Supreme Court pulls up market regulator for filing frivolous cases
The Supreme Court on Monday reprimanded the Securities and Exchange Board of India (Sebi) for filing frivolous cases, saying it should be regulating rather than litigating in courts.
A bench led by Justice BR Gavai dismissed the Sebi’s application to give “appropriate orders” to the effect that the Securities Appellate Tribunal (SAT) order of May 3, 2021 in the case Suzlon Energy be not treated as a precedent by the tribunal. However, it orally said that it cannot be treated as a precedent in other cases.
The apex court told Solicitor General Tushar Mehta, appearing for Sebi, that the regulator has been “filing frivolous cases. We have seen that rather than doing regulating work, you are ligating only.”
Securities lawyer Somasekhar Sundaresan, appearing for Suzlon, argued that SAT cannot be asked to hold its hands like this.
SAT has been setting aside the imposition of penalty on similar issues, though judicial propriety demands that hearing of all the appeals raising the same question of law be deferred by the tribunal to await the decision of the SC, Mehta said.
SAT had partly allowed the appeal and set aside the penalty imposed by Sebi on Suzlon for violating the provisions of the Listing Agreement. A total fine of Rs 1.1 crore, including Rs 5 lakh on an official, was imposed as the company had allegedly failed to disclose price sensitive information as required under the listing regulations on “more than one occasion.” The regulator had investigated announcements made during April 1, 2006 to March 31, 2009.
Sebi in its application stated that since same questions of law were pending consideration before the SC, the SAT “ought to have waited for the outcome of the appeal before passing the orders in other similar matters.”
SAT has grossly erred by failing to appreciate that its earlier order, which is under challenge and pending before the SC, should not to be treated as a binding precedent and the “hearing of all pending appeals before the SAT on the very same questions ought to be deferred to await the decision of the SC,” Sebi said.
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