SAT sets aside Sebi order in Saurashtra Cement case

The Tribunal set aside the order as there were inconsistencies in the directions set out by the regulator

Securities Appellate Tribunal (SAT) today quashed Sebi's order that directed five firms to make a public announcement for acquiring shares of Saurashtra Cement.

The order was set aside by SAT after it was submitted to it that there were inconsistencies in the directions set out by Sebi on the five firms -- Fawn Trading Company, Willow Trading Company, Pallor Trading Company, Fern Trading Company and Tejashree Trading Company.

Taking note of the same, Sebi had also told SAT that "the impugned order may be remanded to the file of the whole time member of Sebi for passing fresh order on merits."

Accordingly, SAT in an order today said "the impugned order dated April 25, 2013 is quashed and set aside and the matter remanded to the file of whole time member of Sebi for passing fresh order on merits in accordance with law with no order as to costs".

On April 25, 2013, Securities and Exchange Board of India (Sebi) had directed the firms to make a combined public announcement to acquire, jointly and severally, the shares of Saurashtra Cement within a period of 45 days.

Saurashtra Cement on March 11, 1998 had allotted 80 lakh shares through preferential allotment to five firms which were the subsidiaries of its main promoter, Jagmi Investments.

Sebi had said that no disclosures were made regarding their change in shareholding pattern by the entities.

According to norms, an acquirer is obligated to make a public announcement to acquire shares if the acquirer exceeds the shareholding threshold.

Sebi had noted that the entities were subsidiaries of a promoter, Jagmi Investments and by virtue of the same, they also formed part of the promoter group.

In a separate order dated March 7, SAT has slashed Sebi's Rs 1 crore penalty on Churuwala Exports to Rs 1.5 lakh in a case related to non-compliance with the regulator's summons.

"The counsel for respondent (Sebi) fairly states that as per the regulations prevailing at the material time, maximum penalty that could be imposed for non-compliance of summons was Rs 1.5 lakh only," SAT said in the order, adding that penalty in excess of Rs 1.5 lakh "cannot be sustained".

Accordingly, SAT ruled that the "penalty imposed upon Churuwala Exports Private Ltd is restricted to Rs 1.5 lakh".