Penalty for failure to observe rules and regulations by an asset management company
Section 15E of the Securities and Exchange Board of India Act, 1992 deals with penalty for failure to observe rules and regulations by an asset management company. Where any asset management company of a mutual fund registered under this Act fails to comply with any of the regulations providing for restrictions on the activities of the asset management companies, such asset management company shall be liable to [a penalty [which shall not be less than one lakh The Act came into force on 30 Jan 1992.
1[15E. Penalty for failure to observe rules and regulations by an asset management company.-- Where any asset management company of a mutual fund registered under this Act fails to comply with any of the regulations providing for restrictions on the activities of the asset management companies, such asset management company shall be liable to 2[a penalty 3[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 15E, 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.15E Penalty for failure to observe rules and regulations by an asset management company — AMC’s Reg.25(7)(a) associate-broker breach attracts s.15E civil penalty without proof of mens rea once contravention is established.
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.
Judgments citing this section
These may be obiter dicta or a precedent, for you to study. These are the judgments where this section is quoted.
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… Joint Commissioner of Income Tax , (2007) 6 SCC 329, the view taken was that mens rea should be held to be an essential ingredient for levy of minimum penalty under section 11AC of the Act. On the other hand, in SEBI v. Shriram Mutual Fund and another , (2006) 5 SCC 361, in the context of Sections 15D(b) and 15E of the Securities and Exchange Board of India Act, 1992 (SEBI Act), it was held that it was not necessary to read requirement of mens rea in a provision laying down minimum penalty. After referring to judgments in Director of Enforcement v. MCTM Corpn. (P) Ltd. (1996) 2 SCC 471, J.K. Industries Ltd. v. Chief …
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 15E
What have the courts held on Section 15E 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.15E Penalty for failure to observe rules and regulations by an asset management company — AMC’s Reg.25(7)(a) associate-broker breach attracts s.15E civil penalty without proof of mens rea once contravention is established.
How do I find court cases under Section 15E 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 15E, section 15E Sebi Act, section 15E 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 15E of the Securities and Exchange Board of India Act, and has it changed?
4 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 15E of the Securities and Exchange Board of India Act come into force?
Section 15E of the Securities and Exchange Board of India Act, cited as Sebi Act 15E, 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
- 11. Functions of Board1315 words
- 11C. Investigation1145 words
- 12. Registration of stock-brokers, sub-brokers, share transfer agents, etc678 words
- 28A. Recovery of amounts629 words
- 15U. Procedure and powers of the Securities Appellate Tribunal494 words
- 15D. Penalty for certain defaults in case of mutual funds464 words
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 15 Oct 2026. This page is not a substitute for legal advice.