The appeal contests several grounds of the Securities Appellate Tribunal (SAT) order. "One of the observations in the SAT order was that clearance of the Sebi board was not taken before initiating investigation proceedings. On this, the appeal has said the investigation was directed by the Delhi high court in 2011," one of them said.

Sebi's contention is as a quasi-judicial body, it has the powers to act on its own accord, wherever it deems fit. In the past, it had taken such actions based on surveillance inputs and investor complaints, etc, without clearance of the board. The regulator is keen on getting this issue clarified at the highest court at the earliest, as several other investigations and orders could be adversely impacted by the position taken by the tribunal, the person added.

A Sebi spokesperson did not respond to an email seeking comments.

The SAT had in March quashed Sebi's October order banning DLF, its promoters and related entities from the capital market for three years. The case relates to non-disclosure of certain information by the company during its initial public offering (IPO) in 2007, which had garnered about Rs 9,000 crore.

While SAT members Jog Singh and A S Lamba favoured quashing the ban, presiding officer J P Devadhar did not agree.

According to the majority decision, the impugned order dated October 2014, is quashed and all appeals allowed, with no order as to costs.

According to the majority decision, the impugned order dated October 2014, is quashed and all appeals allowed, with no order as to costs.

While banning the company from the capital markets, Sebi had alleged the company deliberately withheld information from its Initial Public Offering investors about a (police) First Information Report filed by a Kimsuk Krishna Sinha against the company. Sinha claimed a subsidiary of DLF had cheated him of Rs 34 crore.

Although initially Sebi had not taken any action on Sinha's complaint, it initiated investigation following a direction from the Delhi high court in 2011.

In its order, SAT chastised Sebi for the loss caused to investors following the order of the markets regulator, terming it a case of "over-regulation" by Sebi.

"The jumbling up of rules, regulations and various provisions occurring and operating in different fields by the respondents (Sebi) in the impugned order has led to a grave miscarriage of justice in the present case, inasmuch as the investors have suffered a loss to the tune of thousands of crores in the capital market on the day following the passing of the order," said the order.

In the same matter, Sebi had separately imposed a penalty of Rs 86 crore on DLF and related entities in February. This case is being heard by SAT. The outcome of the Sebi appeal will have a significant impact on this case, too.