Mumbai: Securities Appellate Tribunal (SAT) today set aside Sebi order against Zenith Infotech’s six promoters in an asset stripping case, saying the regulator’s directions are “not sustainable in the eyes of law".

Asking Securities and Exchange Board of India (Sebi ) to look afresh into the matter and pass an order in six weeks, the tribunal said the regulator’s interim order was passed in “gross violation of the principles of natural justice".

Capital market regulator Sebi, through an interim order in March this year had barred six promoters of Zenith Infotech after charging them of stripping company assets for personal gains.

The tribunal has asked Sebi for “fresh consideration expeditiously and preferably within a period of six weeks, from receiving a copy of this order".

Besides, the appellants have been asked to co-operate with the regulator in expediting the matter.

“... we have no hesitation in setting aside the impugned order and remanding the matter to Respondent No 1 (Sebi) for fresh consideration in accordance with law by supplying a copy of the complaint to the appellants in advance and also by deciding the jurisdictional issues raised by the appellants in the present appeal before hand," SAT said.

The Securities Exchange and Board of India (Sebi) had also asked the board of Zenith to provide a bank guarantee of USD 33.93 million, an amount equivalent to the funds that have been diverted from the company, without using the funds or assets of the firm.

In this case, six promoters —chairman Rajkumar Saraf, managing director Akash Saraf, Vu Technologies, Zenith Technologies, Devita Saraf and Vijayrani Saraf — were barred from the securities market.

Passing the order, the tribunal said: “We are of the considered opinion that the impugned ad-interim ex-parte order dated 25 March, 2013 is not sustainable in the eyes of law as it has been passed in gross violation of the principles of natural justice".

No complaint as mentioned in the impugned order has ever been supplied to appellants by giving them an opportunity of hearing in the matter before passing the same, it noted.

According to the tribunal, it is difficult to agree with Sebi counsel Shyam Mehta’s contention that an opportunity of hearing was given to the appellants by granting them three weeks’ time to reply in the impugned order itself.

“It is settled that if the essentials of justice in the sense of granting opportunity of hearing are ignored in passing an order to the prejudice of a person, the order is a nullity for want of natural justice and no amount of post-decisional hearing can cure the same.

“We, therefore, hold that such a post decisional hearing in the fact and circumstances of the present case is no more than an eyewash," the order said.

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