28. Penalty for failure by an intermediary or any other person to comply with provisions or this
Act, rules, regulations and directions.—(1) Any person, who is required under this Act or any rules or
regulations made thereunder,—
(a) to obtain a certificate of registration from the Authority for carrying on any activity under this
Act, carries on such activities without obtaining such certificate of registration, he shall be liable to a
penalty of one lakh rupees for each day during which the failure continues or one crore rupees,
whichever is less;
(b) to comply with the terms and conditions of a certificate of registration fails to do so, he shall
be liable to a penalty of one lakh rupees for each day during which the failure continues or one crore
rupees, whichever is less;
(c) to furnish any information, document, books, returns or report to the Authority, fails to furnish
the same within the time specified by the Authority, he shall be liable to a penalty which may extend
to one crore rupees or five times the amount of profits made or losses avoided, whichever is higher;
(d) to maintain books of account or records, fails to maintain the same, he shall be liable to a
penalty of one lakh rupees for each day during which the failure continues or five times the amount of
profits made or losses avoided, whichever is higher.
(2) If any person, who 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 a penalty of one
lakh rupees for each day during which the failure continues or five times the amount of profits made or
losses avoided, whichever is higher.
(3) If any intermediary registered with the Authority, after having been called upon by the Authority,
in writing, to redress the grievances of subscribers, fails to redress such grievances within the time
stipulated by the Authority, he shall be liable to a penalty of not more than one crore rupees or five times
the amount of profits made or losses avoided, whichever is higher.
(4) If any person, who is registered under this Act as an intermediary, fails to segregate moneys of the
client or clients or uses the moneys of a client or clients for self or for any other client, he shall be liable
to a penalty not exceeding one crore rupees or five times the amount of profits made or losses avoided,
whichever is higher.
(5) Whoever fails to comply with any provision of this Act, the rules or the regulations made or the
directions issued by the Authority under the provisions of this Act for which no separate penalty has been
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provided, he shall be liable to a penalty which may extend to one crore rupees or five times the amount of
profits made or losses avoided, whichever is higher.
29. Crediting sums realised by way of penalties to Subscriber Education and Protection
Fund.—All sums realised by way of penalties under this Act shall be credited to the Subscriber
Education and Protection Fund established under sub-section (1) of section 41.
30. Power to adjudicate.—(1) For the purposes of adjudging under section 28, the Authority shall
appoint any of its officers not below the rank specified by regulations to be an adjudicating officer for
holding an inquiry as may be determined by regulations, after giving the 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 the 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 section 28, he may recommend such penalty as he thinks fit in accordance
with the provisions of that section, to the member in charge of investigation and surveillance.
(3) The penalty shall be imposed by a member other than the member in charge of investigation and
surveillance:
Provided that while adjudging the quantum of penalty under section 28, the member shall have due
regard to the following factors, namely:—
(a) amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result
of the default;
(b) amount of loss caused to a subscriber or group of subscribers; and
(c) the repetitive nature of the default.
31. Attachment of assets and supersession of management of intermediary.—(1) Any person
aggrieved may apply to the Authority for an interim measure of protection in respect of any of the
following matters, namely:–
(a) the retention, preservation, interim custody or sale of any asset or property which is regulated
by the provisions of this Act;
(b) securing any pension fund, moneys and other assets and properties owned by or under the
control of the pension fund;
(c) interim injunction or appointment of an administrator; and
(d) such other interim measures as may appear to the Authority to be just and necessary,
and the Authority shall have power to make such orders including an order for attachment of assets of the
pension fund as it deems fit in this regard.
(2) Where, on a complaint received by the Authority or suo motu, the Authority, after conducting an
inquiry, comes to a conclusion that the governing board or board of directors, by whatever name called, or
the persons in control of any intermediary to the extent regulated under this Act are indulging in any
activity which is in contravention of the provisions of this Act or regulations, it may supersede the
governing board or board of directors or management of the intermediary in accordance with the
provisions of the regulations.
(3) In case the governing board or board of directors or management of an intermediary is superseded
under sub-section (2), the Authority may appoint an Administrator to manage the affairs of the
intermediary in accordance with the provisions contained in the regulations.
32. Offences.—(1) Without prejudice to any award of penalty by the member under this Act, if any
person contravenes or attempts to contravene or abets the contravention of the provisions of this Act or of
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any rules or regulations made thereunder, he shall be punishable with imprisonment for a term which may
extend to 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 member or fails to comply with any of the
directions or orders issued by the member, he shall be punishable with imprisonment for a term which
shall not be less than one month but which may extend to ten years, or with fine, which may extend to
twenty-five crore rupees, or with both.
33. Power to grant immunity.—(1) The Central Government may, on the recommendation by the
Authority, if 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 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 and 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 that the recommendation of the Authority under this sub-section shall not be binding
upon the Central Government.
(2) An immunity granted to a person under sub-section (1) may, at any time, be withdrawn by the
Central Government, if it is satisfied that such person had, in the course of the proceedings, not complied
with the condition on which the immunity was granted or had given false evidence, and thereupon such
person may be tried for the offence with respect to which the immunity was granted or for any other
offence of which he appears to have been guilty in connection with the contravention and shall also
become liable to the imposition of any penalty under this Act to which such person would have been
liable, had no such immunity been granted.
34. Exemption from tax on wealth, income, profits and gains.—Notwithstanding anything
contained in–
(i) the Wealth-tax Act, 1957 (27 of 1957);
(ii) the Income-tax Act, 1961(43 of 1961); or
(iii) any other enactment for the time being in force relating to tax on wealth, income, profits or
gains,
the Authority shall not be liable to pay wealth-tax, income-tax or any other tax in respect of its wealth,
income, profits or gains derived.
35. Cognizance of offences by court.—(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 Authority.
(2) No court inferior to that of a Court of Session shall try any offence punishable under this Act.
36.Appeal to Securities Appellate Tribunal.—(1) Any person aggrieved by an order made by the
Authority or by an adjudicating officer under this Act may prefer an appeal before the Securities
Appellate Tribunal which shall have jurisdiction over the matter.
(2) Every appeal under sub-section (1) shall be filed within a period of forty-five days from the date
of receipt of the order appealed against and it shall be in such form and manner and shall be accompanied
by such fee as may be prescribed:
Provided that the Securities Appellate Tribunal may entertain an appeal after the expiry of the said
period, if it is satisfied that there was sufficient cause for not preferring the appeal within that period.
(3) On receipt of an appeal under sub-section (1), the Securities Appellate Tribunal may, after giving
the parties to the appeal, an opportunity of being heard, pass such orders thereon as it thinks fit,
confirming, modifying or setting aside the order appealed against.
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(4) The Securities Appellate Tribunal shall send a copy of every order made by it to the Authority, the
parties to the appeal and to the adjudicating officers concerned.
(5) The appeal filed before the Securities Appellate Tribunal under sub-section (1) shall be dealt with
by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within
six months from the date on which the appeal is presented to it.
(6) Without prejudice to the provisions of sections 15T and 15U of the Securities and Exchange
Board of India Act, 1992 (15 of 1992), the Securities Appellate Tribunal shall deal with an appeal under
this section in accordance with such procedure as may be prescribed.
37. Civil Court not to have jurisdiction.—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 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.
38.Appeal to Supreme Court.— Any person aggrieved by any decision or order of the Securities
Appellate Tribunal under this Act 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 appellant 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.