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

Under Section 15HA, the upper limit of penalty for fraudulent and unfair trade practices is expressed as twenty-five crore rupees or three times the profits made out of such practices. How is the maximum determined?

The maximum is whichever is higher of twenty-five crore rupees and three times the profits made from the practice. Section 15HA expressly uses the words 'whichever is higher', so the ceiling is not fixed at the rupee figure when profits are large.

  1. AWhichever is lower of the two amounts
  2. BWhichever is higher of the two amountsCorrect
  3. CTwenty-five crore rupees always, ignoring profits
  4. DThree times the profits only, with no rupee cap

Explanation

The section says the penalty may extend to twenty-five crore rupees or three times the profits made out of such practices, whichever is higher. So the higher figure forms the ceiling. Choosing the lower figure misreads the words.

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