Following a ten-year investigation, the Supreme Court calls out SEBI for show-cause notice

26 Oct 2023 , 11:30 AM

The Securities and Exchange Board of India (SEBI) has come under fire from the Supreme Court for sending a show cause notice to a corporation following a ten-year inquiry into a possible breach of securities laws. The complaint concerns the misappropriation of money obtained by Alps Motor Finance through the preferential issuance of shares.

The court has ordered SEBI to conduct an investigation into the reasons for the delay and provide a report on its findings.

According to securities lawyers, this is most likely the first time the Supreme Court has ordered SEBI to conduct an investigation into its personnel for their excessive tardiness in sending out show-cause notifications. They claimed that this case would affect multiple other matters that are similar and are currently before the Supreme Court.

‘The appellant (SEBI) will file an affidavit of the executive director, SEBI, stating the date on which … SEBI received information regarding the allegations; the date on which the investigation under the SEBI Rules, 1995 was initiated; the date on which the investigation was completed; the date on which the adjudicating officer was appointed; the date on which the show cause notice was issued; and date on which the adjudicatory order was passed,’ stated the ruling of the two-judge Supreme Court bench made up of Justices Sanjiv Khanna and Bela M. Trivedi.

‘If there is a delay or default with respect to the dates, an internal investigation will take place. The decision stated that an affidavit and the report of the internal investigation must be filed no later than ten days prior to the next hearing date. The case is anticipated to be heard in February of the following year.

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