Bombay HC judgment bolsters Sebi''s powers

Mumbai: Upholding the regulatory powers of the Securities and Exchange Board of India (Sebi), the Bombay High Court has said that the orders passed by the market watchdog, which do not affect the rights of the parties and which are in the nature of procedural orders, cannot be challenged either in the Securities Appellate Tribunal or even at the high court, under Section 15 Z of the Sebi Act.

The order was in response to an appeal made by H N Bajaj and Rahul H Bajaj before the high court against a SAT order rejecting their appeal for inspection of the documents in the Amara Raja Batteries case.

The Bajaj duo had demanded access to documents to prove that the charges leveled against them by way of show-cause notices of price manipulation and creation of an artificial market in the Amara Raja scrip, were not correct.

The appellants' argument was that Section 15 Z of the Sebi Act created a wide and broad appellate jurisdiction and every kind of judicial order could be challenged in appeal. They pointed out that Section 15 Z of the Sebi Act says that "any person aggrieved by any decision or order of the SAT may file an appeal in the high court within 60 days from the date of communication of the order of SAT to him on any question of fact or law arising out of such order". In effect, Section 15 Z provides an appeal to the high court against the decision or order of SAT.

While passing the instant order, the two-member division bench of justices A P Shah and S A Bonde observed, "It is difficult to accept the submission of the appellants that each and every order made by the appellate tribunal is intended to be subjected to appeal under Section 15 Z."

More importantly, it said, "mere procedural orders are not orders which can be taken up and challenged under Section 15 Z of the Act".

The high court, in effect, has struck down the appeal made by the appellants as being not maintainable, and held that any interlocutory order passed by Sebi which does not affect the rights of the parties cannot be challenged either before SAT or before the high court.