SEBI, by virtue of powers conferred under Section 11C(9) and Section 30 of SEBI Act made the regulation called as ‘SEBI (Procedure for Search and Seizure) Regulations, 2014’ vide Notification No. LAD-NRO/GN/2013-14/40/52, dated 10.01.2014, the date from which these regulations came into effect. These regulations discussed in detail the procedure for search and seizure by the authorized officer.
Warrant of Authority
The authorized officer by the Board is the Investigation authority under these regulations given power to cause search and seizure. If the investigation authority believes that any or all of the grounds specified in Section 11C(8) of the Act exist, he may make a request either in writing or in electronic mode in Form A to the Chairman of the Board with the request to issue a warrant of authority specifying the grounds and reasons for multiple execution, if required. In the request the details of the person or enterprise and its building, place, vessel, vehicle or aircraft whose search is required to be authorized.
On receipt of the request from the Authority the Chairman may, after being satisfied that it is necessary to do so, authority the Investigating Authority or any other officer of the Board as the Authorized Officer by issuing a Warrant of Authority in Form B, duly signed by the Chairman and sealed. The Chairman may authorize multiple execution of the warrant of authority during the period in which it is in force.
Every warrant issued shall remain in force until it is cancelled by the Chairman or until it is executed, or till the expiry of the time limit specified for execution in the warrant of authority, whichever is earlier. A warrant of authority issued to any officer of the Board shall expire on the date of the order of the transfer of such order. A warrant issued to more than one officer of the Board, may be executed by all or any one or more of them. The warrant shall be returned to the Chairman after being executed fully along with the seizure memo or if not executed, whether partially or not, within the time authorized, if any, for its execution, on the expiry of such time. The authorized officer shall make an endorsement on the warrant of authority stating as to the powers which have been exercised by him under such authority.
Procedure to search
The following is the procedure in respect of a search:
Relating to witness
- Before making a search, the authorized officer shall call upon two or more independent and respectable inhabitants of the locality in which the place to be searched to situate or any other locality if no such inhabitant of the said locality is availing or is willing to be a witness to the search, to attend and witness the search and may issue an order in writing to them or any of them so to do;
- If the authorized officer finds that no witness is available, he shall execute the warrant of authority on the execution being video graphed and the search shall not be invalid on the mere ground that no one has stood as witness to the search;
- No person witnessing the search shall be compelled to be a witness in any quasi judicial proceedings under the securities laws except as and when summoned by the Board or the authority before whom such proceedings are pending;
Relating to places and buildings
- It shall be lawful for the authorized officer executing the warrant of authority to enter into such buildings or place, to break open any outer or inner door or window of any building or place, whether that of the person to be searched or any other person, if after notification, be cannot otherwise obtain admittance;
- If such building or place is an apartment in actual occupancy of a woman, the authorized Officer shall before entering such place give notice to such woman that she is at liberty to withdraw and shall afford her every reasonable facility for withdrawing and may then break open any outer or inner door or window of the apartment and enter it;
- The authorized officer may require any person who is the owner or has the immediate possession or control of any box, locker, safe, almirah or any other receptacle situate in such building, place to open the same and allow access to inspect or examine its contents and where the keys are not available or where such person fails to comply with any such requirement, may cause any action to be taken including the breaking open of such box, locker, safe, almirah or other receptacle which the Authorized Officer may deem necessary for carrying out all or any of the purposes specified under the warrant of authority;
- The Authorized Officer may require, pending the commencement of the search, any person not to remove from such building or place any article or other thing;
- The Authorized Officer may require the service of any police officer or of any officer of the Central Government or State Government or all of them to assist him for all or any of the purposes specified in the Warrant of Authority;
- The Authorized Officer may search, with such assistance, any building or place, authorized to be searched, where such information or documents are expected or believed to be kept;
Relating to vessel, vehicle or aircraft
- The Authorized Officer on production of the warrant of authority to the person in charge of vessel, vehicle or aircraft, shall have the free ingress to vessel, vehicle or aircraft for the execution;
- It shall be lawful for the Authorized Officer to require the person for the time being control of the vehicle, vessel or aircraft to stop any such of them from moving; if it is in move compel them to stop;
- The Authorized Officer shall have the authority to break open any outer or inner door or window of any such of them, if after notification of the authority and purpose and demand of admittance duly made, he cannot obtain otherwise;
- If the same is occupied by a woman who according to custom does not appear in public, the Authorized Officer shall, before entering such of them, give notice to such woman that she is at liberty to withdraw and shall afford her every reasonable facility for withdrawing;
- The authorized officer may require any person who is the owner or has the immediate possession or control of any box, locker, safe, almirah or any other receptacle situate in such of them, place to open the same and allow access to inspect or examine its contents and where the keys are not available or where such person fails to comply with any such requirement, may cause any action to be taken including the breaking open of such box, locker, safe, almirah or other receptacle which the Authorized Officer may deem necessary for carrying out all or any of the purposes specified under the warrant of authority;
- If the same is found unsuitable for the search the Authorized Officer shall require the person in charge to take the same to the place which is considered suitable for the search and require that person to accompany with them;
- The Authorized Officer may require the person in charge of the vessel, vehicle or aircraft not to remove from them any article or other thing, pending the commencement of the search;
- The Authorized Officer may taken the services of the any police officer or any officer of the Central or State Government or all of them to assist him for all or any of the purposes;
- The Authorized officer may search with such assistance the vehicle, vessel or aircraft where such information or documents are expected or believed to be kept.
Search of person
- Any person who has got out of or is about to get into or is in the building, place, vessel, vehicle or aircraft authorized to be searched is suspected that he has secreted any books of account or other documents then the Authorized Officer shall made a search for that person;
- If such a person is a female, the search shall be made by a female officer with strict regard to decency;
- The Authorized Officer may require the services of any police officer or of any officer of the Central or State Government or all of them to assist him in the search.
