Description

SEBI issues recovery certificate demanding Rs. 50,53,872.09 from Investment Research Advisor and Algo System for refund order penalties and interest, with 15-day payment deadline before enforcement proceedings.

Summary

SEBI has issued Certificate No. 8971 of 2025 under Section 28A of the SEBI Act, 1992 read with Section 222 of the Income Tax Act, 1961, demanding payment of Rs. 50,53,872.09 from Investment Research Advisor (Proprietor: Amit Gangrade) and Algo System (Proprietor: Sudeep Gangrade). The demand arises from a Quasi-Judicial Authority (QJA) refund order dated April 26, 2023 (Order No. QJA/GG/QJC/QJC-2/25931/2023-24) in the matter of Investment Research Advisor. The entities have 15 days from receipt to pay, failing which SEBI will initiate recovery proceedings including asset attachment, bank account freezing, property sale, and potential arrest.

Key Points

  • Total Demand Amount: Rs. 50,53,872.09 (Fifty Lakh Fifty-Three Thousand Eight Hundred Seventy-Two and Nine Paisa Only)
  • Demand Breakdown: Original refund order amount of Rs. 37,99,151.95; Interest from April 2023 to December 2025 @ 1% per month totaling Rs. 12,53,720.14; Recovery costs of Rs. 1,000
  • Entities: Investment Research Advisor (Proprietor: Amit Gangrade, PAN: AVRPG8196P) and Algo System (Proprietor: Sudeep Gangrade, PAN: GDTPS4158F)
  • Locations: Multiple addresses in Indore and Bhikangaon, Madhya Pradesh
  • Original Order: QJA refund order dated April 26, 2023 in matter of Investment Research Advisor
  • Payment Deadline: 15 days from receipt of notice
  • Recovery Powers: Asset attachment/sale, bank account attachment, property attachment/sale, arrest/detention, receiver appointment

Regulatory Changes

No new regulatory changes introduced. This is an enforcement action under existing provisions of Section 28A of the SEBI Act, 1992 read with Sections 220-227, 228A, 229 and 232 of the Income Tax Act, 1961.

Compliance Requirements

Immediate Actions Required by Named Entities:

  1. Payment Within 15 Days: Pay Rs. 50,53,872.09 through:

    • Direct credit via EFT/NEFT/RTGS to Account No. SEBIRNCIS8971, Bank of India, IFSC: BKID00VAN04, OR
    • Online payment at https://siportal.sebi.gov.in (Recovery Payment module), OR
    • Payment link: SEBI Website → Enforcement → Recovery Proceedings → Pay Now

  2. Property Transfer Restrictions: As per Rule 16 of Second Schedule to Income Tax Act, entities cannot mortgage, charge, lease or deal with any property without Recovery Officer permission; such transfers are void

  3. Deemed Property Provision: Any direct/indirect property or money transfer to spouse, minor child, son’s wife, or son’s minor child without adequate consideration on or after April 26, 2023 is deemed entity property for recovery purposes

Failure to Comply Results In:

  • Attachment and sale of movable property
  • Attachment of bank accounts
  • Attachment and sale of immovable property
  • Arrest and detention in prison
  • Appointment of receiver for property management

Important Dates

  • Original QJA Order: April 26, 2023 (Order No. QJA/GG/QJC/QJC-2/25931/2023-24)
  • Notice Date: December 12, 2025
  • Certificate Number: 8971 of 2025
  • Interest Calculation Period: April 2023 to December 2025 (@ 1% per month)
  • Payment Deadline: 15 days from receipt of this notice

Impact Assessment

Direct Impact:

  • Entity-specific enforcement action against Investment Research Advisor and Algo System
  • No direct market-wide implications
  • Affects proprietors Amit Gangrade and Sudeep Gangrade operating in Indore/Khargone, Madhya Pradesh

Regulatory Significance:

  • Demonstrates SEBI’s continued enforcement against unauthorized investment advisory services
  • Recovery proceedings under Section 28A showcase regulatory powers to collect penalties and refunds
  • Interest accumulation (Rs. 12.53 lakh on Rs. 37.99 lakh over ~32 months) demonstrates cost of non-compliance
  • Property transfer restrictions and deemed ownership provisions prevent evasion tactics

Broader Context:

  • Part of SEBI’s ongoing efforts to regulate investment advisory and research analyst activities
  • Highlights consequences for entities operating without proper registration/authorization
  • Recovery mechanism includes severe measures (asset seizure, arrest) emphasizing seriousness of compliance

Investor Protection:

  • Action against unauthorized advisors protects investors from unregulated advice
  • No immediate impact on listed securities or market operations

Impact Justification

Entity-specific enforcement action against unregistered investment research advisors; no direct market-wide impact but demonstrates SEBI's regulatory oversight of unauthorized advisory services