The Supreme Court on Monday stayed a Securities Appellate Tribunal’s direction to Sebi’s adjudicating officer (AO) to appear before it to explain the market regulator’s action in a matter involving 12-year delay in sending show cause notice to a trader for alleged insider trading and share price manipulation.
Irked by Sebi’s casual approach, the SAT in December had pulled up the watchdog for ‘judicial dishonesty” and also held the market regulator in ‘contempt of court’ as the regulatory official had failed to file a sworn affidavit as ordered by it. SAT had then directed the officer to appear before it on January 27.
A Bench led by Justice Vineet Saran stayed the operations of the SAT two orders and also the remarks made against the Sebi’s AO. It also stayed the direction that the said officer should file an affidavit explaining why the Sebi dealt with the case in a casual manner.
The matter before SAT involved a 12-year delay in issuing a show-cause notice to Yatin Pandya, who between 2008 and 2009 is alleged to have manipulated the share price of Sterling International Enterprises to evade long-term capital gains tax.
Sebi while challenging the aggressive remarks made by the tribunal on its workings said that SAT’s unwarranted “adverse remarks/observation especially in the absence of any pleading and or finding of any malafide or dishonesty will not only affect the independent and fearless dispensation of justice in order to protect the interest of investors but was also wholly unsustainable in law.”
AG KK Venugopal and counsel Pratap Venugopal told the SC that that the aggressive remarks made by SAT were unwarranted as had no powers to try the regulatory official.Terming the SAT orders as “erroneous, unsustainable in law, and exceeding jurisdiction,” the Sebi in its appeal said that “SAT has grossly erred in directing that the reply to be filed by Sebi and be sworn by the assessing officer, Sebi himself, an adjudicating authority carrying out quasi-judicial function.”
The tribunal has not only erred in failing to await a reply to the Pandya’s appeal which would have established that there was no delay in initiating proceedings before the adjudicating officer. SAT has grossly erred in imputing “judicial dishonesty” on the part of the AO in absence of any finding of malafides and on the first date of admission hearing itself, without considering the Ao’s order in its totality, Venugopal said.