Refund money or pay interest: Securities Appellate Tribunal directs Sebi

The Securities Appellate Tribunal (SAT) has directed the Securities and Exchange Board of India (Sebi) to either refund Rs 635,521 to an appellant or pay interest of 12 per cent per annum. This was a rare instance in which the tribunal threatened the capital markets regulator to pay penal interest.

Sebi had, a year ago, imposed penalty of Rs 600,000 on an individual for violation under the Prohibition of Fraudulent and Unfair Trade Practices (FUTP). The individual had moved SAT against the order. However, during the pendency of the appeal, Sebi’s recovery officer recovered an amount of Rs 6,35,521 on December 17.

In February, Sebi’s order was set aside by the SAT. However, Sebi refused to refund the amount, stating that it planned to appeal the SAT’s order in the Supreme Court. The appellant once again filed an urgency application before the SAT, seeking a direction to be issued to Sebi to refund the order.

The appellant submitted medical certificates and gave an undertaking that he would again place the penal amount with Sebi, in case the apex court stayed the SAT’s order.

Sebi’s counsel argued that it couldn’t file an appeal before the apex court, on account of the lockdown. The counsel said that the regulator would refund the amount if the applicant recorded the undertaking before the tribunal.

After hearing both parties, the SAT held that “there was no justification for Sebi to withhold any amount”.

SAT’s order was issued on May 15, with the deadline to repay set as May 22.