Introduction

The Stock Exchange Board of India (SEBI) is the regulator of the financial and Capital market in India. SEBI was established as a non-statutory body dated back on 12^th April, 1988. From the initial period of its establishment, SEBI was a non-statutory body which had no control over anything in the financial market until in the year 1992 through which the government of India declared it as an autonomous body with statutory powers over the financial and capital markets of India.

The Jurisprudence for the endowment of statutory powers to SEBI was based on the fact that in the late 1970s and early 1980s, the capital markets were emerging as the greatest points of sensation among the citizens of India and as a result, numerous malpractices begun to take cause such as unofficial self-styled merchant bankers, rigging of prices, non-adherence to the provisions of the Companies Act, violation of the rules and regulations of the stock exchange and delays in delivery of shares among others. As a result of all these disgusting occurrences, individuals started losing interests and trusts in the stock market which ignited the government to think of an urgent need for a statutory body to regulate this section of trade and thus SEBI was fully adopted as a powerful statutory body to regulate and minimize all these trade hazards involved and ensure the growth and development of the capital market.

Role of SEBI

The major aim the backed up the formation of SEBI is to protect the interests of the investors in the Securities Market and this means that the money which the public is investing is safe because this money is the investors’ own hard-earned money and its investment needed the security of safety and profitability. These roles includes the following:

• Issuer of the securities: These board ensures that the issuance of the Initial Public Offerings and the Follow-Up Public Offerings takes place in a safe and reliable medium which encourages the growth of the capital market.
• Acts as the financial intermediaries: SEBI monitors the activities of the financial intermediaries such as the brokers and ensures that these transactions takes place smoothly and with due diligence with minimal risks of unnecessary losses to the investors.
• The protector for both the traders and the investors in the market: The board also ensures that the interests of the investors are protected against the risks of frauds in the capital market.
• Controlling Unfair Trade Practices: SEBI also acts as the prohibition of the inner trade insecurities and controls the unfair trade practices related to the securities market.

Functions of SEBI

SEBI majorly has three functions which includes the following:

• Protective Function.
• Regulatory Function.
• Development Function.

Protective function: As the name suggests, protective functions are carried out by SEBI to protect the investor’s interest and other financial participants like check price rigging, promoting fair practices, to create consciousness among the investors and prohibit the fraudulent activities and unfair trade practices especially in the stock market.

Regulatory Functions: The objective behind performing these functions is to keep a check on the business of the financial markets work function. These functions shall include among others-

• Framing the code of conduct and guidelines for the proper function of the corporate and financial markets in a proper and efficient manner.
• Intermediaries and regulator of the operation of the individuals in the market.
• Conduct the audit of exchanges and inquiries and rectifies the possible errors.
• Registration of the brokers, merchant bankers etc. and give them legalities in the market.
• Fees Levying in case of certain malpractices by individual members.
• Implementing and exercising powers thus provider of guidance and order for each firms in the market.
• Regulate and register the credit rating agency in the firm accordingly.

Development Functions: are the steps taken by SEBI to provide the investors with a knowledge of the trading and market function           

• Promoting investments by private investors
• Conveying training to intermediaries and unskilled investors in the firm.
• Promote fair trading and reduce malpractices.
• Carrying of the research work in order to discover better and easily reliable means of operation of the stock market exchange market.
• Encouragement of the self-operating enterprises by offering them credit facilities and minimizing taxes in order to motivate such enterprises in the market.

Quasi Judicial Powers of SEBI

In an attempt to keep efficient operation of the capital market in India, SEBI has these powers.

Quasi-Judicial Powers: To ensure transparency, efficiency and accountability in the securities market, the stock-exchange board of India has the powers to deliver judgements related to any kind of fraud and other unethical practices in terms of the securities market. This also includes the drafting of the legislature pertaining to the capital markets.

However, SEBI also has other powers within its jurisdiction which includes the following:

Quasi-Executive powers:  It has the power to implement the regulations and judgements and take legal actions against the members found in violation of the set rules and regulations of the stock market in India.

