report the matter to the Board or fails to preserve the same till such information
continues to be relevant to any investigation, inquiry, audit, inspection or proceeding, which may be
initiated by the Board and conclusion thereof;
(b) without being authorised to do so, access or tries to access, or denies of access or modifies
access parameters, to the regulatory data in the database;
(c) without being authorised to do so, downloads, extracts, copies, or reproduces in any form the
regulatory data maintained in the system database;
(d) knowingly introduces any computer virus or other computer contaminant into the system
database and brings out a trading halt;
(e) without authorisation disrupts the functioning of system database;
(f) knowingly damages, destroys, deletes, alters, diminishes in value or utility, or affects by any
means, the regulatory data in the system database; or
(g) knowingly provides any assistance to or causes any other person to do any of the acts
specified in clauses (a) to (f), shall be liable to a penalty which shall not be less than one lakh rupees
but which may extend to ten crore rupees or three times the amount of profits made out of such act,
whichever is higher.
Explanation.—In this section, the expressions “computer contaminant”, “computer virus” and
“damage” shall have the meanings respectively assigned to them under section 43 of the Information
Technology Act, 2000 (21 of 2000).]
1. Ins. by Act 59 of 2002, s. 16 (w.e.f. 29-10-2002).
2. Subs. by Act 27 of 2014, s.13, for certain words (w.e.f.8-2-2014).
3. Ins. by Act 59 of 2002, s. 17 (w.e.f. 29-10-2002).
4. Subs. by Act 27 of 2014, s. 14, for certain words (w.e.f. 8-2-2014).
5. Ins. by Act 23 of 2019, s. 185 (w.e.f. 20-1-2020).
19
15HB. Penalty for contravention where no separate penalty has been provided.—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 1
[liable to a penalty which
shall not be less one lakh rupees but which may extend to one crore rupees].]
15-I. Power to adjudicate.—(1) For the purpose of adjudging under sections 15A, 15B, 15C, 15D,
15E, 2
[15EA, 15EB,] 15F, 15G,
3
[15H, 15HA and 15HB] the Board 4
[may] 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 as he
thinks fit in accordance with the provisions of any of those sections.
5
[(3) The Board may call for and examine the record of any proceedings under this section and if it
considers that the order passed by the adjudicating officer is erroneous to the extent it is not in the
interests of the securities market, it may, after making or causing to be made such inquiry as it deems
necessary, pass an order enhancing the quantum of penalty, if the circumstances of the case so justify:
Provided that no such order shall be passed unless the person concerned has been given an opportunity
of being heard in the matter:
Provided further that nothing contained in this sub-section shall be applicable after an expiry of a
period of three months from the date of the order passed by the adjudicating officer or disposal of the
appeal under section 15T, whichever is earlier.]
15J. 6
[Factors to be taken into account while adjudging quantum of penalty].—While adjudging
the quantum of penalty under 7
[15-I or section 11 or section 11B, the Board or the adjudicating officer]
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.
8
[Explanation.—For the removal of doubts, it is clarified that the power of 9*** to adjudge the
quantum of penalty under sections 15A to 15E, clauses (b) and (c) of section 15F, 15G, 15H and 15HA
shall be and shall always be deemed to have been exercised under the provisions of this section.]
10[15JA. Crediting sums realised by way of penalties to Consolidated Fund of India.—All sums
realised by way of penalties under this Act shall be credited to the Consolidated Fund of India.]
1. Subs. by Act 27 of 2014, s. 15, for “liable to a penalty which may extend to one crore rupees” (w.e.f. 8-2-2014).
2. Ins. by Act 13 of 2018, s. 184 (w.e.f. 8-3-2019).
3. Subs. by Act 59 of 2002, s. 18, for “and 15H” (w.e.f. 29-10-2002).
4. Subs. by Act 13 of 2018, s. 184, for “shall” (w.e.f. 8-3-2019).
5. Ins. by Act 27 of 2014, s. 16 (w.e.f. 28-3-2014).
6. Subs. by Act 13 of 2018, s. 185, for marginal heading (w.e.f. 8-3-2019).
7. Subs. by s. 185, ibid., for “section 15-I, the adjudicating officer” (w.e.f. 8-3-2019).
8. Ins. by Act 7 of 2017, s.147 (w.e.f. 1-3-2017).
9. The words “of an adjudicating officer” omitted by Act 13 of 2018, s. 185 (w.e.f. 8-3-2018).
10. Ins. by Act 59 of 2002, s. 19 (w.e.f. 29-10-2002).
20
1
[15JB. Settlement of administrative and civil proceedings.—(1) Notwithstanding anything
contained in any other law for the time being in force, any person, against whom any proceedings have
been initiated or may be initiated under section 11, section 11B, section 11D, sub-section (3) of section 12
or section 15-I, may file an application in writing to the Board proposing for settlement of the proceedings
initiated or to be initiated for the alleged defaults.
(2) The Board may, after taking into consideration the nature, gravity and impact of defaults, agree to
the proposal for settlement, on payment of such sum by the defaulter or on such other terms as may be
determined by the Board in accordance with the regulations made under this Act.
(3) The settlement proceedings under this section shall be conducted in accordance with the
procedure specified in the regulations made under this Act.
(4) No appeal shall lie under section 15T against any order passed by the Board or adjudicating
officer, as the case may be, under this section.]
2
[(5) All settlement amounts, excluding the disgorgement amount and legal costs, realised under this
Act shall be credited to the Consolidated Fund of India.]