MUMBAI: A recent Supreme Court order scrapping Sebi’s discretionary power to penalise market participants, has not only rattled promoters and investors, but also disturbed securities lawyers and the regulator. In a case pertaining to purchase of Roofit Industries stock, the apex court recently ordered that non-compliance of Sebi regulations would attract a penalty of Rs 1 lakh a day — up to a maximum of Rs 1 crore. The court has spelt out that this is absolute and non-discretionary. The ruling forced the capital market regulator to impose stiff penalties on companies, promoters and investors for violations such as non-filing and delayed sharing of information with stock exchanges, said lawyers. “Sebi has already imposed penalties as per the judgement and now one can see penalties running into crores for even less serious violations such as delay in making disclosures,” said Tejesh Chitlangi, Partner, IC Legal. “Realising the gravity of the situation, Sebi has rightly filed for a review in the Supreme Court”. Amid chaos, the Securities Appellate Tribunal (SAT) has referred many matters to Sebi as these could attract higher penalties. Some of the parties, asked to cough up fines, have withdrawn appeal, fearing a higher penalty. “As per the Supreme Court ruling, the adjuring officer (AO) will not have discretion in imposition of penalty,” said Sandeep Parekh, founder, Finsec Law Advisor. Since the highest court has taken a clear stand, Sebi and SAT will take a similar stance on fines. “What is interesting is that levy of such huge and flat penalties has become mandatory and inevitable following the SC order,” said Jayant Thakur, a Mumbai-based chartered accountant and securities law expert. “Be that as it may be, Sebi is levying huge penalties. To me, it seems inevitable that the matter will go back to the Supreme Court and hope that the Hon’ble Court reconsiders its view and holds that discretion still remains in matter of levy of penalty.” The market regulator had levied a penalty of Rs 1 crore on Alkan Projects for non-submission of information related to its acquisition of shares of Roofit Industries. Alkan appealed to SAT, which reduced the penalty from Rs 1 crore to Rs 15,000. After Sebi appealed to the Supreme Court, the court set aside the SAT order and pointed out Section 15(A)(a) of the Sebi Act to lay down the quantum of penalty. Soon after this, the regulator has slapped huge penalties in several cases. For instance, it imposed Rs 8 crore fine on Presha Metallurgical and Rs 2 crore on Sunciti Financial Services for failing to make timely disclosures to stock exchanges with regard to change in shareholding.