The Securities Appellate Tribunal (SAT) on Wednesday quashed the order passed by Sebi imposing a fine of Rs 65 lakh on Apollo Tyres for violating norms pertaining to buyback of shares back in 2003. Dismissing the regulator’s directive, the appellate tribunal has directed the Securities and Exchange Board of India (Sebi) to refund the penalty amount deposited by Apollo Tyres within four weeks, according to the SAT order.
The present appeal was filed against the Sebi’s order passed in November, 2018 that levied a penalty of Rs 65 lakh on Apollo Tyres for violation of buyback rules.
It was alleged that shares of Apollo Tyres were bought back by the company and its promoters in contravention of the relevant section of the Companies Act and Sebi regulations. The violations were allegedly committed by the company in 2003.
According to Sebi, Apollo Tyres did not follow any of the methods for repurchase of shares as specified under the buyback regulation.
Under the Regulation 4(1) of buyback, a company can buy back shares through tender offer, open market through book building process via stock exchange and from odd-lot holders.
“The impugned (Sebi’s) order cannot be sustained and is quashed… We have been informed that the penalty amount has been deposited by the appellant under protest. S
“Since we have quashed the order, the respondent (Sebi) is directed to refund the amount within 4 weeks,” a bench consisting of Justice Tarun Agarwala and presiding officer Meera Swarup said.
The ruling in 2018 came after the SAT in January 2017 had set aside the over Rs 1 crore penalty imposed by Sebi on Apollo Tyres in the matter and had directed the regulator to pass a fresh order.
According to the tribunal, the overall penalty amount was in excess of the limit prescribed under the Sebi Act.