Karvy case : SAT suspends further transfer of securities

MUMBAI: Securities Appellate Tribunal (SAT) on Tuesday, without commenting on the merit of the case filed by Bajaj Finance against a November 22 order passed by Sebi, directed the market regulator’s whole time director to hear the NBFC on the basis of its representation dated November 23, 2019. “In the interim further transfer of securities shall remain suspended from DP account of Karvy Stock Broking Ltd (BSE)...” said the SAT order by CKG Nair and Justice MT Patil.
The tribunal also directed Sebi to hear Bajaj Finance on any other additional representation which it may like to make. Such additional representation is to be made by December 4 said SAT and the Sebi has to pass orders by December 10 on it.
Bajaj Finance Limited, non-banking financial corporation (NBFC) had on Monday approached the SAT to challenge the Sebi order that had directed depositories to transfer shares back to the original shareholders’ demat accounts after the Karvy Stock Broking scandal broke out.
The NBFC was aggrieved by the interim order of the Securities and Exchange Board of India (Sebi) on November 22, in the matter of Karvy Stock Broking Ltd.
The SAT said, “Having heard the parties we find that the impugned order (Sebi’s order) notes that Karvy had raised funds pledging securities from banks and NBFCs and therefore was aware that rights of those entities would be impacted by the said order. As such, even if they could not be heard while passing the impugned order atleast on their representation they were entitled to be heard.”
“It is also an undisputed fact that lending against securities is a normal and permitted business activity of banks and NBFCs and Sebi is fully aware of the same, observed SAT. The tribunal observed that the Sebi order has “prejudiced and adversely affected the rights of the appellant (Bajaj Finance) as a bonafide lender."