Alok Industries Limited Vs Securities and Exchange Board of India (Securities Appellate Tribunal, Mumbai)
Summary: The Securities Appellate Tribunal, Mumbai allowed the appeal filed by Alok Industries Limited and quashed the Adjudicating Officer’s order dated July 30, 2020 imposing a penalty of Rs. 12 lakhs for violation of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The proceedings arose after the State Bank of India initiated proceedings under the Insolvency and Bankruptcy Code. An Interim Resolution Professional was appointed on July 18, 2017, a Resolution Plan was accepted on June 20, 2018 and the National Company Law Tribunal approved the Resolution Plan on March 08, 2019. Six months thereafter, the SEBI Adjudicating Officer issued a show cause notice dated October 18, 2019 alleging violation of the LODR Regulations by the company. SAT held that the controversy was squarely covered by its earlier decision in Monnet Ispat & Energy Limited vs. SEBI, Appeal No. 238 of 2020, decided on 29.10.2020.
In that case, SAT had considered the effect of an approved resolution plan upon subsequent SEBI proceedings concerning liabilities and violations pertaining to the period before the resolution. Following that decision, SAT held that the penalty order against Alok Industries could not be sustained. The impugned order dated July 30, 2020 was consequently quashed and the appeal was allowed with no order as to costs. The Tribunal also recorded that the matter had been heard through video conference due to the Covid-19 pandemic and directed the parties to act upon the digitally signed copy of the order.
Cases Discussed
- Monnet Ispat & Energy Limited vs. SEBI, Appeal No. 238 of 2020, decided on 29.10.2020 — SAT held that the controversy in the present appeal was squarely covered by this decision and, following it, quashed the impugned SEBI penalty order.
FULL TEXT OF THE JUDGMENT/ORDER OF SECURITIES APPELLATE TRIBUNAL MUMBAI
1. We have heard Mr. Zerick Dastur, learned counsel for the appellant and Mr. Abhiraj Arora, learned counsel for the respondent through video conference.
2. The appellant has challenged the order dated July 30, 2020 passed by the Adjudicating Officer (“AO” for convenience) of the Securities and Exchange Board of India (“SEBI” for convenience) imposing a sum of Rs. 12 lakhs for violation of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations” for convenience).
3. It transpires that the State Bank of India filed a Petition under the Insolvency and Bankruptcy Code (“IBC”) pursuant to which an Interim Resolution Professional was appointed on July 18, 2017. Subsequently, a Resolution Plan was accepted on June 20, 2018 which was approved by National Company Law Tribunal (“NCLT”) on March 08, 2019. Six months later the AO issued a show cause notice dated October 18, 2019 alleging violation of LODR Regulations by the Company.
4. In our view, the controversy involved in the present appeal is squarely covered by a decision of this Tribunal in Monnet Ispat & Energy Limited vs. SEBI (Appeal No. 238 of 2020 decided on 29.10.2020).
5. In view of the aforesaid, the impugned order cannot be sustained and is quashed. The appeal is allowed with no order as to costs.
6. The present matter was heard through video conference due to Covid-19 pandemic. At this stage it is not possible to sign a copy of this order nor a certified copy of this order could be issued by the Registry. In these circumstances, this order will be digitally signed by the Presiding Officer on behalf of the bench and all concerned parties are directed to act on the digitally signed copy of this order. Parties will act on production of a digitally signed copy sent by fax and/or email.
