Summary of the Supreme Court Judgment in Jaykishor Chaturvedi & Others v. SEBI (2025 INSC 846)
1. Heading of the Judgment
Case Title: Jaykishor Chaturvedi & Others v. Securities and Exchange Board of India (SEBI)
Civil Appeal Nos.: 1551-1553 of 2023
Court: Supreme Court of India
Bench: Justices R. Mahadevan and J.B. Pardiwala
Date of Judgment: July 15, 2025
2. Related Laws and Sections
The judgment primarily interprets and applies the following legal provisions:
SEBI Act, 1992:
Section 15Z (Appeals to Supreme Court)
Section 28A (Recovery of amounts, including penalties and interest)
Chapter VIA (Penalties and adjudication)Income Tax Act, 1961:
Section 220 (Interest on delayed payment of tax/penalty)
Section 156 (Notice of demand)SEBI (Prohibition of Insider Trading) Regulations, 1992 (Violations under Regulations 13(4), 13(4A), and 13(5))
3. Basic Judgment Details
Background:
The appellants (Jaykishor Chaturvedi and others) were directors of Brijlaxmi Leasing and Finance Ltd., a listed company.
SEBI found them guilty of insider trading (violating PIT Regulations) and imposed penalties in 2014.
The appellants challenged the penalties up to the Supreme Court, but their appeals were dismissed in 2019.
When they failed to pay the penalties, SEBI issued recovery notices (2022) demanding payment with 12% interest from 2014.
The appellants contested the interest levy, arguing it should apply only from the 2022 demand notice, not retrospectively from 2014.
Key Issues:
Whether interest on penalties is payable under SEBI laws?
If yes, from which date should interest be calculated—2014 (original penalty order) or 2022 (recovery notice)?
Supreme Court’s Decision:
Interest is payable under Section 28A of SEBI Act read with Section 220 of Income Tax Act.
Interest accrues from the date the penalty became due (2014), not from the later recovery notice (2022).
The demand notice (2022) was merely a reminder, not the starting point for interest.
Appeals dismissed; appellants directed to pay interest within 15 days.
4. Explanation of the Judgment
(A) Liability for Interest Under SEBI Act
The court held that Section 28A of the SEBI Act (introduced in 2013) allows SEBI to recover penalties like income tax arrears, including interest.
Section 220 of Income Tax Act applies, which mandates 1% monthly interest (12% yearly) on unpaid dues after the due date.
The adjudication order (2014) itself was a valid demand notice, so interest runs from the expiry of the 45-day payment deadline specified in that order.
(B) No Separate Demand Notice Needed
The appellants argued that interest should apply only after the 2022 recovery notice.
The court rejected this, stating:
The 2014 penalty order was the first valid demand.
The 2022 notice was just a reminder, not a fresh liability.
Explanation 4 to Section 28A (added in 2019) clarifies that interest starts from when the amount became due (2014).
(C) Interest is Compensatory, Not Penal
The court emphasized that interest is not a punishment but compensation for delayed payment.
SEBI’s funds go to the Consolidated Fund of India, so delayed payments harm public revenue.
Precedents like Bhai Jaspal Singh v. CCT and Dhandakshmy Weaving Works were cited to support this view.
(D) No Retrospective Application Issue
The appellants claimed Explanation 4 (2019) could not apply retrospectively.
The court ruled that Explanation 4 only clarified existing law, so interest was always chargeable from the due date (2014).
5. Conclusion
The Supreme Court upheld SEBI’s recovery action, including interest from 2014.
The judgment reinforces that statutory dues must be paid on time, and delays attract automatic interest.
The ruling ensures strict enforcement of SEBI penalties to protect investor interests and market integrity.
Final Order:
Appeals dismissed.
Appellants must pay interest within 15 days.
No costs imposed.