The Securities Appellant Tribunal (SAT) has stayed the penalties imposed by markets regulator Sebi on Cairn India and others for making a misleading announcement regarding buyback of shares in 2014.
While staying the penalties, the tribunal also directed Cairn India, which was merged with Vedanta Limited in 2017, and others involved in the case to deposit Rs 2.5 crore with Sebi within three weeks.
If the amount is deposited, no further recovery will be made from them during the pendency of the appeal, the tribunal said in an order dated June 22.
In May, the Securities and Exchange Board of India (Sebi) imposed a penalty of Rs 5.25 crore on Cairn India for making a misleading announcement regarding the buyback of shares in 2014.
Further, the regulator imposed a fine of Rs 15 lakh each on P Elango, who was the CEO and director of Cairn India, along with Aman Mehta and Neerja Sharma, who were directors of the company at the time of violation.
According to the Sebi order, the buyback announcement made by the appellants in January 2014 was misleading without any intent to fulfill it and that it was designed to influence the decision of the investors and induce them to trade in the shares of the company.
Cairn India and others have been negligent and should have monitored the trading made by its broker, as per the Sebi order.
"We also find that there was an internal note of the respondent (Sebi) which indicated that no fraud has been committed by the appellants," SAT said, adding that an amount of Rs 143 crore which was collected through buyback arrangement was subsequently kept in an escrow account.
"In view of the aforesaid, we stay the effect and operation of the impugned order provided the appellants deposit a sum of Rs 2.5 crore before the respondent within three weeks," the tribunal said.
Also, the tribunal has directed Sebi to file a reply within three weeks. Thereafter, Cairn India and others need to file a rejoinder. The matter has been listed for admission and final disposal on August 24.
Cairn India had made a public announcement on January 14, 2014, for the buyback of 17,08,95,522 equity shares of Rs 10 each at a maximum price of Rs 335 apiece for a total of Rs 5,725 crore from the open market.
The buyback offer was scheduled to open on January 23, 2014 and close on July 22, 2014.
