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Capital Market and Securities Laws · Securities Contracts (Regulation) Act, 1956

Penalties, Appeals and Adjudication under SCRA 1956

Updated 11 October 2026 · Fact-checked

Under the SCRA, 1956, contravention is punishable under section 23M with up to ten years' imprisonment or a fine up to ₹25 crore, or both. A person aggrieved by an order can appeal to the Securities Appellate Tribunal within 45 days under section 23L, and then to the High Court within 60 days under section 22F.

Understand Penalties, Appeals and Adjudication

The Securities Contracts (Regulation) Act, 1956 controls stock exchanges and dealing in securities. A law needs teeth. So the Act provides punishment for breaking it, a company-level liability rule, and a route to challenge orders.

Think of it in three layers. First, offences and punishment: section 23M sets the jail term and fine. Second, liability of companies and their officers: section 24 says who is guilty when a company breaks the law. Third, appeals: an aggrieved person goes to the Securities Appellate Tribunal (SAT), and from SAT to the High Court.

Section 23M(1) covers a person who contravenes, attempts to contravene or abets the contravention of the Act, rules, regulations or byelaws, where no punishment is provided elsewhere in the Act. The punishment is imprisonment up to ten years, or fine up to ₹25 crore, or both. It applies without prejudice to any penalty awarded by the adjudicating officer or SEBI.

Section 23M(2) is for non-compliance after a penalty or order. If a person fails to pay a penalty imposed by the adjudicating officer or SEBI, or fails to comply with a direction or order, the imprisonment is not less than one month but up to ten years, or fine up to ₹25 crore, or both. Note the minimum of one month: it exists only in sub-section (2).

Appeals follow a ladder. Section 23L allows an appeal to SAT against an order or decision of a recognised stock exchange, an adjudicating officer, or certain SEBI orders (under section 4B or section 23-I(3)). Specific appeals also exist for listing refusal (section 22A) and delisting (section 21A). Each has its own time limit, and exams test these limits.

Key rules to remember

Punishment for contravention (s. 23M(1))
Imprisonment up to 10 years, or fine up to ₹25 crore, or both
Applies to contravention, attempt or abetment where no punishment is provided elsewhere. Without prejudice to penalty by the adjudicating officer or SEBI.
Failure to pay penalty or comply with order (s. 23M(2))
Imprisonment of at least 1 month and up to 10 years, or fine up to ₹25 crore, or both
The one-month minimum applies only here.
Offences by companies (s. 24(1))
Company + every person in charge of and responsible for the business = deemed guilty
Defence: offence committed without his knowledge, or he exercised all due diligence to prevent it.
Officers liable by consent, connivance or gross negligence (s. 24(2))
Director, manager, secretary or other officer is also deemed guilty
Applies where the contravention is proved to be with their consent or connivance, or attributable to their gross negligence.
General appeal to SAT (s. 23L)
45 days from receipt of copy of order or decision
SAT may allow a late appeal on sufficient cause. Appeal is against exchange, adjudicating officer or specified SEBI orders.
SAT disposal target (s. 23L(5))
Endeavour to dispose of finally within 6 months from receipt of appeal
It is an endeavour, not a strict mandate.
Appeal against delisting (s. 21A(2))
15 days from date of the exchange's decision; further period up to 1 month on sufficient cause
Listed company or aggrieved investor may appeal.
Appeal against refusal to list (s. 22A)
15 days from date reasons for refusal are furnished
Where the exchange fails to decide in time: 15 days from expiry of the specified time, extendable by up to one month on sufficient cause.
Appeal to High Court (s. 22F)
60 days from communication of SAT order; further period up to 60 days on sufficient cause
On any question of fact or law arising out of the SAT order.

How to solve Penalties, Appeals and Adjudication questions

Most questions here are either a punishment question, a company-liability question or an appeal question. Use the same method each time.

  1. 1Identify the type of question: offence and punishment, liability of company officers, or appeal and forum.
  2. 2For punishment, decide whether it is a plain contravention (s. 23M(1)) or failure to pay penalty or comply with an order (s. 23M(2)). State the term and fine accordingly.
  3. 3For company contraventions, name the persons caught by s. 24(1) (company and those in charge and responsible), then check s. 24(2) for other officers.
  4. 4Check for a defence: no knowledge, or all due diligence exercised (s. 24(1) proviso).
  5. 5For appeals, find who made the order (exchange, adjudicating officer, SEBI) and pick the section: s. 23L, 22A or 21A for SAT, and s. 22F for High Court.
  6. 6Apply the time limit from the correct section and note the condonation power on sufficient cause.
  7. 7Write the conclusion in one clear line: who is liable or which forum, and within what time.

Quickest way: Forum-and-time grid

When to use it: When a short question asks where to appeal, within what time, or what the punishment is.

  1. Write three anchors: s. 23M (10 years / ₹25 crore), s. 23L (SAT, 45 days), s. 22F (High Court, 60 days).
  2. Add the 15-day exceptions: s. 21A (delisting) and s. 22A (refusal to list).
  3. Add the condonation: extra up to one month for the 15-day appeals, up to 60 days for High Court, and sufficient cause for the 45-day appeal.
  4. For company offences, write s. 24 with its due-diligence defence and the consent, connivance or gross negligence test.
  5. Close with a one-line conclusion.

Common mistakes in Penalties, Appeals and Adjudication

  • Saying 45 days applies to every appeal to SAT.

    Section 23L is the best-known appeal provision, so students generalise it.