Quasi-legislative powers:  SEBI is fully legally bound to frame the rules and regulations that is bound to be followed by the members in the stock market and the financial capital markets in India. These regulations are framed according to the interests of the investors in the market.

Securities Appellant Tribunal (SAT)

Due to the need for the efficient growth of the capital market in India, the government thought of establishing an organised and orderly statutory body which started in the late eighties and emerged to be pragmatic in the early nineties. This was because the government of India assumed that in the absence of this statutory body, the stock market would not develop and compete with other countries around the globe. In the late 1991, the department of the controller of the capital market was abolished by the government and by 1992, an ordinance enacting the securities and exchange board of India Act, 1992 was passed. It was after this Act that the securities appellate tribunal was enacted in order to redress then challenges faced by the security and exchange board of India under section 15K of the SEBI Act, 1992.

SEBI was later substituted by the word “securities” in 1995. Since then, all cases that were to be appealed against came to be dealt with the securities appellate tribunal only in substitution on the securities and exchange board of India. The securities laws till today includes the Securities contract (regulations) Act, 1956, the securities and exchange board of India, 1992 and the depositories Act 1996. SEBI Regulates the securities market and SAT acts as a watchdog to ensure Justice in the market between SEBI and the investors. The Constitution of the SAT under SEBI was in pursuant to sections 29, 15K, 15T and 15U of the SEBI Act, 1992. SAT as a tribunal as is constitutionally formed under Art 227 of the Indian Constitution 1949.

Powers of SAT

The SAT was established to have the purpose of discharging their functions under the SEBI Act, 1992. The same powers as are vested in a civil court under the code of civil procedure 1908 while trying a suit, in respect of the following matters namely;

• Summoning and enforcing the attendance of any person and examine him on oath according to the procedures established in the SEBI Act.
• Requiring the discovery and production of documents by each enterprises involved.
• Receiving evidence on affidavits.
• Issuing commissions for the examination of witnesses or documents under it.
• Reviewing its decisions to ensure effective and fair justice to all its individuals.
• Dismissing an application for default or deciding it ex-parte.
• Setting aside any order or dismissal of any application for default or any order passed by it ex-parte.

Appeals to SAT

Any person aggrieved either by an order of SEBI made under this act or by an order by an adjudicating officer under this act may prefer an appeal to a SAT having jurisdiction in the matter.

Timelimit

• Every appeal must be filed within 45 days from the date on which a copy if the order made by SEBI or the adjudicating officer is received by him and accompanied by such form and fees as may be prescribed.
• SAT may however entertain any appeal after it has passed the said time period only if it satisfies the reason or the cause of such a delay on suo moto.
• The appeal shall be made in to three different copies with additional copies which shall be signed by the authorised parties accordingly.
• On receipt of the appeal, SAT May after giving the parties to an appeal the opportunities of being heard, pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against and such appeal shall be disposed off within 6 months from the date of the appeal.

Any person aggrieved by the decision or order of the SAT can file an appeal to the Supreme Court. The appeal can therefore be filed only on the question of law within 60 days from the date of receiving a copy of the decision or order of SAT. The Supreme Court may thereby allow a further period of days for making an appeal if it is satisfied that the applicant was prevented by the sufficient cause from filling the appeal within the days as established by law.

More so, other civil courts are also estopped from having jurisdictions to entertain any suit or proceedings in respect of any matter which an adjudicating officer appointed under this act or a SAT constitute under this act is empowered by or under this act to determine.

Conclusion

As discussed above, both SEBI and SAT have special purposes in the development of the capital market. These bodies play an indispensable role in ensuring the integrity, transparency, and stability of India’s financial markets. SEBI’s regulatory prowess and its commitment to safeguarding investors’ interests have propelled the Indian capital market to new heights, instilling confidence among market participants. Meanwhile, SAT’s establishment has provided a crucial avenue for aggrieved parties to seek redressal and fair adjudication of disputes, reinforcing the principles of justice and equity in the financial landscape.

 

written by Charles Anyama Kalisto, 3rd year Law Student at Marwadi University