The Securities Appellate Tribunal on Wednesday set aside Sebi's order in a case involving Dilip Pendse, former managing director of erstwhile Tata Finance, and asked the market regulator to issue a fresh order within six months.
The Sebi had in December 2012 barred Pendse for two years from the capital market for alleged involvement in unfair trade practices with regard to shares of four firms, including Infosys and TELCO (now Tata Motors).
Pendse submitted to SAT that the order had been "passed belatedly on December 24, 2012, in spite of concluding the hearing on July 17, 2011."
He said the order should be set aside and the matter filed for a fresh order on merits.
In its response, Sebi had said its whole-time member who heard the matter demitted office on May 17, 2012, and was re-appointed on August 9 the same year.
The tribunal today said there is "merit" in Pendse's contention "because delay in passing the impugned order after concluding the hearing is inordinate."
"Once a whole-time member ceases to hold office, then he cannot deal with matters which were heard by him before demitting the office," SAT noted.
"In such a case, neither his reappointment relates back to the date of his demitting office nor entitles him to pass orders on matters which were heard by him before demitting office, unless the matters are heard afresh," it added.