Comandur Parthasarathy vs SEBI on 9 September 2026

ORDER

Per: Justice P.S. Dinesh Kumar, Presiding Officer This miscellaneous application is filed to condone the delay of 474 days in filing the Appeal No.723 of 2024 directed against order dated 28.04.2023 read with the corrigendum dated 19.06.2023, passed by the WTM1, SEBI2 issuing various directions and penalties contained in paragraph Nos.136 and 137 of the impugned order.

2. We have heard Mr. Janak Dwarkadas, learned Senior Advocate for the appellant and Mr. Shiraz Rustomjee, learned Senior Advocate for the SEBI.

3. Brief Facts of the case are: i. Karvy Stock Broking Limited (‘Karvy’ for short) was a SEBI registered stock broker and registered with NSE and BSE for stock broking activities. It was also a SEBI registered 1 Whole Time Member 2 Securities and Exchange Board of India

Depository Participant with NSDL3 and CDSL4. Appellant (Comandur Parthasarathy) was the Promoter, Chairman and MD5 of Karvy;

ii. On 19.08.2019, NSE conducted an investigation into the affairs of Karvy and submitted a preliminary report to the SEBI. It revealed that Karvy unauthorizedly raised funds by pledging clients’ securities by misusing Power of Attorneys (‘PoAs’ for short) and diverted money to the group entities. Karvy also sold excess securities (not available in DP6 account) of ₹485 Crore through 9 related client entities till 31.05.2019. Further, Karvy also transferred excess securities to 6 out of these 9 related entities;

iii. On 22.11.2019, SEBI passed an ex parte interim order restraining Karvy from on-boarding new clients and directed the depositories not to act on Karvy’s instructions based on power of attorneys and to transfer securities from DP account to respective beneficial owners who had made full payment against the securities.

iv. On 02.12.2019, NSE suspended Karvy’s trading membership and on 23.11.2020, expelled it from NSE’s membership. On 24.11.2020, SEBI passed the confirmatory order confirming the interim directions; 3 National Securities Depository Limited 4 Central Depository Services Limited 5 Managing Director 6 Depository Participant v. NSE appointed Ernst & Young LLP (‘EY’ for short) to conduct a forensic audit of Karvy’s records for the period between 01.04.2016 and 19.10.2019. On 09.01.2020, EY submitted its report to NSE. On 23.11.2020, NSE forwarded its comprehensive findings to SEBI;

vi. Based on the joint inspection and forensic findings, SEBI issued an SCN7 dated 29.01.2021 to 9 noticees, alleging violation of Securities laws; and

vii. Appellant filed his reply to the SCN. After adjudication, SEBI has passed the impugned order.

4. Mr. Janak Dwarkadas, learned Senior Advocate for the appellant submitted that the certified true copy of the impugned order was served upon the appellant on 06.05.2023 and the corrigendum dated 19.06.2023 was received on or around 07.11.2023. The delay in filing this appeal is because the appellant was in judicial custody pursuant to the proceedings initiated by other regulatory agencies including ED8, which severely curtailed his capacity to manage his legal affairs and provide instructions to his advocates. Karvy’s offices were searched and voluminous company records relevant for drafting the statutory appeal were seized. Therefore, it was not possible 7 Show Cause Notice 8 Enforcement Directorate for the appellant to obtain the documents to challenge the impugned order.

5. He further submitted that the appellant is a senior citizen aged about 68 years and suffered serious orthopaedic and other medical ailments. He sustained a fracture and underwent surgery on 17.01.2023. Thereafter, appellant was on bed rest till July 2023. He was also suffering from other medical problems during August and November 2023.

6. Mr. Dwarkadas urged that a liberal approach must be adopted while considering applications for condonation of delay as this is a statutory first appeal for adjudication on both facts and law. He relied upon Khelo MCX Research Services v. SEBI9 and submitted that the Hon’ble Apex Court has held that first appeal on facts is a precious right and condoned a delay of 1,059 days subject to payment of costs. He also relied upon the judgment of this Tribunal in M/s. Al-Falah Investments Ltd. v. SEBI10, wherein a delay of nearly three years was condoned.

