SAT raps Sebi member; regulator to file review petition

The Securities Appellate Tribunal today came down heavily on a Whole Time Member of Sebi for handling a case in a "shoddy manner" and ordered assigning the matter to another "responsible" member, prompting the regulator to seek a review of the ruling.
Besides, the tribunal has decided to bring the matter to the notice of Sebi Chairman and Finance Minister.
In an unusually hard-hitting order, the order passed by the full bench of SAT, also imposed a cost of Rs 1 lakh to be paid by Sebi to the appellant within a week for making the appellant "run around on account of apathy on part of WTM (Whole Time Member) of Sebi".

It also asked Sebi to ensure that other WTM passes an order within two weeks after giving an opportunity of hearing to the appellant, Adventz Finance Pvt Ltd, which had approached SAT against Sebi.
"Since we are distressed with the manner in which the WTM of Sebi has discharged his quasi judicial duties which is highly detrimental to the interests of the securities market, we direct the registry to forward a copy of this order to the Finance Minister and also to the Chairman of Sebi for information," said the order signed by SAT Presiding Officer J P Devadhar and Members Jog Singh and C K G Nair.

Stating that the latest appeal by Adventz "reveals the shoddy manner in which the directions of this Tribunal are dealt with by the WTM of the Securities and Exchange Board of India (Sebi)", SAT recalled it had disposed of two earlier appeals in the case on May 6 "by recording the statement made by counsel of Sebi that the representations made by the appellants therein would be heard and disposed of within seven weeks from that day".

Sources said Sebi is planning to file an appeal with SAT seeking a review of the order.
Although Sebi's WTM gave opportunity of hearing to the appellant on June 21, however, no order was passed till June 24, the date on which seven weeks from May 6 expired. Besides, the member did not bother to seek extension of time from this Tribunal for passing the order.

It is only when the present appeal was mentioned on July 7, seeking urgent circulation, counsel for Sebi orally applied for extension of time to pass an order. However, the oral application was rejected and directed that the appeal be placed for admission on July 12, 2016.
"On July 13, 2016 when the appeal was taken up for hearing, senior counsel for Sebi fairly stated that there is no order passed by the WTM and submitted that the letter dated July 8 was issued by the Chief General Manager, on the basis of the endorsement made by the WTM on the office note put up by a junior officer (AM) of Sebi on June 23," SAT said while adjourning the matter to July 15.

Today, when the appeal was taken up for hearing, counsel for Sebi fairly stated that there is no order passed by the WTM of Sebi.
"In these circumstances, it is apparent that the WTM of Sebi sought to represent that he has already passed an order, when in fact there was no order passed by the WTM of Sebi," it added.