In a significant legal development, the Supreme Court (SC) dismissed the appeal filed by the Securities and Exchange Board of India (SEBI) on December 4. The appeal challenged the decision of the Securities Appellate Tribunal (SAT) to overturn a penalty of Rs 65 lakh imposed on Apollo Tyres for violating share buyback norms in 2003.
During the course of the hearing, the SC bench led by Justice Sanjiv Khanna criticized SEBI for consistently appealing against SAT’s decisions that went against them. Justice Khanna went on to request SEBI to provide a comprehensive list of appeals they have filed in the apex court against SAT’s orders.
Furthermore, the SC sought an affidavit from the officer overseeing the case, questioning the substantial delay in taking action against Apollo Tyres. SEBI had issued the penalty order in 2018, almost 15 years after the alleged violation.
Solicitor General Tushar Mehta, representing SEBI, argued that the regulator does not appeal against every order but makes considered decisions in such cases. However, despite the arguments, the SC dismissed the appeal, while leaving the questions of law open.
In September 2023, SAT dismissed SEBI’s appeal and directed the regulator to refund the penalty amount deposited by Apollo Tyres within four weeks. The initial penalty, imposed by SEBI in November 2018, accused Apollo Tyres of violating buyback rules, alleging irregularities in the repurchase of shares in 2003.
The allegations centered around Apollo Tyres’ failure to adhere to specified methods for repurchasing shares outlined in the buyback regulation. According to Sebi, the company did not follow procedures under Regulation 4(1) of buyback, which includes tender offers, open market purchases through book building processes, and transactions with odd-lot holders.
The legal journey began in 2017 when SAT set aside a previous penalty of over Rs 1 crore imposed by SEBI on Apollo Tyres. The tribunal directed SEBI to pass a fresh order, stating that the penalty exceeded the limit prescribed under the Sebi Act.
This recent ruling by the Supreme Court marks a crucial chapter in the legal saga surrounding Apollo Tyres’ alleged violation of share buyback norms.
Stay tuned for further updates on this evolving legal matter.
