The Supreme Court (SC) on December 4 dismissed the appeal filed by the Securities and Exchange Board of India (SEBI), challenging the Securities Appellate Tribunal's (SAT) decision to quash a Rs 65 lakh penalty imposed on Apollo Tyres for violating buyback of shares norms in 2003.
During the hearing, the SC bench, led by Justice Sanjiv Khanna, criticised the market regulator for appealing against every order of the SAT that went against them. Justice Khanna asked SEBI to file a list of appeals they have filed in the apex court against SAT's orders. \
Additionally, Justice Khanna sought an affidavit from the officer in charge of the case explaining the significant delay in taking action against Apollo Tyres, as SEBI passed the order in 2018, almost 15 years after the alleged violation.
Solicitor General Tushar Mehta, who appeared for SEBI told the apex court that the regulator does not appeal against every order but takes a considered decision in such cases. However, eventually the court dismissed the appeal albeit leaving the questions of law open.
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In September 2023, the SAT while dismissing SEBI's appeal, directed the regulator to refund the penalty amount deposited by Apollo Tyres within four weeks. The appeal was filed against Sebi’s order passed in November 2018 that levied a penalty of Rs 65 lakh on Apollo Tyres for violation of buyback rules.
It was alleged that 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. The violations were allegedly committed by the company in 2003. According to Sebi, Apollo Tyres did not follow any of the methods for repurchasing shares as specified under the buyback regulation. Under Regulation 4(1) of buyback, a company can buy back shares through a tender offer, open market through book building process via stock exchange and from odd-lot holders.
The ruling in 2018 came after the SAT in January 2017 had set aside the over Rs 1 crore penalty imposed by Sebi on Apollo Tyres in the matter and had directed the regulator to pass a fresh order. According to the tribunal, the overall penalty amount was in excess of the limit prescribed under the Sebi Act.
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