2021 (9) TMI 1392 - SC - SEBI

Supreme Court orders fresh review by Securities Appellate Tribunal

The Supreme Court set aside the judgment of the Securities Appellate Tribunal due to reliance on a reversed decision and failure to consider the ... Fraud by the company - Liability of directors - Concealing and suppressing the material facts as in violation of the provisions of Section 12A of SEBI Act - Director guilty for violating Section 12A of the SEBI Act - scheme to defraud any shareholder or investor HELD THAT:- Appellate Tribunal was impressed by the view taken by it in another case decided around the same time viz., in the case of ‘Adi Cooper v. Securities and Exchange Board of India’ [2019 (11) TMI 1380 - SECURITIES APPELLATE TRIBUNAL, MUMBAI] Placing reliance on the said decision, the Securities Appellate Tribunal allowed the appeal preferred by the respondent. Be it noted, the decision of the Securities Appellate Trib[2019 (11) TMI 1380 - SECURITIES APPELLATE TRIBUNAL, MUMBAI]unal in the case of ‘Adi Cooper v. Securities and Exchange Board of India’ has been reversed by this Court in [2021 (9) TMI 1391 - SUPREME COURT] - As a result, it is not open to place reliance on the said decision. Further, we have noticed that the SEBI in its order which has been set aside by the Securities Appellate Tribunal, had adverted to the specific role of the respondent as noticee No. 6. It is noticed that besides being party to the loosely worded resolution, which paved way to the company for resorting to fraudulent transaction, he had complete knowledge about the same. These aspects have not been squarely dealt with by the Securities Appellate Tribunal in the impugned judgment. Taking any view of the matter, therefore, this appeal ought to succeed. The impugned judgment and order passed by the Appellate Tribunal is set aside. Instead, the parties are relegated before the Securities Appellate Tribunal for reconsideration of the appeal afresh. Issues:Appeal against judgment of Securities Appellate Tribunal; Reliance on reversed decision; Lack of consideration of specific role of respondent by Securities Appellate Tribunal.Analysis:The Supreme Court heard an appeal challenging the judgment and order of the Securities Appellate Tribunal dated 19.11.2020. The Appellate Tribunal had based its decision on a previous case, 'Adi Cooper v. Securities and Exchange Board of India,' which was later reversed by the Supreme Court in Civil Appeal No. 380 of 2020. The Court noted that it is not permissible to rely on the decision in 'Adi Cooper' anymore. Furthermore, the Court observed that the Securities Appellate Tribunal did not adequately address the respondent's specific role as noticee No. 6 in a fraudulent transaction, despite the SEBI order of 06.03.2020 highlighting this aspect. Due to these reasons, the Supreme Court set aside the impugned judgment and ordered the parties to go back before the Securities Appellate Tribunal for a fresh reconsideration of the appeal. The Court left all contentions open, disposed of the Civil Appeal with no costs, and also disposed of all related applications.