In the Karvy ruling, SAT refers to NSDL as a "highway robber" for following SEBI's orders

 In the Karvy ruling, SAT refers to NSDL as a "highway robber" for following SEBI's orders

This is only a few months after the tribunal discussed the regulator's careless behavior in the Kirloskar case.

Karvy's lenders — Axis Bank, ICICI Bank, Bajaj Finance, HDFC Bank and IndusInd Bank – have moved the tribunal.

The Securities Appellate Tribunal (SAT) has issued another scathing ruling, likening the conduct of National Securities Depository Limited (NSDL) to highway robbery and asserting that the market regulator gave "illegal instructions" for these actions to be taken. The tribunal's ruling on December 20 declared in favor of the creditors of Karvy Stock Broking (KSBL).

Representing one of the lenders, Sandeep Parekh, Founder, Finsec Law Advisors, reacted on the "very strong words" used by SAT against the Securities and Exchange Board of India (SEBI) as well as NSDL. In a post on X (formerly Twitter), he acknowledged that his customer successfully got his money back with interest.

An email requesting comment on the topic was forwarded to SEBI and NSDL spokespersons. However, there was not any immediate response from any organisation.

Earlier this month, SAT criticized SEBI for its "inconvenient approach" in defrosting the securities acquired by the Kirloskar family, saying the regulator's actions "in resolving to cases at the last instant" detracted from its methodology. Shows.

Subsequently, SEBI Chairperson Madhabi Puri Buch conveyed regret over the Kirloskar incident as well as admitted that the regulator regards the SAT rebuke seriously.

Exactly a month later, SAT issued another scathing assessment in the Karvy case. The National Stock Exchange (NSE), SEBI, and NSDL were ordered by the tribunal to either pay the lenders interest or return the securities that Karvy had pledged. This decision may result in a financial liability of more than Rs 1,400 crore on the Securities and Exchange Commission and regulated entities.

Karvy's lenders, including Axis Bank, ICICI Bank, Bajaj Finance, HDFC Bank and IndusInd Bank, moved the tribunal after being refused access to the securities pledged for loans made to Karvy.

After an investigation, SEBI found that Karvy had misappropriated the money of consumers and securities, and directed NSDL to transfer these securities back to the associated customers. However, Karvy's lenders argued that this violated the SAT order ordering everyone involved to maintain status quo on commodities held in a specific depository account.

The SAT order, overturning Sebi's rejection-related of the lenders' claims, said, "In our view, if SEBI/NSE/NSDL thought the fact that the pledge was wrongly held by Karvy, then the depository would be considered entitled to file an appeal before the NCLT. The necessary remedy was to submit an application (National Company Law Tribunal) for correction of its registration."

It further added, “This process was not done, and like the highway robber, NSDL, through illegal instructions through SEBI, sold the pledged shares (which were refundable) to Karvy beyond any authority of law. passed to the consumers."

The tribunal concluded that the actions of the regulator, the depositories and the exchange "in failing to permit the Appellants to cancel the pledge under the Depositories Act and in removing the declared shares without the consent of the the applicants were completely illegal alongside in violation of any right of law."Was without." It ordered restoration of shares delisted alongside transferred by NSDL to the lenders under SEBI directions.