“It is necessary that governmental entities, including public sector undertakings, need to develop protocols for coming out from being prisoners of protracted procedures for complying with applicable laws and regulations timely, because as legal entities accountability falls on them,” the Tribunal said.
The Tribunal said that all rules and regulations should be equally applicable to every legal entity irrespective of its ownership. “Only such an approach would bring in clarity and certainty to laws and regulations and a predictable rule of law regime,” it added.
SAT’s advise takes prominence in the context of concerns that the capital market rules are not applied in the same spirit to public sector undertakings as they are to private sector listed companies.
The Tribunal was presiding over an appeal made by Life Insurance Corp of India, Bank of Baroda and State Bank of India against a Securities and Exchange Board of India (Sebi) order against them with respect to violations of certain mutual fund norms.
In August, the capital market regulator had imposed a fine of Rs 10 lakh each on the three appellants for violating SEBI’s mutual fund regulations, under which a sponsor of one mutual fund cannot hold a more than 10 per cent stake in another mutual fund.
LIC, SBI and Bank of Baroda each have their own mutual funds but also hold significant stakes in UTI Asset Management Co.
SAT has turned the monetary penalty for the three state-owned entities into a warning as it found no “justifiable” reasons to impose a monetary penalty on the violators.
“In these matters, a warning is sufficient. Further, SEBI is at liberty to impose penalty for similar violations in future,” the Tribunal said.