Holding

Interest on the unpaid penalties accrues from the expiry of the 45‑day compliance period specified in the 2014 adjudication order, as the order itself constitutes a demand under Section 28A read with Section 220 of the Income‑Tax Act.

Summary

The appellants, promoter‑directors of a listed finance company, were found to have purchased shares in violation of SEBI's insider‑trading regulations and were penalised by an SEBI Adjudicating Officer on 28‑08‑2014. The penalty orders required payment within 45 days and were affirmed by the Supreme Court in 2019, after which the appellants failed to pay. SEBI later issued demand notices on 13‑05‑2022 directing payment of the penalties together with interest at 12% per annum, and attached the appellants' bank and demat accounts when payment was not made. The appellants contended that interest could not be levied retrospectively and should only accrue from the 2022 demand notices, relying on the pre‑2019 version of Section 28A and various tax cases. The Court held that the adjudication order itself constituted a valid demand, that Section 28A incorporates Section 220 of the Income‑Tax Act, and that Explanation 4 to Section 28A (effective 2019) merely clarifies that interest accrues from the date the amount becomes payable. Consequently, interest is payable from the expiry of the 45‑day period specified in the 2014 adjudication order, and the appeals were dismissed.

Issues considered

Whether interest on penalties imposed by the SEBI Adjudicating Officer is payable by the appellants.
From which date interest on the unpaid penalties should accrue – the date of the adjudication order (28‑08‑2014) or the date of the SEBI demand notices (13‑05‑2022).
Whether Explanation 4 to Section 28A of the SEBI Act, inserted in 2019, can be applied retrospectively to affect interest liability.

Legislation cited

Companies Act
Income Tax Act, 1961s. 156, s. 220(1), s. 220(2), s. 220(4)
Income Tax (Certificate Proceedings) Rules, 1962
Interest Act, 1978
Securities and Exchange Board of India Act, 1992s. 15I, s. 15J, s. 15JA, s. 28A
Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995s. Rule 5
Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992s. Regulation 13(4), s. Regulation 13(4A), s. Regulation 13(5)
Securities Laws (Amendment) Act, 2014

Headnote

Issue for Consideration Whether interest on penalties imposed by the Adjudicating Officer is payable by the appellants, and if so, from which date- whether from the date of the adjudication orders passed by the Adjudicating Officer or the demand notices issued by Board of India Act, 1992 – s.28A – Income Tax Act, 1961 – s.220(1), (2), (4) – Recovery of amounts – When tax payable and when assessee deemed in default – Interest on unpaid penalties imposed by the Adjudicating Officer, if payable by the appellants

Subjects

Violation of SEBI (Prohibition of Insider Trading) Regulations, 1992Adjudication orderPenaltyInterest on penaltiesAdjudicating OfficerSection 28ASection 220Legislation by incorporationLegislation by referenceRetrospective application of lawDemand noticeStatutory interest

Judgment

[2025] 8 S.C.R. 138 : 2025 INSC 846

Jaykishor Chaturvedi & Etc.
v.
Securities and Exchange Board of India
(Civil Appeal No(s). 1551-1553 of 2023)
15 July 2025
[J.B. Pardiwala and R. Mahadevan,* JJ.]

Issue for Consideration
Whether interest on penalties imposed by the Adjudicating Officer
is payable by the appellants, and if so, from which date- whether
from the date of the adjudication orders passed by the Adjudicating
Officer or the demand notices issued by the respondent-SEBI.

Headnotes†
Securities and Exchange Board of India Act, 1992 – s.28A –
Income Tax Act, 1961 – s.220(1), (2), (4) – Recovery of
amounts – When tax payable and when assessee deemed
in default – Interest on unpaid penalties imposed by the
Adjudicating Officer, if payable by the appellants – If yes, from
which date- whether interest on the unpaid penalty should
accrue from the expiry of the 45-day period stipulated in the
Adjudicating Officer’s orders dtd.28.08.2014, or from the expiry
of 30 days following the respondent’s notices dtd.13.05.2022:
Held: Adjudicating Officer’s order itself constituted a clear and
enforceable demand for payment of penalties within 45 days –
This order attained finality following the appellants’ unsuccessful
challenges before the SAT and this Court, thereby crystallizing
the liability – Once the adjudication order has attained finality,
the obligation to pay the penalty stands revived from the date of
adjudication – U/s.220(1), Income Tax Act r/w s.28A, SEBI Act,
interest becomes payable upon failure to meet the demand within
the prescribed time – Thus, appellants’ failure to comply within
the specified time rendered them ‘defaulters’ u/s.220(4), Income
Tax Act, justifying the accrual of interest from the expiry of the
45-day compliance period – Further, since s.156, Income Tax Act

* Author
[2025] 8 S.C.R. 139

Jaykishor Chaturvedi & Etc. v. Securities and Exchange Board of India

is not incorporated into the SEBI Act, the original order must be
treated as the statutory trigger for the purpose of calculation of
interest – Moreover, the demand notice dtd.13.05.2022 merely
reiterated the earlier demand and did not create a fresh liability –
The enabling provision to recover interest was already in vogue
when the adjudication order was passed – Appellants liable to pay
interest at 12% p.a on the unpaid penalty amounts for the period
of delay – Plea of the appellants that interest cannot be levied
retrospectively, misplaced – Interest to accrue from the expiry of
the 45-day compliance period following the adjudication orders
dtd.28.08.2014 – Order of the Tribunal dismissing the challenge
to the notices of attachment issued against the appellants, not
interfered with – SEBI Rules, 1995 – SEBI (Prohibition of Insider
Trading) Regulations, 1992 – Regulation Nos.13(4) and 13(4A)
r/w 13(5). [Paras 10, 11.3, 11.5, 11.6]

Securities and Exchange Board of India Act, 1992 – Explanation 4
to s.28A – Appellants contended that the Explanation 4 to s.28A
inserted in 2019, cannot be applied retrospectively, as it alters
the legal position as it stood earlier by introducing provisions
relating to the levy of interest:
Held: An “explanation” in any law clarifies, restricts, or expands
the scope of the main provision – The nature and effect of an
Explanation must be understood in the context of the object of
the Act, and in particular, the provision to which the Explanation is
inserted – Explanation 4 to s.28A inserted on 21.02.2019, explicitly
states that interest u/s.220, Income Tax Act shall accrue from the
date the amount became payable – The liability to pay penalty
stood triggered from the date of adjudication and that no separate
notice of demand is necessary – Further, in the present case, as
the adjudication order itself specified the time for payment of the
penalty, the liability to pay interest would commence upon the expiry
of the period mentioned in the assessment notice – The Explanation
introduced in 2019, did not bring about any substantive change
but merely clarified the existing legal position – Also, where the
original adjudication order under the SEBI Act does not specify any
time for payment, the period of 30 days u/s.220, Income Tax Act
should be deemed to apply for making the payment, failure of which
would trigger the liability to pay interest – Thus, the adjudication
officer’s order which specified payment within 45 days, effectively
140 [2025] 8 S.C.R.

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operates as a notice of demand, rendering any separate demand
notice redundant – Adjudication amounts to a crystallization of
liability, and the demand is a natural sequitur – Thus, there is
no corresponding requirement for issuance a separate notice
of demand seeking payment of the amount determined under
the adjudication order – Adjudication authority is well within his
powers to fix a period for payment of the amount specified in the
adjudication order, and upon default, the liability to pay interest
becomes inevitable – Securities Laws (Amendment) Act, 2014 –
Securities and Exchange Board of India (Procedure for Holding
Inquiry and Imposing Penalties) Rules, 1995 – Income Tax Act,
1961. [Paras 11.4, 9.9]
“Legislation by incorporation”; “Legislation by reference” –
Income Tax Act, 1961 – ss.220(1), 156 – Limited reference to
s.156 in s.220(1) not to be treated either as a “legislation by
incorporation” or a “legislation by reference” – Explained –
Securities and Exchange Board of India Act, 1992.
[Para 9.6, 9.8]
Income Tax Act, 1961 – Securities and Exchange Board of
India Act, 1992 – Interest on unpaid penalties – Nature –
Compensatory, not penal – Purpose, stated. [Para 11.5]
Securities and Exchange Board of India Act, 1992 –
Adjudication, when triggered – Chapter VIA – s.28A – Levy
of penalties – Penalties and Adjudication – Securities Laws
(Amendment) Act, 2014 – SEBI (Prohibition of Insider Trading)
Regulations, 1992 – Securities and Exchange Board of India
(Procedure for Holding Inquiry and Imposing Penalties) Rules,
1995 – Income Tax Act, 1961 – ss. – s.220(1), (2), (4), 156.
[Para 9.9]

