Say delayed proceedings cause hardship and prejudice to market participants
The Association of National Exchanges Members of India (ANMI) has urged the Government to limit the timeframe for issue of show cause by market regulator Sebi.
In a letter to the Department of Economic Affairs, the association suggested that the Limitation Act should be incorporated into the SEBI Act through amendments.
It called for prescribing a maximum period for issuance of show-cause notice and proceedings, while all pending matters that do not fall under the Limitation Act should be closed.
Sebi does not prescribe any period for initiation of proceedings, leading to delays for years after the alleged violation, and needless hardship and grave prejudice to market participants, besides affecting their ability to respond effectively to the notices.
Market intermediaries are covered under the Limitation Act, while other acts (such as Income-tax Act, 1961) have a prescribed time limit for issuance of notices, said ANMI.
The Securities Appellate Tribunal has, in several cases, held such delays as fatal to the proceedings and even set aside Sebi’s orders.
SAT has held that Sebi must exercise its powers within a reasonable time, though there is no limitation prescribed in the Act or for the completion of the adjudication proceedings.
Courts have been exercising discretion and refusing to entertain Sebi’s show-cause notice issued after an inordinate delay.
In its order dated December 16, SAT had hauled up Sebi for issuing a show-cause notice after 12 years and termed it as ‘judicial dishonesty’. It directed the adjudicating officer of Sebi to submit a sworn reply within a specified timeline and termed the regulator’s action as “contempt of court”.