SAT sets aside Sebi order on Vijay Rupani HUF, 21 others
Mumbai/Ahmedabad: The Securities and Appellate Tribunal (SAT) on Thursday set aside an order passed by Sebi on 27 October against the Vijay Rupani Hindu Undivided Family (HUF) and 21 others.
SAT cited the fact that the Securities and Exchange Board of India (Sebi) passed the order without giving a hearing to those named in the case.
Gujarat chief minister Vijay Rupani is part of the HUF, which is a family grouping that pools its income and assets and is assessed as a single income tax unit.
On 27 October, Sebi imposed a penalty of Rs6.9 crore on the Rupani HUF and 21 others for allegedly manipulative trades in little-known Sarang Chemicals Ltd between January 2011 and June 2011.
Rupani HUF was asked to pay Rs15 lakh in penalty for selling shares of Sarang Chemicals. According to the Sebi order, this sale of shares clubbed with trading of shares by 11 other entities named in the order, generated interest among the other investors to trade in the scrip and gave a false impression of liquidity in the shares.
Akash Harishbhai Desai, one of the 22 individuals named in the Sebi order, filed an appeal before the Tribunal.
Rupani’s office declined to comment. However, the Gujarat chief minister mentioned the issue on the microblogging Twitter.
"One of such persons against whom such an ex-parte order was passed approached Sebi Tribunal by filing an Appeal. Having found that none of the persons against whom the Sebi officer has passed an order is even heard, the Tribunal has quashed and set aside the said order,” tweeted Rupani.
Sebi’s lawyer Pradeep Sancheti said the regulator will provide a personal hearing to the 22 individuals if they submit their replies to its show cause notice. The regulator's adjudicating officer had passed the penalty order because they had failed to reply to show cause notices issued in May 2016. Under Sebi's adjudication rules, in case the regulator does not receive a reply or no cause to stop the proceedings is shown, a further hearing is not required.
Rupani, through his Twitter account, also explained that, in 2011, the broker of Rupani HUF had carried out only one transaction, which was a minuscule part of the total transactions done by several unconnected entities. An official from the chief minister's office said that the transaction done by Rupani HUF account in Sarang Chemicals was only 0.1% of the total transactions.