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:

1. Whether interest on penalties is payable under SEBI laws?

2. 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.