BackSAT quashes Sebi penalty on Apollo Tyres in 2003 share buyback case
The Securities Appellate Tribunal Wednesday quashed the order passed by Sebi imposing a fine of ₹65 lakh on Apollo Tyres for violating norms pertaining to buyback of shares in 2003 and directed the market regulator to refund the deposited penalty amount within four weeks
PremiumThe Securities Appellate Tribunal (SAT) Wednesday quashed the order passed by Securities and Exchange Board of India imposing a fine of ₹65 lakh on Apollo Tyres for violating norms pertaining to buyback of shares back in 2003 and directed the market regulator to refund the deposited penalty amount within four weeks.
The appeal was filed against the Sebi's order passed in November, 2018 imposing a penalty of ₹65 lakh on Apollo Tyres for violation of buyback norms.
It was alleged that 36.90 lakh shares of Apollo Tyres were bought back by the company and its promoters in contravention of the relevant section of the Companies Act and Sebi regulations.
Apollo Tyres did not follow any of the methods for repurchase of shares as specified under the buyback regulation, the market regulator had said.
Under the Regulation 4(1) of buyback, a company can buy back shares through tender offer, open market through book building process via stock exchange and from odd-lot holders.
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“Once the sale of 36.90 lakh shares was upheld by the Supreme Court, the question of SEBI looking into the possible violation of the Buy-Back Regulations or of the Section 77 of the Companies Act does not arise nor penalty could be imposed. We are of the view, that once the sale of 36.90 lakhs have been affirmed by the Supreme Court the alleged violation is deemed to have been waived and it was no longer open for the intervener to allege violation nor was it open to SEBI to impose a penalty for the alleged violation," a SAT bench consisting of Justice Tarun Agarwala and presiding officer Meera Swarup said.
"The impugned order cannot be sustained and is quashed. The appeal is allowed with no order as to costs. We have been informed that the penalty amount has been deposited by the appellant under protest," the SAT said
"Since we have quashed the order, the respondent (Sebi) is directed to refund the amount within 4 weeks from today."
The ruling in 2018 came after the SAT in January 2017 had set aside the over ₹1 crore penalty imposed by the Sebi on Apollo Tyres in the matter and had directed the market regulator to pass a fresh order.
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