The Securities Appellate Tribunal, in its order dated July 15, 2016, in the matter of Adventz Finance Private Limited, rebuked SEBI for the shoddy manner in which its directions were dealt with by the Whole Time Member of SEBI and imposed costs of Rs. 1 lakh (0.1 million) to be paid by SEBI to Adventz. In an order dated May 6, 2016, SAT had directed SEBI to give Adventz an opportunity of hearing and pass a final order by June 24, 2016. Although an opportunity of hearing was given on June 21, 2016 by the WTM of SEBI, no order was passed by the WTM within the deadline stipulated by SAT.
After being made to run around by SEBI, Adventz approached SAT in relation to SEBI’s failure to pass an order. SAT was irked by a letter issued to Adventz and signed by the WTM, which contained the reasons for which the WTM had rejected the representation made by Adventz. On perusing the letter, SAT found that it was not an order passed by the WTM, but only a communication issued by a junior SEBI official, recording the gist of the order, allegedly passed by the WTM of SEBI.
SAT stated that, if it was not possible for the WTM to pass an order within the stipulated time, the WTM could have sought extension of time, rather than resorting to a totally impermissible mode of representing that an order has been passed, when in fact no order was passed by him. Considering such an act to be an attempt to mislead the matter, SAT stated that the manner in which the WTM discharged his quasi-judicial duties was highly detrimental to the interest of the securities markets. SAT quashed the letter and directed SEBI to re-assign the matter to another WTM who shall pass an order within two weeks.
However, following an unconditional apology and review application from SEBI, SAT has recently, on July 25, allowed the WTM of SEBI to pass an appropriate order within a week, and withdrawn the penalty of Rs. 1 lakh that was levied on SEBI.