Sebi Act lacks clarity, says Supreme Court

The Supreme Court last week stated that the Securities and Exchange Board of India (Sebi) Act and its regulations referring to imposition of penalty for manipulative or fraudulent practices are "somewhat unclear if not a confused picture that emanates from parallel provisions." The procedural regulations including those that prescribe the procedural course, namely, Sebi (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations 2002 and the successor Regulation i.e. Sebi (Intermediaries) Regulations 2008 contain identical and parallel provisions with regard to imposition of penalty resulting in myriad provisions dealing with the same situation. A comprehensive legislation can bring about more clarity and certainty on the norms governing the security/capital market and, therefore, would best serve the interest of strengthening and securing the capital market. The court continued in its judgment, Sebi vs Kishore Ajmera, that "a comprehensive legislation can bring about more clarity and certainty on the norms governing the security/capital market and, therefore, would best serve the interest of strengthening and securing the capital market." The court was disposing of a large number of appeals by Sebi against brokers. It allowed the appeals in most cases and set aside the appellate tribunal's orders while restoring the orders of penalty imposed on the brokers by Sebi.

Govt loses land acquisition case

The Supreme Court last week dismissed the review petition of the central government and asked the collector of land acquisition in Andaman and Nicobar Islands to pay compensation to the industry whose land and buildings were taken over for building a port. The Attorney General's argument was that the land belonged to the government and therefore there was no need to pay compensation to the holder of land. The industrial unit, which had constructed structures, demanded compensation under the Land Acquisition Act contending that it had perpetual licence and therefore had right to get compensation. On denial of compensation, the firm moved the Calcutta high court which accepted the contention of the firm. The government appealed to the Supreme Court. In its judgment, Collector of Land Acquisition vs Andaman Timber Industries, the court dismissed the appeal. In the review petition, the court asserted that "not awarding compensation amounts to deliberate omission in discharge of statutory duty by the collector, despite the statutory right vesting in the firm for award of compensation in lieu of losing the holding rights over the land". Further, the court accepted the plea of the employees of the firm that when the compensation was received, they had the first charge on the amount and right to get their dues from the firm under the Companies Act

Public school turned into Govt school

A public school in Delhi will turn into a government school after three decades of litigation over land acquisition. The land was bought by the school authorities after its acquisition in 1965. An award was made in 1981. The land owning school moved the Delhi high court against the acquisition proceedings and lost. The appeals moved back and forth for many years, the courts going against the school. Ultimately the owners agreed to surrender the land but did not. Contempt of court proceedings started in the Supreme Court following which the owners apologised for their behaviour. The court appointed an administrator for the land, the school and the adjacent playground. The Delhi government moved to get possession and wanted to run its own school. The court allowed it to do so in the case, Kathuria Public School vs Union of India.

Biodiversity safe in Govt hands

A set of public interest petitions moved by the Research Foundation for Science against the central government seeking protection of biodiversity in the country has been disposed of by the Supreme Court, accepting the assurance of the government that necessary steps would be taken in this regard. The court noted that the prayer asking the government to challenge the patenting of wheat before the European Patent Office in Munich, Germany, has become infructuous as the patent has since been revoked there. Another prayer, that a permanent board be set up to take up biodiversity issues before international forums, was rejected as the Supreme Court felt that the government appeared to take all necessary steps in this matter. In any case, it is for the petitioner-foundation to take up the issue like identification of traditional Indian plant varieties and biopiracy and make suitable representation to the government. "We hope and trust that any such suggestions will engage the attention of the government for such action as it may in its wisdom consider appropriate," the judgment said.

Choosing the court to sue management

The Supreme Court has set aside the judgment of the Bombay High Court and ruled that an employee aggrieved by his termination can move the labour court where he had been employed or where the company headquarters is located. In this case, Nandram vs Garware Polyster Ltd, a supervisor was employed in the Puducherry unit by the firm with corporate office in Aurangabad. The unit was closed and there was dispute over his termination. He moved the Aurangabad labour court. The firm argued that he should have moved the Puducherry labour court as he was employed there. The labour court rejected the argument. But the industrial court and the high court ruled that Puducherry was the place to tackle the labour dispute. On appeal, the Supreme Court stated that he could move court in either place. He was terminated in Puducherry; so he could move the court there. "But that does not mean that the labour court in Aurangabad within whose jurisdiction the management is situated and where the decision to close down the unit at Puducherry also does not have the jurisdiction," the judgment said.

Vacancy not to affect court order

A single member of the Appellate Tribunal of Value Added Tax can function as the appellate tribunal under the Delhi VAT Act, the high court ruled, rejecting the arguments in a number of appeals moved by companies, led by Franke Faber India vs Commissioner. Initially, there was a chairman and two members. Later, two vacancies arose with the judicial member alone functioning. The question was whether one person could constitute the tribunal. The high court said yes. "No litigant should suffer on account of the delays and uncertainties only because a vacancy is created in the appellate tribunal," the judgment said. The decisions taken by the single member shall be valid and they shall not be subjected to "collateral attack" by raising the validity of his appointment.


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