Debarment period suffered held sufficient; PFUTP violation requires specific facts.

Capitalaim Financial Advisory Pvt. Ltd. (Appellant No. 1) is a SEBI registered Investment Adviser since 2014, with Abhijeet Bajpai (Appellant No. 2) as its Director.

An inspection conducted by SEBI for the period between November 2, 2019, and November 8, 2019, revealed alleged violations of the SEBI Act, 1992, SEBI (Investment Advisers) Regulations, 2013 ("IA Regulations"), and SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 ("PFUTP Regulations").

An interim order cum Show Cause Notice (SCN) was issued, alleging failure to conduct risk profiling and suitability assessments, charging unreasonable fees, and defrauding clients.

Following replies from the appellants and a hearing, the Whole Time Member (WTM) of SEBI passed an order dated January 9, 2023, debarring the appellants from accessing the securities market for five years and directing them to resolve complaints on the SCORES platform.

The appellants filed this appeal and have by the time of the hearing suffered debarment for 4 years and 5 months.

They also informed SEBI that Capitalaim stopped taking new clients and closed its business in February 2020.

Mr. Nandlal Kushwaha filed an intervention application (Misc. Application No. 104 of 2026) claiming Capitalaim owed him ₹4,74,253/-, despite having settled a previous claim in 2018 by receiving ₹13,60,560/-.

1. Whether the period of debarment imposed on the appellants was proportional, considering the time already served and the closure of their business.

2. Whether the findings of violation of SEBI (PFUTP) Regulations, 2003, were justified, or if such violations were merely a consequence of violating IA Regulations.

3. Whether the intervention application seeking further refund from Capitalaim was maintainable, given a prior settlement.

The Tribunal applied Section 15T of the Securities and Exchange Board of India Act, 1992, which governs appeals against SEBI orders.

It also considered the SEBI (Investment Advisers) Regulations, 2013, and the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003.

The Tribunal referred to its own precedent in Pinnacle Market Investment Advisory Pvt. Ltd. & Others v. SEBI (Appeal No. 340 of 2023, decided on September 6, 2023), which held that a general allegation of IA Regulations violation does not automatically constitute a breach of PFUTP Regulations without specific facts.

The principle of "approbate and reprobate" was also implicitly applied in dismissing the intervention application.

The Tribunal noted that the appellants had already suffered debarment for 4 years and 5 months out of the 5-year period and had closed their business, making the proportionality of the remaining debarment a key consideration.

Regarding the PFUTP Regulations violation, the Tribunal found no specific facts indicating a breach, distinguishing it from general violations of the IA Regulations.

It held that merely violating IA Regulations does not automatically imply a PFUTP violation unless specific fraudulent conduct is demonstrated, consistent with its previous ruling in Pinnacle Market Investment Advisory Pvt. Ltd. & Others v. SEBI.

On the intervention application, the Tribunal found that the intervener had previously settled the dispute in 2018 by receiving ₹13,60,560/- and could not now seek additional refunds, applying the principle that one cannot both accept and reject the terms of a settlement.

The period of debarment already suffered by the appellants was held to be sufficient.

The finding regarding the violation of SEBI (PFUTP) Regulations was set aside.

Misc. Application No. 104 of 2026 (Intervention application) was dismissed as lacking merit.

Pending interlocutory applications were disposed of, and no costs were awarded.