Securities Appellate Tribunal today upheld Sebi's order against GHCL, its non-executive chairman and company secretary in a case related to violations of trading norms and takeover rules.
Besides, the tribunal has upheld the market regulator's penalties on GHCL's 10 promoter entities which was imposed for indulging in fraudulent trade activities, but has set aside the fines slapped on them for violations of takeover norms.
The Securities and Exchange Board of India (Sebi) found that GHCL, its chairman, company secretary and the promoters had mislead investors of the company by making false reporting of promoter's shareholding.
In October, 2013, Sebi had imposed Rs 50 lakh on GHCL, Rs 25 lakh on the firm's non-executive chairman Sanjay Dalmia and Rs 10 lakh on the company secretary Bhuwneshwar Mishra.
It had also imposed Rs 5 lakh each on GHCL's 10 promoters entities for fraudulent trading acitvity and another Rs 2 lakh for violation of takeover norms.
The 10 GHCL promoters are -- Carissa Investment, Dear Investment, Dalmia Housing Finance, Ilac Investment, Lovely Investment, Antarctica Investment, Comosum Investment, Alter Investment, Anurag Trading Leasing & Investment and Archana Trading Leasing & Investment.
Following Sebi's ruling, all the entities had approached the tribunal challenging the regulator's order.
In a common order issued today, the tribunal has dismissed the appeal filed by GHCL, Dalmia and Mishra.
According to SAT, the company, the company secretary and the chairman "are not mere conduit to pass-on whatever details they receive from the promoters to the stock exchanges irrespective of the records maintained by the company in respect of the shares which may be held by a promoter at given point of time".
"The appellants should have acted more diligently and responsibly and should not have been guided by mere legal opinions," SAT said adding that there was "no legal infirmity" in Sebi's order.
In the case of the promoters, SAT said that "Rs 5 lakh imposed on each of the appellants for violation of FUTP (Fraudulent and Unfair Trade Practices) Regulations...Is upheld whereas penalty of Rs 2 lakh imposed on each of the appellants for violation of...Of SAST (Substantial Acquisition of Shares and Takeovers) is quashed and set aside".
SAT said that Sebi had "not recorded any specific finding that there was an understanding or agreement, direct or indirect, among the 10 appellants (promoters)".
"In the absence of any such finding or evidence on record, none of the 10 appellants can be held guilty of violating Regulation...Of the SAST Regulations", it said.
Sebi had alleged that the promoters had projected their shareholdings far in excess of their real shareholding by taking into consideration holdings of third parties as part of their own shareholding in an illegal manner.
