The Supreme Court on March 24 dismissed the Securities Exchange Board of India’s (SEBI) appeal against Securities Appellate Tribunal (SAT) setting aside a penalty of Rs 2 lakhs against Bhushan Steel now owned by Tata Steel.
While dismissing the plea, Justice Sanjiv Khanna remarked that it was too small an amount for SEBI to have appealed at the Supreme Court, and questioned the lawyers if SEBI filed the appeal because its ego was hurt.
SEBI’s lawyer tried to convince the court stating that the appeal was filed considering the question of law involved and not just the penalty. The bench was however not convinced by the argument and proceeded to dismiss the case.
In December 2022, SAT set aside SEBI's order to impose a Rs 2 lakh penalty on Bhushan Steel Ltd, now known as Tata Steel BSL Ltd, for disclosure lapses.
Bankruptcy proceedings were initiated against the debt-laden Bhushan Steel Ltd in July 2017. After completing the corporate insolvency resolution process (CIRP), Bhushan Steel was taken over by Tata Steel Ltd in 2018.
"The impugned order dated 14 February 2022, cannot be sustained and is quashed. However, it would be open to the respondent SEBI to issue a show cause notice for the alleged violation against the entity," SAT said in an order passed on December 20.
The ruling comes after an appeal was filed against the Sebi order, levying a Rs 2 lakh fine on Bhushan Steel for not making the requisite disclosure under LODR (Listing Obligations and Disclosure Requirements) rules.
It noted that the appellant was found guilty of non-disclosure of the number of investor complaints filed with the stock exchanges on a quarterly basis -- March 2016, September 2018 and December 2018.
Under the rules, a listed entity shall file with the recognised stock exchange(s) on a quarterly basis, within twenty-one days from the end of each quarter, a statement giving the number of investor complaints pending at the beginning of the quarter, those received during the quarter, disposed of during the quarter and those remaining unresolved at the end of the quarter.
However, SAT in its order noted that "the company had gone into July 2017 under the Insolvency Bankruptcy Code (IBC) and in view of the decision of this tribunal, no penalty can be levied on the new management which came into the picture on May 18, 2018.
"The violation, if any, committed for the quarter ended March 2016, was of the previous management which cannot be imposed upon the new management." It further noted that the non-disclosure for the quarter ended September 2018 and December 2018 concerned, no charge has been levied against the appellant in the show cause notice and consequently, no penalty can be imposed for this violation, the tribunal said.
