Unserved Sebi notices at 19-year low amid better tracking, outreach

Electronic messaging services permitted for notices, summons after a 2021 amendment

The Securities and Exchange Board of India (Sebi) had sent a notice for hearing a case related to front-running to an address in the Mumbai suburban region on January 30, but it could not be served.

 

The regulator has recorded 72 such instances of unserved summons and notices in the previous financial year (FY26).

 

An unserved notice or summons is usually when the regulator is unable to reach an entity for matters such as front-running and other violations.

 

The regulator attempts to reach out at the last known address. But recently, it has done so through other means of contact. When this fails, the notice is considered unserved; newspaper advertisements can follow and the order is also placed on the Sebi website. There have been around 300 such unserved notices on an average annually over the last 10 years. The numbers for FY26 as available in April shows a drop to 72 notices, the fewest since FY08. The annual numbers on unserved notices were calculated thro¬ugh counting of individual notices between April and March of each financial year. 

 

The total number of notices is not disclosed in this section, which makes it difficult to understand the share of unserved notices as a proportion of total notices, or overall activity in this regard by the regulator.   

 

The 2007-08 Sebi annual report shows that the cases taken up for investigation had dropped 80 per cent year-on-year (Y-o-Y) in 2007-08 to 25 from 120 in 2006-07 even as cases completed rose from 102 to 169 in the same period.

 

The annual report which provides data on investigations in FY26 has not yet been released.

 

An email sent to the regulator on April 2 did not receive a reply.

 

A Sebi official said that many notices are also being served using the help of intermediaries such as brokerages which often have updated information on their clients. This may have played a role in the reduced numbers.  

 

Serving notice is considered an important step in effective regulatory action.

 

“Effective service is an essential process. It is an essential and important element of the principles of natural justice which Sebi must comply with,” said Tomu Francis, partner at legal firm Khaitan and Co.

 

If the notice is not considered to have been served correctly, then it can be a ground for appeal.

 

Parties can argue that proceedings were initiated without giving the person or entity an opportunity to present their side of the case.

 

Physical notices, if the person is not available to receive it, have typically been put up prominently at the last known address, though electronic means of communicating notices are also now accepted including email, said Francis.

 

“Electronic has become the primary mode of service,” said Sonam Chandwani, managing partner at KS Legal and Associates.  

 

“By ensuring higher success in initial delivery itself, Sebi reduces its reliance on substituted service such as public notices. These are typically resorted to as a last measure, and also carry lower practical effectiveness in securing actual participation of noticees. This approach aligns with principles of natural justice ensuring real, not merely deemed, notice while simultaneously improving recovery, adjudication efficiency, and overall regulatory credibility,” she added.

 

Electronic messaging services (like Whatsapp or Telegram) were added to the means by which notices can be served in 2021.

 

Such a notice sent through email or electronic messaging platforms must be digitally signed. An email which has bounced is not considered valid.

 

The regulator has been looking to streamline its processes through higher use of technology in other ways as well.

 

The last annual report for FY25 showed an E-services portal for various regulatory processes, including tracking served notices.

 

“In order to accelerate the pace of software development, Sebi has procured a low code software development platform. Using the features and capabilities of the platform, a portal providing a wide gamut of applications/services has been developed,” it said.

 

One of the services mentioned include a show cause notice delivery tracker which tracks delivery of notices and orders through market infrastructure institutions.