SEBI attaches accounts of Karan Ravde over India Infraspace penalty

The Enforcement Action

The Securities and Exchange Board of India (SEBI) has attached the demat accounts, mutual fund folios and bank and post office accounts of Karan Subhashchandra Ravde, moving to recover an unpaid penalty in the matter of India Infraspace Limited, according to two notices issued by its Western Regional Office in Ahmedabad on 22 October 2026.

The notices were issued under Recovery Certificate No. 7137 of 2023 as Attachment Proceeding Nos. 15857 and 15858 of 2026. The recovery certificate puts the amount due at Rs 7,50,000. That is made up of a Rs 7,00,000 penalty, Rs 49,000 in interest at 1% a month from March to September 2023, and Rs 1,000 in recovery costs. Further interest and costs continue to accrue. The notices state that "no amount has been paid by the Defaulter".

The underlying penalty was imposed by a SEBI Adjudicating Officer in Order No. Order/AN/HP/2022-23/25284-25352, dated 31 March 2023. That order dealt with 69 noticees in the matter of trading activities in the scrip of India Infraspace Limited (IIL), a BSE-listed company. It found that Mr Ravde, Noticee 64 in the order, had violated the securities-fraud provisions of the SEBI Act and the PFUTP Regulations. It levied the Rs 7 lakh penalty under Section 15HA of the SEBI Act.

According to the order, Mr Ravde neither replied to the show-cause notice nor attended the hearing offered to him. Nothing in the public record shows that he has responded to the attachment notices.

How the Scheme Worked

SEBI's investigation covered trading in IIL shares between 26 April 2016 and 11 July 2016. According to the order, the investigation began after a specific reference received in June 2016 and was completed in March 2021. In that period, the order records, the share price on BSE rose from Rs 58.40 to a high of Rs 144.90, an increase of 148.12%. Before the investigation period, the stock had been thinly traded, with an average of only 1,060 shares changing hands a day. During it, average daily volume jumped to 1,43,737 shares.

The order describes three patterns. First, SEBI identified 72 entities that were connected to one another "directly/ indirectly through telephone/email/address". Together they contributed 31.65% of market volume through trades among the group. With negligible exceptions, each of them bought and sold exactly the same number of shares, leaving a net position of nil.

Second, SEBI found reversal trades, in which the same counterparties bought and then sold back shares between themselves. The order said these trades indicated a "meeting of minds" and created artificial volume "without intending to change the ownership of the shares". Mr Ravde was one of 18 noticees whose individual share of the reversal-trade quantity exceeded 1%. His reversal trades covered 19,956 shares, or 0.26% of total market volume. Over the period he bought and sold 85,372 shares each way. SEBI separately found circular trades between 5 May and 21 June 2016 that involved 14,12,399 shares, or 29.56% of market volume in that window.

Third, the order looked at the last traded price (LTP). It found that Mr Ravde accounted for 1.89% of the market's positive LTP contribution across 829 trades. In 623 of those trades, it said, he placed buy orders for only 1 to 10 shares, with an average of about 6.93 shares. He did so even though sell orders averaging about 1,768.75 shares were available, and his orders were priced above the last traded price. Those trades added Rs 31.15 to the price, 1.42% of the market's positive LTP. The order observed that a buyer would "generally tend to buy the scrip at prevailing or less than prevailing prices" and found there was no rationale for this pattern.

The procedural history, as recorded in the order, runs as follows:

• SEBI appointed an Adjudicating Officer on 31 March 2022.
• A common show-cause notice, No. EAD5/MC/HP/15428/1-69/2022, was issued on 7 April 2022.
• The final order was passed on 31 March 2023.
• Proceedings against five noticees were abated after they were reported to have died.
• Recovery Certificate No. 7137 of 2023 and a Notice of Demand were issued on 12 September 2023.
• The account attachments followed on 22 October 2026.

The Law Invoked

The adjudication order found that Mr Ravde violated Section 12A(a), (b) and (c) of the SEBI Act, 1992, read with Regulations 3(a), (b), (c), (d), 4(1), and 4(2)(a) and (g) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (the PFUTP Regulations).

