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Attorney General (AG) KK Venugopal today informed a bench of Justices Chandrachud and Surya Kant that the Securities Exchange Board of India (SEBI) and the Securities Appellate Tribunal (SAT) are at frequent loggerheads, with the tribunal having penalised SEBI officials on atleast 2 occasions.

The AG was arguing a matter for SEBI wherein the tribunal levied a cost of Rs. 2 lakhs to be paid by SEBI to 4 appellants in 8 weeks' time.

The matter pertained to the SAT directing SEBI to investigate the complaint by two investors against a company called Vittal Communications Limited and ascertain if their claim for refund was justified then issue orders directing VCL to refund the actual amount spent by the investors.

SEBI by an order dated 16 December 2014 had directed the Investigation Department to examine the feasibility of quantifying ill-gotten gains, if any, and issue requisite notice for refund of the whole monies.

While the company would have incurred a cost of a few lakhs going by the order of SAT, it had to incur cost in crores in order to comply with the order of SEBI. Hence the company approached SAT against the order of SEBI dated December 16, 2014.

The tribunal while holding that the order of SEBI was wholly without jurisdiction held that SEBI did not comply with the order of SAT to investigate into the allegations of fraud and take steps to refund the amount to the investors. The tribunal further noted that the entire exercise of SEBI was to ensure the money of all the investors was refunded.

AG submitted that, "This Court has on many occasions held in land acquisition proceedings that if an increased amount is paid to one party, it has to be paid to all the other parties as well. SEBI’s exercise was something akin to this.”

AG also recollected the order by a bench headed by Justice Vineet Saran which had stayed the order of SAT summoning an adjudicating officer in a matter.

The bench on hearing the AG issued notice in the matter and stayed the costs levied on SEBI by SAT.

Cause Title: SEBI vs Vital Communications Limited