Delhi HC issues notice to SEBI to implead Midas Touch in a PIL on consent orders
Moneylife Digital Team 11 April 2012

Midas Touch has argued that that it has additional information relating to consent orders

The Delhi High Court (HC), on Tuesday, issued notices to the market watchdog Securities and Exchange Board of India (SEBI) and a petitioner, for impleading Midas Touch Investor Association in the public interest litigation (PIL), challenging the constitutional validity of the popular “consent orders” mechanism by SEBI used to settle disputes related to securities law offences.

Midas Touch moved an application stating that it should be allowed to be impleaded in the PIL as it has additional information relating to the case, following which orders were issued by bench of acting chief justice AK Sikri and justice Rajiv Sahai Endlaw.

In a press note, Midas Touch stated that, “it was one amongst the privileged eight unconnected organizations and individuals invited by the JPC (Joint Parliamentary Committee) for personal deposition before it. Therefore, impleading the applicant in the PIL would enable it to assist the Hon’ble Court in dispensing justice.”

A PIL was filed in October last year, by Delhi-based businessman Deepak Khosla challenging the SEBI’s 2007 circular enabling adjudicating officers (AOs) to issue consent orders without fixing guilt of parties involved. The plea also sought quashing of the circular and cancelling all consent orders passed by SEBI or by the AOs in pursuance of the circular.

The SEBI circular enables AOs to settle “administrative or civil actions” in cases where a person is prima facie found to have violated rules without fixing the guilt of the parties involved. Such cases also include those which are pending before the courts or appellate authority.

Virendra Jain, president, Midas Touch says that, “Such unfettered powers can be conferred in an authoritarian state and have no place in a democracy.”

The writ petition further said that there is no power with SEBI to frame such a “Super Amnesty” scheme, especially since the scheme is completely contrary to the SEBI Rules and Regulations Act.

It also states that the consent guidelines issued by SEBI have been grossly abused. It has referred to the constitution and recommendations of Joint Parliamentary Committee (JPC) formed following the 2002 securities scam, also known as Ketan Parekh scam. The report submitted by the JPC in 2002 had noted that there was a nexus between Ketan Parekh, banks and corporate houses. It recommended SEBI, the ministry of company affairs, along with other enforcement and investigating agencies, to investigate this nexus and action taken under relevant laws. SEBI invoked the consent mechanism in numerous such cases which has enabled the market regulator to settle cases in defiance of the will of the Parliament.

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