The Supreme Court has upheld Sebi?s powers to regulate the markets by barring top officials of a company from trading in securities.
A Bench comprising G S Singhvi and Ashok Kumar Ganguly has quashed the Securities Appellate Tribunal?s (SAT) decision that set aside the Sebi?s 2004 order that banned Ajay Agarwal, joint managing director of Trident Steel Ltd, from associating with any corporate body in accessing the securities market and also prohibited him from buying, selling or dealing in securities for a period of five years for misstating facts in the prospectus of the company?s public issue of 1993.
While asserting that the amended procedures can be applied retrospectively, the court turned down Agarwal?s submission that that the regulator cannot pass a restraint order under Section 11-B of the Sebi Act 1992 for an alleged irregularity committed prior to January 25, 1995, when the law came into effect. The apex court said that the official was not held guilty of committing any offence nor was subjected to any penalty but was merely restrained from dealing with the securities market for five years. Allowing the Sebi?s appeal, the court said, ?if we look at the legislative intent for enacting the Act (Sebi Act 1992), it transpires that the same was enacted to achieve the twin purposes of promoting orderly and healthy growth of securities market and for protecting the interest of the investors. The requirement of such an enactment was felt in view of substantial growth in the capital market by increasing participation of the investors, Justice Ganguly, writing the verdict for the Bench said.