The Hon’ble Securities Appellate Tribunal (“SAT”) passed an order on November 06, 2023, in the matter of Choice Equity Broking Private Limited v Multi Commodity Exchange of India Limited [ Appeal No 818 of 2023] wherein it emphasized the importance of following a fair and transparent procedure for imposing penalties by the exchanges.
The Hon’ble SAT found that the alleged SCN, which was in the form of an email, did not provide the grounds for the proposed action or the penalty to be imposed against the appellant and thus, imposing a penalty in the absence of issuing a SCN while also denying the opportunity for a hearing constitutes a breach of the fundamental principles of natural justice. The Tribunal also issued a directive for MCX to formulate a procedural framework governing the initiation of penalty proceedings against its members.
The judgment emphasizes that to follow the principles of natural justice is a “sine qua non” to administrative proceedings. The Hon’ble Tribunal, in instructing MCX to devise a fitting procedure for commencing penalty proceedings, serves as a poignant reminder to both market participants and regulatory bodies for adhering to fair and transparent process while levying penalties.
Against this backdrop, Abhiraj Arora, Associate Partner & Deepanshu Agarwal Agrawal, Associate, Economic Laws Practice (ELP) Laws Practice have co-authored an article titled SAT emphasizes on need for fair procedure to levy penalties by exchange published on Mondaq.
To know more, please read the article here: https://lnkd.in/diSN8kSe