SAT rejects Karvy Stock Broking and C Parthasarathy’s appeal over delay

According to fresh market updates, The Securities Appellate Tribunal (SAT) has dismissed Karvy Stock Broking Limited’s appeal against a 2023 Securities and Exchange Board of India (SEBI) order after refusing to condone a 688-day delay in filing the appeal.

A three-member bench of SAT held that the reasons cited by Karvy for the delay were not genuine and lacked bona fides. The tribunal dismissed the appeal without examining the merits of Karvy’s challenge to the SEBI order.

Karvy had challenged SEBI’s April 28, 2023 final order in the matter, which followed proceedings over the alleged misuse of clients’ securities and funds and imposed various directions and penalties on the stock broker and others.

The firm argued that it had not received a certified copy of the SEBI order and that access to relevant records was difficult because agencies, including the Enforcement Directorate (ED), had conducted searches and seized documents. It additionally cited the health condition and incarceration of its chairman and managing director, C Parthasarathy.

SEBI opposed the plea, pointing out that the order had been served on Parthasarathy on May 6, 2023. SAT noted that SEBI had produced a speed-post acknowledgement and that Karvy had not categorically denied receipt of the order.

The tribunal additionally noted that Parthasarathy had been released from custody on June 22, 2022, nearly a year before SEBI’s order. Medical records revealed that he underwent surgery for a leg fracture and was discharged on January 19, 2023.

SAT further pointed out that Karvy and its MD had actively pursued several cases during the period. The firm had itself furnished details of around 70 proceedings before various forums.

Rejecting the argument that documents were inaccessible, SAT stated Karvy had produced no material showing that it had made efforts to obtain them.

The tribunal stated the fact that the appeal was a first appeal did not by itself justify condoning the delay.

“The cause shown in the application for condonation of delay are not based on genuine facts. Hence, the application for condonation of delay lacks bona fides. Though this is a first appeal, in view of appellant’s conduct, it shall not be entitled for the discretionary remedy of condonation of delay” SAT stated.

SAT separately dismissed appeals by Karvy promoter C Parthasarathy and the firm against SEBI’s April 28, 2023 order. The tribunal refused to condone delays of 474 days, respectively. SAT stated the explanations relating to document access, incarceration and health issues lacked bona fides.

It noted Parthasarathy was actively pursuing several legal cases while not challenging the SEBI order before SAT. The tribunal dismissed both appeals without examining the merits of SEBI’s findings.

Karvy Stock Broking was represented by Zal Andhyarujina, Senior Advocate, instructed by Joby Mathew and Associates, while SEBI was represented by Shiraz Rustomjee, Senior Counsel, instructed by The Law Point.