2025 (11) TMI 869 - AT - SEBI

Pending higher decision on whether Section 26E SARFAESI overrides Section 28A(3) SEBI, SEBI must deposit auction proceeds in interest-bearing account

HDB Financial Services Limited Versus Securities and Exchange Board of India & Anr.

AT held the issue whether Section 26E of the SARFAESI Act prevails over Section 28A(3) of the SEBI Act is pending before the SC, given appeals from HC ... Whether Section 26E of the SARFAESI Act shall prevail over Section 28A(3) of the SEBI Act or not. - HELD THAT:- Since two judgements on the similar issue, Hon’ble Telangana High Court and second by the Hon’ble Kerala High Court are challenged before the Hon’ble Supreme Court the issue involved in the present appeal, is pending before the Hon’ble Supreme Court. During the pendency of the present appeal, the auction proceeds shall be placed by SEBI in an interest bearing account. The party succeeding ultimately shall be entitled to receive the same. Respondent No. 2 shall not create any third party right with respect to the secured asset/auctioned property. Appeal is adjourned initially for a period of 6 months. The principal question is 'whether Section 26E of the SARFAESI Act shall prevail over Section 28A(3) of the SEBI Act or not.' Both parties relied on two High Court judgments on this issue that are currently challenged before the Supreme Court, leaving the substantive question pending before the Supreme Court. Interim directions: the auction proceeds of Rs. 1,69,90,220/- are to be placed by SEBI in an interest-bearing account, with the party ultimately succeeding entitled to receive the same; Respondent No. 2 is restrained from creating any third-party right over the secured asset/auctioned property; SEBI is directed to 'take necessary steps to expedite the matter before the Hon'ble Supreme Court by filing appropriate application.' The appeal is adjourned for six months with liberty to mention; matter listed for directions on April 06, 2026.