Penalty for certain defaults in case of mutual funds
Section 15D of the Securities and Exchange Board of India Act, 1992 deals with penalty for certain defaults in case of mutual funds. - If any person, who is--- (a) required under this Act or any rules or regulations made thereunder to obtain a certificate of registration from the Board for sponsoring or carrying on any collective investment scheme, including mutual funds, sponsors or carries on any collective investment scheme, i The Act came into force on 30 Jan 1992.
1[15D. Penalty for certain defaults in case of mutual funds---- If any person, who is---
(a) required under this Act or any rules or regulations made thereunder to obtain a certificate of registration from the Board for sponsoring or carrying on any collective investment scheme, including mutual funds, sponsors or carries on any collective investment scheme, including mutual funds, without obtaining such certificate of registration, he shall be liable to 2[a penalty3[which shall not be less than one lakh rupees but which may extend to one lakh rupees for each day during which he sponsors or carries on any such collective investment scheme including mutual funds subject to a maximum of one crore rupees;]]
(b) registered with the Board as a collective investment scheme, including mutual funds, for sponsoring or carrying on any investment scheme, fails to comply with the terms and conditions of certificate of registration, he shall be liable to 4[a penalty 5[which shall not be less than one lakh rupees but which may extend to one lakh rupees for each day during which such failure continues subject to a maximum of one crore rupees;]]
(c) registered with the Board as a collective investment scheme including mutual funds, fails to make an application for listing of its schemes as provided for in the regulations governing such listing, he shall be liable to 6[a penalty 4[which shall not be less than one lakh rupees but which may extend to one lakh rupees for each day during which such failure continues subject to a maximum of one crore rupees;]]
(d) registered as a collective investment scheme, including mutual funds, fails to despatch unit certificates of any scheme in the manner provided in the regulation governing such despatch, he shall be liable to 6[a penalty 4[which shall not be less than one lakh rupees but which may extend to one lakh rupees for each day during which such failure continues subject to a maximum of one crore rupees;]]
(e) registered as collective investment scheme, including mutual funds, fails to refund the application monies paid by the investors within the period specified in the regulations, he shall be liable to 8[a penalty 4[which shall not be less than one lakh rupees but which may extend to one lakh rupees for each day during which such failure continues subject to a maximum of one crore rupees;]]
(f) registered as a collective investment scheme, including mutual funds, fails to invest money collected by such collective investment schemes in the manner or within the period specified in the regulations, he shall be liable to 9[a penalty 4[which shall not be less than one lakh rupees but which may extend to one lakh rupees for each day during which such failure continues subject to a maximum of one crore rupees.]]
Section 15D, The Securities and Exchange Board of India Act, 1992 (Act 15 of 1992).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Chairman, SEBI v. Shriram Mutual Fund & Anr.
Court's Decision & Legal Precedent
DATE VERIFIED REPORTABLE Judgment 2006-05-23 (order-5.pdf; Dr. AR. Lakshmanan & Lokeshwar Singh Panta JJ.; body date marker 23/05/2006 matches order index Judgment of Main Case 2006-05-23). Classic mens rea lock for Chapter VI-A civil penalties: under close scrutiny of ss.15D(b) and 15E there is nothing requiring proof of mens rea before penalty; once contravention of statutory/regulatory conditions is established, penalty follows; quantum remains discretionary having regard to s.15J factors (default nature, repetitive character, gain, loss caused, etc.). SAT had wrongly insisted on proof of deliberate/dishonest intent before upholding AO penalties of Rs 2 lakh under s.15D(b) (mutual fund registration/conditions defaults) and Rs 5 lakh under s.15E (AMC associate-broker routing breach); SC restored AO orders and set aside SAT. Teaching: Chapter VI-A penalties for mutual-fund defaults under s.15D are civil/regulatory, not criminal.
On this section: s.15D Penalty for certain defaults in case of mutual funds — AO penalty under s.15D(b) for failure to comply with registration/certificate conditions does not require mens rea; once contravention is proved, penalty follows subject to s.15J quantum factors.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Made under this section, and citing it
2 instruments name this provision in its title or its text without being made under it.
Questions about Section 15D
What have the courts held on Section 15D of the Securities and Exchange Board of India Act?
Chairman, SEBI v. Shriram Mutual Fund & Anr. (23 May 2006) is the leading judgment on this section among those set out below: s.15D Penalty for certain defaults in case of mutual funds — AO penalty under s.15D(b) for failure to comply with registration/certificate conditions does not require mens rea; once contravention is proved, penalty follows subject to s.15J quantum factors.
How do I find court cases under Section 15D of the Securities and Exchange Board of India Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Sebi Act 15D, section 15D Sebi Act, section 15D of the Securities and Exchange Board of India Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 1 reported judgment on this section is set out on this page, beginning with Chairman, SEBI v. Shriram Mutual Fund & Anr. (23 May 2006).
What should I read with Section 15D of the Securities and Exchange Board of India Act, and has it changed?
3 other provisions in this corpus refer back to it. 2 instruments name it without being made under it, most recently SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 (1995), then the Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995. (1995).
When did Section 15D of the Securities and Exchange Board of India Act come into force?
Section 15D of the Securities and Exchange Board of India Act, cited as Sebi Act 15D, came into force on 30 Jan 1992, having been enacted on 04 Apr 1992. It is in force as at the date shown on this page.
Other sections of this Act
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 20 Oct 2026. This page is not a substitute for legal advice.