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2021 (5) TMI 86 - Securities / SEBI
Investment Adviser entitled to charge fees for providing investment advice from a client in the manner as specified by the Board - Constitutional validity of Regulation 15A of the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 which was inserted by Regulation 3(XII) of the Securities and Exchange Board of India (Investment Advisers) (Amendment) Regulations, 2020, as also the consequential paragraph 2(iii) of the SEBI Circular dated 23 September 2020 - HELD THAT:- Under section 19 of the SEBI Act, the SEBI is empowered to delegate its powers and functions by general or special order in writing to any member, officer of the SEBI or any other person subject to such conditions as specified by SEBI. Accordingly, the SEBI had issued SEBI (Delegation of Statutory and Financial Powers) Order, 2019 dated 31-07-2019 delegating various powers and functions to the members and officers of the SEBI, as approved by the Board. The said Delegation of Power Order is annexed at Exh.C to the Additional Affidavit-in-Reply - In Clause 3(2) of the Delegation of Power Order, the powers and functions delegated to any member or officer of the Board or authority under this Order may be exercised by any officer or authority, higher in grade or rank or position to the Deputy General Manager. The impugned Circular has been signed by Mr.Naveen Sharma, the General Manager in the Investment Management Department, who is stated in rank higher than the Deputy General Manager. In the circumstances, Mr.Naveen Sharma would be well within his authority to sign the impugned Circular issued under the SEBI Act.
As stated earlier, SEBI is an expert regulatory body established under the SEBI Act and the Court, therefore, would have to exercise judicial restraint and the scope of interference would be extremely narrow. The Court cannot substitute own views in place of views of the expert body. Moreover, it is well settled that the Court should be very slow in staying a law by way of interim relief when the constitutional validity of the law is challenged.
As noticed that the power to specify a ceiling on the fees exists in the IA principal 2013 Regulations much before the insertion of the impugned Regulation 15A. Regulation 15(9) under Chapter-III “General obligations and responsibilities” of the impugned IA principal 2013 Regulation makes provisions for Code of Conduct of an Investment Adviser. In view of the above discussion, the prayer for interim relief shall stand rejected. The hearing of the Petition is expedited.