Exam time help its urgent

CONSENT ORDERS

Consent Order means an order settling administrative or civil proceedings between the regulator and a person (Party) who may prima facie be found to have violated securities laws. It may settle all issues or reserve an issue or claim, but it must precisely state what issues or claims are being reserved. A Consent Order may or may not include a determination that a violation has occurred.

POWER OF SEBI TO PASS CONSENT ORDERS

The Parliament of India has recognised the powers of SEBI to pass consent orders under the SEBI Act and the Depositories Act. This will of the Parliament is apparent from Section 15T of the SEBI Act 1992 and section 23 A of the Depositories Act.

All appropriate administrative or civil actions e.g. proceedings under sections 11, 11B, 11D, 12(3) and 15I of SEBI Act and equivalent proceedings under the SCRA and the Depositories Act,1996 and other civil matters pending before Securities Appellate Tribunal (SAT) / courts may be settled between SEBI and a person (party) who may prima facie be found to have violated the securities laws or against whom administrative or civil action has been commenced for such violation.

OBJECTIVE OF CONSENT ORDERS

Consent orders may provide flexibility of wider array of enforcement actions which will achieve the twin goals of an appropriate sanction and deterrance without resorting to a long drawn litigation before SEBI/Tribunal/Courts. Passing of consent orders will also reduce regulatory costs and would save time and efforts taken in pursuing enforcement actions. Consent orders cannot be construed as waiver of statutory powers by the Board. The Board always has the right to proceed for appropriate action if it cannot achieve its objectives through a consent order.

COMMENCEMENT AND SCOPE OF CONSENT

Consent Order may be passed at any stage after probable cause of violation has been found. However, in the event of a serious and intentional violation, the process should not be completed till the fact finding process is completed whether by way of investigation or otherwise. Compounding of Offence can take place after filing criminal complaint by SEBI. Where a criminal complaint has not yet been filed but is envisaged, the process for consent orders will be followed.

PROCEDURE FOR CONSENT ORDERS WHERE ADJUDICATION PROCEEDINGS ARE PENDING

a)         If the party against whom an adjudication proceeding is pending proposes passing of a consent order, the proposal may be referred to a high powered Committee consisting of a retired judge of a High Court and two other external experts.

b)         The Committee will consider the proposal of consent, requisite waivers by the party, the facts and circumstances of the case, material available on records and take into account the factors and guidance as mentioned below. Where the Committee finds the terms for passing a consent order inadequate, it may ask the party to revise the consent terms.

c)         The consent terms finalized by the Committee and agreed to by the party shall be forwarded to the Adjudication Officer for passing a suitable order in line with the consent terms.

PROCEDURE FOR CONSENT IN OTHER CASES

(I) Any person (party) who is notified or who has reasonable grounds to believe that a civil/ administrative proceeding may or will be instituted against him/her, or any party to a proceeding already instituted, may, at any time, propose in writing along with requisite waivers for an offer of consent. All communications in this regard should be addressed to the Division of Regulatory Action, Enforcement Department, SEBI, G Block, Bandra Kurla Complex, Bandra (East), Mumbai 400 051, which would forwardthe same to the High Powered Committee.

(II) Any person (party) who is notified or who has reasonable ground to believe that a criminal proceeding may or will be instituted against it, may, before filing a criminal complaint by SEBI before any criminal court, propose in writing along with requisite waivers for consent. All communications in this regard should be addressed to the Prosecution Division, Enforcement Department of SEBI at Mumbai, which would forward the same to the high powered Committee.

(III) The Committee will consider the proposal of consent, requisite waivers by the party, the acts and   circumstances of the case, material available on record and take into account the factors and guidance as set out below at para 11. Where the Committee finds the terms for passing a consent order inadequate, it may ask the party to revise the consent terms. If the Committee agrees with the proposal, suitable consent terms shall be recommended to a panel of two Whole Time Members, who may pass a suitable order in view of the recommendation of the Committee.

