SAT Rightly Dismisses Penalty on Co. For Not Using Preferential Issue Funds as Intended as Shareholders Ratified Object | SC
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- Last Updated on 19 February, 2024
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Case Details: Securities and Exchange Board of India v. ALPS Motor Finance Ltd. - [2024] 159 taxmann.com 422 (SC)
Judiciary and Counsel Details
- Sanjiv Khanna & Dipankar Datta, JJ.
- N. Venkataraman, A.S.G. Ms Surekha Raman, Amarjit Singh Bedi, Abhishek Anand, Ms Unnimaya S. & Shreyash Kumar, Advs. for the Petitioner
Facts of the Case
In the instant case, the Respondent Company made six preferential allotments and made necessary disclosure on the stock exchange platform. Subsequently, an investigation was made and the stock exchange submitted a report indicating the possibility of mis-utilization of proceeds in 2016.
Based on this report, SEBI carried out further investigation and concluded that the company had deviated from the object of an issue and did not utilize proceeds from the preferential issue as per objects and thus, violated clause 43 of the Listing Agreement/Regulation 32 of LODR regulations and regulations 3 and 5 of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.
SEBI accordingly imposed penalties. SAT by the impugned order quashed an order by the SEBI on the ground that there was an inordinate delay in the issuance of adjudication proceedings. Even otherwise, prior to the issuance of show cause notice, alleged deviation by the company was ratified pursuant to a special resolution passed by the shareholders of the company.
Supreme Court Held
The Supreme Court held that there was no good ground and reasons to interfere with the impugned judgment and hence, the appeal against same was to be dismissed.
List of Cases Reviewed
- Alps Motor Finance Ltd. v. SEBI [2024] 159 taxmann.com (SAT-Mum.) affirmed
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