The Securities and Exchange Board of India (SEBI) asks for an amendment to the SEBI Act, under which appellants pre-deposit 10% of the penalty amount before appealing at Securities Appellate Tribunal (SAT) against its orders.
SEBI is demanding this amendment to crack down frivolous appeals made with the intent to delay the payment of penalty. The market watchdog feels that entities are appealing at SAT to delay the execution of SEBI’s orders.
SEBI feels that this measure helps in avoiding frivolous appeals at SAT. There are similar provisions in the Income Tax Act, the Central Exercise Act and Reconstruction of Financial Assets and Enforcement of Securities Interest Act.
The Finance Ministry has agreed to the SEBI’s proposal, which is approved by the SEBI’s board. As per the new proposal, SAT would not admit an appeal against the SEBI’s order pertaining to monetary penalties, recovery, refunds, disgorgement, or impounding, unless the appellant deposits 10% of the penalty imposed by SEBI.
The amendment allows the SAT to reduce or dispense the pre-deposit if the appellant finds difficulty in making such a deposit. This is subject to appellant meeting conditions to protect investors’ interest.
In 2017-18, 340 appeals were filed at the appellate tribunal against SEBI’s orders. Out of the 340 appeals, 306 were dismissed, while only 17 were allowed or ruled against the SEBI.
A staggering 223 appeals were pending with the SAT as on March 31, 2018. The SEBI has moved the Supreme Court disputing 13 orders passed by SAT against it, while 42 appellants have taken the matter to the apex court.
The pre-deposit clause, if implemented, is expected to eliminate frivolous appeals by saving time and cost.
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