SAT dismisses Karvy Stock Broking’s appeal after refusing to condone 688-day delay, citing lack of bona fide explanation

Karvy Stock Broking Limited (“Karvy”), a SEBI-registered stock broker and depository participant, was investigated after allegations that it had misused clients’ securities and powers of attorney, raised funds by pledging client securities, diverted funds to group entities, and sold or transferred excess securities through related entities.

SEBI passed interim and confirmatory orders, following which an investigation and forensic audit were conducted. SEBI subsequently issued a show-cause notice and, after adjudication, passed an order dated 28 April 2023, together with a corrigendum dated 19 June 2023, imposing various directions and penalties.

Karvy filed an appeal under Section 15T of the SEBI Act, 1992 with a delay of 688 days and sought condonation of delay.

It contended that it had not received the impugned order, that relevant records had been seized in proceedings initiated by other regulatory agencies, and that its Managing Director had been incarcerated and suffered health complications.

Whether Karvy had shown sufficient cause for condonation of the 688-day delay in filing the appeal under Section 15T of the SEBI Act, 1992?

Whether non-service of the impugned order, the Managing Director’s health and incarceration, and alleged non-availability of documents constituted sufficient cause for the delay?

Whether the fact that the appeal was a statutory first appeal involving questions of fact and law warranted a liberal approach to condonation of delay?

The Tribunal applied Section 15T of the SEBI Act, 1992, governing appeals to the Securities Appellate Tribunal, and the principle that delay may be condoned only upon demonstration of “sufficient cause”.

Relying on Shivamma (Dead) by LRs v. Karnataka Housing Board, 2025 SCC OnLine SC 1969, the Tribunal held that the inquiry in a delay-condonation application must ordinarily be confined to whether sufficient cause for the delay has been established; the merits of the underlying appeal cannot substitute for such proof.

The Tribunal also considered Khelo MCX Research Services v. SEBI, Civil Appeal No. 3055 of 2026, concerning the importance of a statutory first appeal on facts, and Udayan Banerjee v. SEBI, Appeal No. 496 of 2022, concerning the insufficiency of general medical material to explain inordinate delay.

The court must first assess the bona fides of the explanation; merits may be considered only where the explanation and opposition are otherwise equally balanced.

The Tribunal held that Karvy had not given a bona fide or satisfactory explanation for the 688-day delay.

SEBI produced a speed-post acknowledgment indicating service of the impugned order, while Karvy did not categorically deny its receipt; instead, it merely contended that service did not establish actual knowledge.

The Managing Director had admittedly received the order on 6 May 2023, had been released from custody nearly a year before the impugned order, and had continued to pursue numerous proceedings on behalf of himself and Karvy.

The medical records showed surgery and discharge before the impugned order was passed, and therefore did not explain the subsequent delay.

The assertion that relevant documents were inaccessible was also rejected because Karvy had actively filed and defended several proceedings during the relevant period and produced no evidence of efforts to obtain the allegedly unavailable records.

Although the Tribunal recognised that a statutory first appeal is important, that consideration could not overcome Karvy’s failure to establish sufficient cause or bona fide reasons for the prolonged delay.

The application for condonation of delay, Miscellaneous Application No. 744 of 2025, was dismissed as devoid of merit.

Consequently, Appeal No. 319 of 2025 was dismissed, and pending interlocutory applications were disposed of. No order as to costs was made.