SC stays SAT order on Malanpur Steels

The Securities and Exchange Board of India (Sebi) has won a stay from the Supreme Court in a case relating to non-payment of amount due to investors of debentures issued by Malanpur Steels.

The regulator had approached the Supreme Court after the Securities Appellate Tribunal (SAT) had set aside a Sebi order (June 23, 2004), which had asked Malanpur Steels to pay a penalty of Rs 25 lakh after it failed to redress the investor grievances of debenture holders, despite a Sebi order.

The 2004 Sebi order follows an earlier order in December 2002 by the regulator, which had asked the company to redress the grievances of its investors on the non-payment of its debentures within 30 days.

The firm had appealed and won a favourable order from SAT, pointing out that more than 90 per cent of the complaints related to the non-payment of the amount due to investors on maturity, which could not be paid owing to the erosion of the entire networth of the company.

The apex court, admitting the Sebi plea, said, "... the operatives of the impugned order passed by SAT remains stayed".

The company had pleaded that since a reference was pending with the Board for Industrial and Financial Reconstruction (BIFR), it was entitled to the protection of Section 22(1) of SICA and that the amount due to the creditors and investors could not be paid, as the company was unable to make payment till the rehabilitation package came from the BIFR.