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CS Executive · Capital Market and Securities Laws · Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market

Meera Securities is alleged to have made a profit of Rs 2 crore through a fraudulent practice in securities. Under Section 15HA of the SEBI Act, 1992, which statement about the upper limit of the penalty is correct?

The upper limit is Rs 25 crore. Section 15HA permits a penalty up to twenty-five crore rupees or three times the profits, whichever is higher. Three times Rs 2 crore is only Rs 6 crore, so the fixed Rs 25 crore figure is the higher and governs.

  1. AIt is Rs 6 crore, being three times the profit
  2. BIt is Rs 25 crore, because that figure is higher than three times the profitCorrect
  3. CIt is Rs 2 crore, being equal to the profit
  4. DIt is Rs 27 crore, being Rs 25 crore plus the profit

Explanation

Three times Rs 2 crore is Rs 6 crore. The section sets the limit at the higher of Rs 25 crore and three times the profit, so Rs 25 crore is the ceiling. Treating Rs 6 crore as the limit ignores the 'whichever is higher' wording.

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