Case Law Cited
Sedco Forex International Drill Inc. v. Commissioner of Income Tax
[2005] Supp. 5 SCR 302 : (2005) 12 SCC 717; Shyam Sundar
& others v. Ram Kumar and Another [2001] Supp. 1 SCR 115 :
(2001) 8 SCC 24; Keshavlal Jethalal Shah v. Mohanlal Bhagwandas
and Another [1968] 3 SCR 623 – distinguished.
J.K. Synthetics Ltd. v. CTO [1994] 3 SCR 964 : (1994) 4 SCC
276 – held not applicable.
[2025] 8 S.C.R. 141

Jaykishor Chaturvedi & Etc. v. Securities and Exchange Board of India

State of Punjab v. Bhajan Kaur [2008] 7 SCR 1111 : (2008) 12
SCC 112; Shiv Kumar Sharma v. Santhosh Kumari [2007] 10
SCR 17 : (2007) 8 SCC 600; Shamsu Suhara Beevi v. G.Alex
and another [2004] Supp. 3 SCR 653 : (2004) 8 SCC 569;
The Collector of Customs, Madras v. Nathella Sampathu Chetty
and Ors., MANU/SC/0089/1961 : AIR 1962 SC 316; Ujagar Prints
and Ors. v. Union of India (UOI) and Ors., MANU/SC/0675/1988 :
AIR 1989 SC 516; Girnar Traders and Ors. v. State of Maharashtra
and Ors. (2011) 3 SCC 1; Calcutta Jute Manufacturing Co. and
Another v. Commercial Tax Officer [1997] Supp. 1 SCR 474 :
(1997) 106 (STC) 433; Bhai Jaspal Singh v. CCT [2010] 14 SCR
41 : (2011) 1 SCC 39; Dushyant N. Dalal and Another v. SEBI
[2017] 11 SCR 448 : (2017) 9 SCC 660 – referred to.
Commissioner of Income-Tax v. Dhanalakshmy Weaving Works
(2000) 245 ITR 13 : 1999 SCC OnLine Ker 597 – referred to.

List of Acts
Securities and Exchange Board of India Act, 1992; Income Tax
Act, 1961; Securities and Exchange Board of India (Procedure
for Holding Inquiry and Imposing Penalties) Rules, 1995; SEBI
(Prohibition of Insider Trading) Regulations, 1992; Securities Laws
(Amendment) Act, 2014; Income Tax (Certificate Proceedings)
Rules, 1962; Companies Act.

List of Keywords
Violation of the SEBI (Prohibition of Insider Trading) Regulations,
1992; Adjudication order; Penalties; Interest on penalties;
Adjudicating Officer; Date of the adjudication orders; Demand
notices issued by SEBI; Interest on the unpaid penalty; From the
expiry of the 45-day period stipulated in the Adjudicating Officer’s
orders; From the expiry of 30 days following SEBI’s notices; Interest
on unpaid penalty levied retrospectively; Adjudicating Officer’s
order; Demand for payment of penalties within 45 days; Show
cause notices; Obligation to pay penalty; Revived from the date
of adjudication; Defaulters; Accrual of interest from the expiry of
the 45-day compliance period; Unpaid penalty amounts; Period of
delay; Enabling provision; Notices of attachment; No separate notice
of demand necessary; Separate demand notice; No fresh liability;
Legislation by incorporation; Legislation by reference; Explanation;
Notice of demand; Adjudication authority; Arrears of income tax.
142 [2025] 8 S.C.R.

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Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No(s). 1551-1553
of 2023
From the Judgment and Order dated 29.09.2022 of the Securities
Appellate Tribunal, Mumbai in AN Nos. 626, 627 and 628 of 2022

Appearances for Parties
Advs. for the Appellants:
Dr. Purvish Jitendra Malkan, Benni Chatterji, Sr. Advs., Dharita
Malkan, Khushboo Aakash Sheth.
Advs. for the Respondent:
Pratap Venugopal, Sr. Adv., M/S. K J John And Co, Amarjit Singh
Bedi, Ms. Surekha Raman, Shreyash Kumar, Imlikaba Jamit.

Judgment / Order of the Supreme Court

Judgment

R. Mahadevan, J.

1. All these appeals are filed under Section 15Z of the Securities and
Exchange Board of India Act, 19921 challenging the common judgment
and order dated 29.09.20222 passed by the Securities Appellate
Tribunal, Mumbai3, in Appeal Nos.626 to 628 of 2022 preferred by
the appellants. By the impugned order, the Tribunal dismissed the
challenge to the notices of attachment dated 23.06.2022 issued
against the appellants.

FACTUAL MATRIX
2. According to the appellants, they are the promoter-directors of
M/s. Brijlaxmi Leasing and Finance Limited, a company incorporated
under the Companies Act and limited by shares, which is listed on the
Bombay Stock Exchange and engaged in providing various financial
services, including lending, loan syndication, advisory, and portfolio
management, among others.

1 Hereinafter referred to as “SEBI Act”
2 For short, “the impugned order”
3 For short, “the Tribunal”
[2025] 8 S.C.R. 143

Jaykishor Chaturvedi & Etc. v. Securities and Exchange Board of India

2.1. The company in the year 1995-96 went in to initial public offer
for fully paid-up share capital of 56,48,500 shares of face value
of Rs.10/- each. The fully paid up 5,64,85,000 shares of the
company were split from Rs.10/- to Re.1 each from 30.06.2005.
2.2. While so, the respondent conducted examination of scrip of
the company and found that the promoters and directors of
the company purchased shares of the company on various
dates between October 2012 and July 2013 in violation of the
provisions of Regulation Nos.13(4) and 13(4A) read with 13(5)
of the SEBI (Prohibition of Insider Trading) Regulations, 19924.
2.3. Upon issuance of show cause notices, the Adjudicating Officer
passed adjudication orders on 28.08.2014 under section 15-I
of the SEBI Act read with Rule 5 of the SEBI Rules, 1995,
imposing penalty on the appellants.
2.4. Challenging the aforesaid orders, the appellants by names
Jaykishor Chaturvedi, Siddharth Jaykishor Chaturvedi, and
Ankur Jaykishor Chaturvedi preferred appeals bearing Nos.435,
436 and 434 of 2014, respectively, before the Tribunal under
Section 15E of the SEBI Act. Vide order dated 04.08.2015,
the Tribunal dismissed these appeals. Aggrieved by the same,
the appellants preferred further appeals bearing Civil Appeal
Nos.14729, 14730, and 14728 of 2015, respectively, before
this Court.
2.5. By a common judgment dated 28.02.2019 in C.A.No(s).11311
of 2013 etc. cases, a 3-Judge Bench of this Court disposed of
all these appeals upholding the quantum of penalty imposed
on the appellants.
2.6. Thereafter, the respondent through its Recovery Officer, Western
Regional Office, issued demand notices dated 13.05.2022
directing the appellants to pay the penalties imposed by the
Adjudicating Officer vide orders dated 28.08.2014 along with
interest @ 12% p.a. from 28.08.2014 to 13.05.2022. However,
the appellants failed to comply with the demand for payment
issued by the respondent.

4 For short, “the PTI Regulations”
144 [2025] 8 S.C.R.

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2.7. Consequently, the respondent issued notices of attachment of
bank accounts on 23.06.2022, to the Principal Officer / Chairman
& Managing Director /CEO of all Banks in India, ordering the
following attachment with immediate effect:
(a) All account/s by whatever name called including lockers
of the Defaulter (appellants), either singly or jointly with
any other person/s held with the Bank.
(b) All other amount/ proceeds due or may become due to
the Defaulter (appellants) or any money held or may
subsequently hold for or on account of the Defaulter
(appellants).
2.8. The Respondent also issued notices of attachment of demat
accounts on 23.06.2022 to National Securities Depository Ltd.
and Central Depository Services (I) Ltd., ordering the following
attachment with immediate effect:
(a) All Demat account/s by whatever name called of the
Defaulter, either singly or jointly with any other person/s
held with the Depositories.
(b) All funds/folios/schemes held by whatever name called of
the defaulters (appellants), either singly or jointly with any
other person/s held with the Depositories.
2.9. Aggrieved by the aforesaid actions taken by the respondent, the
appellants preferred appeals bearing Nos.626, 627, and 628
of 2022 before the Tribunal on the ground that the recovery
proceedings and attachment notices issued are excessive in
nature and grossly disproportionate to the penalties imposed
by the Adjudicating Officer. By the impugned order, the Tribunal
dismissed all these appeals. Hence, the appellants are before
us with the present Civil Appeals.

