Recent Decision

*Securities Law / Corporate Law : Power to SEBI To Direct Disgorgement*

In the case of *SEBI v. Ram Kishori Gupta [2025] GCtR 799 (SC)*, it was held that "the scheme of Section 11B of the SEBI Act, 1992 is that SEBI, in the interest of investors in securities and the securities market, may make or cause to be made an enquiry in that regard and, if it is satisfied that it is necessary to do so, SEBI may issue such directions, be it to a person or a class of persons, referred to in Section 12, or associated with the securities markets or to any company in respect of matters specified in Section 11A, as may be appropriate in the interest of investors in securities and the securities market. The Explanation, which was inserted therein with effect from 18.07.2013, makes it clear for the removal of doubts that the power to issue directions under Section 11B shall include and always be deemed to have included the power to direct disgorgement of an amount equivalent to the wrongful gain made or loss averted by indulging in any transaction or activity in contravention of the provisions of the Act of 1992 or the Regulations made thereunder. Section 11(5) of the Act of 1992, which was also inserted in the statute book with effect from 18.07.2013, provides that disgorgement may be affected pursuant to a direction issued under Section 11B of the Act of 1992 or the provisions of allied enactments, such as the Securities Contracts (Regulation) Act, 1956, or the Depositories Act, 1996, etc, and the amount disgorged pursuant to such direction shall be credited to the Investor Protection and Education Fund established by SEBI and shall be utilised by it in accordance with the Regulations made under the Act of 1992. Section 19 is titled ‘Delegation’ and states that SEBI may, by general or special order in writing, delegate to any of its members, officers or any other persons, subject to such conditions as may be specified in the order, such of its powers and functions as it may deem necessary".