SC dismisses Sebi plea against SAT relief to NHAI


The Sebi’s order was challenged by the NHAI before the tribunal.

The Supreme Court on Wednesday dismissed Sebi’s appeal against the Securities Appellate Tribunal’s order that quashed its decision to impose Rs 7-lakh penalty on the NHAI for the delay in filing financial results. The tribunal had let off the authority with just a warning.

A Bench led by justice LN Rao upheld the SAT’s August 27 order that had termed the imposition of penalty as “harsh and excessive” after noting violations of the Listing Obligations and Disclosure Requirement (LODR) Regulations. The tribunal had granted relief to NHAI “in the peculiar facts and circumstances” of the case and had said that it should not be treated as a precedent for other matters.

The regulator had in May levied the fine on NHAI as it did not submit the mandated financial results on time for the half-year ended September 30, 2018, and March 31, 2019, as required under the LODR Regulations. The Sebi’s order was challenged by the NHAI before the tribunal.

Sebi told the SC that the SAT’s order was “wholly erroneous and unsustainable” and also the tribunal had erred in law in converting the monetary penalty to a mere warning after upholding its findings. The market regulator said that there was no provision for providing relaxation under Regulation 52 of the LODR.

Attorney general KK Venugopal told the SC that SAT’s remarks that the penalty imposed by Sebi’s adjudicating officer was “harsh and excessive” was “unwarranted and disparaging” as Sebi had after a detailed consideration of the materials on record unequivocally found that there was repeated failure of compliance with the LODR Regulations by NHAI which continued even after the Sebi’s advisory.

Sebi in its appeal filed through counsel Pratap Venugopal further stated that SAT by converting the monetary penalty into a mere warning had travelled beyond the provisions of Section 15T(4) of the Sebi Act, 1992, which limits its powers to only confirming, modifying or setting aside of the Sebi’s impugned orders.

The tribunal while granting relief to NHAI had stated that the PSU being governed under the NHAI Act warranted involvement of a large number of members who are highly ranked officials appointed by the government and simultaneously discharge their duties under various other portfolios. “It thus becomes slightly tedious and cumbersome to ensure that all the members of the board meeting come together under one roof and get the audited or unaudited financial results approved before the stipulated period,” the tribunal stated, adding that at times it was beyond the control of the NHAI officers to enforce strict compliance of the Sebi’s norms.

According to the tribunal, Sebi should have taken this factor into account while considering the application for extension of time to file the financial results.

The adjudicating officer had held that there was repeated failure on the part of NHAI in not filing the returns on seven occasions from 2015-2019. It rejected the NHAI’s contention that the procedural delay cannot be taken as a mitigating factor for relaxation of the period for filing the unaudited financial results.


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