CONTENTIONS OF THE PARTIES
3. The main contention of the learned counsel for the appellants is that
the Recovery Officer of the respondent exceeded the powers vested
under section 28A of the SEBI Act by imposing retrospective interest
computed from the date of the original adjudication orders dated
28.08.2014 under section 15-I of the SEBI Act, despite the absence
of any provision for the imposition of interest in the said order.
[2025] 8 S.C.R. 145

Jaykishor Chaturvedi & Etc. v. Securities and Exchange Board of India

3.1. Elaborating further, the learned counsel submitted that the
scheme of recovery proceedings under the SEBI Act is governed
by Section 28A read with Sections 220 to 227, 228A, 229, 232,
along with the Second and Third Schedules to the Income Tax
Act, 1961, and the Income Tax (Certificate Proceedings) Rules,
1962. Section 220(2) in unambiguous terms, stipulates that
interest would be imposable at the rate of 1% per month after the
30th day from the date of the demand notice as it stood prior to
insertion of Explanation– 4 to Section 28A, which came into force
on 21.02.2019. Explanation – 4 states that the interest referred
to in Section 220 of the Income Tax Act, 1961 shall commence
from the date the amount becomes payable by the person. This
implies that prior to the insertion of Explanation – 4 to Section
28A of the SEBI Act, interest was to be levied in accordance
with Section 220 of the Income Tax Act, 1961 – that is, after 30
days from the issuance of the notice of demand, and not from
the date the amount became payable by the person. Whereas,
the notice of demand dated 13.05.2022 issued under section
28A of the SEBI Act by the respondent comprised the penalty
amount imposed along with interest at 12% p.a. computed from
the date of the adjudication orders.
3.2. It is further submitted that Section 220 of the Income Tax Act,
1961 provides for the recovery of any amount payable under
a notice of demand. Section 156 of the Income Tax Act, 1961
defines a notice of demand as a demand, in the prescribed
form for the payment of any tax, interest, penalty, fine or any
other sum payable in consequence of any order passed. The
phrase, “in consequence of any order passed” refers to the
original adjudication orders dated 28.08.2014 which imposed
only a penalty and did not award any interest. Therefore, the
Recovery Officer of the respondent exceeded his jurisdiction by
computing interest on the penalty amount at 12% per annum
from the date of the adjudication orders, when such order did
not direct the payment of any interest.
3.3. It is also submitted that the demand notices, in essence, amount
to a rewriting of the original adjudication orders, which had
already attained finality. Hence, interest on the penalty would
be leviable only at the rate of 1% per month from 13.05.2022,
i.e., 30 days after the date of the demand notices issued by
146 [2025] 8 S.C.R.

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the respondent, and not from 28.08.2014, the date of the
adjudication orders.
3.4. Placing reliance on the decisions of this Court in Sedco Forex
International Drill Inc. v. Commissioner of Income Tax5, Shyam
Sundar & others v. Ram Kumar and another6, and Keshavlal
Jethalal Shah v. Mohanlal Bhagwandas and another7, the
learned counsel submitted that the insertion of Explanation - 4
to Section 28A of the SEBI Act, which came into effect from
21.02.2019, cannot be applied retrospectively, as it alters the
legal position as it stood earlier by introducing provisions relating
to the levy of interest. It is also submitted that the imposition
of interest is a matter of substantive law, and therefore, cannot
have retrospective application [See: J.K. Synthetics Ltd v. CTO8
and State of Punjab v. Bhajan Kaur9]. Thus, according to the
learned counsel, Explanation - 4 to Section 28A of the SEBI Act,
would not apply to the case of the appellants, as the amendment
was introduced long after the original adjudication orders, which
had attained finality by a common judgment dated 28.02.2019
in C.A.No(s).11311 of 2013 etc. cases. Since the amendment
cannot be applied retrospectively, in light of the decisions referred
to above, interest for the purposes of Section 28A shall not
commence from the date of the adjudication orders. Instead,
it shall be computed in accordance with the plain language of
Section 220(2) of the Income Tax Act, 1961 i.e., after 30 days
from the date of notice of demand.
3.5. The learned counsel further pointed out that in Dushyant N.
Dalal and another v. SEBI10, this Court after referring to various
judgments, upheld the levy of interest in equity as a principle of
law, in the absence of express statutory provisions for interest. In
that case, the appeal related to an adjudication order of penalty
dated 13.11.2009 i.e., prior to the insertion of Section 28A into
the SEBI Act, which provision was introduced by the Securities

5 (2005) 12 SCC 717
6 (2001) 8 SCC 24
7 [1968] 3 SCR 623
8 (1994) 4 SCC 276
9 (2008) 12 SCC 112
10 (2017) 9 SCC 660
[2025] 8 S.C.R. 147

Jaykishor Chaturvedi & Etc. v. Securities and Exchange Board of India

Laws (Amendment) Act, 2014, with effect from 18.07.2013.
Whereas, in the present case, the adjudication orders against
the appellants are dated 28.08.2014 i.e., after the insertion of
Section 28A into the SEBI Act. Section 28A as it then stood,
was clear and unambiguous, providing for the levy of interest
under section 220(2) of the Income Tax Act, 1961 at the stage
of recovery, in the event of non-payment of penalties imposed
under the adjudication orders within 30 days from the date of
service of the demand notices by the Recovery Officer. Despite
being cognizant of the power to provide for future interest, as
was done in Dushyant N. Dalal, the Adjudicating Officer in the
case of the present appellants, made no such provision for
future interest and the adjudication orders therefore attained
finality in their existing form.
3.6. Referring to the judgments of this Court in Shiv Kumar Sharma
v. Santhosh Kumari11, and Shamsu Suhara Beevi v. G.Alex
and another12, the learned counsel submitted that it is trite law
that the exercise of equity cannot override or violate express
statutory provisions; and the equity jurisdiction may be invoked
only where the law is silent or does not operate in the field.
3.7. With these submissions and case laws, the learned counsel
prayed that these appeals be allowed by setting aside the levy
of interest at 12% p.a. charged from 28.08.2014, as well as the
recovery certificates issued by the respondent and the notices
of attachment issued in pursuance thereof.
4. Per contra, the learned counsel for the respondent submitted that
the issues involved herein are no longer res integra, having been
conclusively adjudicated by this Court in Dushyant N. Dalal (supra),
wherein, this Court affirmed the authority of SEBI to levy interest,
including on penalty amounts, pursuant to Section 28A of the SEBI
Act read with Section 220 of the Income Tax Act, 1961. In doing so,
this Court expressly rejected the contrary views previously adopted
by the Securities Appellate Tribunal, which had limited the recovery
of interest to periods subsequent to the enactment of Section 28A
in 2013. This Court further clarified that the provision for levying

11 (2007) 8 SCC 600
12 (2004) 8 SCC 569
148 [2025] 8 S.C.R.

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interest embodies both substantive and procedural elements of law,
thereby enabling SEBI to recover interest from the date on which
the liability originally arose, in consonance with principles of equity
and the Interest Act, 1978.
4.1. It was further submitted that in the present case, the cause of
action arose on 28.08.2014, i.e., upon the imposition of penalties
by the Adjudicating Officer of SEBI, on each of the appellants,
accompanied by a direction to effect payment within 45 days
from the date of receipt of the adjudication orders. Section
220(1) of the Income Tax Act, 1961 does not contemplate the
issuance of any independent notice of demand, but refers to
the notice of demand served under Section 156. It mandates
that the amount specified in such notice shall be paid within
30 days, failing which interest at the rate of 12% per annum
becomes payable under Section 220(2) on the amounts specified
therein, calculated from the expiry of the period prescribed
under Section 220(1). Since Section 156 of the Income Tax
Act is not incorporated into Section 28A of the SEBI Act, the
expression ‘notice of demand’ referred to in Section 220(1),
for the purposes of recovery under the SEBI Act would be
referrable to the demand raised by SEBI - inter alia through a
penalty order passed under Chapter VIA of the SEBI Act. In
the instant case, the direction issued by the Adjudicating Officer
of SEBI in the adjudication orders dated 28.08.2014, requiring
payment of penalties by the appellants within 45 days from
the receipt of the said orders, would constitute the ‘notice of
demand’ contemplated under section 156 of the Income Tax
Act (with necessary modification as envisaged by Section 28A
(1) of the SEBI Act). Consequently, the appellants’ failure to
comply with the said direction would render them ‘deemed
defaulters’ within the meaning of Section 220(4) of the Income
Tax Act. Therefore, the levy of interest from 28.08.2014 until
the date of payment is fully warranted and justified as per the
applicable statutes and the settled legal position.
4.2. It was also submitted that Section 28A of the SEBI Act makes
the provisions of Sections 220 to 227, 228A, 229, 232 and the
Second and Third Schedules to the Income Tax Act, 1961 and
the Income Tax (Certificate Proceedings) Rules, 1962 apply
[2025] 8 S.C.R. 149

