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

Before the SEBI Act, 1992 took effect, an 'existing Securities and Exchange Board' operated under a Government resolution. A supplier had a contract with that existing board, and a recovery suit against it was pending. What is the position on the date the statutory Board is established?

The contract is treated as having been entered into with the statutory Board, and the pending suit may be continued by or against the Board. Section 10 transfers rights, liabilities, contracts and legal proceedings of the existing board to the new Board.

  1. AThe contract is deemed entered into with the statutory Board, and the suit may be continued by or against itCorrect
  2. BThe contract lapses and the supplier must negotiate a new one, while the suit abates
  3. CThe contract continues but all pending suits are barred
  4. DThe contract passes to the Central Government, and the suit continues against it alone

Explanation

Section 10(1)(d) deems contracts of the existing board to be entered into with the Board. Section 10(1)(f) allows pending suits to be continued by or against the Board. Lapse, abatement or transfer to the Government is not provided.

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