Sebi plans to approach the Government seeking amendments to securities law for more clarity on adjudicating officers’ discretionary powers in determining the quantum of monetary penalty in cases of violations. The move comes after the Supreme Court recently rejected the regulator's plea that an adjudicating officer has discretion to fix the penalty amount under a particular provision of the Sebi Act. Besides, the apex court had said pursuant to Sebi (Amendment) Act 2002 and prior to the Amendment Act of 2014, the discretion of adjudicating officers was taken away and effectively restored through the amendment in 2014.
In the matter of Roofit Industries, Sebi had challenged Securities Appellate Tribunal's decision to reduce the fine amount. While rejecting the plea, the Supreme Court did not accept that ‘section 15J (of the Sebi Act) gives discretion to adjudicating officers’ to decide the penalty quantum.
A senior official said the court's conclusion has led to a situation where heavy penalties were imposed even for minor breaches in matters of violations during 2002-2014 period. Besides, the Securities and Appellate Tribunal (SAT) has remanded back several orders of Sebi for passing fresh orders causing delays in disposal appeals.
As many as 36 cases have been remanded back to Sebi for passing fresh orders by the tribunal. Also, around 3,000 adjudication actions remain pending as on March this year, of which 90 per cent pertain to the period between 2002 and 2014, according to the official. Against this backdrop, the official said Sebi plans to approach the Government for necessary amendments in existing regulations to ensure that there is more clarity with respect to exercise of discretionary powers of adjudicating officers.