7. In reply, Mr. Shiraz Rustomjee, learned Senior Advocate for SEBI vehemently opposed the application for condonation of delay. He submitted that the delay in filing this appeal is inordinate and the application for condonation of delay does not contain satisfactory reasons to condone the delay and therefore, liable to be rejected.

9 Civil Appeal No.3055 of 2026, decided on 30.04.2026 by the Hon’ble supreme Court of India 10 Appeal No.107 of 2006, decided on 08.09.2006 by the Securities Appellate Tribunal, Mumbai

8. He submitted that unless the applicant demonstrates that he took all possible steps within his power and exercised due care and diligence as a prudent person, the delay cannot be condoned. He relied upon Balwant Singh (Dead) v. Jagdish Singh & Ors.11 and N. Balakrishnan v. M. Krishnamurthy12 and argued that ‘length of delay’ is not the criterion, but the cogent explanation is the sole decisive test.

9. He submitted that the grounds urged by the appellant namely, incarceration, health complications and his inability to access records due to various parallel proceedings and searches at Karvy’s premises are completely afterthought, frivolous and an attempt to mislead this Tribunal. The documents enclosed by the appellant do not describe any medical condition which had incapacitated him from filing the appeal within the period of limitation and the said ground is belied by appellant’s own conduct. He submitted that between August, 2023 and September 2024, appellant has filed and prosecuted as many as 9 writ petitions and 3 petitions under Section 482 of Cr.P.C. before the Hon’ble Telangana High Court both in his personal capacity and also on behalf of the Karvy group. He submitted that applicant has challenged the recovery proceedings pursuant to the order impugned in this appeal in a Writ Petition (W.P.No.25750 of 2024) on 18.09.2024, before the Hon’ble Telangana High Court praying inter alia for a writ of mandamus declaring SEBI’s action in issuing demand certificate13 and 11 (2010) 8 SCC 685 12 2008 (228) ELT 162 (SC) 13 No.7927 of 2024 dated 07.08.2024

consequential attachment proceedings14 as barred by law and unconstitutional. Thus, the appellant was actively pursuing legal remedies in the High Court and therefore cannot be heard to contend that he was incapacitated or prevented from filing this appeal within the prescribed period of limitation. He relied upon Udayan Banerjee v. SEBI15, wherein this Tribunal held that general medical prescriptions without proof of serious illness or hospital confinement, do not constitute ‘sufficient cause’ to condone inordinate delay.

10. He also placed strong reliance on Shivamma (Dead) by LRs v. Karnataka Housing Board & Ors.16 and Subhash Chandra v. SEBI17.

11. In rejoinder, Mr. Dwarkadas, learned Senior Advocate submitted that the decision in Shivamma is distinguishable on facts and it has no application to this case. He submitted that in Shivamma’s case, there was a delay was nearly 11 years (3,966 days) by a State entity. In contra distinction, this appeal is a statutory first appeal under Section 15T of the SEBI Act, which is a valuable and precious statutory remedy. He submitted that the authority in Khelo MCX Research Services is fully applicable to the facts of this case in the realm of Securities laws, wherein the Hon’ble Apex Court has specifically recognised that a first appeal on facts before this Tribunal is a precious right and 14 Nos.12846 of 2024 and 12847 of 2024 dated 12.09.2024 15 Appeal No. 496 of 2022, decided on 20.09.2022 by the Securities Appellate Tribunal, Mumbai 16 2025 SCC OnLine SC 1969, Paragraph Nos.116 to 134 and 139 to 142 17 Appeal No.132 of 2024, decided on 02.05.2025 by the Securities Appellate Tribunal, Mumbai accordingly condoned a substantial delay of 1,059 days by imposing costs to enable an adjudication of the appeal on its merits.

12. We have carefully considered rival contentions and perused the record.

13. Admitted facts are, appellant was the Managing Director and Chairman Karvy Stock Broking Limited (‘Karvy’ for short). SEBI passed an interim order inter alia restraining Karvy from on-boarding new clients and debarring Karvy from accessing the securities market. The interim order was confirmed subsequently. A show cause notice18 was issued by SEBI to 9 noticees. Karvy is noticee No.1 and appellant is noticee No.2. Noticees filed their replies and participated in the proceedings. After adjudication, SEBI has passed the impugned order on 28.04.2023, challenged in this appeal with a delay of 474 days.

