A division bench of Justice N K Sodhi, Arun Bhargava and Utpal Bhattacharya imposed the penalty on the capital market regulator and set aside the adjudication order of September 8, 2006.
Sebi's then adjudicating officer Amit Pradhan had imposed a penalty of Rs 1 crore on Goldman Sachs Investment (Mauritius), citing violation by the firm under Sebi's (Foreign Institutional Investors) Regulations, 1995.
According to Pradhan's order, Goldman Sachs International, an affiliate of Goldman Sachs Investment (Mauritius), a sub-account registered with Sebi, issued offshore derivatives instruments (ODIs) or a participatory note (PN) to an Overseas Corporate Body (OCB) known as Magnus Capital Corporation.
It, however, failed to pass on the required information to the regulator in the prescribed format and was charged with violation of Sebi's FII regulations.
However, according to Thursday's order, the judges are of the view that in the aforesaid observations the adjudicating officer "showed a lack application of mind on his part". The order further said the offer had referred to the "Takeover Regulations", which have no concern whatsoever with the case in hand.
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"The aforesaid response of the adjudicating officer to the clarification sought by the appellant appears to be of sheer arrogance. In this background, we cannot appreciate the response of the adjudicating officer and cannot but deprecate his conduct," said the division bench while setting aside the order.
SAT also directed the market regulator to desist from insisting on the undertakings prescribed by the revised reporting format by the officer.