Securities and Exchange Board of India (‘SEBI') is the capital and commodities market regulator of India. SEBI has been constituted under the SEBI Act, 1992 (‘SEBI Act') and possesses wide quasi-legislative, quasi-executive and quasi-judicial powers in relation to the securities markets in India. Securities Appellate Tribunal (‘SAT') is an appellate body constituted under the SEBI Act, to hear appeals against any order passed by SEBI or its adjudicating officers.

This piece examines in detail, legal perspectives in so far as power to impose costs by SAT on SEBI is concerned.

Meaning of Costs

The meaning of costs in civil litigation is provided under Code of Civil Procedure, 19081 (‘CPC') as reasonable costs which relate to the fees and expenses of the witnesses, legal fees and expenses incurred or any other expenses incurred in connection with the proceedings. Supreme Court in Subrata Roy Sahara v. SEBI2 held that one of the key reason for imposing costs is to deter parties from undertaking frivolous litigation and to ensure that, ‘that anyone who initiates and continues a litigation senselessly, pays for the same.”

240th report of Law Commission of India provided an exhaustive review of provisions relating to costs and suggested certain legislative changes to the CPC including increasing the maximum amount of cost specified under Section 35A of CPC to INR 1 lakh.


Imposing costs on SEBI by SAT in the given facts and circumstances and SEBI immediately rushing to Supreme Court of India, is not something unheard of. Almost two decades back, in the matter of Mathew Easow, an investment advisor appearing on CNBC, was alleged to have committed unfair trade practice by acting contrary to his recommendation of stocks. In the matter, SEBI imposed a penalty of INR 20 lakhs. SEBI in the same matter, in a parallel proceeding, issued direction of cease and desist to Mathew Easow to cease and desist from giving any recommendation about any investment in the securities market in any public media. On appeal against the penalty order, in the facts, SAT set aside the order of SEBI and directed3 SEBI to provide cost of INR 1 lakh to Mathew Easow on the ground that ‘thedamage caused to the reputation of Mathew cannot be undone'. SEBI appealed to Supreme Court4, challenging the SAT order including challenging the power of SAT to impose costs on SEBI. However, pending litigation, unfortunately Mr. Mathew Easow passed away and Supreme Court could not get into the question of law as the matter had to be abated. (Disclosure: The author assisted SEBI in the litigation as the then SEBI Legal Officer).

Much water has flown since then. SAT has while allowing appeals, displayed its dissatisfaction when SEBI did not pass appropriate orders or has used its powers under the SEBI Act disproportionately in various cases. SAT has passed adverse orders against SEBI for its various actions and omissions including for the “callous attitude on the part of SEBI5, order passed “without application of mind6 , for SEBI's actions amounting to “judicial dishonesty7, for passing of “harsh and unwarranted8 orders, and when the “course adopted by SEBI in the present case is detrimental to the interests of the securities market9.

SAT has in an order even remarked “that there is gross negligence on part of various officials of SEBI including the concerned WTM of SEBI”10and that the “appellant is made to run around on account of apathy on part of WTM of SEBI”.11 In a matter SAT has even given unquantified costs on SEBI. 12

In all of these abovementioned cases, costs were imposed except in one case where SAT considered remanding the matter to SEBI on account of serious abnormalities noticed in SEBI order while making a remark that it would have imposed heavy costs on SEBI but for remand.13

In another case14, a former compliance officer of a company had tendered her resignation and ceased to be in service much before a contentious board meeting, the adjudicating officer of SEBI still imposed a paltry penalty of INR 50,000 rather than providing the benefit of doubt. The Appellant in such a case, placed a statement of expenditure through a Misc. Application indicating that she has spent a sum of INR 96,710 towards fee and expenses. In such a case, SAT imposed costs of INR 50,000 on SEBI and remarked “Considering the fact that the appellant had to undergo this litigation and face harassment for almost 1 and a ½ years, coupled with the fact that a substantial portion was spent towards fee paid to an advocate for drafting the appeal…”.

