The Delhi High Court Friday referred to a larger bench a petition filed against market watchdog seeking direction to quash SEBI's 2007 circular saying that it is prejudicial to the interest of investors.

A single judge bench of Justice Rajiv Sahai Endlaw said that the issue involves public interest while referring the matter to a larger bench which hears PIL.
    
The direction of the court came on a plea of Deepak Khosla challenging the circular of Securities and Exchange Board of India (SEBI) which enables an adjudicating officer to pass an order 'settling' the administrative or civil actions in the cases where a person is prima facie found to have violated the rules.
 
The petitioner submitted that an adjudicating order promotes dissemination of the information among the investors as it exposes the violators, their modus operandi and other important aspects.
 
He further said that an consent order, on the other hand, can be passed by the adjudicating officer without fixing the guilt of the parties involved.
 
" A consent order doesn't indicate to the investors whether or not intermediaries and other persons they deal with in the securities market are violators.
 
"Consent orders, therefore, lead to denial of important information to investors," the petitioner said.
The circular also empowers the official to pass an order compounding an offences under the SEBI rules and regulation, Khosla said.
 
The impugned circular also says that there would be no appeal from an order passed with the consent of the parties, he said.