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No checks and balances? SEBI requires ‘Separation of Powers’

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In the background of the Adani Group-Hindenburg issue, the Supreme Court of India had appointed an expert committee under the chairmanship of former Supreme Court of India judge Justice A.M. Sapre.

The expert committee submitted its report recently and one of its important observations is that there is a need to ensure separation of powers within SEBI. It observed that the quasi-judicial arm of SEBI has to be necessarily ring-fenced so that there is truly check and balance on the executive arm of the regulator. Within SEBI (as indeed any other regulator), the doctrine of separation of powers must be followed in letter and spirit. If performance of the quasi-judicial officers is appraised by the executive arm, the very foundation of separation of powers would be nullified.

In light of the same, Mr. Palak Shah from ZEE Business has written an article discussing the need for checks and balances to the power of SEBI.

The article also features views of Mr. Sumit Agrawal, Managing Partner, Regstreet Law Advisors and former SEBI officer, who observed that, “The apprehensions of the Supreme Court two decades back on the statutory scheme of the SEBI Act are surfacing now. In the Clariant International AG judgement in 2004 Supreme Court held that the wide jurisdiction of SEBI runs counter to the doctrine of ‘Separation of Powers’ and integration of power by vesting legislative, executive and judicial powers in the same body, in future may raise several public law concerns. Non-judges with drastic powers statutorily are a concerning trend in regulatory laws and the regulatory architecture needs to be revisited.”

Readers are also welcome to send their views to Regstreet Law Advisors at info@regstreetlaw.com.

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