Jaykishor Chaturvedi & Etc. v. Securities and Exchange Board of India

“with necessary modifications” as if the said provisions and
Rules made thereunder were the provisions of the SEBI Act.
In the present case, the order of the Adjudicating Officer of
SEBI dated 28.08.2014 itself required that the penalty amount
be paid within 45 days from the date of receipt of the order.
The demand notices dated 13.05.2022 issued by the Recovery
Officer of SEBI were necessitated solely due to the appellants’
failure to pay the penalty demanded and were intended to inform
them of the outstanding dues as on that date, along with the
proposed recovery actions, such as, attachment and detention.
The appellants had unsuccessfully challenged the imposition of
the penalty before both the Tribunal and this Court. Therefore,
they cannot now contend that the cause of action for payment of
the penalty arose only on 13.05.2022, when notice was issued
by the Recovery Officer of SEBI.
4.3. Ultimately, it was submitted that as on date, the appellants
remain liable to pay the following sums by way of interest:

Name Penalty Recovered Interest
amount (Rs.) amount till pending
date (Rs.) (Rs.)
Siddharth J.Chaturvedi 5,00,000/- 5,00,465.85 5,34,640.77
Jaykishore Chaturvedi 11,00,000/- 11,00,000/- 11,79,533.33
Ankur J. Chaturvedi 7,00,000/- 7,00,000/- 7,41,133,33

4.4. Thus, according to the learned counsel, there is no merit in
the present appeals and the same are liable to be dismissed.

DISCUSSION AND FINDINGS
5. We have heard the learned counsel appearing on either side and
perused the materials available on record.
6. Concededly, the Adjudicating Officer passed the adjudication
orders dated 28.08.2014, imposing penalties of Rs.11,00,000/- in
the case of Jaykishor Chaturvedi, Rs.5,00,000/- in the case of
Siddharth Jaykishor Chaturvedi and Rs.7,00,000/- in the case of
Ankur Jaykishor Chaturvedi, for the alleged violation of Regulation
Nos.13(4) and 13(4A) read with 13(5) of the PIT Regulations. The
said adjudication orders were affirmed by the 3-Judge Bench of this
150 [2025] 8 S.C.R.

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Court vide judgment dated 28.02.2019 in C.A. No (s).11311 of 2013
etc. cases and hence, the same had attained finality.
7. Seemingly, the appellants failed to pay the penalties imposed by
the Adjudicating Officer, even after the same was affirmed by this
Court. Consequently, the respondent issued demand notices dated
13.05.2022, directing the appellants to pay the penalties along with
interest @ 12% per annum from 28.08.2014 to 13.05.2022 within 15
days from the date of receipt of the notices, failing which, recovery
proceedings would be initiated against them. Even then, the appellants
failed to make the payments. As a result, the respondent issued
notices of attachment of the bank accounts and demat accounts
against the appellants. Challenging the same, the appellants preferred
appeals, which were dismissed by the Tribunal, by the impugned
order dated 29.09.2022, observing that the penalty amount had
not been paid even though the adjudication orders were passed
eight years ago. It further held that if the amount is not paid within
45 days, interest becomes payable under Section 28A of the SEBI
Act. Aggrieved by the dismissal of the appeals, the appellants have
preferred these appeals before us.
8. Now, the questions to be determined in these appeals are, whether
interest on penalties imposed by the Adjudicating Officer is payable
by the appellants, and if so, from which date – whether from the
date of the adjudication orders passed by the Adjudicating Officer
or the demand notices issued by the respondent?
9. Before proceeding further, it is necessary to examine the legal position
related to the issue involved herein.
9.1. Chapter VI A, comprising of Sections 15A–15HB prescribe
penalties for various defaults under the SEBI Act viz., failure
to furnish information, return, etc. Section 15A provides that
a person who fails to file a return or furnish information, shall
be liable to a penalty 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. Likewise, Sections 15B–15HB impose
monetary penalties for other contraventions. However, none
of these sections themselves mention that interest is payable
on the penalty; and they only set out the penalty amounts.
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Even Section 15JA merely directs that penalties recovered are
credited to the Consolidated Fund.
9.2. Section 15I authorizes SEBI to appoint adjudicating officers
to impose penalties under Sections 15A–15HB. But, it does
not by itself mention any interest liability on delayed payment.
9.3. Section 15J directs that in determining the penalty amount
under Sections 15A–15HB, the adjudicating officer shall have
due regard to certain factors viz., disproportionate gain, loss
to investors, repetitive nature of default, etc. It also contains
no provision for interest on delayed payments.
9.4. Although outside Chapter VI-A, Section 28A which was inserted
by the Securities Laws (Amendment) Act, 2014 in Chapter VII,
dealing with Miscellaneous matter, with effect from 18.07.2013,
deals with the recovery when any person fails to pay amounts
due under the Act. It states that if a person fails to pay a penalty
imposed under the SEBI Act, the SEBI Recovery Officer may
prepare a certificate specifying the amount due and recover it
by attachment or other measures. Crucially, it provides that for
the purposes of recovery, the provisions of Sections 220 to 227,
228A, 229, 232, the Second and Third Schedules to the Income-
tax Act, 1961 and the Income-tax (Certificate Proceedings)
Rules, 1962 – shall apply, with necessary modifications, as if
those provisions and the rules were the provisions of the SEBI
Act and referred to amounts due under this Act, instead of
income-tax. In particular, Income-tax Act, Section 220 (which
is thereby incorporated) imposes interest at 1% per month (or
part thereof) on any tax (here, SEBI dues) remaining unpaid
after the due date. Thus, Section 28A effectively makes all sums
due to SEBI (including penalties) recoverable as arrears and
subjects them to statutory interest under the Income-tax Act. For
ease of reference and specificity, the provisions of Section 28A
of the SEBI Act and Section 220 of the Income Tax Act, 1961
are reproduced below:
“28-A. Recovery of amounts. - (1) If a person fails
to pay the penalty imposed by the adjudicating officer
or fails to comply with any direction of the Board for
refund of monies or fails to comply with a direction
of disgorgement order issued under section 11-B or
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fails to pay any fees due to the Board, the Recovery
Officer may draw up under his signature a statement
in the specified form specifying the amount due from
the person (such statement being hereafter in this
Chapter referred to as certificate) and shall proceed
to recover from such person the amount specified
in the certificate by one or more of the following
modes, namely:-
(a) attachment and sale of the person‘s movable
property;
(b) attachment of the person‘s bank accounts;
(c) attachment and sale of the person‘s immovable
property;
(d) arrest of the person and his detention in prison;
(e)appointing a receiver for the management of the
person’s movable and immovable properties,
and for this purpose, the provisions of sections 220 to
227, 228A, 229, 232, the Second and Third Schedules
to the Income-tax Act, 1961 and the Income-tax
(Certificate Proceedings) Rules, 1962, as in force from
time to time, insofar as may be, apply with necessary
modifications as if the said provisions and the rules
made thereunder were the provisions of this Act and
referred to the amount due under this Act instead of
to income-tax under the Income-tax Act, 1961.
Explanation 1.- For the purposes of this sub-section,
the person’s movable or immovable property or
monies held in bank accounts shall include any
property or monies held in bank accounts which has
been transferred directly or indirectly on or after the
date when the amount specified in certificate had
become due, by the person to his spouse or minor
child or son’s wife or son’s minor child, otherwise than
for adequate consideration, and which is held by, or
stands in the name of, any of the persons aforesaid;
and so far as the movable or immovable property or
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monies held in bank accounts so transferred to his
minor child or his son’s minor child is concerned, it
shall, even after the date of attainment of majority
by such minor child or son’s minor child, as the case
may be, continue to be included in the person’s
movable or immovable property or monies held in
bank accounts for recovering any amount due from
the person under this Act.
Explanation 2.- Any reference under the provisions of
the Second and Third Schedules to the Income-tax
Act, 1961 and the Income-tax (Certificate Proceedings)
Rules, 1962 to the assessee shall be construed as
a reference to the person specified in the certificate.
Explanation 3. - Any reference to appeal in Chapter
XVIID and the Second Schedule to the Income-tax
Act, 1961 shall be construed as a reference to appeal
before the Securities Appellate Tribunal under section
15T of this Act.
13
[Explanation 4.
The interest referred to in section 220 of the Income-
tax Act, 1961 shall commence from the date the
amount became payable by the person.
(2) The Recovery Officer shall be empowered to seek
the assistance of the local district administration while
exercising the powers under sub-section (1).
(3) Notwithstanding anything contained in any other
law for the time being in force, the recovery of amounts
by a Recovery Officer under sub-section (1), pursuant
to non-compliance with any direction issued by the
Board under section 11B, shall have precedence over
any other claim against such person.
(4) For the purposes of sub-sections (1), (2) and (3),
the expression “Recovery Officer” means any officer

