Bombay HC rejects Discharge Plea of Karvy CEO in SEBI Case
Judgment dated 11.9.2025 of the High Court of Bombay in Criminal Revision Application No.370 of 2024 of Rajiv Ranjan Singh Vs. Securities & Exchange Board of India and another
Trial of Karvy CEO – Bombay HC rejects Discharge Plea – Securities Fraud of Rs.2,700 crores
SEBI Criminal Prosecution – Bombay High Court rejects CEO’s Discharge Plea
SEBI Act – Corporate Accountability in cases of misuse of investor assets.
Section 27(2) of the SEBI Act – CEO – Offences against Stock Broker Company
Regulatory exoneration bars criminal prosecution only if there is a clear finding of innocence.
SEBI’s adjudication order – Absence of penalty does not amount to innocence
Criminal complaint of SEBI was filed under Sections 24(1), 27, 12A, 26 and26B of SEBI Act, 1992, SEBI (Stock Brokers) Regulations, 1992, Regulations 4(1) and 4(2)(m) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003, read with various Circulars of SEBI and Sections 193 and 200 of the Cr PC.
Accused No.1 Karvy Stock Broking registered with SEBI as stock broker & Depository Participant, NSE, BSE, NSDL and CDSL. Respondent No.2 was its Managing Director and promoter. Accused No.5 was its Chief Executive Officer.
It is alleged that the Accused No.1 unauthorizedly pledged and misused its clients’ securities and funds to the tune of Rs.2,700/- crores.
The Accused No.5 had applied for discharge from the said case on the ground that in the adjudication order dated 20.4.2023, no penalty was imposed and no adverse direction was issued against him.
HELD that the adjudication order cannot operate as a bar to the present prosecution under Section 27(1) of the SEBI Act. The complaint prima facie discloses material against the applicant CEO and the findings in the adjudication order reinforce his responsibility as CEO and as a person in charge of the company’s business at the relevant time. The role of the applicant as CEO and his participation in the affairs of the company, is evident even from the adjudication order itself. These findings support, and do not negate the statutory presumption of liability under Section 27(1) of the SEBI Act.
It is not necessary under Section 27(1) of the SEBI Act to show that the officer himself committed the wrongful act. The liability simply arises because the officer was in charge of and responsible for the conduct of company business when the offence took place.
