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ISSN 2063-5346
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“THE ROLE OF INDIAN JUDICIARY TOWARDS PROTECTION OF INVESTORS IN SHARE MARKET: AN ANALYTICAL STUDY WITH SPECIFIC REFERENCE TO SEBI”

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Vikash Singhal, Omprakash Somkuwar
» doi: 10.48047/ecb/2023.12.7.264

Abstract

The Indian judiciary plays a crucial role in protecting investors in the share market through its interpretation and enforcement of laws related to securities and investments. The regulatory agency in charge of overseeing the Indian securities market is the Securities and Exchange Board of India (SEBI). It formulates rules and regulations and ensures their enforcement. The judiciary's role is to interpret these laws and provide legal remedies in case of any violations or disputes. It is important to note that the judiciary's role is not limited to SEBI alone. There are other regulatory bodies and laws that govern the securities market, such as the Companies Act, the Securities Contracts (Regulation) Act, and the Insolvency and Bankruptcy Code. The judiciary's role extends to interpreting and enforcing these laws as well to protect the interests of investors. Investors are an integral part of the financial market, and they rely on the regulatory framework and judiciary system to safeguard their investments from fraudulent activities and unethical practices. The Indian judiciary, through various judgments, has made it clear that the primary objective behind securities regulations is to protect the interest of investors, and any action that violates this objective would be deemed illegal. One such recent decision was the verdict pronounced by the Supreme Court of India in the Sahara case, where it directed the Sahara group to refund investors' money collected through fraudulent means. This decision was a significant step towards protecting investors who had invested their hard-earned money with Sahara. The Indian judiciary's role in ensuring investor protection extends beyond just punishing the guilty parties. It also conducts judicial review of SEBI regulations to ensure they are in line with the constitutional provisions and do not infringe on investors' fundamental rights. The judiciary has, in the past, declared certain regulations as unconstitutional if they were found to be violative of investors' rights. This clearly depicts that the protection of investors in the share market is one of the crucial functions of the Indian judiciary system. Therefore, it can be opined that judiciary plays a pivotal role in ensuring that investor protection is adequately safeguarded in the securities market. It works in tandem with the regulatory body, SEBI, to ensure that investors are protected, and any fraudulent or illegal activities are swiftly brought to justice. Through its decisions and judicial review of regulations, the judiciary aims to establish trust and confidence in the securities market and reassure investors that their investments are safe and secure. In this following article we will explore the various dimensions of the role of judiciary in protecting the rights of investors in share market.

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