Supreme Court Pulls Up SEBI for Filing Frivolous Cases: Report

Moneylife Digital Team 14 March 2023

Investor Interest

The Supreme Court (SC) reprimanded market regulator Securities and Exchange Board of India (SEBI) for filing frivolous cases, saying it should be regulating rather than litigating in courts, says a report.

In the report, Economic Times says, "A bench led by justice BR Gavai dismissed SEBI's application to give 'appropriate orders' to the effect that the Securities Appellate Tribunal (SAT) order of 3 May 2021 in the case Suzlon Energy Ltd be not treated as a precedent by the tribunal."

"The apex court told solicitor general Tushar Mehta, appearing for SEBI, that the regulator has been 'filing frivolous cases. We have seen that rather than doing regulating work, you are ligating only," the report says.

The bench of justice Gavai and justice Vikram Nath, permitted the solicitor general to withdraw SEBI's application.

"However, we clarify that the order impugned will not be treated as a precedent in other cases," the SC says.

Ealier in January this year, SAT (securities appellate tribunal) imposed a cost of Rs50,000 on the market regulator in the Suzlon Energy case.

In an order issued on 6 January 2023, the bench of justice Tarun Agarwala, presiding officer, and Meera Swarup, technical member, says, "...finding given by the adjudicating officer (AO)is in complete disregard to the decision given by this Tribunal in Suzlon's case. In effect, what the AO is trying to state is that the principles of law evolved in Suzlon's case given by this Tribunal is not in accordance with the plain reading of Section 23E of the Securities Contracts (Regulation) Act (SCR) and therefore, the decision of the Tribunal is incorrect. The AO further goes on to say that the order of the Tribunal in Suzlon's case has been appealed by SEBI before the Supreme Court and the same is pending."

"We may add that the decision of this Tribunal in the Suzlon case is binding on the AO and is required to be followed. The mere fact that SEBI has filed an appeal before the Supreme Court is not sufficient for the AO not to give effect to the order of the Tribunal in Suzlon's case," SAT says.

In the Suzlon case, SAT held that penalty under 23E of the SCR Act cannot be imposed for the violation of the listing conditions in as much as Section 23E applies for non-compliance of listing conditions or delisting conditions of a company to be listed on the stock exchange and has nothing to do with the violation of the listing agreement.

"This judgement has not been set aside by a higher court and is therefore binding on the sub-ordinate authorities, namely, the AO of SEBI in the instant case," the bench stated. (Read: SAT Imposes Rs50,000 Cost on SEBI for Not Following Its Ruling and Violating Judicial Discipline)

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