2020 (12) TMI 1383 - SCH - SEBI

Offence under SEBI - imposition of disgorgement - appellants are prohibited from dealing in equity derivatives in F O segment of Stock Exchanges - Appellant no. 1 shall disgorge an amount of Rs 447.27 Crs alongwith interest @12% p.a. w.e.f. 29.11.2017 onwards till the date of payment - HELD THAT - Securities Appellate Tribunal has recoded a split verdict, with a dissent by its Chairperson. Having regard to the issues raised, we admit the appeal against the order of the Securities Appellate Tribunal dated 5 November 2020. Insofar as the interim relief is concerned, the appellants have complied with the order for debarment from dealing in equity derivatives for one year, imposed by the Whole Time Member of SEBI. The appellants have been directed to make payment of the disgorged amount of Rs 447.27 crores along with simple interest at the rate of 12% per annum with effect from 29 November 2007 till payment. As and by way of interim relief, we order and direct that the appellants shall, within a period of four weeks from today, deposit an amount of Rs 250 crores in the Investors Protection Fund in compliance with the order of the Whole Time Member, subject to the final result of the appeal. There shall be a stay on the recovery of the balance, inclusive of interest, pending the appeal.

Summary

Issues:
1. Split verdict by the Securities Appellate Tribunal
2. Compliance with debarment order and disgorged amount payment
3. Interim relief - deposit in Investors' Protection Fund

Analysis:
1. The Supreme Court, comprising Hon'ble Dr. Justice D.Y. Chandrachud, Hon'ble Ms. Justice Indu Malhotra, and Hon'ble Ms. Justice Indira Banerjee, admitted an appeal against the Securities Appellate Tribunal's split verdict, which included a dissent by its Chairperson. The Court took into consideration the raised issues and decided to proceed with the appeal against the Tribunal's order dated 5 November 2020.

2. Regarding the compliance with the debarment order from dealing in equity derivatives and the payment of the disgorged amount, the appellants have adhered to the directive of the Whole Time Member of SEBI. The appellants were instructed to pay the disgorged amount of Rs 447.27 crores along with a simple interest rate of 12% per annum from 29 November 2007 until payment. As interim relief, the Court ordered the appellants to deposit Rs 250 crores in the Investors' Protection Fund within four weeks from the date of the order. Additionally, the Court stayed the recovery of the remaining amount, inclusive of interest, pending the final outcome of the appeal.

3. The interim relief granted by the Supreme Court aimed to ensure compliance with the regulatory directives while safeguarding the interests of investors. By ordering the deposit in the Investors' Protection Fund and staying the recovery of the balance pending appeal, the Court balanced the need for regulatory enforcement with the rights of the appellants to challenge the Tribunal's decision. This comprehensive approach demonstrated the Court's commitment to upholding the principles of financial market integrity and investor protection while ensuring due process and fairness in adjudicating disputes related to securities regulations.