FACTORS TO BE CONSIDERED FOR CONSENT

While considering the proposal of consent from any party, the Committee shall have due regard to the objective of the respective statute, the interests of investors and securities market and factors including but not limited to the following, where-ever applicable:

i.  Whether violation is intentional.

ii. Party’s conduct in the investigation and disclosure of full facts.

iii. Gravity of charge i.e. charge like fraud, market manipulation or insider trading.

iv. History of non-compliance. Good track record of the violator i.e. it had not been found guilty of similar or serious violations in the past.

v. Whether there were circumstances beyond the control of the party.

vi. Violation is technical and/or minor in nature and whether violation warrants penalty.

vii. Consideration of the amount of investors’ harm or party’s gain.

viii. Processes which have been introduced since the violation to minimize future violations/lapses.

ix. Compliance schedule proposed by the party.

x. Economic benefits accruing to a party from delayed or avoided compliance.

xi. Conditions where necessary, to deter future non-compliance by the same or another party.

xii. Satisfaction of claim of investors regarding payment of money due to them or delivery of securities to them.

xiii. Compliance of the civil enforcement action by the accused.

xiv. Party has undergone any other regulatory enforcement action for the same violation.

xv. Any other factors necessary in the facts and circumstances of the case.

WAIVERS

As a condition for consent, the party shall furnish a written waiver from taking any legal proceedings against SEBI concerning any of the issues covered by the consent order.

(I) The party shall waive:

1. all hearings pursuant to the statutory provisions under which the proceeding is to be or has  been instituted;

2. the filing of proposed findings of fact and conclusions of law;

3. proceedings before the Board or any officer;

4. all post-hearing procedures; and

5. appeal/review before/by SAT/ courts.

(II) The party shall further waive:

a. such provisions of the Regulations or other requirements of law as may be construed to prevent any officer of SEBI from participating in the preparation of, or advising the Competent Authority as to, any order, opinion, finding of fact, or conclusion of law to be entered pursuant to the offer; and

b. any right to claim bias or prejudgment by SEBI based on the consideration of or discussions concerning settlement of all or any part of the internal proceedings.

(III) In addition, the party will undertake to waive a plea of limitation for reopening the case, if the party violates the consent order subsequently.

If the Committee believes that the proposal of consent is not commensurate with the violation or the factors mentioned above are not satisfied or the waivers are not given, it may decline to consider the proposal of the party. In such an event, the Board and the party will both be free to resort to legal recourse as may be available to them under the law.

CONSEQUENCE OF NON-ACCEPTANCE

(i)        If the Committee rejects the proposal of the party, the person making the offer shall be notified of the same and the offer of settlement shall be deemed to be withdrawn.

(ii)       The rejected offer shall not constitute a part of the record in any proceeding against the person making the offer, provided, however, that rejection of an offer of settlement does not affect the continued validity of waivers.

(iii)      SEBI and the Party will be free to resort to legal recourse as may be available to them under law and neither SEBI nor the Party would be entitled to use any information relating to the settlement process in such proceedings.

(iv)      Any proceeding which had been kept in abeyance pending the consent process will begin from the stage at which it was kept in abeyance.

PUBLICATION

The consent order shall be published through a press release and put on SEBI’s website. All information submitted and discussions in pursuance of the consent orders shall be in a fiduciary capacity and may not be released to the public, as it would prejudice SEBI and/or the party.

ENFORCEABILITY

(i)        The consent order shall be binding on the party and in cases where the party undertakes

any compliances, it has to comply with the same.

(ii)       If the party fails to comply with the consent orders it may lead to the following:-

a)         Invite appropriate action under the respective statute,

b)         Revival of the pending administrative/civil action.

Thnx for reply 

this is too long pls explain me in simple BHASHA ye to book me diya hai but the moment i start reading i cant concentrate so pls if u can explain in crux of it .........

he is right

Please explain me in crux.........

To put it simply, with regard to SEBI, it is an out-of-court settlement order between regulator and a company which has violated the prescribed rules.

so in this case no further appel can be filed?

In my opinion, a company can appeal the SEBI's consent order to Securities Appellate Tribunal (SAT). But normally a company appeals to SAT only when it has violated the provisions of act or rules made thereunder were unintentional. The word Act can be read of SEBI Act and its further regulations made thereunder and Depositories Act. However, if the company violates the same intentionally and if the violation is in serious nature, then the company itself will refrain from appealing to SAT. It prefer mostly to settle the case through consent proceedings of SEBI.