Search of Computer
- The Authorized Officer, in the process of search may use reasonable measures to access a computer system that the person being searched is carrying or that is in the person’s physical possession or immediate control;
- He may operate any computer or other device or cause any such computer or other devices to be operated by a person accompanying the Authorized Officer; and
- He may require any person to facilitate access, to provide access to the information held in any such computer or other device which can be accessed by the use of that computer or data storage device-
- To get any password necessary to operate; or
- Otherwise to enable to examine the information accessible by the computer in a form in which the information is visible and legible.
Power of Inspection
The Authorized Officer if so authorized shall have the power of inspection of the documents found in any place, building, vessel, vehicle and aircraft.
Power of seizure
The Authorized Officer shall have the power to seize any such books of account or other documents found as a result of such search, or get the signature of such persons. If it is not practicable to seize he may serve an order in Form C or Form D on the person who has the owner or having the control, part with or otherwise deal with it except with the previous permission of the Authorized Officer and such person shall there upon take such steps as may be necessary for ensuring compliance with the order.
Seizure Memo
In the seizure process the Authorized Officer may prepare a seizure memo in Form F signed by two witnesses, containing a list of all documents seized or copied in the course of such search and of the place in which they were respectively found and verify the inventory of any such documents seized. In seizing the electronic storage media he shall enter in Form F the description of the physical storage media that were seized or copied. The seizure memo shall contain the following details-
- The time of entry into and exit from place, building, vessel, vehicle or aircraft;
- The identity of the persons searched;
- The address of place and building and details of vessel, vehicle or aircraft searched;
- The details of officers present, if any, at the time of seizure;
- The details of other persons present, if any, at the time of seizure;
- The signature of the authorized officer;
- The signature of the witnesses with thump impression and date;
- The description of identification mark, if any, placed by any person from whose possession or control the documents are seized;
- The signature of the owner or the person who is in immediate possession or control of premises, building, vehicle or aircraft, if available therein;
- The signature of the person from whom the seizure is effected.
Powers of Authorized Officer
The following are the powers of the Authorized Officer-
- To place identification mark on any books of account or other documents;
- To make or cause to be made extracts or copy of documents of any books of account;
- To record on oath the statement of any person in the presence of two witnesses.
Obligations of the Authorized Officer
The Authorized Officer, before executing the warrant of Authority shall-
- Identify himself either by name or by official identification documents;
- Show the warrant of authority to the person concerned;
- Conduct search and seizure in the presence of the witnesses and prepare panchnama as prescribed in Form G;
- Deliver a copy of the seizure memo to any person from whose possession or control the documents are seized;
- Not enter at any place of business or profession after day time;
- Execute the warrant of authority within the time limit prescribed, if any, in the warrant of authority.
Rights of persons under search and persons in charge
The following are the rights of the persons under search and persons in charge-
- To see the warrant of authority and authorized officer and to obtain a copy thereof;
- To verify the identity of the authorized officer and officials assisting him;
- To be present during the search and seizure;
- To put his own mark of identification on the documents seized along with his signature, stamp, seal, etc.,;
- To have copy of document seized or take extracts in the presence of Authorized Officer ;
- To have a copy of any statement recorded during search and seizure.
Obligations of persons under search and persons in charge
The following are the obligations on the part of the persons under search and persons in charge-
- Any person in charge of any building, place shall identify any person as may be required;
- Any person in charge of vessel, vehicle or aircraft on demand locate and identify the vessel, vehicle or aircraft;
- Allow the Authorized Officer free ingress and afford all reasonable facilities for a search;
- Stop the vessel or vehicle or stop and cause to be landed any aircraft on communication of the Authorized Officer;
- Bound to disclose the password and such other information in case of computer devices;
- Provide necessary facility to inspect books of account or other documents;
- Identify the locker etc., and to hand over keys of the same to the Authorized Officer;
- No officer shall be prevented from execution of Warrant of Authority.
Safe Custody of seized documents
The seized documents shall be transmitted in safe manner to the place of custody. The Authorized Officer shall hand over the documents seized along with the seizure memo to the Investigating Authority, who shall keep the same in his custody for such period not later than the conclusion of the investigation as he considers necessary. The same shall not be retained more than 180 days from the date of seizure except with the approval of the Chairman. It shall be ensured that records in physical form are not altered, damaged, mutilated and the records in electronic form is not altered or erased. It is also ensured that the seized articles are stored, maintained in suitable physical and environmental conditions.
Return of documents
The Investigating Authority shall return the documents to the person from whom the same were seized. Before returning such documents identification marks are to be recorded. Any person information severable from any documents shall be returned to the person to whom such information relates on a written request being made in this behalf by him.
Protection of Personal Information
The personal information contained in any document seized shall not be divulged to any third person except for the compliance of any law for the time being in force, without the consent of the person to whom the information relates.
Retention of forensic copy
The forensic copy of the data or mirror image of the storage device and any copy thereof may be retained, on being satisfied that such data or image has evidentiary value. Any copy made or generated from any other document may be retained.
Liability for non compliance of obligations
Any intermediary who fails to comply with any of the obligations shall be liable for any one or more of the following actions-
- Adjudication under Section 15HB of SEBI Act;
- Proceedings under chapter V of SEBI (Intermediaries) Regulations, 2008;
- Prosecution under Section 24 of the Act.
Any person other than an intermediary who fails to comply with any of the obligations shall be liable for any one or more of the following actions-
v Adjudication under Section 15HB of SEBI Act;
v Action under Section 11B and Section 11(4) of the Act;
v Prosecution under Section 24 of the Act.