14. The point for consideration is, whether ‘sufficient cause’ is shown to condone the delay in filing the appeal?

15. Appellant has admitted that he was served with the certified copy of the impugned order on 06.05.2023 and corrigendum on 07.11.2023.

16. SEBI has strongly contested the application for condonation of delay. Mr. Rustomjee has placed reliance on Shivamma (Dead) by LRs v. Karnataka Housing Board &

18 Dated 29.01.2021

Ors.19(paragraph Nos.118, 121 to 128). He made special reference to paragraph No.140 of the judgment and submitted that while considering an application for condonation of delay, the inquiry must be confined to find out whether ‘sufficient cause’ has been demonstrated for not filing the appeal within the prescribed period of limitation. Adverting to paragraph No.141, he submitted that ‘sufficient cause’ cannot be substituted by examining the merits of the case.

17. Appellant’s miscellaneous application for condonation of delay reads thus: “1) Mr. Comandur Parthasarathy, the Applicant/ Appellant (“the Applicant”) states that this Appeal has been preferred under Section 15T of the Securities and Exchange Board of India Act, 1992 (“SEBI Act”) against an Order dated April 28, 2023 passed by the Respondent and a Corrigendum dated June 19, 2023 (“the Impugned Order”).

2) The Applicant states that he was served with the certified true copy of the Impugned Order vide Letter dated May 6, 2023, and thereafter, on and around November 7, 2023, the Appellant received a Corrigendum dated June 19, 2023. The Applicant submits that there is a delay of 474 days in filing the Appeal.

3) The Applicant states that the delay in filing the Appeal occurred due to unavoidable circumstances that were beyond the control of the Applicant, and the same was inadvertent and unintentional.

a) The Applicant states that the inadvertent delay was due to the incarceration of the Appellant due to orders passed by the Enforcement Directorate, among other regulatory agencies. The Applicant had also faced numerous health problems, and was subject to continuous visits to his physician preventing him from providing his Advocates with adequate instructions. A copy of the 19 2025 SCC OnLine SC 1969

Applicant's medical certificates are annexed hereto and marked as Exhibit “A”.

b) The Applicant states that due to the order of the Respondent, various regulatory agencies had also searched the office of Karvy Stock Broking Limited (“KSBL”), where the Appellant functioned as the Chairman and Managing Director (“CMD”), and a major portion of the documents relevant to the Appeal Memorandum were located, which was subject to litigation. Thus, there was immense difficulty for the Applicant to obtain documents to rebut the Impugned Order. A copy of the Orders of the High Court at Hyderabad are annexed hereto and marked as Exhibit “B”.

c) There was also delay in availing the services of Advocates to prepare and file the Appeal Memorandum. Furthermore, the documents referred to in the Impugned Order were voluminous and required examination. The Applicant was also in the process of obtaining additional information that was relevant, and was to be included in the Appeal Memorandum, from other offices, including the office of KSBL.

4) Therefore, this Hon’ble Tribunal would be justified in condoning the delay for the reasons stated aforesaid by allowing the present Application, so that the Appeal, which has been filed in this Hon’ble Tribunal against the Respondent can be heard and decided on its merits.

5) The Applicant submits that the Respondent has failed to consider relevant material on record as well as the submissions made by the Applicant and the Impugned Order was passed in disregard to the principles of natural justice. Therefore, the Applicant states that they have a good case on merits and therefore, the Applicant requests and prays to this Hon’ble Tribunal that the present Application may be allowed, and the Appeal be heard on merits. The Applicant states that no prejudice will be caused to the Respondent if the said delay is condoned by this Hon’ble Tribunal and the Appeal is heard on merits.

6) The Applicant states that the SEBI Act empowers this Hon’ble Tribunal to entertain the Appeal if there appears to be sufficient cause for not filing the same within the limitation period.

7) In view of the above mentioned, Applicant prays that:-

(i) This Hon’ble Tribunal may be pleased to condone the delay of 474 days in filing the present Appeal.

(ii) Any other relief as the nature of the circumstances may require.”

18. The reasons for delay are stated in paragraph No.3., wherein it is pleaded that delay was due to ‘unavoidable circumstances beyond appellant’s control’. It is next pleaded that the delay was due to his (i) incarceration, (ii) health issues and

(iii) difficulty in obtaining documents.