Main objects of the Consent Order by SEBI includes it reduces the regulators time and efforts, and to reduce the regulatory costs that SEBI will incur in enforcing the action against companies, and to clear the cases on fast track basis which are pending before them from lang back. Consent application can be moved by either regulator or by a company.

Out-of-court settlement by a company doesn't mean that it neither accepts nor denies the guilt. Few such cases in news were PWC and Reliance ADAG. In the case of PWC, it itself has filed a consent application with SEBI for settlement of the case with regard to Satyam. PWC has done so to avoid delay of legal proceedings, which it doesn't mean it admits the wronging.

The amount of settlement between the parties is decided on case basis. However, SEBI will not accept every violation by a company through consent application route. SEBI accepts the consent route only if the violation is not serious and it not affecting large no. of investors. If by chance SEBI accepts settlement even in case of serious violation, SAT can object for the same, if the party has already filed application with them. So, size of settlement amount depends on each case and the extent of violation. POINT TO NOTE IS VIOLATION IS UNINTENTIONALLY MADE AND NOT A SERIOUS CASE. In case of Reliance Infra, it has settled the case for Rs 50 crore along with certain conditions.

From SEBI's point of view, once if consent application is received from other party, SEBI Internal Committee will review the same and sends the proposal to SEBI High Powered Committee (HPC), which HPC may accept/reject the application. If both parties are not able to reach settlement terms, then SEBI will do its investigations in a normal way. Hope your concept is clear now.

Actully help me in this context not in SEBi:-

Whether Revenue can prefer an appeal in case of a consent order?
CCus v. Trilux Electronics 2010 (253) E.L.T. 367 (Kar.)
Decision of the case:
High Court held that if an order was passed by CESTAT based on consent and the matter was remanded at the instance of Revenue, then Revenue could not pursue an appeal against such order in a higher forum.
In the instant case, the Tribunal had remanded the matter in order to re-compute the duty payable by the assessee on the basis of representation of Revenue. Thereafter, the Revenue filed an appeal against the said order.
The assessee contended that the appeal filed by the Revenue was not maintainable since the order had been passed by the Tribunal on the submission of the representative of the Revenue. Further, since it is a consent order, no appeal would lie. The High Court held that an appeal against the consent order cannot be filed by the Revenue.
Note: A consent order is a judicial decree expressing a voluntary agreement between parties to a suit, especially an agreement by a defendant to cease activities alleged by the Government to be illegal in return for an end to the charges.
 

In my opinion, the Revenue cannot appeal to higher authority as decided in the caselaw. But an aggrieved party to the consent order of CESTAT can do so.

if its settlement order (OUT OF COURT)the hw cum there will be any aggrieved party ?

It is possible that the terms of settlement between the parties may also not be acceptable to the other party. Amount of settlement amount mostly, in my opinion, will be decided the the party who issues the consent order. There may not be any transparency regarding how they arrived at that much amount. Like in SEBI, the Internal Committee may decide a higher amount/High Powered Committe will decide a higher or lesser settlement amount. If these terms are not agreeable to other party, then he may not agree. Hence, instead of consent route, the normal investigations will be carried on again.

then y we call it out of court settlement i think out of court to wo hote hai jisme dono party  ek commom point pe agree ho jaye............ M I Wrong?

In most cases, both parties may agree, but there may also be cases that the terms of settlement may not be agreeable by the other party. If the company which violated the act or rules, then it tries to get the issue resolved mostly through consent proceedings, but the settlement amount to be decided by regulator may seems unjustifiable to the company. The regulator may also impose other restrictions depending on the case. Because of lack of transparency of how the regulator arrived at the amount, the company may not agree to it. However, it tries to convince in the matter. If not, then the company is liable to face detailed investigation and penal/criminal/civil actions are levied and that case may be prolonged through the years, also involves time and efforts, and may also damage the reputation of the company. It is called out-of-court settlement, because it happens between the government authority and the company which was allegedly violated the provisions. No court involvement exists in this scenario. 

Thanx for ur reply i think sumwhat i m clear nw