Court says stock broker has an efficacious alternative remedy before SAT and leaves all issues open, including objections to lien, account freezes and ex parte action
The Delhi High Court has refused to entertain a writ petition filed by M/s Chaubara Eats Pvt. Ltd. challenging interim ex parte directions issued by the Securities and Exchange Board of India (SEBI), holding that the petitioner has an effective alternative remedy of appeal before the Securities Appellate Tribunal (SAT).
Justice Amit Mahajan was hearing the petition against SEBI’s order dated 16 September 2026, by which the regulator invoked its powers under Sections 11(1), 11(4), 11B and 19 of the SEBI Act, 1992. The impugned order directed the impounding of bank accounts, creation of fixed deposits with lien in favour of SEBI, freezing of demat accounts, restrictions on access to the securities market, and a prohibition on alienating assets.
According to SEBI, the directions were necessary to protect investors and preserve the integrity of the securities market. The order fixed impounding amounts of Rs. 22,06,44,706 in relation to Prsaar Sampada Private Limited and connected noticees, and Rs. 6,05,63,836 in relation to Chaubara Eats Private Limited and related persons.
Before the High Court, the petitioner argued that the order had been passed ex parte, without affording an opportunity to rebut the allegations. It was also contended that the figures recorded in the SEBI order were not supported by the record and that losses allegedly suffered by the petitioner had not been considered while computing the amount. The petitioner further argued that once lien had been created for the specified amount, SEBI could not have issued additional directions restraining debits and dealings in accounts and assets.
However, the Court declined to examine the merits of these submissions. The judge observed that although the petitioner’s argument appeared attractive at first blush, the availability of an efficacious statutory remedy before SAT weighed against the High Court’s interference under Article 226 of the Constitution.
The Court also noted that the petitioner’s contention regarding lack of due application of mind could be raised before the appellate forum. Accordingly, the writ petition was disposed of with liberty to the petitioner to approach the appropriate forum. The Court expressly left all rights and contentions of both sides open.
The order means that SEBI’s interim directions will not be tested by the High Court at this stage, and Chaubara Eats will have to pursue its challenge before the Securities Appellate Tribunal if it wishes to contest the regulator’s action.
Bottom Line :
SEBI interim ex parte directions under Sections 11(1), 11(4), 11B read with Section 19 of the SEBI Act, 1992 challenged in writ petition - High Court declined to entertain writ petition in view of efficacious alternative remedy of appeal before Securities Appellate Tribunal under Section 15T of SEBI Act - Petitioner relegated to appellate forum with all rights and contentions kept open.
Statutory provision(s): Section 11(1), Section 11(4), Section 11B, Section 15T, Section 19 of the SEBI Act, 1992, Article 226 of the Constitution of India, 1950
M/s Chaubara Eats Pvt. Ltd v. SEBI, (Delhi) : Law Finder Doc id # 2985340