    Fix: Remember that delisting (s. 21A) and listing refusal (s. 22A) appeals have 15 days. Check the type of order first.

  • Stating a minimum jail term for all offences under s. 23M.

    Students mix up sub-sections (1) and (2).

    Fix: The minimum of one month is only in s. 23M(2), for failure to pay penalty or comply with an order. Section 23M(1) has no minimum.

  • Treating every director as automatically guilty when a company contravenes.

    Students ignore the words 'in charge of and responsible to the company'.

    Fix: Under s. 24(1) only those in charge and responsible are deemed guilty, and they can prove no knowledge or due diligence. Others are caught only under s. 24(2).

  • Saying appeals under s. 22 go to the Central Government.

    Old text of section 22 still appears in the Act.

    Fix: The proviso to section 22 bars appeals under it after the Securities Laws (Second Amendment) Act, 1999. Appeals against listing refusal go to SAT under s. 22A.

  • Writing that SAT must follow the Code of Civil Procedure.

    Students know SAT has civil court powers and assume full CPC procedure.

    Fix: Under s. 22B(1), SAT is not bound by the CPC but is guided by natural justice. It has civil court powers for listed matters such as summoning witnesses and reviewing its decisions.

  • Forgetting that the High Court appeal lies on a question of fact or law.

    Students assume it is only on law, as in many other statutes.

    Fix: Section 22F says any question of fact or law arising out of the SAT order, within 60 days, extendable by up to 60 days.

Worked examples

Example 1

A stock exchange delists the securities of Sundaram Textiles Ltd. The company wants to challenge the decision. Advise on the forum and time limit, and say what happens if it is late by 20 days.

Show the solution
  1. Provision: section 21A(2) allows a listed company or an aggrieved investor to appeal to the Securities Appellate Tribunal against the exchange's delisting decision.
  2. Time limit: the appeal must be filed within fifteen days from the date of the exchange's decision.
  3. Condonation: if the SAT is satisfied that the company was prevented by sufficient cause, it may allow filing within a further period not exceeding one month.
  4. Application: filing 20 days late means the appeal is filed on day 35, which is within the 15 days plus one month outer limit, so it can be heard only if sufficient cause is shown.
  5. Procedure: sections 22B to 22E apply as far as may be.

Answer: Sundaram Textiles Ltd. should appeal to SAT under section 21A(2) within 15 days of the decision. A delay of 20 days can be condoned only if it shows sufficient cause, and the outer limit is one further month.

Example 2

Aarav Securities Ltd. contravened a provision of the SCRA. Rohan, the managing director, was in charge of the business. Meera, a director, was not involved, but the contravention is proved to be attributable to her gross negligence. Examine the liability of the company, Rohan and Meera.

Show the solution
  1. Provision: section 24(1) makes the company and every person in charge of and responsible for its business deemed guilty.
  2. Company: Aarav Securities Ltd. is liable as the contravening company.
  3. Rohan: as managing director in charge of the business, he is deemed guilty unless he proves the offence was without his knowledge or that he exercised all due diligence to prevent it.
  4. Meera: she is not in charge of the business, so s. 24(1) does not apply. But s. 24(2) applies where the contravention is attributable to the gross negligence of a director, manager, secretary or other officer, so she is also deemed guilty.
  5. Punishment: where no other punishment is provided, s. 23M(1) applies, with imprisonment up to ten years, or fine up to ₹25 crore, or both.

Answer: The company and Rohan are liable under s. 24(1), with Rohan able to claim the no-knowledge or due-diligence defence. Meera is liable under s. 24(2) because of gross negligence. Punishment is as provided in s. 23M(1).

Exam tips

  • Learn the time limits as a list: 45 days (s. 23L), 15 days (ss. 21A and 22A), 60 days (s. 22F). Examiners often test one of these directly.
  • In a case question, write the provision first, then apply it to the facts, then conclude. Cite the section number each time.
  • Separate s. 23M(1) and s. 23M(2) in your answer. Showing the one-month minimum for s. 23M(2) signals precision.
  • For company offences, always mention the due-diligence proviso in s. 24(1). Many answers miss it.
  • Mention that SAT is guided by natural justice and not bound by the CPC when asked about its powers.

Practice questions from Securities Contracts (Regulation) Act, 1956

Penalties, Appeals and Adjudication in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Penalties, Appeals and Adjudication: frequently asked questions

What is the punishment for contravening the SCRA, 1956?

Under section 23M(1), imprisonment up to ten years, or fine up to ₹25 crore, or both. This applies where no punishment is provided elsewhere in the Act. For failure to pay a penalty or comply with an order, section 23M(2) applies, with a minimum of one month in jail.

How do I appeal against an order under the SCRA?

Appeal to the Securities Appellate Tribunal under section 23L within 45 days from receiving the copy of the order or decision. The appeal must be in the prescribed form with the prescribed fee. SAT may admit a late appeal if there was sufficient cause.

Can I appeal from the Securities Appellate Tribunal?

Yes. Under section 22F, you can appeal to the High Court within 60 days from communication of the SAT order, on any question of fact or law arising out of it. The High Court may allow a further period of up to 60 days for sufficient cause.

Who is liable when a company contravenes the SCRA?

Under section 24, the company and every person in charge of and responsible for its business are deemed guilty. Such a person escapes if he proves lack of knowledge or due diligence. Other directors, managers, secretaries or officers are liable if consent, connivance or gross negligence is proved.