The Securities and Exchange Board of India (Sebi) has put in place a division to reduce litigations and tackle pendency of appeals.
Officials privy to the matter have indicated that earlier this month Sebi created a new Securities and Appellate Tribunal (SAT) Litigation Division to act as an interface between Sebi and the appellate body.
“We plan to reduce pendency and streamline litigation matters handled across departments within Sebi,” said a senior official on the condition of anonymity. A query sent to Sebi remained unanswered. Currently, it is the enforcement department that cumulatively handles all the appeals against Sebi's orders, whether in the Supreme Court, other courts or SAT. The new division would be a part of the Sebi’s enforcement department. Sebi has listed the functions of its enforcement department: “While undertaking defence representation in contentious matters involving complex issues of law, the division would liase with senior advocates, law firms and represent the interest of Sebi at the SAT. The division would also be an interface between Sebi and SAT while collaborating with other departments of Sebi. It would also assist Sebi in filing affidavits and submissions while attending hearings.” The functions were updated recently on the market regulator's website.
“The enforcement department as a whole is required to handle all the appeals against Sebi, the specific division for SAT appeals would definitely streamline the process of representation before SAT,” said RS Loona, advocate and former executive director at Sebi.
According to Sebi’s latest annual report, as of March 2014, 61 appeals are pending with the SAT. Sebi in most cases uploads its annual report by August every year. But, this time, the report for the previous financial year is awaited.
With the creation of this department, Sebi also hopes to increase the efficiency of its representation before the SAT when its orders are opposed.
Recently, Sebi’s stance had been criticised in three orders. This year, the SAT was critical of Sebi’s order in the matter of DLF, which is now before the Supreme Court. The SAT was also critical of Sebi in the matter of setting up a self regulatory organisation for mutual funds.
“There are three aspects to determine whether any order is upheld by the SAT. One is the quality of investigation, the application of mind by the whole-time member or the adjudicating officer, and finally representation before the SAT. All three need to be strong for the SAT to pass the judgment in favor of Sebi,” said Loona.
According to Sebi insiders, this division is also Sebi’s way to prepare for the Financial Sector Appellate Tribunal (FSAT). The finance ministry plans to transform the SAT into the FSAT, which will hear appeals against regulators for all financial products.
Currently, the SAT is hearing appeals against Insurance Regulatory and Development Authority, Pension Fund and Regulatory Authority and Sebi.