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The Securities Appellate Tribunal (SAT) today set aside market regulator Sebi's order against three entities in a case of fraudulent trading in Jagsonpal Pharmaceuticals shares way back in 2000.
Among others, SAT has cited "unnatural delay" of about 12 years by Sebi to initiate and complete the proceedings in the case, and therefore has set aside the regulator's ban imposed on -- HB Stockholdings, Alaknanda Capital Services and Har Sai Investments -- from the securities market.
"...We quash and set aside the impugned order in each case and allow the three appeals on merit as well as on the ground of unconscionable and unexplained delay of about 12 years in initiating and completing the proceedings against the three appellants in question," SAT said in the order.
In May 2012, Securities and Exchange Board of India (Sebi) had restrained the three entities from dealing in the capital market for a period of two years.
The ban was imposed after the regulator's probe found that the three entities related to each other had entered into structured/synchronised trades in the scrip of Jagsonpal Pharmaceuticals, a company listed on NSE and DSE, in 2000.
SAT said that the entities were "compelled to make a feeble attempt" to defend their case on the basis of "scanty and incomplete material" supplied by Sebi.
Further, SAT said that even after the conclusion of the second sitting in 2011 the market regulator took a period of around one year to pass the order on May 9, 2012.
"This unnatural delay of about 11 to 12 years in initiation and completion of the proceedings against the appellants has caused definite prejudice to them", SAT said.
Moreover, the Tribunal said that the law governing the field of fraudulent and unfair trade practices (FUTP) had been amended in the year 2003.
"...Respondent(Sebi) has utilised the amended FUTP Regulations of 2003 not only for procedural matters but applied substantive portions of the amended regulations for holding the appellant guilty of the charge against them, which in itself is incorrect as far as substantive law is concerned," SAT said.
SAT also said that certain sections in the Sebi Act did not exist in the year 2000 when the alleged trades took place.
