SC to decide on Sebi’s conflicting directives

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₹29.42 crore of the IPO proceeds. “The question which arises for consideration is, that once an AO, after making an inquiry and adjudicating the matter quashes the proceedings, is it open to an another authority of Sebi to adjudicate the same issue on the same facts under Section 11 and 11B of the Sebi Act and pass contradictory orders," the Securities Appellate Tribunal (SAT) asked in a 12 April order. SAT also criticized Sebi for not following a consistent approach and observed that the orders of an AO will be binding on Sebi in such cases.

“In our opinion the authorities of the board, while passing quasi-judicial orders, are required to take a consistent view in a matter," the appellate tribunal said. “If the AO after applying his mind, and after considering the material evidence on record passes an order exonerating an appellant, then the order of the AO which is an order of the regulator, Sebi, is binding upon the WTM and it is not open for the WTM to take a different view," it had said. However, Sebi board has the authority to overturn any order passed by an AO if it believes the order is erroneous and not in the interests of the security markets.

This can be done through a special provision under the rules. But in this instance, Sebi did not seek a review, leading SAT to conclude that the order was final and binding on Sebi. In the past, questions over consistency of Sebi’s regulatory actions have sparked debates.