Supreme Court sets aside ₹80 lakh costs imposed by Bombay High Court on SEBI, NSE, BSE

The Supreme Court on Monday set aside costs of ₹80 lakh imposed on the Securities and Exchange Board of India (SEBI), the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) for the unlawful freezing of demat accounts. (BSE Ltd v. Pradeep Mehta and ors).A Bench of Chief Justice of India (CJI) DY Chandrachud with Justices JB Pardiwala and Manoj Misra directed the Bombay High Court to take a fresh call in the matter.As per media reports, the Court noted that the order under challenge was an ex-parte one passed while reserving the interim relief applications..The Bombay High Court had on August 26 imposed the costs on the entities for freezing of accounts belonging to one Dr Pradeep Mehta and his son, Neil Pradeep Mehta.A Bench of Justices GS Kulkarni and Firdosh P Pooniwalla had declared the actions against the father-son duo as "illegal and invalid" on grounds of severe procedural flaws and violations of constitutional rights.This led to the instant appeal by BSE and SEBI before the apex court, through law firms KJ John and Co, and Expletus Legal, respectively..The issue arose after Dr Mehta and his son had their demat accounts frozen following SEBI’s directives aimed at promoters of Shrenuj & Company Limited, a company that had been declared non-compliant.Dr Mehta’s demat accounts were frozen by the National Securities Depository Limited (NSDL) in March and April 2017. The decision was based on SEBI circulars mandating such actions against promoters of companies that failed to comply with regulatory requirements.The company had failed to submit financial results for the quarter ending December 2016, as required under SEBI’s Listing Obligations and Disclosure Requirements (LODR) Regulations. This non-compliance led to a fine imposed by BSE and further regulatory actions..Dr Mehta challenged the freezing of his accounts on the grounds that he had no role in Shrenuj’s management, was a minority shareholder, and had no influence over the company’s operations. Neil Pradeep Mehta, who resides in Singapore, was similarly affected despite being a minor at the time of his father's involvement with Shrenuj..The High Court had eventually directed the immediate unfreezing of all shares held by the duo in their demat accounts..Bombay High Court slaps ₹80 lakh costs on SEBI, NSE, BSE for illegal freezing of demat accounts.Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.