New bill dilutes Sebi power on search and seizure

Written by PTI | New Delhi | Updated: Aug 5 2014, 04:47am hrs
Diluting Sebi's powers on conduct of search and seizure of defaulters' properties, a new bill today proposed that permission for such operations would be required from a special court, as against earlier ordinances providing for Sebi chief to directly authorise such actions.

Under the Securities Laws (Amendment) Bill, 2014, introduced in the Lok Sabha today, Sebi would have to seek permission from special courts to conduct search and seizure operations.

While the new Bill has retained all the powers granted to Sebi through the three ordinances, it has tweaked some provisions as there were demands that the greater powers need to be balanced with necessary safeguards.

The ordinance allowed the Securities and Exchange Board of India (Sebi) Chairman to authorise search and seizures against suspected entities, but the new Bill provides that permission for such actions would need to be obtained from a Magistrate or Judge of a designated court.

The new bill contains as many as 57 clauses for amending various provisions of the three capital markets-related Acts, as against 30 clauses in the last ordinance that was passed in March this year for grant of greater powers to Sebi.

The first ordinance was promulgated in this regard in July 2013, followed by second ordinance in September 2013. The third ordinance also expired on July 18, 2014, pursuant to which the government has now introduced the new Bill in the Parliament to empower Sebi.