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Vivek Law
Mumbai, Dec 25: The Delhi high court has, in its verdict upholding Sebi's order which allowed BV Raju's open offer for Sri Vishnu Cement Ltd (SVCL) to go through, clearly stated that the market regulator is well within its rights to issue interim directions under sections 11 and 11B.
This power of Sebi has been questioned in several cases and has thus become a matter of much debate. Sebi has on its part been relying on clarifications from courts to send the signal across that it does indeed have the powers to order interim reliefs pending an inquiry or investigation.
In the recent past, in the matter pertaining to Sebi's action on brokers on charges of price manipulation, the Mumbai high court too had held that Sebi does indeed have the powers to issue interim directions to safeguard the interests of the market.
In a 27-page verdict on an investor's petition before the court challenging the legality of the open offer by BV Raju and others for SVCL at Rs 100 per share, justice Anil Dev Singh has heldthat Sebi has the power to pass interim orders before or during the inquiry or investigation to effectuate the purpose of the Sebi Act and the Regulations.
"Under section 11 of the Sebi Act, Sebi has the powers to protect the interests of investors in securities and to promote the development of and to regulate the securities market, by such measures as it thinks fit. The power is of a very wide nature and is not hedged in by an restrictions. This power will embrace the power to issue interim orders. The Sebi in a fit case can pass interim orders in the interests of investors and to promote the development of and regulate the securities market", the verdict states.
"If at the initial stage it becomes necessary to pass an interim order, the Sebi has been endowed with such a power under section 11 of the Act. In case the provisions of sections 11 are construed in a restrictive manner, the interests of the investors in securities and development and regulation and regulation of securities market willsuffer", it further states.
Under the same provision, it can frame regulations as well for the same purpose. "The final orders after the inquiry are contemplated under section 11B of the Act and at that stage it can issue such directions to any person referred to in the section as may be appropriate in the interests of the investors and securities market. Both under sections 11 and 11B the duty is cast on the board to protect the interests of investors", the order states.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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