SECURITIES AND EXCHANGE BOARD OF INDIA
(PROCEDURE FOR HOLDING INQUIRY AND IMPOSING PENALTIES BY ADJUDICATING OFFICER)
RULES, 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 ) Rules, 1995.
(2)
They
shall come into force on the date of their publication in the Official Gazette.
Definition
?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
(1) In
holding an inquiry for the purpose of adjudging under [1][sections 15A, 15B,
15C, 15D, 15E, 15F, 15G, 15HA and 15HB] whether any person
has committed contraventions as specified in any of the section 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 against
him.
(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.
[2] [(5 A) - The Board
may appoint a presenting officer in an inquiry under this rule.]
(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.
(2)
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 default;
(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 decision.
(4) Every
such order shall be dated and signed by the adjudicating officer.
Copy of the order
The
adjudicating officer shall send a copy of every order made under rules by it to
person concerned and to the Board.
Service of notices and order
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 (d), 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.