The tribunal had asked Sebi to consider MgSEs application for corporatisation and demutualisation (C&D) before disposing of the maintainability plea by the market watchdog.
SC has also directed SAT to first decide on the maintainability plea of Sebi. The apex court has requested SAT to pass an order on the issue of maintainability of the appeal within eight weeks. The order was pronounced on April 1 by a two-member bench consisting Justices Ruma Pal and Arun Kumar.
The SC bench said, We are of the view that once the tribunal has noted that the appeal had been challenged as not being maintainable, it should dispose of the issue of maintainability first, before passing any further order. In view of this, the impugned order passed by the tribunal is stayed until it disposes of the issue of maintainability. The tribunal is requested to dispose of the issue as early as is conveniently possible, preferably within a period of eight weeks from date.
In August 2004, Sebi had refused to renew the registration to MgSE. The refusal was a result of its investigation into the affairs of the bourse. The market watchdog had found that the day-to-day affairs of MgSE were carried out contrary to the interest of investors, members of the stock exchange and the public.
MgSE moved SAT against the Sebi order. Sebi took preliminary objection of maintainability in the said appeal and argued that SAT had no jurisdiction to entertain an appeal against an order passed under the Securities Contract Regulation Act (SCRA).
During the course of hearing, SAT asked Sebi to file written submissions on the issue of maintainability and Sebi prayed before the appellate authority that issue of maintainability be decided first before deciding the main appeal on its merit.
In January 2005, SAT, however, directed the regulator to consider MgSEs C&D application without considering its refusal to renew MgSEs recognition.
Sebi then decided to move SC where its case was represented by GE Vahanvati, solicitor general of India, while Gopal Subramaniam, senior counsel appeared on behalf of MgSE in the case.