SAT raps Sebi for 'lackadaisical approach' in Kirloskar Industries matter

Tribunal asks market regulator to pay Rs 5 lakh for delay in complying with its order

The Securities Appellate Tribunal (SAT) has directed the Securities and Exchange Board of India (Sebi) to pay a cost of ₹5 lakh for a ‘lackadaisical approach’ in a matter related to Atul and Rahul Kirloskar of Kirloskar Industries.

In spite of SAT quashing a Sebi order on both in October 2022, their holdings in Kirloskar Industries were not defrosted by the National Securities Depository (NSDL).

Sebi had submitted that it had sent an email in December 2022 directing NSDL to comply with the SAT order, but NSDL contended that they were unable to comply as the PAN numbers were not given. Further, NSDL wrote an email to Sebi in March 2023 seeking directions, which met with no response from the market regulator. Countering it, Sebi submitted that the email was sent to the wrong person.

“...we find that a blame game has started between Sebi and NSDL. Both the entities are blaming each other for non-compliance of SAT order,” noted Justice Tarun Agarwala.

Due to the non-compliance of the SAT order, the holdings of Atul and Rahul Kirloskar remained frozen for over a year even after getting relief from the tribunal.

“There is apathy on the part of Sebi in not taking follow-up action,” said the order, adding that ‘all hell broke loose’ when the Kirloskar brothers filed applications in the tribunal on November 1, following which the shares were defrosted on November 3.

“This by itself speaks volumes of the functioning of Sebi in reacting to matters at the last moment,” said the tribunal.

The tribunal added that in the event Sebi finds that the fault lay with NSDL, it will be open to them to take appropriate remedial measures against NSDL.