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CS Executive · Capital Market and Securities Laws · Securities and Exchange Board of India

Before the SEBI Act, 1992, an administrative SEBI existed. A vendor had a contract with that earlier body, and a supplier's suit against it was pending when the statutory Board was established. What is the effect under Section 10 of the SEBI Act?

The contract is deemed to have been entered into with the Board, and the pending suit may be continued by or against the Board. Section 10 transfers the existing board's rights, liabilities, contracts and legal proceedings to the statutory Board from the date of its establishment.

  1. AThe contract is deemed made with the Board and the pending suit may be continued by or against the BoardCorrect
  2. BThe contract lapses and the supplier must file a fresh suit after six months
  3. CThe contract binds the Central Government alone, not the Board
  4. DThe suit abates automatically because the Board is a new body

Explanation

Section 10(1) provides that on the date of establishment, references to the existing board are treated as references to the Board, and its contracts and obligations are deemed to be those of the Board. Suits instituted by or against the existing board may be continued by or against the Board. So lapse, abatement, or transfer to the Central Government alone is wrong.

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