With Great Power Comes Great Responsibility

Courts have, by and large, been supportive of power whenever Sebi has used it in extraordinary circumstances.

The Securities Appellate Tribunal (Sebi) has spoken. The Tribunal has ruled that extreme powers to take extreme measures should be used with extreme caution. Sections 11 and 11B of the Sebi Act, 1992, which represent the equivalent of anti-terror laws such as TADA and POTA, have been liberally and frequently used since their inception - the mid-1990s.

The jurisprudence on these powers has kept swinging, with regulators getting governments convinced that blanket powers to "issue such directions as deemed fit" are critical for effective regulation of markets. Section 11B was inserted into the Sebi Act in 1995 - about four years after Sebi got statutory powers. It empowered Sebi to issue such directions as it deems fit in the interests of investors in the securities market.