KBS India Ltd vs NSEIL

IN THE SECURITIES APPELLATE TRIBUNAL AT
MUMBAI


TH

DATED THIS THE 30 DAY OF JUNE, 2026


CORAM : Justice P. S. Dinesh Kumar, Presiding Officer
Ms. Meera Swarup, Technical Member
Dr. Dheeraj Bhatnagar, Technical Member


Appeal No. 105 of 2024
And
Misc. Application No. 1723 of 2023
And
Misc. Application No. 426 of 2024

Between

KBS India Ltd.
502, Commerce House, 5,140,
Nagindas Master Road, Next to Rhythm
House, Fort, Mumbai – 400 001.



…. Appellant

By Mr. Kunal Katariya, Advocate i/b SD and Associates for
the Appellant.

And

National Stock Exchange of India Limited
Exchange Plaza, C 1, Block G,
Bandra Kurla Complex, Bandra (East),
Mumbai - 400 051.



… Respondent

By Mr. Anubhav Ghosh, Advocate with Mr. Vivek Shah,
Mr. Paras Taneja, Advocates i/b Trilegal for the Respondent.


THIS APPEAL IS FILED UNDER SECTION 23L OF SCRA,
1956 TO SET ASIDE ORDER DATED NOVEMBER 28,
2023 (EX-A) PASSED BY NSE.

TH
THIS APPEAL COMING ON FOR HEARING THIS 30
DAY OF JUNE 2026, THIS TRIBUNAL PASSED THE
FOLLOWING:

2

O R D E R

Per : Justice P. S. Dinesh Kumar, Presiding Officer (Oral)


This appeal is directed against order dated 28.11.2023
passed by the Enforcement Department of the National
Stock Exchange of India Limited (‘Respondent’ / ‘Exchange’
for short). By the impugned order, respondent has imposed
a monetary penalty of ₹5,35,000/- which included a sum of
₹5,00,000/- with a direction to submit a restructuring/
disinvestment plan and quarterly compliance reports.
2. Mr. Kunal Katariya submitted that NSE has recorded a
finding that appellant had engaged as a principal in a
business other than that of securities involving personal
financial liability, in contravention of Rule 8(1)(f) and Rule
8(3)(f) of the Securities Contracts (Regulation) Rules, 1957
1
(‘SCRR’ for short) read with Exchange circular dated
07.01.2022. He submitted that by the aforesaid circular,
NSE, by way of clarification to Rule 8(1)(f) and 8(3)(f) of
the SCRR, set out an illustrative list of twelve activities
which would be construed as non-compliance with the said
Rules if undertaken by a member. NSE has imposed penalty
for violation of the said circular. That circular was
challenged before the Hon’ble Bombay High Court, wherein
the Union of India made a submission that clarification, if
any, shall be issued by the Government of India.
3. Further, the Department of Economic Affairs, Ministry
of Finance, by amendment published in the Gazette of India
on 19.05.2025, inserted a further proviso to Rule 8(1)(f)
and 8(3)(f) of the SCRR, to the effect that investments

1
NSE/COMP/50957 dated 07.01.2022

3
made by a member shall not be construed as business
except when such investments involve client funds or client
securities or relate to arrangements which are in the nature
of creating a financial liability on the broker. Pursuant
thereto, vide circular dated 10.06.2025, NSE deleted Point
No.10 of the illustrative list contained in circular dated
07.01.2022.
2
4. Thereafter, by another circular dated 23.06.2026, NSE
modified points No.1 and 2 and deleted points No.3 to 12 of
the illustrative list. In substance, Mr. Katariya submitted
that non-compliance with Rule 8(1)(f) and 8(3)(f) of the
SCRR now stands confined to only two activities i.e. (i)
issuing corporate guarantee towards credit facilities availed
by any entity, including group companies and (ii) deposit
pledged with a bank for overdraft facilities availed by any
entity, including group companies.
5. Mr. Katariya, on instructions, submitted that the
appellant does not press this appeal qua the other issues
and undertakes to pay the penalty of ₹35,000/- imposed
under the impugned order.
6. Mr. Ghosh, learned Advocate for the NSE, on
instructions, submitted that matter be remanded insofar as
it relates to Rule 8(3)(f) issue is concerned, to enable the
Member Committee of the Exchange to pass orders in
accordance with the revised and more lenient circulars.
7. We have considered the rival contentions.
8. It is not in dispute that the allegations against the
appellant are under Rule 8(3)(f) which pertain to inter-
corporate deposits/advances extended by the appellant as

2
Circular No. NSE/INSP/74836 dated 23.06.2026

4
well as to investments made by the appellant in its group
companies / subsidiaries, do not fall within either of the two
clauses of the illustrative list, namely, (i) issuing corporate
guarantees and (ii) deposit pledged with a bank for
overdraft facilities. NSE’s findings are based on clauses
which now stand deleted, including Point No.10 thereof
relating to investments in group companies. Therefore, the
penalty imposed under Rule 8(3)(f) issues is not
sustainable. Hence, NSE’s prayer for remand is
unnecessary.
9. In view of the above, the following:
ORDER
(i) Appeal is allowed in part .
(ii) The impugned order, insofar as it relates to the
Rule 8(3)(f) issue, is quashed and set aside and
the penalty collected thereunder shall be refunded
to the appellant within two weeks from the date of
this order.
(iii) Pending interlocutory application(s), if any, stand
disposed of.
(iv) No costs.

Justice P. S. Dinesh Kumar
Presiding Officer



Ms. Meera Swarup
Technical Member


Dr. Dheeraj Bhatnagar
Technical Member
30.06.2026
PTM

Digitally signed
by MRS PRAMILA
Date: 2026.07.02
11:56:48 +05'30'
MRS
PRAMILA