19. With regard to incarceration, appellant has stated20 on oath that he was in jail from 19.08.2021 to 22.06.2022. This period is nearly one year prior to the receipt of the impugned order on 06.05.2023. In its reply affidavit, SEBI has listed out as many as twelve proceedings initiated by the appellant in Hon’ble Telangana High Court and they are as follows: Sr. No. Filing Date Judicial Forum Case No. Case Name Purpose of Filing

07th August

Telangana High Court W.P. No. 21223/2023 Karvy Comtrade Ltd. (Through MD Mr. C. Parthasarathy) v/s

1. Union of India

2. Reserve Bank of India

3. HDFC Bank Limited Appellant filed writ petition praying for the issuance of writ of mandamus declaring the action of HDFC Bank in classifying the Petitioner's account as Fraud as arbitrary, illegal and unconstitutional.

09th August Telangana High Court W.P. No. 21609/2023 C. Parthasarathy Appellant filed writ petition praying for the issuance of

20 Rejoinder affidavit dated 10.11.2025 (para 6)

v/s State of Telangana writ of mandamus declaring the actions of the respondent police of arresting and keeping him in illegal custody being contrary to sections 70, 71, and of Cr.P.C.

31st August

Telangana High Court CRLP

Karvy Comtrade Ltd. (Through MD Mr. C. Parthasarathy) v/s

1. State of Telangana

2. ICICI Bank Appellant filed petition under Section 482 of Cr.P.C, praying that in the circumstances stated in the grounds filed in support of the Criminal Petition, the High Court may be pleased to quash the FIR and Complaint in Cr No 891 of dated 23.08.2021 registered at PS Gachibowli Hyderabad and pass...

20th September

Telangana High Court W.P. No. 26227/2023 Karvy Comtrade Ltd. (Through MD Mr. C. Parthasarathy) v/s

1. Union of India

2. Reserve Bank of India

3. HDFC Bank Limited Appellant filed writ petition praying for the issuance of writ of mandamus declaring the action of HDFC Bank in classifying the Petitioner's account as Fraud as arbitrary, illegal and unconstitutional.

20th September

Telangana High Court W.P. No. 26222/2023 Karvy Comtrade Ltd. (Through MD Mr. C. Parthasarathy) v/s

1. Union of India

2. Reserve Bank Appellant filed writ petition praying for the issuance of writ of mandamus declaring the action of DBS Bank in red-flagging and identifying the Petitioner's account as Fraud as arbitrary, illegal and unconstitutional.

of India

3. DBS Bank Limited

16th October

Telangana High Court W.P. No. 29247/2023 C. Parthasarathy v/s Union of India Appellant filed writ petition praying for the issuance of writ / order / direction particularly one in the nature of Writ of Certiorari by calling for the records in CC No 145 of 2021 on the file of District Consumer Disputes Redressal Commission III Hyderabad and quash the order passed by the District Consumer Disputes Redressal Commission III Hyderabad dated 11/07/2022 as without jurisdiction arbitrary illegal unconstitutional and statutory and legal rights of the Petitioner.

07th November

Telangana High Court W.P. No. 31124/2023 Karvy Stock Broking Ltd. (Through MD Mr. C. Parthasarathy) v/s

1. Union of India

2. Reserve Bank of India

3. HDFC Bank Limited Appellant filed writ petition praying for the issuance of writ of mandamus against HDFC Bank in issuing a Show Cause Notice asking KSBL to show cause why their account should not be classified as Fraud in terms of the RBI Master Circular.

08th November

Telangana High Court CRLP 11071/2023 Karvy Stock Broking Ltd. / C. Parthasarathy v/s

1. State of Telangana

2. HDFC Bank Appellant filed petition under Section 482 of Cr.P.C, praying that in the circumstances stated in the grounds filed in support of the Criminal Petition, the High Court may be pleased to quash the Complaint and

Limited F.I.R No. 78 of 2021 dated 22.04.2021 registered at CCS DD, Hyderabad.

27th December

Telangana High Court W.P. No. 34889/2023 C. Parthasarathy v/s Recovery Officer, Employees Provident Fund Organization, Regional Office

- Madhapur Appellant filed writ petition praying for issuance of a writ order a direction particularly one in the nature of Writ of Mandamus by setting aside the letter bearing No APHYD001738681000/ Recovery/ 51601/ RRC 339/ 2023/ 202324/ 670 dated 07/10/2023 issued by the Respondent No 1 in Form No EPFCPI as being wholly without jurisdiction arbitrary illegal unconstitutional and statutory and legal rights of the Petitioner.

