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Company & Insolvency LawSupreme Court of India

Securities and Exchange Board of India v. Terrascope Ventures Limited Etc. Etc.

Civil Appeal · 2026 INSC 245Decided 17 Mar 2026
C.A. No.-005209-005211 - 2022
Justice J.B. Pardiwala · Justice K.V. Viswanathan

Background

In 2012, a company then called Moryo Industries Limited (later renamed Terrascope Ventures Limited) raised about Rs. 15.87 crore through a preferential allotment of shares to 42 entities, stating the funds would be used for business expansion. SEBI's investigation found that, instead, the funds were diverted almost immediately into purchasing shares of other companies and making loans/advances, which SEBI alleged was part of a scheme to generate artificial long-term capital gains through price manipulation. SEBI's Whole Time Member first restrained the company, its directors (including Mr. and Mrs. Saraf), and associated allottees from the securities market, and later an Adjudicating Officer imposed monetary penalties on them for violating the PFUTP Regulations and the Securities Contracts (Regulation) Act. The Securities Appellate Tribunal set aside these penalties, prompting SEBI's appeal to the Supreme Court; the respondents did not appear, so the Court appointed an amicus curiae to represent their side.

Decision Breakdown

The Supreme Court allowed SEBI's appeals, set aside the SAT's order, and restored the Adjudicating Officer's penalty order. It held that the Whole Time Member's earlier interim order (restraining market access) and the Adjudicating Officer's later penalty order operated in separate fields under different statutory powers and were not duplicative: the WTM at the relevant time could only restrain access and order disgorgement, while the power to impose a monetary penalty for fraud under Section 15HA vested separately in the Adjudicating Officer. The Court distinguished the precedents relied on by the respondents (Nirmal N. Kotecha and Ram Kishori Gupta) as factually different, since in this case there was no prior final order covering the same cause of action that the penalty order improperly supplemented. It also found the quantum of penalty proportionate to the fraud established.

Lesson Learnt

A market restraint/disgorgement order by SEBI's Whole Time Member and a separate monetary penalty by the Adjudicating Officer for the same underlying fraud are not automatically duplicative. They can validly coexist where they are exercises of distinct statutory powers, and a company or its promoters cannot escape penalty merely because an earlier, different kind of regulatory action was already taken against them.

Securities and Exchange Board of India v. Terrascope Ventures Limited Etc. Etc. – Legal Case Shots | LegalAware