13 The Explanation Inserted by Act 21 of 2019, s. 42 and the Second Schedule (w.e.f. 21.2.2019)
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of the Board who may be authorised, by general or
special order in writing, to exercise the powers of a
Recovery Officer.]”
“220.When tax payable and when assessee
deemed in default.
(1) Any amount, otherwise than by way of advance
tax, specified as payable in a notice of demand under
section 156 shall be paid within [thirty days]14 of the
service of the notice at the place and to the person
mentioned in the notice:
Provided that, where the [Assessing Officer]15 has
any reason to believe that it will be detrimental to
revenue if the full period of [thirty days] aforesaid is
allowed, he may, with the previous approval of the
[Joint Commissioner]16, direct that the sum specified
in the notice of demand shall be paid within such
period being a period less than the period of [thirty
days] aforesaid, as may be specified by him in the
notice of demand.
[(1A) Where any notice of demand has been
served upon an assessee and any appeal or other
proceeding, as the case may be, is filed or initiated
in respect of the amount specified in the said notice
of demand, then, such demand shall be deemed to
be valid till the disposal of the appeal by the last
appellate authority or disposal of the proceedings,
as the case may be, and any such notice of demand
shall have the effect as specified in section 3 of
the Taxation Laws (Continuation and Validation of
Recovery Proceedings) Act, 1964 (11 of 1964).]
(2) If the amount specified in any notice of demand
under section 156 is not paid within the period limited

14 Substituted by Act 4 of 1988, Section 85, for “ thirty-five days” (w.e.f. 1.4.1989)
15 Substituted by Act 4 of 1988, Section 2, for “ Income-tax Officer” (w.e.f. 1.4.1988)
16 Substituted by Act 21 of 1998, Section 3, for “ Deputy Commissioner” (w.e.f. 1.10.1998)
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under sub-section (1), the assessee shall be liable
to pay simple interest at [one per cent.]17[for every
month or part of a month comprised in the period
commencing from the day immediately following the
end of the period mentioned in sub-section (1)]18 and
ending with the day on which the amount is paid:
[Provided that, where as a result of an order under
section 154, or section 155, or section 250, or section
254, or section 260, or section 262, or section 264]19
[or an order of the Settlement Commission under
sub-section (4) of section 245-D] 20[the amount
on which interest was payable under this section
had been reduced, the interest shall be reduced
accordingly and the excess interest paid, if any,
shall be refunded:]21
[Provided further that where as a result of an order
under sections specified in the first proviso, the
amount on which interest was payable under this
section had been reduced and subsequently as a
result of an order under said sections or section
263, the amount on which interest was payable
under this section is increased, the assessee shall
be liable to pay interest under sub-section (2) from
the day immediately following the end of the period
mentioned in the first notice of demand, referred to
in sub-section (1) and ending with the day on which
the amount is paid:]
[Provided further that in respect of any period
commencing on or before the 31st day of March,
1989 and ending after that date, such interest

17 Substituted by Act 4 of 1988, Section 85, for “ fifteen per cent. per annum from the day commencing after
the end of the period mentioned in sub-Section (1)” (w.e.f. 1.4.1989)
18 Substituted by Act 4 of 1988, Section 85, for “fifteen per cent. per annum from the day commencing after
the end of the period mentioned in sub-Section (1)” (w.e.f. 1.4.1989)
19 Inserted by Act 13 of 1963, Section 14 (w.e.f. 1.4.1962)
20 Inserted by Act 4 of 1988, Section 85 (w.e.f. 1.4.1989)
21 Inserted by Act 13 of 1963, Section 14 (w.e.f. 1.4.1962)
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shall, in respect of so much of such period as falls
after that date, be calculated at the rate of one and
one-half per cent for every month or part of a
month.] 22
….”
In conclusion, once Section 28A of the SEBI Act came into force
with effect from 18.07.2013, the legal position stands settled
that any penalty imposed by the Adjudicating Officer under the
SEBI Act and remaining unpaid beyond the stipulated period is
recoverable in the same manner as arrears of income tax under
the Income Tax Act, 1961. As a necessary corollary, interest
on such unpaid penalty also becomes statutorily leviable under
section 220(2) of the Income Tax Act, which prescribes simple
interest at the rate of 1% per month (12% per annum) for any
amount specified in a demand notice that is not paid within the
prescribed time.
9.5. To elucidate further, we will also look into the provision of Section
156 of the Income Tax Act, 1961, which reads as under:
“156. Notice of demand- When any tax, interest,
penalty, fine or any other sum [Certain words omitted
by Act 13 of 1966, Section 32 and Schedule III (w.e.f.
1.4.1967).] is payable in consequence of any order
passed under this Act, the [Assessing Officer]23 shall
serve upon the assessee a notice of demand in the
prescribed form specifying the sum so payable:
[Provided that where any sum is determined to be
payable by the assessee under sub-section (1) of
section 143, the intimation under that sub-section
shall be deemed to be a notice of demand for the
purposes of this section.]24
9.6. It is clear from the above provision that when any tax, interest,
penalty, fine or any other sum (other than advance tax) is

22 Inserted by Act 4 of 1988, Section 85 (w.e.f. 1.4.1989)
23 Substituted by Act 4 of 1988, Section 2, for” Income-tax Officer” (w.e.f. 1.4.1988)
24 Inserted by Act 18 of 2008, Section 40 (w.e.f. 1.4.2008)
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payable under the Income Tax Act, the Assessing Officer is
required to serve a notice of demand upon the assessee. This
notice mandates payment of the specified amount within 30
days from the date of its service. A reading of the provisions
makes it clear that for the purpose of recovery of amounts due
under the SEBI Act, certain provisions of the Income Tax Act
have been incorporated into the SEBI Act. At this juncture, it
will be relevant to point out the difference between “legislation
by incorporation” and “legislation by reference”. In the case
of “legislation by incorporation”, the provisions of the original
Act, once specified, become an integral and independent part
of the subsequent Act. The provisions of the original Act are
deemed to be incorporated in the subsequent Act as if they
were enacted within it. On the other hand, in the case of
“legislation by reference”, the provisions are generally referred
to for applicability, and the effect of such reference is that not
only the provisions existing at the time the subsequent Act was
enacted are applied, but also any subsequent amendments
made to the provisions referred to in the original enactment.
Therefore, in the case of “legislation by incorporation”, only
the provisions as they existed on the date of incorporation
into the subsequent law are applicable. In contrast, in the
case of “legislation by reference”, the law as it exists on the
date of application, including any subsequent modifications or
amendment, is applicable. Thus, in the case of “legislation by
incorporation”, modifications to the provisions in the original Act
are not carried into the subsequent Act.
9.7. It will be useful to refer to the following judgments of this court
on this aspect:

(i) The Collector of Customs, Madras v. Nathella Sampathu
Chetty and Ors.25
“…..To consider that the decision of the Privy
Council has any relevance to the construction
of the legal effect of the terms of section 23A
of the Foreign Exchange Regulation Act is to

25 MANU/SC/0089/1961 : AIR 1962 SC 316
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ignore the distinction between a mere reference
to or a citation of one statute in another and an
incorporation which in effect means the bodily
lifting of the provisions of one enactment and
making it part of another so much so that the
repeal of the former leaves the latter wholly
untouched. In the case, however, of a reference
or a citation of one enactment by another without
incorporation, the effect of a repeal of the one
“referred to” is that set out in section 8(1) of the
General Clauses Act:
“8(1) Where this Act, or any Central Act or
Regulation made after the commencement
of this Act, repeals and re-enacts, with or
without modification, any provision of a former
enactment, then references in any other
enactment or in any instrument to the provision
so repealed shall, unless a different intention
appears : be construed as references to the
provision so re-enacted. “
52. On the other hand, the effect of incorporation
is as stated by Brett, L. J., in Clarke v. Bradlaugh
(1881) 8 Q.B.D. 63:
“Where a statute is incorporated, by reference,
into a second statute the repeal of the first statute
by a third does not affect the second”.
53. This is analogous to, though not identical
with the principle embodied in section 6A of the
General Clauses Act enacted to define the effect
of repeals effected by repealing and amending
Acts which runs in these terms:
“6A. Where any Central Act or Regulation made
after the commencement of this Act repeals any
enactment by which the text of any Central Act
or Regulation was amended by the express
omission, insertion or substitution of any matter,
then, unless a different intention appears, the
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repeal shall not affect the continuance of any such
amendment made by the enactment so repealed
and in operation at the time of such repeal.”
54. We say ‘not identical’ because in the
class of cases contemplated by section 6A
of the General Clauses Act, the function of
the incorporating legislation is almost wholly
to effect the incorporation and when that is
accomplished, they die as it were a natural
death which is formally effected by their repeal.
In cases, however, dealt with by Brett, L. J., the
legislation from which provisions are absorbed
continue to retain their efficacy and usefulness
and their independent operation even after the
incorporation is effected.”