27th December

Telangana High Court W.P. No. 34944/2023 C. Parthasarathy v/s Recovery Officer, Employees Provident Fund Organization, Regional Office

- Madhapur Appellant filed writ petition praying for issuance of a writ order a direction particularly one in the nature of Writ of Mandamus by setting aside the letter bearing No TS/RO/HYDII/1018941 / Rec/ 51601/ RC18603/ 2020 / 202324/

dated 09/10/2023 issued by the Respondent No 1 in Form No EPFC PI as being without jurisdiction and arbitrary illegal and unconstitutional.

27th Telangana CRLP C. Appellant filed petition

August

High Court v/s State of Telangana under Section 482 of Cr.P.C, praying that in the circumstances stated in the grounds filed in support of the Criminal Petition, the High Court may be pleased to quash the proceedings in CC No 4872 of 2021 on the file of IX Additional Chief Metropolitan Magistrate Nampally as against the Petitioner.

18th September

Telangana High Court W.P. No. 25750/2024 C. Parthasarathy v/s

1. SEBI

2. Recovery Officer (SEBI)

3. NSDL

4. CDSL Appellant filed writ petition praying for issuance of writ in the nature of Mandamus declaring the actions of the Respondents more specifically Respondent No 2 in issuing Notice of Demand Certificate No of dated 07.08.2024 which came to be served on the correct address of the Petitioner on 10.09.2024 and also the consequent actions in issuing the Attachment Proceeding No 12846 of 2024 dated 12.09.2024 and Attachment Proceeding No 12847 of dated 12.09.2024 as being barred by law and in violation of principles of natural justice illegal arbitrary and unconstitutional.

20. Thus, it is amply clear that the appellant who was the Managing Director of a big stock broking company chose to remain complacent for 16 months after receiving the order in May 2023 and approached the Hon’ble Telangana High Court21 challenging the recovery notice arising out of the order impugned in this appeal. It is relevant to note that the appellant was prosecuting his other cases at least from August, 2023 as noted in the above list of cases. Therefore, it is reasonable to infer that the appellant neglected to challenge the impugned order right from the date of its receipt i.e.06.05.2023 and in the least from August 2023, when he filed writ petitions and criminal petitions in the High Court.

21. With regard to the health issues, appellant has annexed medical certificates as Exhibit – A. The first three certificates advised rest from 18.01.2023 to 20.07.2023 for fracture of bone in left leg. The immediate next certificate is dated 16.08.2023 advising rest for one week for suffering from irritable bowel syndrome. It is followed by two certificates in October and November, 2023 advising rest for three weeks each for suffering from irritable bowel syndrome, fracture of left ankle and rheumatoid arthritis.

22. It is also relevant to note that the discharge summary issued by Star Hospitals shows that he was admitted on 16.01.2023, diagnosed with fracture in left leg, underwent surgery on 17.01.2023 and discharged on 19.01.2023.

21 In W.P.No.25750 of 2024, C. Parthasarathy v. SEBI and Ors.

23. A combined reading of appellant’s pleadings made on oath and the medical records produced by the appellant lead to an inference that from and after August 2023, appellant was fully active with his writ petitions and criminal petitions filed in Hon’ble Telangana High Court. However, for the reasons best known to him, he did not choose to challenge the impugned order in this Tribunal. On the other hand, he approached Hon’ble Telangana High Court in a writ petition22 challenging the recovery initiated by the SEBI. It is, therefore, irrefutable that appellant was served with the impugned order in May 2023, but did not choose to challenge, although he initiated several proceedings in the High Court and also challenged the recovery proceedings.

24. With regard to the third ground that the appellant had difficulty in collecting the documents, it is stated in the application that various regulatory agencies had searched Karvy’s office where appellant was the CMD. It was argued that the search by those authorities had caused immense difficulty to obtain the documents. This averment runs counter to appellant’s conduct. We say so because, appellant was holding a high position as the Chairman and Managing Director of a big stock broking company and he had chosen to file several cases in the Hon’ble High Court of Telangana including challenge to the recovery proceedings pursuant to the impugned order. No material is placed on record to show that appellant made any efforts nor approached any authority or court seeking the 22 W.P.No.25750 of 2024

documents. The application for condonation of delay extracted hereinabove is bereft of any details of appellant’s effort in that behalf.

