New Delhi– In a major development, the Supreme Court has stayed an order of the Securities Appellate Tribunal (SAT) wherein the latter had substituted a penalty by SEBI in a case of fraudulent trading in the shares of Mapro Industries, with just a warning.
The matter pertains to an appeal filed by the Securities and Exchange Board of India (SEBI) folllowing the SAT order.
The top court noted that the direction substituting the penalty, which was imposed for indulging in fraudulent and unfair trading practices Section 15HA of the SEBI Act, with a warning was in contradiction to the statutory provision.
As per Section 15HA of the SEBI Act, if any person indulges in fraudulent and unfair trade practices relating to securities, he shall be liable to a minimum penalty of Rs 5 lakh which may go up to Rs 25 crore rupees.
The capital market regulator imposed a penalty of Rs 5 lakh each against Bharti Goyal along with 15 other entities for indulging in fraudulent trade in the shares of Mapro Industries. The penalty was imposed for violating provisions of the norms for prohibition of fraudulent and unfair trade practices.
Following the imposition of the penalty, Goyal and one other individual approached the appellate tribunal. Later in August 2020, SAT, though, said that the manner of trading by the individuals violated the norms, replaced the fine levied by SEBI with a warning.
Supreme Court in its order noted that the SAT is not exercising the jurisdiction under Article 226 of the Constitution in manner consistent with law.
The development gains significance as it may lead review of such similar directives by the appellate tribunal, which may eventually close any leeway to escape monetary policy by offenders of fraudulent trading in securities. (IANS)