Jurisdiction of SEBI debarring the respondents as Lead Managers relating to GDRs , for 10 years
whether SEBI
had jurisdiction in passing the impugned order dated 20.06.2013 debarring
the respondents for a period of ten years in dealing with securities while
considering the role played by the respondents as Lead Managers relating to
the GDRs issued by six companies who issued such GDRs. =
The short question that arises in this appeal relates to the jurisdiction
of SEBI under the Securities and Exchange Board of India Act, 1992, (in
short “SEBI Act, 1992”) to initiate proceedings against the respondents as
Lead Managers to the Global Depository Receipts (in short “GDRs”) issued
outside India based on investigations held by it and on its conclusion that
in relation to transaction of sale/purchase of underlying shares released
on redemption of GDRs in the securities market in India, the Lead Managers
had committed fraud on the investors in India and that such fraudulent
intention existed at every stage of the GDR process till sale/purchase of
underlying shares in the securities market in India. The further question
that arises for consideration is that if the said question is answered in
the affirmative, whether the SEBI was justified in passing its impugned
order dated 20.06.2013, debarring the respondents herein from rendering
services in connection with instruments that are defined as securities
under Section 2(h) of the Securities Contracts (Regulation) Act, 1956 (in
short “SCR Act, 1956”) and such debarment for a period of 10 years
prohibiting the respondents from accessing the capital market directly or
indirectly under SEBI Act, 1992 and the regulations framed there under was
justified.
When the order of SEBI dated 20.06.2013 was challenged by the respondents
before the Securities Appellate Tribunal, Mumbai in Appeal No.126 of 2013,
the Chairman of the Tribunal in his minority view upheld the order of the
SEBI while the members of the Tribunal by way of their majority view set
aside the order of SEBI debarring the respondents. It was in the above
stated background SEBI has come forward with this appeal before us.=
Held that
SEBI had jurisdiction in passing the impugned order dated
20.06.2013 debarring the respondents for a period of 10 years in dealing
with the securities while considering the role played by the respondents as
Lead Managers relating to the GDRs issued by six companies which issued
such GDRs.
We, therefore, hold that the Tribunal is bound to examine the
correctness or otherwise of the order of SEBI dated 20.06.2013 in the
appeal preferred by the respondents in Appeal No.126 of 2013.
We,
therefore, set aside the impugned order by the majority and hold that the
minority view of the Chairman of the Tribunal is perfectly in order. The
appeal stands allowed and the impugned order of the majority is set aside.
The appeal No.126 of 2013 before the Securities Appellate Tribunal at
Mumbai shall stand restored and the same shall be disposed of on merits and
in accordance with law expeditiously preferably within three months from
the date of production of a copy of this order.-2015 S.C.MSKLAWREPORTS
whether SEBI
had jurisdiction in passing the impugned order dated 20.06.2013 debarring
the respondents for a period of ten years in dealing with securities while
considering the role played by the respondents as Lead Managers relating to
the GDRs issued by six companies who issued such GDRs. =
The short question that arises in this appeal relates to the jurisdiction
of SEBI under the Securities and Exchange Board of India Act, 1992, (in
short “SEBI Act, 1992”) to initiate proceedings against the respondents as
Lead Managers to the Global Depository Receipts (in short “GDRs”) issued
outside India based on investigations held by it and on its conclusion that
in relation to transaction of sale/purchase of underlying shares released
on redemption of GDRs in the securities market in India, the Lead Managers
had committed fraud on the investors in India and that such fraudulent
intention existed at every stage of the GDR process till sale/purchase of
underlying shares in the securities market in India. The further question
that arises for consideration is that if the said question is answered in
the affirmative, whether the SEBI was justified in passing its impugned
order dated 20.06.2013, debarring the respondents herein from rendering
services in connection with instruments that are defined as securities
under Section 2(h) of the Securities Contracts (Regulation) Act, 1956 (in
short “SCR Act, 1956”) and such debarment for a period of 10 years
prohibiting the respondents from accessing the capital market directly or
indirectly under SEBI Act, 1992 and the regulations framed there under was
justified.
When the order of SEBI dated 20.06.2013 was challenged by the respondents
before the Securities Appellate Tribunal, Mumbai in Appeal No.126 of 2013,
the Chairman of the Tribunal in his minority view upheld the order of the
SEBI while the members of the Tribunal by way of their majority view set
aside the order of SEBI debarring the respondents. It was in the above
stated background SEBI has come forward with this appeal before us.=
Held that
SEBI had jurisdiction in passing the impugned order dated
20.06.2013 debarring the respondents for a period of 10 years in dealing
with the securities while considering the role played by the respondents as
Lead Managers relating to the GDRs issued by six companies which issued
such GDRs.
We, therefore, hold that the Tribunal is bound to examine the
correctness or otherwise of the order of SEBI dated 20.06.2013 in the
appeal preferred by the respondents in Appeal No.126 of 2013.
We,
therefore, set aside the impugned order by the majority and hold that the
minority view of the Chairman of the Tribunal is perfectly in order. The
appeal stands allowed and the impugned order of the majority is set aside.
The appeal No.126 of 2013 before the Securities Appellate Tribunal at
Mumbai shall stand restored and the same shall be disposed of on merits and
in accordance with law expeditiously preferably within three months from
the date of production of a copy of this order.-2015 S.C.MSKLAWREPORTS