In yet another order15, SAT imposed costs of INR 25,000 on SEBI for an error of the Recovery Officer in construing the WTM order. It was held by SAT that, “it is high time for SEBI to take a fresh look at their officers who are worthy of discharging the duties as RO.”

Statistically, almost every order where SAT passes adverse observations, SEBI appeals to Supreme Court of India where it is represented by Attorney General of India, Solicitor / Additional Solicitor General of India, or other eminent senior counsels. Some of the matters such as Sawaca Business Machines Limited, 16 Palco Metals Limited, 17 Goldman Sachs, 18 SEBI appealed in the Supreme Court against the imposition of costs on itself, but the costs were either set aside as unwarranted, or the Respondents (private parties) themselves agreed to not recover the costs from SEBI. To digress a bit, there has always been a demand to have cost-benefit analysis before SEBI is allowed to appeal with public funds, almost every adverse judgement before the Supreme Court of India.

It is not only on SEBI, SAT has imposed costs even on the National Stock Exchange and the Bombay Stock Exchange in multiple orders.19 

In none of these cases, the Supreme Court has gone into the question of law to determine the power of SAT to impose costs on SEBI and its limitation, if any, thereto.

But SAT has noted that cogent evidence has to be put forth in order for SAT to quantify the costs. In MLB Financial Services Limited20 the quantum of costs sought by the private party from SEBI was rejected because of insufficient evidence to show the actual amount of cost incurred by them. So SAT calculated and imposed an approximate cost of INR 50,000 to be paid by SEBI to the appellants.

In this light, it is interesting to make a note of a recent order, in the matter of Vital Communications Limited vs SEBI (‘Vital Communications')21 has once again imposed costs on SEBI, who immediately rushed to Supreme Court and obtained a stay.22 Despite the multitudinous litigation since the first SCN, which was issued in 2005, it remains sub-judice in the Supreme Court with respect to SEBI's appeal on costs imposed and is listed for final disposal on July 27, 2022. This may be a landmark judgement of the Supreme Court, defining the boundaries of the civil powers of the SAT over SEBI, if Supreme Court decides to delve into the question of law.

Power of SAT to impose costs

Section 15U of the SEBI Act lays out procedure and powers of the SAT. SAT has the same powers with respect to certain matters as that of a civil court under the CPC.23 Further, Section 15U lays out that SAT is “not be bound by the procedure laid down by the Code of Civil Procedure, 1908but shall be guided by the principles of natural justice and, subject to the other provisions of this Act and of any rules, the Securities Appellate Tribunal shall have powers to regulate their own procedure…

Proceedings before SAT are deemed to be judicial proceedings and SAT is deemed to be a civil court for all the purposes of Section 195 (Prosecution of contempt of lawful authority of public servants for offences against public justice and for offences relating to documents given in evidence) and chapter XXVI of Code of Criminal Procedure, 1973 (Section 340 to Section 352-Provisions as to offences affecting administration of justice).

Further, Rule 21 of Securities Appellate Tribunal (Procedure) Rules, 2000 (‘SAT Procedure Rules') as framed and notified by the Government of India, provides power to SAT to, “ make, such orders or give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice.24

SAT has not been expressly empowered by the SEBI Act to impose costs, as under section 15U(2) there is no provision enabling SAT to impose costs. Ideally, a Tribunal has to be bestowed with powers of imposing costs to prevent unnecessary abuse of its process or to secure the ends of justice. These provisions are wide and may be interpreted to mean that a quasi-judicial authority, in absence of an explicit provision, should be considered to have an inherent jurisdiction to impose costs (and power to expunge remarks), in order to prevent the abuse of the process of law or otherwise, and to secure the ends of justice.

On another note, SAT has not been expressly conferred with the power of remanding matters also. However, the power of remand should flow naturally, then only SAT would be able to exercise such appellate jurisdiction effectively.25 The power of remand is an essential power, in case there is an aspect of case which requires to be decided by a lower forum, SAT should use its discretion and refer such a matter before making its decision. 

