In a key improvement, 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 prime court noted that the path 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 particular 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 well go up to Rs 25 crore rupees.
The capital marketplace regulator imposed a penalty of Rs 5 lakh every 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 a single other person approached the appellate tribunal. Later in August 2020, SAT, although, stated that the manner of trading by the people violated the norms, replaced the fine levied by SEBI with a warning.
Supreme Court in its order noted that the SAT is not working out the jurisdiction beneath Article 226 of the Constitution in manner constant with law.
The improvement gains significance as it may well lead assessment of such comparable directives by the appellate tribunal, which may well sooner or later close any leeway to escape monetary policy by offenders of fraudulent trading in securities.