In a communication to all SEs, Sebi said that it has been brought to its notice that arbitration proceedings take an unduly long period of time to reach the stage of making an award.
It has also been observed that the time period provided for in the bye-laws of the stock exchanges too, is long which has led to the arbitration cases pending for a long time and consequently the undue delay in the resolution of these cases.
In a circular issued recently, Sebi said it has, therefore, been decided that the bye-laws of the exchange pertaining to arbitration be changed and a new clause be incorporated.
The new clause states: The arbitral tribunal shall make the arbitral award within 3 months from the date of entering upon the reference. The time taken to make the award may not be extended beyond three times, by the managing director or relevant authority or an application by either of the parties or the arbitral tribunal, as the case may be. Any further adjournments, shall however be granted only in exceptional cases, for bona-fide reasons, that are to be recorded in writing.
For the purpose of this bye-law, the arbitral tribunal shall be deemed to have entered upon a reference on the date on which the arbitral tribunal has held the first hearing, it said.
Sebi has also asked all the SEs to take immediate steps to implement this decision and inform of compliance to the regulator.