NEW DELHI : The Supreme Court has stayed an order of the Securities Appellate Tribunal (SAT), which had replaced market regulator Sebi’s directive of monetary penalty with a warning, in a fraudulent trading case.
The order comes following an appeal filed by the Securities and Exchange Board of India (Sebi) against the SAT order.
It has also been submitted that similar orders have been passed by SAT in many other cases, leading to several appeals being filed before this court by Sebi.
A bench comprising Justices D Y Chandrachud, Indira Banerjee and Sanjiv Khanna said the direction of substituting the fine, which has been imposed for indulging in fraudulent and unfair trading practices, with a warning is contrary to the statutory provision.
“Prima facie, the direction for substituting the penalty which has been imposed under Section 15HA with a warning is contrary to the statutory provisions,” the court said in its order on Tuesday.
Section 15HA of the SEBI Act provides for a minimum penalty of Rs 5 lakh, which can go up to Rs 25 crore, for indulging in fraudulent and unfair trade practices related to the securities market.
“The SAT is not exercising the jurisdiction under Article 226 of the Constitution and is a creature of the statute. Even the jurisdiction under Article 226 has to be exercised in a manner consistent with law,” the court noted.
Hence, the apex court has stayed the order passed by SAT.
In February 2020, Sebi imposed a penalty of Rs 5 lakh each against Bharti Goyal and 15 other entities for indulging in fraudulent trading in the shares of Mapro Industries. The penalty was imposed for violating provisions of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms.
Pursuant to this, Bharti Goyal and one other individual approached the tribunal.
In August last year, SAT held that the nature and pattern of trading of the individuals are violative of the provisions of the PFUTP Regulations but substituted the fine levied by the regulator with a warning. (AGENCIES)
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