The Securities Appellate Tribunal has slashed the penalty imposed by SEBI on Jindal Cotex Ltd to Rs 25 lakh from Rs 10.3 crore in a case related to manipulation in the issuance of global depository receipts.
Also, the appellate tribunal reduced the fine on Jindal Cotex's Managing Director Sandeep Jindal to Rs 10 lakh from Rs 20 lakh.
However, it affirmed the penalty imposed on Rajinder Jindal and Yash Paul Jindal who was Whole Time Director and Chairman of Jindal Cotex, respectively, saying the fines were neither arbitrary nor excessive.
"In our opinion, the penalty imposed is 'excessive' and disproportionate to the violation and is also discriminatory"
"The company is a running concern. Penalising the firm with such a heavy penalty is in fact penalising the shareholders, which is not justifiable especially for a running company," the appellate tribunal said in its order dated February 23.
The ruling came after Jindal Cotex, Sandeep Jindal, Rajinder Jindal and Yash Paul Jindal challenged the order passed by the regulator in Jan. 2020.
SEBI's Adjudicating Officer had imposed a penalty of Rs 10.30 crore on Jindal Cotex, Rs 20 lakh on Sandeep Jindal and Rs 10 lakh each on Rajinder Jindal and Yash Paul Jindal in a matter related to manipulation in the issuance of Global Depository Receipts.
The "money raised through Global Depository Receipts has been received by the Jindal Cotex and has not been misappropriated. The same has been utilised for the purpose for which the Global Depository Receipts was issued which fact has not been disputed. Thus, it is not a case of defalcation of the funds," the appellate tribunal said.
According to the order, a penalty has also been imposed on the firm for violating the section 23E of the Securities Contracts (Regulations) Act for non-disclosure under the listing agreement. The imposition of penalty is wholly erroneous and is not applicable, it added.
Affirming the order of the AO for the violations committed by Jindal Cotex, it said, "we reduce the penalty against the company to Rs 25 lakh, while the fine against Sandeep Jindal is reduced to Rs 10 lakh and penalties against Rajinder Jindal and Yash Paul Jindal is affirmed", the appellate tribunal said.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.