SAT sets aside Sebi order in Pan Asia case by majority

By a majority verdict, the Securities Appellate Tribunal (SAT) today set aside a Sebi order that had barred Pan Asia Advisors and its promoter Arun Panchariya from the capital market for 10 years for alleged market manipulation using global securities issued by six Indian companies.
Two SAT members, Jog Singh and A S Lamba, passed the order setting aside a Sebi direction, while Presiding Officer Justice J P Devadhar gave a minority judgement in which he upheld the order of the Securities and Exchange Board of India (Sebi).
Sebi had in June barred Pan Asia Advisors and its promoter from accessing the capital market, directly or indirectly, for 10 years.

The case relates to alleged irregularities that were observed in issuance of global depository receipts of Asahi Infrastructure & Projects, Avon Corporation, Cat Technologies, IKF Technologies, K Sera Sera and Maars Software International.
"In light of the legal and factual backdrop, the impugned order is hereby set aside on the ground of Sebi not having the jurisdiction over the creation and issuance of GDRs abroad.
"Having thus decided on the basis of the preliminary objection, we are not obligated by law to adjudicate upon the other issues raised in the appeal pertaining to the merits of the matter, which are kept open to be looked into by the relevant authority as per law, and if so advised, with a view to streamline the entire programming of the issuance of GDRs. The appeal is, accordingly, allowed. No costs," the majority order said.

Disagreeing with this order, Devadhar said: "On perusal of order proposed by learned Member Jog Singh, I find it difficult to agree with the views expressed therein. Hence, this separate order.

"The decision of Sebi that appellants (Pan Asia Advisors and Panchariya) in connivance with issuer companies have committed fraud upon the investors in India and therefore, as persons associated with the transactions in the securities market in India," he said.
"...Appellants are liable for action under Sebi Act, 1992 and the regulations made thereunder cannot be faulted," it added.
The Tribunal further said: "Questions raised in the appeal are answered in the affirmative, ie in favour of Sebi and against appellants.