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The Securities Appellate Tribunal (SAT) has ruled in favour of the Securities and Exchange Board of India (SEBI) enhancing penalties on credit rating agency India Ratings in the case of Infrastructure Leasing and Financial Services Ltd (IL&FS), as per reports.
The tribunal, in a hearing of the petition filed by India Ratings Ltd against a second show-cause notice issued by SEBI, had ruled that it had powers to enhance the penalty for the credit rating agency, LiveMint reported.
SEBI in December had slapped a ₹25 lakh on credit rating agencies India Ratings and Research Pvt Ltd, ICRA and CARE Ratings for the IL&FS case.
The fine was levied for lack of "due diligence" in credit ratings to non-convertible debentures of IL&FS, said previous reports.
SEBI had issued a fresh notice on January 28 under Section 15-I (3) of SEBI Act, Section 15(I). As per this notice, the board can examine the record of these proceedings. It can then increase the penalty if it deems the ₹25 lakh inadequate.
India Ratings had appealed to the SAT against SEBI's ability to enhance penalties. However, SAT ruled that the securities board can do so if it deems the earlier penalty insufficient.
"We are prima facie of the opinion that SEBI has the power to initiate proceedings under Section 15-I(3) of the SEBI Act," said SAT, as quoted by LiveMint.
SEBI has four weeks to reply to the petition. The matter will now be taken up on August 20 for either admission or disposal, it said.
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