SC stays SAT’s contempt order against SEBI

A direction by the Securities and Appellate Tribunal (SAT) seeking a sworn affidavit from an official of market regulator SEBI has been stayed by the Supreme Court (SC). The court has also stayed the SAT order that carried adverse observations against SEBI in a matter involving nearly 12 years’ delay in sending a show cause notice (SCN).

In December 2021, the SAT had asked SEBI’s adjudicating officer (AO) to appear before it in person and termed the regulator’s actions as ‘contempt of court’ as it was irked by the regulator’s casual approach to its order on filing the affidavit. SAT had pulled up SEBI for what it termed as ‘judicial dishonesty’ and asked the AO to file a sworn affidavit for a 12-year delay in sending an SCN in an insider trading and share price manipulation matter.

However, SEBI failed to file the affidavit, which did not go well with the SAT’s presiding officer Tarun Agarwala and judicial member MT Joshi. Both the judges asked the SEBI AO to be personally present before them.

As a face-saver, the SEBI moved the SC seeking its intervention in ordering SAT to quash the adverse remarks and the summons. SEBI’s counsel told the apex court that aggressive comments made by the tribunal were unwarranted and that it had no powers to try the regulatory official, who failed to file a sworn affidavit as ordered by SAT, for contempt. The regulator also argued that SAT’s adverse remarks will impede its ability to work “fearlessly and independently”.

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