SAT imposes penalty on Sebi for failing to pass order on time

The Securities Appellate Tribunal (SAT) has passed an order against the Securities and Exchange Board of India, or Sebi, for failing to comply with the Tribunal’s directions for nearly three years and has imposed a cost of ₹10,000 on the market regulator.

‘Sebi shall pay costs of ₹10,000 to the advocate for the appellant within a period of two weeks from today,’ said the SAT order

An email sent to a Sebi spokesperson did not result in any response.

The matter pertained to a takeover code violation in 2010 in the Vybra Automet Ltd. Where Sebi, in January 2014, had slapped a penalty of ₹26 lakh on six entities.

In September 2014 the Tribunal observed that Sebi did not adhere to principles of natural justice in passing the order.

SAT further directed Sebi to issue showcause notices and pass fresh orders within four months.

However even in June 2017, Sebi had failed to pass an order in a time bound manner.

“Sebi has failed and neglected to comply with the said directions,” said SAT in the order passed on June 28 but uploaded on SAT website on Friday.

Though Sebi filed affidavits explaining the circumstances in which the directions of SAT were not complied but ‘SAT was not at all impressed by those explanations’.

“In our opinion, there is gross negligence on part of various officials of Sebi including the concerned Whole Time Member (WTM) of Sebi,” said SAT in the order.

Following the SAT order, Sebi may file a petition in the tribunal for a review, said two people aware of the regulator’s thinking.

“Costs are added on the discretion of the court and should be imposed after considering the facts and circumstances of the case. In present matter it seems that SAT has not considered the reasons given by Sebi for this gross delay,” said Ashish Bhakta, Partner, ANB Legal.

“There have been many instances in the past where Sebi has grossly delayed in complying with directions of SAT. Accordingly SAT must have thought fit to take up the matter in a manner that the same may not be repeated,” he added.

This is the second instance within a span of one year when Sebi has been penalised by SAT.

In a rare instance last year in July, the tribunal had imposed a a cost of ₹1 lakh on Sebi for failing to pass orders in an Long Term Capital Gains (LTCG) violation case in the scrip of Adventz Finance Pvt. Ltd in a timely fashion.

Sebi later filed a review petition with the Tribunal. After which SAT deleted the personal observation against the WTM.