Supreme Court Upholds SAT Order Setting Aside SEBI Action Against CARE Ratings Ex-MD Rajesh Mokashi

The Supreme Court recently upheld the order of the Securities Appellate Tribunal (SAT) in favour of Rajesh Mokashi, former Managing Director of CARE Ratings Ltd, while clarifying that regulatory findings must be based on evidence on record and not on external enquiry reports.

A bench of Justices Pamidighantam Sri Narasimha and Alok Aradhe was hearing an appeal filed by the Securities and Exchange Board of India (SEBI) against the SAT order dated June 27, 2025, by which the tribunal had set aside SEBI's order restraining Mokashi from associating with market intermediaries for two years and had imposed costs of ₹5 lakh on SEBI.

“The decisions to be arrived by the Board or the Appellate Tribunal, as the case may be, must be on the basis of evidence that is brought on record. External Enquiry Reports which do not form part of investigation and enquiry by the Board should not be relied on by the statutory authorities i.e. the Board or the Appellate Tribunal,” the court observed.

The case arose from allegations that Mokashi, as Managing Director of CARE Ratings, had interfered in the credit rating process, particularly in relation to DHFL. In its order dated June 27, 2025, the SAT found no evidence of such interference and held that SEBI had misconstrued the findings of an independent inquiry conducted by Justice B.N. Srikrishna, which had exonerated Mokashi.

The Supreme Court held that it found no error of fact or law in the conclusions drawn by the tribunal and upheld the decision, while clarifying that both SEBI and the SAT must base their conclusions only on evidence forming part of the investigation or enquiry and cannot rely on external enquiry reports.

However, the court set aside the direction imposing costs of Rs 5 lakh on SEBI, partly allowing the appeal to that limited extent..

Click Here To Read/Download SAT Order