SEBI recovery against former directors is valid when affirmed orders expressly impose refund liability.

The petitioner, a former director of Amrit Projects (N.E.) Limited (APNEL), resigned on 8 April 2013.

SEBI found that APNEL had issued redeemable preference shares between financial years 2009–10 and 2012–13, raising ₹10,38,54,000 from 5,033 investors.

By an order dated 23 February 2016, SEBI’s Whole Time Member directed APNEL and its directors, including the petitioner, to refund the money with interest and imposed related restraints.

The Securities Appellate Tribunal dismissed the petitioner’s appeal on 10 January 2018.

SEBI later initiated recovery proceedings and attached the petitioner’s bank accounts; on 21 October 2024, the Recovery Officer directed remittance of attached funds towards a stated liability of ₹9,93,29,277.

The petitioner challenged the freezing and remittance, arguing that he had no liability and disputing the recovery calculation

Whether SEBI’s Recovery Officer could attach the petitioner’s personal bank accounts and direct remittance when the petitioner contended that he had no liability to refund the amounts collected by APNEL

Whether the amount stated in the remittance order was improperly calculated

The Court considered the SEBI Act, 1992, including Sections 11B and 28A: Section 11B provides the basis for SEBI’s directions, while Section 28A permits recovery of amounts due under securities laws.

It also referred to Section 73(2) of the Companies Act, 1956, which was the basis for calculating interest on investor repayments under the Whole Time Member’s order.

The operative rule in this case was that recovery could proceed to enforce the final SEBI order directing the company and its directors to refund investor money; the Court cited no judicial precedents

The Court found that the petitioner was a director throughout the relevant fundraising period and had resigned only on 8 April 2013.

The Securities Appellate Tribunal had already rejected his contention that he was not a director at the relevant time, and the 2016 refund direction expressly named him alongside APNEL’s other directors.

The Court therefore treated the recovery proceedings as enforcement of an existing direction, rather than a determination of liability for the first time.

On quantum, it noted that SEBI had identified collections of ₹10,38,54,000 and that the recovery proceedings initially concerned that amount; the remittance order stated a liability of ₹9,93,29,277.

It found no illegality in the remittance order

W.P.O. No. 159 of 2026 was dismissed