(ii) Ujagar Prints and Ors. v. Union of India (UOI) and Ors.26
“49. Referential legislation is of two types. One
is where an earlier Act or some of its provisions
are incorporated by reference into a later Act.
In this event, the provisions of the earlier Act
or those so incorporated as they stand in the
earlier Act at the time of incorporation, will be
read into the later Act. Subsequent changes in
the earlier Act or the incorporated provisions
will have to be ignored because, for all practical
purposes, the existing provisions of the earlier
Act have been re-enacted by such reference into
the later one, rendering irrelevant what happens
to the earlier statute thereafter.
Examples of this can be seen in Secretary
of State v. Hindustan Co-operative Insurance
Society MANU/PR/0038/1931 : AIR 1931
PC 149, Bolani Ores Ltd. v. State MANU/
SC/0313/1974 : AIR 1975 SC 17, Mahindra

26 MANU/SC/0675/1988: AIR 1989 SC 516
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and Mahindra Ltd v. Union of India MANU/
SC/0391/1979 : AIR 1979 SC 798. On the other
hand, the later statute may not incorporate the
earlier provisions. It may only make a reference
of a broad nature as to the law on a subject
generally, as in Bhajiya v.Gopikabai MANU/
SC/0403/1978 : (1978) 3 SCR 561 : AIR 1978
SC 793, or contain a general reference to the
terms of an earlier statute which are to be made
applicable. In this case any modification, repeal
or re-enactment of the earlier statute will also
be carried into in the later, for here, the idea is
that certain provisions of an earlier statute which
become applicable in certain circumstances are
to be made use of for the purpose of the latter
Act also. Examples of this type of legislation are
to be seen in Collector of Customs v. Nathella
Sampathu Chetty MANU/SC/0089/1961 : (1962)
3 SCR 786 : AIR 1962 SC 316, New Central
Jute Mills Co. Ltd. v. Assistant Collector MANU/
SC/0339/1970 : (1971) 2 SCR 92 : AIR 1971
SC 454 and Special Land Acquisition Officer,
City Improvement Trust Board Mysore v. P.
Govindan MANU/SC/0384/1976 : (1977) 1
SCR 549 : AIR 1976 SC 2517...Ed. Whether
a particular statute falls into the first or second
category is always a question of construction.
In the present case, in my view, the legislation
falls into the second category. Section 3(3) of
the 1957 Act does not incorporate into the 1957
Act any specific provisions of the 1944 Act. It
only declares generally that the provisions of the
1944 Act shall apply “so far as may be”, that is,
to the extent necessary and practical, for the
purposes of the 1957 Act as well.
50. That apart, it has been held even when a
specific provision is incorporated and the case
apparently falls in the first of the above categories,
that the rule that repeals, modifications or
amendments of the earlier Act will have to be
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ignored is not adhered to in certain situations.
These have been set out in State of Madhya
Pradesh v. Narasimhan MANU/SC/0226/1975 :
(1976) 1 SCR 6 : AIR 1975 SC 1835. In that case,
the Supreme Court was considering the question
whether the amendment of Section 21 of the
Penal Code by the Criminal Law Amendment
Act, 1958, was also applicable for purposes of
the Prevention of Corruption Act 1947, which
by Section 2 incorporates, for the purposes
of that Act, the definition of ‘public servant’ in
Section 21 of the Penal Code. Answering the
question in the affirmative, the Court outlined
the following propositions:
Where a subsequent Act incorporates provisions
of a previous Act, then the borrowed provisions
become an integral and independent part of the
subsequent Act and are totally unaffected by
any repeal or amendment in the previous Act.
This principle, however, will not apply in the
following cases:
(a) Where the subsequent Act and the previous
Act are supplemental to each other;
(b) where the two Acts are in pari materia;
(c) where the amendment in the previous Act, if
not imported into the subsequent Act also, would
render the subsequent Act wholly unworkable
and ineffectual; and
(d) where the amendment of the previous Act,
either expressly or by necessary intendment,
applies the said provisions to the subsequent Act.”

(iii) Girnar Traders and Ors. v. State of Maharashtra and Ors.27
“86. At the very outset, we may notice that
in the preceding paragraphs of the judgment,

27 MANU/SC/0029/2011: 2011 3 SCC 1
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we have specifically held that the MRTP Act
is a self-contained code. Once such finding is
recorded, application of either of the doctrines
i.e. “legislation by reference” or “legislation by
incorporation”, would lose their significance
particularly when the two Acts can coexist and
operate without conflict.
87. However, since this aspect was argued by
the learned Counsel appearing for the parties
at great length, we will proceed to discuss the
merit or otherwise of this contention without
prejudice to the above findings and as an
alternative plea. These principles have been
applied by the courts for a considerable period
now. When there is general reference in the
Act in question to some earlier Act but there
is no specific mention of the provisions of
the former Act, then it is clearly considered
as legislation by reference. In the case of
legislation by reference, the amending laws
of the former Act would normally become
applicable to the later Act; but, when the
provisions of an Act are specifically referred
and incorporated in the later statute, then
those provisions alone are applicable and
the amending provisions of the former Act
would not become part of the later Act. This
principle is generally called legislation by
incorporation. General reference, ordinarily,
will imply exclusion of specific reference and
this is precisely the fine line of distinction
between these two doctrines. Both are referential
legislations, one merely by way of reference
and the other by incorporation. It, normally,
will depend on the language used in the later
law and other relevant considerations. While
the principle of legislation by incorporation has
well-defined exceptions, the law enunciated as
of now provides for no exceptions to the principle
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of legislation by reference. Furthermore, despite
strict application of doctrine of incorporation, it
may still not operate in certain legislations and
such legislation may fall within one of the stated
exceptions.
xxx xxx xxx
121. These are the few examples and principles
stated by this Court dealing with both the
doctrines of legislation by incorporation as
well as by reference. Normally, when it is by
reference or citation, the amendment to the
earlier law is accepted to be applicable to the
later law while in the case of incorporation, the
subsequent amendments to the earlier law are
irrelevant for application to the subsequent law
unless it falls in the exceptions stated by this
Court in M.V. Narasimhan case [State of M.P. v.
M.V. Narasimhan, MANU/SC/0226/1975 : (1975)
2 SCC 377: 1975 SCC (Cri) 589]. It could well
be said that even where there is legislation by
reference, the Court needs to apply its mind as to
what effect the subsequent amendments to the
earlier law would have on the application of the
later law. The objective of all these principles of
interpretation and their application is to ensure
that both the Acts operate in harmony and the
object of the principal statute is not defeated by
such incorporation. Courts have made attempts
to clarify this distinction by reference to various
established canons. But still there are certain
grey areas which may require the court to
consider other angles of interpretation.
122. In Maharashtra SRTC [MANU/
SC/0187/2003 : 2003:INSC:137 : (2003) 4 SCC
200] the Court was considering the provisions of
the MRTP Act as well as the provisions of the
Land Acquisition Act. The Court finally took the
view by adopting the principle stated in U.P. Avas
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Evam Vikas Parishad [ MANU/SC/0055/1998 :
1998:INSC:31 : (1998) 2 SCC 467] and held
that there is nothing in the MRTP Act which
precludes the adoption of the construction that
the provisions of the Land Acquisition Act as
amended by Central Act 68 of 1984, relating
to award of compensation would apply with full
vigour to the acquisition of land under the MRTP
Act, as otherwise it would be hit by invidious
discrimination and palpable arbitrariness and
consequently invite the wrath of Article 14 of
the Constitution. While referring to the principle
stated in Hindusthan Coop. Insurance Society
Ltd. [ MANU/PR/0038/1931 : (1930-31) 58 IA 259:
AIR 1931 PC 149] and clarifying the distinction
between the two doctrines, the Court declined to
apply any specific doctrine and primarily based
its view on the plea of discrimination but still
observed: (Maharashtra SRTC case [ MANU/
SC/0187/2003 : 2003:INSC:137 : (2003) 4 SCC
200], SCC p. 208, para 11)
11. ... The fact that no clear-cut guidelines or
distinguishing features have been spelt out to
ascertain whether it belongs to one or the other
category makes the task of identification difficult.
The semantics associated with interpretation
play their role to a limited extent. Ultimately,
it is a matter of probe into legislative intention
and/or taking an insight into the working of the
enactment if one or the other view is adopted.
The doctrinaire approach to ascertain whether
the legislation is by incorporation or reference is,
on ultimate analysis, directed towards that end.
The distinction often pales into insignificance
with the exceptions enveloping the main rule.
123. In the case in hand, it is clear that both
these Acts are self-contained codes within
themselves. The State Legislature while
enacting the MRTP Act has referred to the
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specific Sections of the Land Acquisition
Act in the provisions of the State Act.
None of the Sections require application
of the provisions of the Land Acquisition
Act generally or mutatis mutandis. On the
contrary, there is a specific reference to
certain Sections and/or content/language of
the Section of the Land Acquisition Act in
the provisions of the MRTP Act.”
[Emphasis supplied]

