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Surging Markets: CJI Chandrachud Advises Sebi and SAT to be Cautious

Chief Justice of India, D.Y. Chandrachud Thursday said that regulators such as Sebi and appellate forums such as the Securities Appellate Tribunal (SAT) need to exercise caution through the current surge in stock indices as these platforms assume immense national importance in fostering a stable and predictable investment environment.

“The more you see the surge in the stock market, the greater the role, I believe, for SEBI and SAT, as institutions which will exercise caution, celebrate the successes but at the same time, ensure that the backbone is stable,” Justice Chandrachud said.

Speaking at the inauguration of new SAT premises in Mumbai, CJI Chandrachud stressed the need for additional benches because of increased workload.

“When investors feel assured that their investments are protected by law and that there are effective mechanisms for dispute resolution, they are more likely to invest in the country’s markets,” the CJI said.

He emphasized that a legal system with adequate procedural safeguards, fairness, and justice without arbitrariness is key to building investor confidence in the country’s stock markets and business landscape.

“The Securities Appellate Tribunal (SAT) is like a referee, ensuring that in the ‘dog-eat-dog world of finance, all stakeholders play by the rules. Just like any good referee, the SAT has successfully kept pace with the evolving game,” said the CJI. To effectively adjudicate the appeals before the tribunal, members require: not only a de ep understanding of intricate financial matters but most importantly, a strong commitment to fair adjudication and procedural safeguards. This is crucial in maintaining market integrity and investor confidence, he said. SAT’s presiding officer Justice PS Dinesh Kumar said there are 1,020 appeals pending in the SAT as on June 28, and that it has disposed of nearly 7,000 appeals since 2010.

“The appeals filed before the SAT have increased manifold. In such a scenario. the vacancies in the SAT must be filled at the earliest to allow the tribunal to work effectively and at full capacity. In fact, the SEBI Act also allows for the setting up of benches of the SAT. It may be worth giving greater thought to the proposals of equipping the tribunal with additional benches and improved infrastructure to manage its escalating caseload,” the CJI said.

The Chief Justice of India also shared the thinking during the recent selection of the chairperson of SAT. He revealed that there is a perception in the highest level of government that it is a key tribunal in terms of economic regulation. “Therefore it is necessary to have a person who may not necessarily be someone who has practiced securities law or presided over securities cases but who has the basic and robust approach to regulation,” he said.

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