Bhoomi Finance Ltd (BFL) is a Non-Deposit Accepting Core Investment Company registered with RBI and lends and invests in its Group Companies. BFL group had consolidated borrowing of over ₹1,000 crore in its balance sheet

The facts of the case are similar to in case of India Ratings And Research Private Limited (IRRPL) and Infrastructure Leasing & Financial Services Limited. In the said matter, SEBI had initiated adjudication proceedings against IRRPL for alleged violation of Regulation 24(7) and Clauses 4 and 8 of Code of Conduct for CRAs, read with Regulation 13 of SEBI (Credit Rating Agencies) Regulations, 1999 ("SEBI (CRA) Regulations"). The Adjudicating Officer(AO) passed order and imposed a penalty of ₹25,00,000 under Section 15HB of the Securities and Exchange Board of India ("SEBI") Act, 1992. SEBI examined the AO Order and observed that that the penalty imposed by AO appeared to be erroneous and not commensurate with the overall impact these violations had on the market and hence the penalty needs to be increased. While passing order enhancing the penalty, SEBI observed as below: Section 15 I-(3) of SEBI Act reads as follows: "The Board may call for and examine the record of any proceedings under this section and if it considers that the order passed by the adjudicating officer is erroneous to the extent it is not in the interests of the securities market, it may, after making or causing to be made such inquiry as it deems necessary, pass an order enhancing the quantum of penalty, if the circumstances of the case so justify. Provided that no such order shall be passed unless the person concerned has been given an opportunity of being heard in the matter: Provided further that nothing contained in this sub-section shall be applicable after an expiry of a period of three months from the date of the order passed by the adjudicating officer or disposal of the appeal under section 15T, whichever is earlier." This was appealed against by the rating company but SEBI replied stating that" I concur with the factual findings of the AO, with respect to the conduct of the Noticee, as reproduced in para 3 of the SCN. I am also in agreement with the fact that the AO has chosen to impose a monetary penalty on the Noticee. However, the AO has failed to grasp the gravity of the violation and its consequent impact on the securities market and has failed to gauge the severity of the hit on the investors. Given his backdrop, the AO has not come up with justifiable grounds to arrive at the quantum of penalty which looks very meagre in comparison to the gravity of the violation. SEBI in enhancing the penalty opined that "in exercise of powers under Section 15-I(3) of the SEBI Act, after taking into consideration all the facts and circumstances of the case and the breaches or lapses on the side of the Noticee, as mentioned above, and having found the AO Order dated December 26, 2019 as erroneous to the extent it is detrimental to the interests of securities market, hereby impose a monetary penalty of ₹1,00,00,000/-(Rupees One Crore Only) upon the Noticee under Section 15HB of the SEBI Act." Under Section 15 I-(3) of SEBI Act, if SEBI considers that the order passed by the adjudicating officer is erroneous to the extent it is not in the interests of the securities market, it may, after making or causing to be made such inquiry as it deems necessary pass an order enhancing the quantum of penalty, if the circumstances of the case so justify. Accordingly, SEBI has the power to enhance the penalty.