9.8. There is yet another possibility, where, in the original Act, there
can be an incorporation of another provision from the same or
a different enactment. In such cases, the incorporated provision
should also be deemed to have been incorporated into the
subsequent Act. Furthermore, when there is a general reference
in the original Act that forms part of the incorporation in the
subsequent Act, the general reference also gets incorporated
into the subsequent Act as a reference. Section 220 of the
Income Tax Act deals with the period within which the demand
made under Section 156 is to be paid. Section 156, by itself,
does not specify any period within which the payment is to be
made. However, the proviso to Section 156 makes it clear that a
separate demand is not necessary when an assessment is made
under Section 143(1) of the Income Tax Act, and the intimation
of assessment is to be treated as the notice of demand. At this
juncture, it is necessary to point out that the period of 30 days
mentioned in Section 220 can also be reduced for the reasons
stated in the proviso, provided the prescribed procedure is
followed. The reference in Section 220(1) to Section 156 is
limited to the purpose of reckoning the period of 30 days from
the date of issuance of the demand notice. Therefore, in the strict
sense, the limited reference to Section 156 in Section 220(1)
cannot be treated either as a “legislation by incorporation” or
a “legislation by reference”.
9.9. The SEBI Act, 1992 was primarily enacted to protect the
interests of investors in securities, to promote the development
and regulation of the securities market, and to address matters
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incidental thereto. These include, but are not limited to, preventing
fraudulent activities and malpractices in trading, guiding investors
through the mobilisation and allocation of resources, ensuring
safety in investments by prohibiting insider trading, curtailing
price rigging, promoting fair practices in the trading of securities
and stocks, and regulating financial intermediaries through
the creation of codes of conduct for take overs, as well as
conducting inquiries and audits of the stock market. To achieve
these objects, the SEBI Board takes cognizance of offences
committed by companies and their directors and initiates action
by way of levying penalties, suspending trading privileges, or
recommending imprisonment. A company, though a juristic
person, capable of suing and being sued in its own name, can
be inflicted with punishments of penalty or suspension from
trading, but cannot be punished by imprisonment. However,
the directors and other connected persons covered by the PTI
Regulations, who were at the helm of affairs at the time of the
violation, can be subjected to punishment. It is trite law that
in cases where directors of a company are prosecuted, the
company is also liable to be prosecuted, because, in certain
cases, but for the violation by the company, the directors cannot
be prosecuted. The Board, armed with powers under Sections
29 and 30 of the SEBI Act, has also framed various rules and
regulations to achieve the Act’s objectives. Any violation of the
SEBI Act, its rules or its regulations – and violations of certain
provisions under the Companies Act by a listed company –
can trigger adjudication by SEBI. Thus, it can be seen that
adjudication under SEBI Act is triggered only by a violation.
In contract, under the Income Tax Act, the levy and collection
are enabled by charging provisions. Section 156 of the Income
Tax Act, which deals with the issuance of a demand notice
before recovery, has not been incorporated into the SEBI
Act. Under the SEBI Act, the levy of penalties under various
circumstances is governed by Chapter VIA, which deals with
penalties and adjudication. The adjudication is carried out in
accordance with the procedure laid down in the Securities and
Exchange Board of India (Procedure for Holding Inquiry and
Imposing Penalties) Rules, 1995. Section 28A of the SEBI Act,
introduced with effect from 18.07.2013, provides the mechanism
for recovery of penalties and, in cases of default, contemplates
[2025] 8 S.C.R. 167

Jaykishor Chaturvedi & Etc. v. Securities and Exchange Board of India

the payment of interest by incorporating certain provisions of
the Income Tax Act. In effect, Section 28A is a substantive law
insofar as the levy of interest. The adjudication is conducted
as per the mechanism outlined under SEBI Act and the rules
framed thereunder. Notably, the provisions of the SEBI Act or
its rules do not mandate the issuance of a separate demand
notice before recovery. Adjudication amounts to a crystallization
of liability, and the demand is a natural sequitur. Therefore, there
is no corresponding requirement for issuance a separate notice
of demand seeking payment of the amount determined under
the adjudication order. The adjudication authority is well within
his powers to fix a period for payment of the amount specified
in the adjudication order, and upon default, the liability to pay
interest becomes inevitable.
10. In the present case, although the original adjudication orders dated
28.08.2014 did not expressly mention interest, the liability to pay
interest arises as a matter of law by operation of section 28A read
with section 220 of the Income Tax Act. The appellants admittedly
failed to pay the penalty within the 45-day period as directed in the
adjudication orders, and the payment was eventually made after
nearly nine years, only pursuant to the order of this Court dated
24.04.2023. It is a settled principle that statutory dues not paid within
the prescribed time attract statutory interest, irrespective of whether
such interest was specifically mentioned in the original order or not.
All that is required is an enabling provision to demand interest. Once
such a provision is available, the liability to pay interest becomes
axiomatic upon the expiry of the period provided for payment of the
penalty. As stated earlier, the enabling provision to recover interest
was already in vogue when the adjudication order was passed.
Accordingly, the appellants are liable to pay interest at 12% per annum
on the unpaid penalty amounts for the period of delay. Therefore,
the contentions of the appellants that interest cannot be levied
retrospectively is misplaced, as is their reliance on the judgments
of this court – since not only are the facts different, but also are the
statutory provisions involved. In fact, in J.K. Synthetics Ltd, the issue
was the interpretation of the provisions of the Rajasthan Sales Tax Act,
1954, specifically whether interest was to be calculated from the date
of filing the return or from the date of assessment. The Constitutional
Bench of this court held that the liability to pay interest would accrue
168 [2025] 8 S.C.R.

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only after the tax liability was crystallized upon assessment. In the
present case, interest is demanded after adjudication – not from the
date of the violation – and therefore, the principle laid down in J.K.
Synthetics is not applicable.
11. Now, the next question is whether interest on the unpaid penalty
should accrue from the expiry of the 45-day period stipulated in the
Adjudicating Officer’s orders dated 28.08.2014, or from the expiry
of 30 days following the SEBI’s notices dated 13.05.2022.
11.1. The appellants contend that interest, if payable, should accrue
only from the date of the demand notices issued on 13.05.2022,
rather than from the date of the adjudication orders. Conversely,
the respondent argues that interest is due from the expiry
of the 45-day period following the adjudicating orders dated
28.08.2014 as those orders constituted enforceable demands.
11.2. As seen above, section 220(1) of the Income Tax Act, 1961
does not independently envisage the issuance of a demand
notice. Instead, it refers to the notice served under section 156,
requiring payment within 30 days. Failure to comply attracts
interest at 12% per annum under section 220(2), calculated
from the expiry of the 30-day period. However, since section
156 is not incorporated into section 28A of the SEBI Act, the
expression ‘notice of demand’ for recovery under the SEBI
Act must be understood to include adjudication orders issued
under Chapter VIA of the SEBI Act. We have already held
that the adjudication officer was well within his rights to fix a
period for payment. One of the purposes of specifying such a
period in the adjudication order is to determine the period from
which payment of interest is to be calculated, if the assessee
commits a default.
11.3. In the present case, the Adjudicating Officer’s order itself
constituted a clear and enforceable demand for payment of
penalties within 45 days. This order attained finality following
the appellants’ unsuccessful challenges before the SAT and this
Court, thereby crystallizing the liability. Once the adjudication
order has attained finality, the obligation to pay the penalty
stands revived from the date of adjudication. The pendency
of any challenge after the period specified for payment only
postpones or reduces the liability to pay interest; and the interim
order granted if any, would also not absolve the appellants
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Jaykishor Chaturvedi & Etc. v. Securities and Exchange Board of India

