Independent non-executive directors absolved of liability for fraudulent GDR proceedings they didn't participate in

The Securities Appellate Tribunal held that independent non-executive directors who merely passed a resolution but did not participate in subsequent GDR proceedings could not be penalized for fraudulent activities. A director who resigned on the day of resolution passing was also absolved of liability for subsequent acts. However, the Managing Director, Company, and Whole Time Director were held liable for the fraudulent GDR issue and misappropriation of proceeds. The Managing Director could not escape responsibility by claiming he merely followed Lead Manager instructions, as his position required awareness of the account charge agreement's consequences.

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Issues Involved:
1. Delay in filing appeals
2. Restraining appellants from accessing securities market
3. Imposition of penalties for violations of regulations
4. Liability of different appellants in the case

Issue 1: Delay in filing appeals
The judgment begins by condoning the delay in filing the appeals based on the reasons stated in the applications. The miscellaneous applications for condonation of delay are allowed, indicating a procedural issue addressed at the outset.

Issue 2: Restraining appellants from accessing securities market
The judgment discusses two separate orders by the Whole Time Member (WTM) of the respondent Securities and Exchange Board of India (SEBI) and the Adjudicating Officer (AO) concerning the appellants. The WTM restrained all appellants from accessing the securities market for five years, while the AO imposed penalties for violations of various regulations. The orders were based on violations of specific regulations related to fraudulent and unfair trade practices in the securities market.

Issue 3: Imposition of penalties for violations of regulations
The common facts of the case involve the issuance of Global Depository Receipts (GDRs) by the appellant Company, where the GDR proceeds were not utilized as intended but were instead used to create a false impression of immediate subscription. The GDRs were later converted into equity shares and sold in the Indian securities market. The judgment details the involvement of different appellants in these transactions and their defenses against liability.

Issue 4: Liability of different appellants in the case
The judgment analyzes the roles of each appellant in the case. Independent non-executive directors were found not liable as they did not participate in the GDR proceeds issue after passing the resolution. A resigned director was also deemed not liable for subsequent actions. However, the Managing Director, Whole Time Director, and the Company were held liable for their involvement in the fraudulent activities based on their roles and responsibilities. The judgment concludes by allowing some appeals and dismissing others based on the individual liability of each appellant.

Overall, the judgment provides a detailed analysis of the issues involved, focusing on the violations of regulations, individual liabilities of the appellants, and the rationale behind the decisions regarding penalties and restraints in accessing the securities market.

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