The Supreme Court today set aside an order passed by the Securities Appellate Tribunal (SAT), which had upheld fines imposed by Sebi on three investment firms for not complying with the market regulator's summons.
A Bench, comprising Chief Justice S H Kapadia and Justices K S Radhakrishnan and Swatanter Kumar, directed SAT to hear the cases filed by the three brokerage houses again.
The Bench also directed the three Kolkata-based investment firms -- Gateway Computers, Tricon Business and Delton Exim -- to pay Rs 1 lakh each. "The tribunal (SAT), on the payment of such an amount, would hear the cases... Would be listed before the tribunal on July 26 for directions," the court said.
SAT would also give the firms time to file their supporting applications, it added.
The apex court said that SAT had not accorded the brokers a proper hearing and dismissed the cases in the absence of their counsel.
The court's direction came over a petition filed by the three firms, which contended that they could not respond to summons issued by Sebi officials as they hadn't received the proper attachments.
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The matter related to trading of shares of Nageshwar Investment Ltd, which witnessed an enormous rise between April 2005 and November 2005. Following this, Sebi initiated an investigation and issued summons to the firms -- asking them to produce the relevant documents.
Despite receiving three summons from the regulatory body, the firms had failed to furnish any documents.
Following this, Sebi issued notices asking the firms to explain why action should not be taken against them for non-compliance of its order.
The firms responded by stating that they had not received the annexures attached to the summons.
Not satisfied with the explanation, the market regulator imposed a fine of Rs 15 lakh on them under Section 15 A of the Sebi Act in April 2009.
This was challenged by them before SAT, which rejected their contention that Sebi had not provided them with enough time to collect the relevant data and documents.