SEBI reached the Supreme Court against the decision of the Appellate Tribunal

The Securities and Exchange Board of India’s (Sebi) plea against the SAT judgment in the Supreme Court said that unwarranted adverse remarks would hamper the market regulator’s ability to act fearlessly and independently.

The matter pertains to a SAT order passed on December 16, where it had questioned SEBI’s 12-year delay in initiating the quasi-judicial process and sending a show-cause notice to Yatin Pandya for allegedly manipulating the stock price. is accused of doing. Sterling International Enterprises Ltd. to avoid long-term capital gains tax. Sebi, in its order passed in September, said that Pandya and 29 other entities allegedly traded among themselves to create a false and misleading impression of actual trading in sterling shares. Trading dates back to 2008-09.

The person had filed an appeal in SAT against the SEBI order citing delay in initiation of proceedings and passing of the order.

The SAT took cognizance of the petitioner’s submissions and observed that the adjudicating officer of SEBI has dealt with the matter negligently, which amounts to ‘judicial dishonesty’. It directed the officer to file a reply and appear before the SAT.

Interestingly, it was only a two-page order that did not go into the merits of the case.

The Adjudicating Officers of SEBI are supposed to be independent of the administration to ensure that they can pass fair and impartial orders.

The matter did not end here. SAT, in another order, almost made a case of contempt for SEBI as the adjudicating officer did not file a reply. SAT directed the officer to appear on January 27. Mint has reviewed the copy of the SEBI petition filed in the Supreme Court. The petition is expected to be heard by the court when it reopens after the holiday.

Typically, in cases where adverse comments are made against it or its whole-time members, the regulator files a review petition with the SAT and requests the removal of the adverse comments. However, this time the regulator has taken the matter to the top court.

“It is respectfully submitted that the adverse remarks/observations will affect the free and fearless delivery of justice to protect the interests of the investors not only in the absence of any pleadings and/or discovering any malicious or dishonest , was rather completely untenable even in law,” SEBI said in its petition filed in the Supreme Court.

According to SEBI, the proceedings of the market regulator are not bound by any statute of limitations, which means there is no time limit on when a matter can be taken up for passing orders.

SEBI further stated that SAT has erred in passing such order without considering the facts of the case.

This is another example of the growing gap between these two bodies. Early last year, the regulator had questioned the absence of a third member on the SAT bench. Typically, the SAT bench should consist of three members. However, the third post, which should have been occupied by a technical member, has been lying vacant for almost a year.

SEBI said, “The Bench must have at least one technical member, and since the existing Bench consists of judicial members, the constitution of the Bench is faulty, and the orders passed by this Bench shall be quorum non-judicial (not before a judge). “

Due to lack of a third member, SAT gave a split verdict in the PNB Housing Finance-Carlisle case. In June, PNB Housing announced that it would sell shares and warrants on a preferential basis to the Carlyle Group 4,000 crores. The transaction would have transferred control of PNB Housing to the Carlyle Group.

On complaints from some investors, SEBI said that the shares require an independent valuation as required by the Articles of Association of the Mortgage Lenders. Carlyle challenged the SEBI decision in the Appellate Tribunal. However, the bench delivered a fragmentary verdict.

Sebi’s questions on a two-member bench prompted the SAT’s decision last May. It said the proceedings before the tribunal cannot be questioned on the ground of any defect in the constitution of the SAT.