The Securities and Exchange Board of India (Sebi) on Friday told the high court that it could not withdraw its order refusing permission to MCX Stock Exchange (MCX-SX) to start equities trading.
“Sebi, as a regulator, has some constraints. Our position here will affect a dozen other matters. As the counsel, I can assure you that if you decide to set aside the impugned order on reasonable grounds, we will abide by it,” said Darius Khambatta, the counsel for Sebi.
Judge D Y Chandrachud said the court was also aware that the regulator’s powers should not be compromised while carrying out justice in an individual case. Khambatta said Sebi could issue a fresh showcause notice, based on new information provided by the exchange and undertakings, if any. A fresh hearing will be given there after and a decision taken, he said. However, the MCX-SX counsel said a fresh showcause notice could take the matter back to square one.
The court said since a showcause notice creates an impression that the appellant is a violator, that may not enable a business-like discussion between the parties. It suggested Sebi could instead take up the exchange’s application for new segments for consideration taking into account the fresh undertakings the exchange was ready to give.
In response, the Sebi counsel said he would have to take instructions from his client before presenting his views. Counsels for the promoters requested Sebi to meet exchange officials before the next hearing, but the regulator did not agree.
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The MCX-SX counsel also requested that while setting aside the order, the court should ensure that certain issues like the company’s economic interest should not be raised by Sebi again.
However, Khambatta said the court should pass a composite order, wherein Sebi can ask for a different undertaking or further undertakings from the exchange if was not satisfied with those offered. “There are some narrow, but serious issues,” said Khambatta. The case will resume on October 14.