25. It was argued on behalf of the appellant that in Khelo MCX, it is held that this Tribunal provides an appeal on facts and the first appeal is a precious right.

26. In Shivamma23 relied upon Mr. Rustomjee, it is held thus:

“140. However, at the same time, the courts must be mindful that strong case on merits is no ground for condonation of delay. When an application for condonation of delay is placed before the court, the inquiry is confined to whether “sufficient cause” has been demonstrated for not filing the appeal or proceeding within the prescribed period of limitation. The merits of the underlying case are wholly extraneous to this inquiry. If courts were to look into the merits of the matter at this stage, it would blur the boundaries between preliminary procedural questions and substantive adjudication, thereby conflating two distinct stages of judicial scrutiny. The purpose of Section 5 of the Limitation Act is not to determine whether the claim is legally or factually strong, but only whether the applicant had a reasonable justification for the delay.

141. Test of “sufficient cause” cannot be substituted by an examination of the merits of the case. Condonation of delay is a matter of discretion based on explanation for the delay, not on the prospects of success in the case. If merits are considered, a litigant with a stronger case may be favoured with condonation despite negligence, while a weaker case may be rejected even if sufficient cause is made out. This would lead to an inequitable and inconsistent application of the law, undermining the uniform standard that the doctrine of limitation is designed to maintain.

23 2025 SCC OnLine SC 1969, Shivamma (Dead) by LRs v. Karnataka Housing Board & Ors.

142. Another practical reason why merits must not be considered at the stage of delay condonation is that it risks prejudicing the mind of the court against one party even before the matter is substantively heard. By glancing into merits prematurely, the court may inadvertently form a view that colours the fairness of the subsequent adjudication. The judicial discipline required at this stage demands that only the cause for delay be scrutinized, and nothing more. This ensures that the ultimate adjudication of rights occurs in a neutral and unprejudiced setting.

143. The law of limitation is meant to apply uniformly across cases, regardless of the intrinsic strength or weakness of the claims involved. To import merits into condonation proceedings would effectively dilute this uniformity.”

27. It is further held in Shivamma24 that – the court owes a duty to first ascertain the bona fides of the explanation offered by the party seeking condonation. If ‘sufficient cause’ assigned by the litigant and the opposition of the other side is equally balanced, then the court may bring into aid the merits of the matter for the purpose of condoning the delay.

28. We may record that law of limitation being a handmaid of justice, courts consider the aspect of delay liberally subject to exceptions based on the facts of each case. At the same time, a party who approaches the court belatedly, has to place satisfactory material to condone the delay. Here is a case where a Chairman and Managing Director of a big stock broking company having been served with the impugned order chooses not to challenge the same for more than one year. The application is bereft of any cogent reasons. On the other hand, 24 Para 258 (2025 SCC OnLine SC 1969)

the list of cases mentioned hereinabove pursued by the appellant in the Hon’ble High Court of Telangana clearly shows that he neglected filing this appeal in time. As held in Shivamma (supra), Court owes a duty to ascertain the bona fides of the explanation. Appellant’s admission that he had received the impugned order but chose not to challenge clearly indicates that he was negligent.

29. To conclude, we may record that all the three causes shown in the application for condonation of delay are not substantiated with genuine facts and lack bona fides. Though this is a first appeal, in view of appellant’s conduct, he shall not be entitled for discretionary remedy of condonation of delay. Accordingly, we answer the point for consideration in the negative.

30. In the result, the application for condonation of delay is dismissed as being devoid of merits. Consequently, the Appeal No.723 of 2024 stands dismissed. Pending interlocutory application(s), if any, stand disposed of. No costs.

Justice P.S. Dinesh Kumar Presiding Officer

Ms. Meera Swarup Technical Member

Dr. Dheeraj Bhatnagar Technical Member 09.09.2026 RHN RAJALA KSHMI H NAIR Digitally signed by RAJALAKSHMI H NAIR Date: 2026.09.09 13:22:04 +05'30'