from the obligation to pay interest. [See: Calcutta Jute
Manufacturing Co. and another v. Commercial Tax Officer28].
Under section 220(1) read with section 28A of the SEBI Act,
interest becomes payable upon failure to meet the demand
within the prescribed time. The appellants’ failure to comply
within the specified time rendered them ‘defaulters’ under
Section 220(4) of the Income Tax Act, justifying the accrual of
interest from the expiry of the 45-day compliance period. As
already mentioned, since section 156 is not incorporated into
the SEBI Act, the original order must be treated as the statutory
trigger for the purpose of calculation of interest. Moreover, the
demand notice dated 13.05.2022 merely reiterated the earlier
demand and did not create a fresh liability. To hold otherwise
would undermine the effectiveness of the original compliance
period and incentivize delay.
11.4. In Dushyant Dalal (supra), this court affirmed that the Interest
Act, 1978 empowers tribunals, including SAT, to award interest
from the date the cause of action arose until the initiation of
recovery proceedings based on equitable considerations. The
following passage of the said decision is relevant:
“32. We agree with the aforesaid statement of the law.
It is clear, therefore, that the Interest Act of 1978 would
enable Tribunals such as SAT to award interest from
the date on which the cause of action arose till the
date of commencement of proceedings for recovery
of such interest in equity. The present is a case where
interest would be payable in equity for the reason that
all penalties collected by SEBI would be credited to
the Consolidated Fund under Section 15-JA of the
SEBI Act. There is no greater equity than such money
being used for public purposes. Deprivation of the
use of such money would, therefore, sound in equity.
This being the case, it is clear that, despite the fact
that Section 28-A belongs to the realm of procedural
law and would ordinarily be retrospective, when it
seeks to levy interest, which belongs to the realm of
substantive law, the Tribunal is correct in stating that

28 1997 106 (STC) 433
170 [2025] 8 S.C.R.

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such interest would be chargeable under Section 28-A
read with Section 220(2) of the Income Tax Act only
prospectively.29 However, since it has not taken into
account the Interest Act, 1978 at all, we set aside the
Tribunal’s findings that no interest could be charged
from the date on which penalty became due. Civil
Appeals Nos. 10410-12 of 2017 are allowed insofar
as the penalty cases are concerned.”
The liability of interest is fortified after the enactment of section
28A, which is a substantive law. Furthermore, Explanation
4 to section 28A inserted on 21.02.2019, explicitly states
that interest under section 220 shall accrue from the date
the amount became payable. We have already held that
the liability to pay penalty stood triggered from the date
of adjudication and that no separate notice of demand is
necessary. Further, in the present case, as the adjudication
order itself specified the time for payment of the penalty, the
liability to pay interest would commence upon the expiry of the
period mentioned in the assessment notice. An “explanation”
in any law serves to clarify, restrict, or expand the scope of
the main provision. The nature and effect of an Explanation
must be understood in the context of the object of the Act,
and in particular, the provision to which the Explanation is
inserted. The Explanation introduced in 2019, in our view, did
not bring about any substantive change but merely clarified
the existing legal position. We also foresee another situation:
where the original adjudication order under the SEBI Act does
not specify any time for payment, the period of 30 days under
Section 220 of the Income Tax Act should be deemed to
apply for making the payment, failure of which would trigger
the liability to pay interest. Thus, the adjudication officer’s
order which specified payment within 45 days, effectively
operates as a notice of demand, rendering any separate
demand notice redundant.

29 The same 2014 Amendment which introduced Section 28-A, with effect from 18-7-2013, also introduced
Section 15-JB retrospectively, with effect from 20-4-2007. This is a positive indication that Section
28-A was intended only to have prospective application. It must be clarified, however, that interest is
chargeable only with effect from 25-8-2014, as Section 220 was not referred to, while enacting Section
28-A, in any of the three Ordinances preceding the Amendment Act of 2014.
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Jaykishor Chaturvedi & Etc. v. Securities and Exchange Board of India

11.5. At this juncture, it is to be pointed out that interest on unpaid
penalties is compensatory in nature, not penal. Its primary
purpose is not to punish the defaulter, but to make good the
financial loss occurred to the Revenue on account of delay in
receiving the payment that was lawfully due. When a penalty
is imposed, a specific period is granted for compliance. If the
payment is not made within that stipulated period, the delay
deprives the Revenue of the timely use of funds that rightfully
belong to the public exchequer. Therefore, the accrual of
interest upon default is automatic and flows from the nature
of the liability – serving to compensate for the time value of
money and the disruption caused by delayed payment, rather
than to impose an additional punitive burden. In this regard, it
will be useful to refer to the following decisions:

(i) Bhai Jaspal Singh v. CCT30:
“36. Interest is compensatory in character and
is imposed on an assessee who has withheld
payment of any tax as and when it is due and
payable. The interest is levied on the actual
amount of tax withheld and the extent of delay in
paying the tax on the due date. Essentially, it is
compensatory and different from penalty which
is penal in character (see Pratibha Processors
v. Union of India [(1996) 11 SCC 101: AIR 1997
SC 138]).

(ii) Commissioner of Income-Tax v. Dhanalakshmy Weaving
Works31:
“8…
“Interest” is a consideration paid either for use of
money or for forbearance in demanding it after it
has fallen due. It is a compensation allowed by
law or fixed by parties or permitted by custom
or usage for use of money belonging to another

30 (2011) 1 SCC 39 : (2010) 35 VST 456
31 (2000) 245 ITR 13 : 1999 SCC OnLine Ker 597 : (2000) 160 CTR 374
172 [2025] 8 S.C.R.

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or for the delay in paying the money after it has
become payable. It can be said to be the cost of
using credit or funds of another. The liability for
payment of interest at the rate stipulated accrues
automatically on a failure to pay the amount of
tax by the due date. This is so because such
a provision is not a claim for any tax, but is
a procedural matter providing machinery for
recovery of tax which is compensatory in nature
(see Karimtharuvi Tea Estate Ltd. v. State of
Kerala, [1966] 60 ITR 262 (SC); CST v. Qureshi
Crucible Centre, [1993] 89 STC 467 (SC) and
Prahlad Rai v. STO, [1992] 84 STC 375 (SC)).
Liability to pay interest arises by operation of law,
being automatic. Looking at the nature of levy, it
is clear that it is compensatory in character and
not in the nature of penalty. It is seen that there
are several provisions where the Legislature has
made a distinction between interest payable and
penalty imposable. The ultimate liability for tax
being not there does not dilute the requirements
for the non-compliance of which interest is levied
under section 201(1A).
9. Judged in that background, the levy of interest
is justified and the Tribunal was not justified in
deleting it. The answer to the reframed question
is in the negative, in favour of the Revenue and
against the assessee. Reference application is
accordingly answered.”
Thus, we hold that interest must accrue from the expiry of the
45-day compliance period following the adjudication orders
dated 28.08.2014. The subsequent demand notices are nothing
but reminders and are not the first demand notices before the
accrual of liability for interest. Accepting the appellants’ position
would encourage defaulters to delay payment indefinitely under
the guise of awaiting formal orders, thereby undermining the
efficacy of the enforcement framework and resulting in a loss
to the revenue.
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Jaykishor Chaturvedi & Etc. v. Securities and Exchange Board of India

11.6. In view thereof, the authorities relied upon by the appellants
lack persuasive value, and we find no infirmity or illegality
in the order passed by the Tribunal that would warrant our
interference.

CONCLUSION
11.7. Accordingly, all these appeals stand dismissed. The appellants
are directed to pay interest calculated by the respondent, within
a period of 15 days from the date of receipt of a copy of this
judgment. No costs. Consequently, connected miscellaneous
application(s), if any, shall stand closed.

Result of the case: Appeals dismissed.

†
Headnotes prepared by: Divya Pandey