TO BE PUBLISHED IN PART II, SECTION 3 SUB-SECTION (i)
THE EXTRAORDINARY GAZETTE OF INDIA
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF ECONOMIC AFFAIRS)
NOTIFICATION, NEW DELHI 10th JULY, 1995
In exercise of the powers conferred by clause (da)
of sub-section (2) of section 29 of the Securities and Exchange Board of
India Act, 1992 (15 of 1992), the Central Government hereby makes the
following rules for holding inquiry for the purpose of imposing penalty under
Chapter VI-A of the said Act , namely:-
Short title and commencement.
(1) These rules may be called the Securities and Exchange Board of India
(Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer)
(2) They shall come into force on the date of their publication in the
2. In these rules, unless
the context otherwise requires,-
(a) "Act" means the Securities and
Exchange Board of India Act, 1992 (15 of 1992);
(b) "adjudicating officer" means the officer appointed by
the Board as adjudicating offer under section 15L of the Act;
(c) "inquiry" means the inquiry
referred in section 15-I.
Appointment of adjudicating officer for holding inquiry.
Whenever the Board is of the opinion that there are grounds for adjudging
under any of the provisions in Chapter VIA of the Act, it may appoint any of
its officer not below the rank of Division Chief to be an adjudicating
officer for holding an inquiry for the said purpose.
Holding of inquiry.
4.(1) In holding an inquiry for the purpose of adjudging
under sections 15A, 15B, 15C, 15D, 15E, 15F, 15G and 15H whether any person
has committed contraventions as specified in any of sections 15A, 15B, 15C,
15D, 15E, 15F, 15G and 15H, the adjudicating officer shall, in the first
instance, issue a notice to such person requiring him to show cause within
such period as may be specified in the notice (being not less than fourteen
days from the date of service thereof) why an inquiry should not be held
(2) Every notice under sub-rule (1) to any such person shall indicate the
nature of offence alleged to have been committed by him.
(3) If, after considering the cause, if any, shown by such person, the
adjudicating officer is of the opinion that an inquiry should be held, he
shall issue a notice fixing a date for the appearance of that person either
personally or through his lawyer or other authorised representative.
(4) On the date fixed, the adjudicating officer shall explain to the person
proceeded against or his lawyer or authorised representative, the offence,
alleged to have been committed by such person indicating the provisions of
the Act, rules or regulations in respect of which contravention is alleged to
have taken place.
(5) The adjudicating officer shall then give an opportunity to such person to
produce such documents or evidence as he may consider relevant to the inquiry
and if necessary the hearing may be adjourned to a future date and in taking
such evidence the adjudicating officer shall not be bound to observe the
provisions of the Evidence Act, 1872 (11 of 1872) :
Provided that the notice referred to in sub-rule (3), and the personal
hearing referred to in sub-rules (3), (4) and (5) may, at the request of the
person concerned, be waived.
(6) While holding an inquiry under this rule 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.
(7) If any person fails, neglects or refuses to appear as required by
sub-rule (3) before the adjudicating officer, the adjudicating officer may
proceed with the inquiry in the absence of such person after recording the
reasons for doing so.
Order of adjudicating officer.
(1) if, upon consideration of the evidence produced before the adjudicating
officer, the adjudicating officer is satisfied that the person has become
liable to penalty under any of the sections specified in sub-section (1) of
section 15-I, he may, by order in writing, impose such penalty as he thinks
fit in accordance with the provisions of the relevant section or sections
specified in section 15-I.
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
(b) the amount of loss caused to an investor or group of investors as a
result of the default;
(c) the repetitive nature of any default.
(3) Every order made under sub-rule (1) shall specify the
provisions of the Act in respect of which default has taken place and shall
contain brief reasons for such decisions.
(4) Every such order shall be dated and signed by the adjudicating officer.
Copy of the order.
6. The adjudicating
officer shall send a copy of every order made under rules by it to the person
concerned and to the Board.
Service of notices and orders.
7. A notice or an order
issued under these rules shall be served on the person in the following
manner, that is to say,-
(a) by delivering or tendering it to that person or his
duly authorised agent;
(b) by sending it to the person by registered post with acknowledgement due
to the address of his place of residence or his last known place of residence
or the place where he carried on, or last carried on, business or personally
works, or last worked, for gain; or
(c) if it cannot be served under clause (a) or clause (b), by affixing it on
the outer door or some other conspicuous part of the premises in which that
person resides or is known to have last resided, or carried on business or
personally works or last worked for gain and that written report thereof
should be witnessed by two persons.
JOINT SECRETARY TO THE GOVERNMENT OF INDIA