Other Tribunals

From an overall perspective such imposition of costs by an Appellate Tribunal is not uncommon in India. Earlier avatar of Competition Appellate Tribunal (‘COMPAT') and now the National Company Law Appellate Tribunal (‘NCLAT') that hears appeals against Competition Commission of India (‘CCI') or the Telecom Disputes Settlement and Appellate Tribunal (‘TDSAT') that hears appeals against Telecom Regulatory Authority of India (‘TRAI'), have also been imposing costs on the respective Regulators in the given facts and circumstances. Recently, even the Appellate Authority of Chartered Accountants imposed costs of INR 50,000 on the ICAI, in a matter where the Institute was found negligent and casual in the non-compliance of the directions of Appellate Authority. 26

In the case of Narayan Avachitrao Deshmukh v. State Bank of India, Nagpur,27 a question arose before the Bombay High Court, to determine if Debt Recovery Tribunal has the power to impose costs under Section 19(5) of The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (‘Recovery of Debts Act'). The High Court, in the said order set aside the costs while commenting upon the ‘practice' to impose costs in proportion of the claim amount although it clearly upheld the Tribunal's power to impose costs in suitable cases. Here it is interesting to note that Section 19(5) of the Recovery of Debts Act is exactly the same as Rule 21 of SAT Procedure Rules.

Imposition of costs on private parties by SAT

The power of SAT to impose costs, and limits thereon is an open question of law to be settled by Supreme Court of India in due course. It is publicly reported that in Supreme Court recently, SEBI has argued that SAT does not have the jurisdiction and is not empowered to impose costs on SEBI which is a statutory regulator established under SEBI Act.

As and when this issue is considered, it is important to consider that SAT has not only imposed costs on SEBI, but also on the Appellants (private individuals/corporates) in certain matters for instance, Chetan S. Kothari vs SEBI28 and Abhey Ram Dahiya vs SEBI29. Further in Pyramid Saimira Theatre Ltd.  v. SEBI30 the claimant was imposed a cost of INR 1 lakh for vexatious litigation. In the case of Harish Chandra Gutt & Co. Pvt. Ltd.  v. Bombay Stock Exchange Ltd31 also SAT imposed a cost of INR 2 lakh, as not only the appeal lacked merit but the appellant kept seeking undue adjournments with a view to gain time.

Interestingly, SEBI has not filed any cross appeal in Supreme Court challenging SAT's power to impose cost in cases where private parties were saddled with costs. In fact, it is very common for SEBI to ask for costs, in High Court as well as in Supreme Court against the private parties. In a matter, Calcutta High Court32 directed a company to pay cost of INR 1 lakh to SEBI who had initiated investigation following the petitioners plea.


Statistically, most of the orders of SEBI are upheld by SAT and only a fractional percentage is in favor of private parties. According to SEBI's own annual report of financial year 2020-21, SEBI orders were plainly upheld in about 60 % of the appeals. Almost 82% of the appeals disposed off were in favor of SEBI in one way or another (including Appeals dismissed, Appeals remanded, SEBI orders upheld with modifications, Appeals withdrawn). This number was 85.3% of the appeals disposed in favor of SEBI for the financial year 2019-20.

Despite this whooping number of orders in favour of SEBI, it blows hot and cold on extent of SAT's powers. Even though there is no estoppel against law, in many matters, SEBI itself seeks from SAT an imposition of cost in litigations while praying dismissal of appeals. But SEBI raises concern when costs are imposed on itself. SEBI as a responsible regulator ought not to take such stands.

Yet there is another angle to the SEBI vs SAT conflict. When SEBI settles, administrative and civil proceedings, it directs the parties to pay legal costs. In fact, SEBI (Settlement Proceedings) Regulations 2018 which has its origins in Section 15T and Section15JB of SEBI Act, allows SEBI to not credit these costs with Consolidated Fund of India and such amounts remain with SEBI itself. This begs the question as to whether SEBI can provide such a power to itself through its regulation making power, while on the other hand, contesting the power of SAT on the ground of non-explicit provisions. If SEBI were to be held to have such a power, certainly its appellate body SAT would also be held to have such a power.