• Section 12A prohibits using manipulative or deceptive devices, or engaging in any act that operates as a fraud, in connection with dealing in listed securities.
• Regulation 3 of the PFUTP Regulations applies that prohibition to dealings in securities.
• Regulation 4(1) bars any manipulative, fraudulent or unfair trade practice.
• Regulation 4(2)(a) covers trading that creates a false or misleading appearance of trading.
• Regulation 4(2)(g) covers transactions where there is no real change in beneficial ownership.

The penalty was imposed under Section 15HA of the SEBI Act, which provides for monetary penalties for fraudulent and unfair trade practices. The Adjudicating Officer acted under Section 15-I of the SEBI Act, read with Rule 5 of the SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995.

The demat and mutual fund attachment notice was issued under Section 28A(1) and Section 11(2)(ia) of the SEBI Act, read with the relevant sections of the Income-tax Act. Section 28A lets SEBI's Recovery Officer recover unpaid penalties as if they were income-tax arrears. The order warned that non-payment could lead to "attachment and sale of movable and immovable properties".

What Happens Next

The attachment notices direct that no debit be made from the attached accounts until the Recovery Officer orders otherwise, although credits may still be allowed. Institutions must report the accounts they hold and attach any opened later. In SEBI's standard recovery process, attached balances can then be ordered remitted to SEBI's recovery account through a remittance order, as has happened in other matters this week. Under Section 28A, the Recovery Officer can also attach and sell other movable and immovable property.

Adjudication orders passed by SEBI can be appealed before the Securities Appellate Tribunal (SAT), and SAT decisions can be appealed to the Supreme Court. The recovery notices do not mention any stay or pending appeal. Recovery proceedings enforce a penalty that has already been imposed. They are not a fresh finding.

SEBI's adjudication order is a civil regulatory finding, not a criminal conviction. It rests on trading data, order logs and connection analysis, set out in the 119-page order.

What It Means

This matter shows how a thinly traded small-cap stock can be made to look active. According to the order, a stock that averaged about a thousand shares a day suddenly traded more than 1.4 lakh shares a day while its price rose almost two and a half times. Much of that activity came from a connected group trading among itself. The order records that by March 2021 the stock was under BSE's Graded Surveillance Measure framework and closed at Rs 3.09.

For ordinary investors, the practical lessons are about the warning signs:

• A sudden jump in volume in an otherwise illiquid stock, especially one with no matching corporate news, is worth questioning before you buy.
• Exchange surveillance tags such as GSM and ASM are published on the BSE and NSE websites and can be checked in seconds.
• Unsolicited tips pushing small-cap names with rising volumes deserve particular caution.

The case also shows how long enforcement can take. The trades took place in 2016, and the penalty followed in 2023. The account attachments came more than three years after that. SEBI's recovery machinery is not quick, but it does not lapse: Section 28A powers allow the regulator to keep pursuing unpaid dues, with interest, long after an order is passed.

FAQ

What exactly did SEBI do on 22 October 2026?

SEBI's Recovery Officer at the Western Regional Office attached all demat accounts, mutual fund folios and bank and post office accounts held by Karan Subhashchandra Ravde, including joint accounts. No debits are allowed from them until further orders. The aim is to recover Rs 7,50,000 due under Recovery Certificate No. 7137 of 2023, plus further interest and costs, which arise from a penalty imposed in the India Infraspace Limited matter.

Does this mean the person named committed a crime?

No. The 31 March 2023 order is a civil adjudication by SEBI under the SEBI Act. It found violations of the PFUTP Regulations and imposed a monetary penalty, but it is not a criminal conviction. Adjudication orders can be appealed before the Securities Appellate Tribunal. The attachment is a recovery step to enforce the unpaid penalty and adds no new finding.

Can the order be appealed?

Yes. Orders of SEBI Adjudicating Officers can be appealed before the Securities Appellate Tribunal, and from there to the Supreme Court. The recovery notices issued in October 2026 do not refer to any pending appeal or stay. They record that no amount has been paid against the recovery certificate.

Where can I read the official documents?

The adjudication order and the recovery notices are on SEBI's website under Enforcement. The order is listed under Orders of AO, dated 31 March 2023, and the notices under Recovery Proceedings, dated 22 October 2026. Links are below.

This report is based on the official SEBI notice of attachment of demat account and mutual fund folios dated 22 October 2026, the companion notice of attachment of bank and post office accounts, and the SEBI adjudication order dated 31 March 2023.