It is true that powers of SEBI, are wide but equally denuding SAT from its power to impose costs on SEBI would take away the balance on SEBI's wide powers in the legislative scheme. Otherwise the law would be what George Orwell famously said in Animal Farm, ‘All animals are equal, but some animals are more equal than others'.


1 Section 35, 35A and 35B of the Code of Civil Procedure, 1908

2 Subrata Roy Sahara vs SEBI, (2014) 8 SCC 470

3 Appeal no. 136 of 2006, SAT Order dated January 10, 2008

4 SEBI vs Mathew Easow, Civil Appeal No. 1936 of 2008, Supreme Court of India

5 Doel Saha vs Harishchandra Gupta, SAT order dated 13.06.2014

6 Nimain Charan Biswal vs SEBI, SAT order dated August 18, 2020; Subsequently, the remarks and costs imposed were waived by the Supreme Court in an order dated November 18, 2020.

7 Yatin Pandya HUF vs SEBI, SAT order dated 16.12.2021

8 Sanjay Gupta vs SEBI, SAT order dated June 04, 2019; Interestingly, after the aforesaid order was pronounced the learned senior counsel for SEBI made an appeal for waiver of the costs contending that such imposition of costs would send a ripple down the throat of the SEBI, however, SAT justified the cost given the circumstances of the case.

9 Umashankar Agarwal vs SEBI, SAT order dated May 04, 2018

10 SEBI vs. Vilas Valunji & Ors. With SEBI vs V.A Norhi, SAT order dated June 28, 2017

11 Adventz Finance Pvt Ltd vs. SEBI, SAT order dated July 15, 2016; However, on review petition by SEBI, SAT withdrew its earlier order of imposing costs directing the matter to be heard by another WTM of SEBI.

12 Bipin Taro Vazirani vs SEBI, SAT order dated November 11, 2021; Further Supreme Court has by an order dated February 07, 2022 deleted costs imposed by SAT, as the question of law is pending before the Supreme Court.

13 Ibid.

14 Pooja Mahna vs SEBI, SAT order dated June 28, 2019

15 Udaksh Kumar Verma vs. SEBI, SAT order August 29, 2017. In a review application filed by SEBI, SAT in its order dated September 28, 2017 upheld its orders and stated, “observations made against the RO in the order dated August 29, 2017 and the costs imposed do not deserve to be deleted.”

16 SEBI v. Sawaca Business Machines Limited Civil Appeal No(s). 4565/2006, dated April 11, 2017

17 SEBI vs Palco Metals Limited Civil Appeal No(s).5048 of 2008, dated January 19, 2009

18 SEBI vs Goldman Sachs Investment (Mauritius) Ltd Civil Appeal No(s). 5171 of 2008, dated February 02, 2009

19 For issuing arbitrary penalty, in contradiction to SC judgement, SAT imposed costs in Prrsaar Commodities Private Ltd. Vs National Stock Exchange, SAT Order dated September 18, 2020; Santowin Corporation Limited vs BSE Ltd, SAT order dated October 3, 2019; SAT imposed INR 1 lakh on BSE, which is to be adjusted in the ultimate order that would be passed by the delisting committee

20 MLB Financial Services Ltd. Vs SEBI, SAT order dated March 22, 2021

21 Vital Communications Ltd vs SEBI Order dated December 20, 2021

22 SEBI vs Vital Communications Ltd, Civil Appeal No(s).1649-1652/2022, order dated March 16, 2022

23 Section 15U(2) of SEBI Act

24Rule 149 of the National Company Law Tribunal Rules, 2016 provides a specific power to the Tribunal in respect of imposing costs on the defaulting party, as it may deem fit.

25 Refer Order XLI Rule 23 and Rule 25 of the Code of Civil Procedure, 1908 

26 Devendraa P. Kapur vs ICAI & Ors, Order dated February 26, 2020

27 (2004) 15 AIC 910 (BOM)

28 SAT Order dated March 25, 2019

29 SAT Order dated February 15, 2019

30 SAT order dated April 07, 2010

31 SAT order dated June 06, 2011

32 Axes Multi Developers Ltd vs State of West Bengal, 2013 SCC Online Cal 17406

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.